An Inside Look at the Rapidly Escalating Physical Silver Shortage Via SDBullion

An Inside Look at the Rapidly Escalating Physical Silver Shortage Via SDBullion

January 21, 2013 By The Doc 57 Comments

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*Updated- shortage spreading to Silver Maples, SDBullion experiencing unprecedented demand for silver bullion

On Thursday, we alerted SD readers to the fact that the US Mint had sold out of Silver Eagles, selling over 6 million ounces over the first 9 days of sales in 2013, and was shutting down sales and production of Silver Eagles through at least 1/28, and would ration sales of eagles upon resumption of sales.

With a rapidly growing presence in the retail gold and silver market via SDBullion, we have had a unique perspective of the escalating physical silver shortage, and would like to give our readers an inside glimpse of the time-line of events evidencing a growing shortage of physical silver.

Full time-line of the developing silver shortage from a wholesale perspective is below:

Silver Shortage Time-Line:
Mid December 2012: US Mint announces 3 week halt of Silver Eagle production as the Mint transitions to 2013 Silver Eagles. Wholesale premiums and retail pricing of Silver Eagles do not change.
Late December 2012: Wholesale premiums begin noticeably rising on 90% silver -pre-1965 coins.
Monday 1/7: US Mint begins sales of 2013 Silver Eagles
Monday, 1/14: Wholesale suppliers run out of 90% face pre-1965 silver coins. Wholesale premiums rise 2-3 fold, and suppliers quote 3 week delays.
Tuesday 1/15: SDBullion’s primary supplier informs us that premiums on generic 1 oz rounds are doubling, effective immediately, with a 1-2 week delay on delivery. Delivery on previously placed orders are also delayed 1 week.
Wednesday 1/16: Rumors begin to circulate that premiums on Silver Eagles and Silver Maples are set to jump .75/oz imminently. All major suppliers deny the rumor, and state they expect premiums to remain stable for the foreseeable future.
Thursday 1/17: 9am: SDBullion’s suppliers all confirm ASE’s are in stock at standard premiums.

Thursday 1/17: 3pm: US Mint sends the following communication to authorized purchasers:
Authorized Purchasers,

The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins. As a result, sales are suspended until we can build up an inventory of these coins. Sales will resume on or about the week of January 28, 2013, via the allocation process.
Please feel free to call us if you have any questions.
Regards,
Jack A. Szczerban
Branch Chief, Precious Metals Group
Department of the Treasury
United States Mint

Thursday 1/17: 3:30 pm: SDBullion’s primary ASE supplier raises premiums by .75/oz.
Thursday 1/17: 5pm: SDBullion’s primary ASE supplier is sold out of 2013 Silver Eagles
Thursday 1/17: 5:30pm: SilverDoctors.com advises readers that the US Mint is sold out of 2013 Silver Eagles
Thursday 1/17: 6pm: SDBullion is forced to raise premiums on 2013 Silver Eagles as wholesale supply is rapidly vanishing, and premiums are skyrocketing.
Thursday 1/17: 9pm: SDBullion.com sells out of all remaining 2013 Silver Eagles
Friday 1/18: 9am: SDBullion is able to procure a small order of 2013 ASE’s from a secondary provider for .75 over normal wholesale premium.
Friday 1/18 3pm: Nearly all wholesale bullion dealers are sold out of 2013 ASE’s, wholesale premiums have risen by nearly $1.50 for those wholesalers with any remaining (and rapidly diminishing) inventory.
Friday 1/18: 4pm: SDBullion’s primary supplier refuses to honor the new and increased pricing for 1 oz generic rounds agreed to 48 hours prior

Monday 1/21: SDBullion’s primary suppliers are running out of 2013 Silver Maples due to massive demand, wholesale premiums have tripled on Silver Maples, and have already been raised twice today at our primary supplier!

Monday 1/21: 2:30pm: and……they’re gone! SD Bullion has again been completely cleaned out of all on-hand 2013 Silver Eagles

Monday 1/21: SDBullion experiencing unprecedented demand for silver bullion in all forms
2013 Silver Eagle retail availability As of Sunday 1/20/2013:
Apmex: Sold out

Provident: Sold Out
Tulving: Sold Out
Scottsdale: Sold Out

SDBullion: Under 500 oz remaining, with one last inventory order en route.
With the US Mint not scheduled to begin resumption of ASE sales for another 8 days, at which point it will begin sales with rationing/ allocation, expect premiums on Silver Eagles to continue escalating, and expect supplies of alternate forms of physical silver coins and rounds to begin drying up, as investors turn to Silver Maples, Philharmonics, generic rounds, 10 oz and 100 oz bars as alternatives to the skyrocketing premiums Silver Eagles are commanding.

With shortages causing panic buying among silver investors, much the way that the recent gun and ammo shortages and threats of gun confiscation have caused massive demand and 2-3 fold increases in prices of guns and lead futures, a similar situation could easily develop quickly in the silver market, particularly with the fact that silver is a Giffen good, and is an extremely small market.