Silver Squeeze?

Eusebius Erasmus

Woodpecker
I've been thinking of dipping my toes into a bit of bullion. Not really as an investment, and only 10k or so, but purely as insurance against a true SHTF scenario. What's a significantly lower premium? Right now spot Ag is at 31.48 CAD, and after looking at like a dozen dealers nation wide, best I could find was: MLs were 38.61 ( 22% premium) Eagles were 37.67 (20%), recognized other bars (like JM refiners) were 37.35 (19%). Even 100 oz bars still worked out to 36.41/oz (16%). Gold MLs on the other hand were 2290 vs a spot of 2176 ( 5%). While the Gold MLs are a better deal, you're out of luck if you want to buy less than $2k worth of something in said SHTF scenario. 1/10 oz Gold MLs worked out to 2523/oz. I guess it's just the cost of refining and minting.
This is not financial advice.

If you can find a trustworthy dealer, then I wouldn’t mind the premiums. Silver will go up like crazy in value anyway, and a trustworthy dealer is worth it.
 

bucky

Ostrich
I've been thinking of dipping my toes into a bit of bullion. Not really as an investment, and only 10k or so, but purely as insurance against a true SHTF scenario. What's a significantly lower premium? Right now spot Ag is at 31.48 CAD, and after looking at like a dozen dealers nation wide, best I could find was: MLs were 38.61 ( 22% premium) Eagles were 37.67 (20%), recognized other bars (like JM refiners) were 37.35 (19%). Even 100 oz bars still worked out to 36.41/oz (16%). Gold MLs on the other hand were 2290 vs a spot of 2176 ( 5%). While the Gold MLs are a better deal, you're out of luck if you want to buy less than $2k worth of something in said SHTF scenario. 1/10 oz Gold MLs worked out to 2523/oz. I guess it's just the cost of refining and minting.
Last time I looked at US online dealers closely, a few weeks ago, I was seeing Eagles at around 36 USD, Maple Leafs at about 33 USD, and Kruggerands and Philharmonics as low as almost 31.50 USD.

I was thinking that for an American it might be better to go for anything but Eagles, not just because of the higher premium, but also because I'm pretty sure it's illegal to melt Eagles here. I know it's illegal to melt old "junk silver" coins.
 

MRAll134

Kingfisher
I was seeing Eagles at around 36 USD, Maple Leafs at about 33 USD, and Kruggerands and Philharmonics as low as almost 31.50 USD.
All of these are very common strikes, made in the millions, which I am sure you know. If you have them, they will increase in value very slowly - compared if you bought something rarer (< a 100K strikes).
 

NoMoreTO

Ostrich
LBMA's take on the Silver Squeeze

A little background on the LBMA
The London Bullion Market Association (now known simply as LBMA), established in 1987, is the international trade association representing the global Over The Counter (OTC) bullion market, and defines itself as "the global authority on precious metals".


LBMA's take on the Silver Squeeze is that Silver is not squeezable, and that it is a conspiracy. They then point to a more "legitimate" cause, namely the expected demand of the Biden Administration. Shortages and delays are blamed on logistics and corona.
Buoyed by this success, social media discussions soon focused on silver, and in particular longheld conspiracies that financial institutions were holding significant short positions. For many, the resemblance to GameStop was all-too apparent, albeit erroneous. Buying of silver bars, coins and exchange-traded products (ETPs) quickly ramped up. This chapter focuses on the first two, with ETPs already covered in Chapter 2 – Exchange Traded Products. However, it was not long before product shortages started to emerge. This was largely predictable for several reasons. First, flight restrictions meant it was often difficult to quickly move coins and bars to where they were needed. Second, many dealer stocks were quickly depleted. In the US, silver retail demand in January had been relatively quiet, in contrast to gold, and so for some dealers the focus was on securing gold bars and coins. A related point is the limitation on how much product some dealers can hold, given that this requires financing. In other words, if poorly selling stock is held for too long, the cost of financing this inventory can quickly eat into the premium, making any subsequent sale to retail investors unprofitable. Although the silver price achieved a six-year high of $30.10, the social media frenzy quickly faded – dynamics in the silver market are quite different to those behind the GameStop trade. In essence, there were no massive short positions in silver to force out. Furthermore, GameStop’s market capitalisation was small prior to the buying spree, at a little over US$1bn, compared to the value of global silver ETP holdings at end-2020 of over $28bn as just one example of silver investment. This was by no means the end for silver retail demand. As the social media frenzy was picked up by the mainstream media, silver benefited from widespread news coverage, particularly in the US. Importantly, the rationale for a ‘short squeeze’ appears to have carried little weight. Instead, concerns about the Biden administration and especially its stimulus measures were reported to have resonated with retail buyers

At the same time in Chapter 2 (as noted in the zero hedge article), the LBMA accepts that there was indeed an inability to meet demand, if the squeeze continued.
Early 2021 saw an unprecedented 110Moz added in just three days. Although some liquidations emerged, there were concerns that London would run out of silver if ETP demand remained at a high level.

Then they noted that it would have been a matter of weeks for the silver squeeze to break the market.
This suggests that had demand in iShares continued at the frenetic rate of late-January/early February it would only have been a matter of weeks before London’s existing stock was used up

Squeeze harder men!

Zero Hedge - LBMA Article - provides a more full analysis on the report.

LBMA - Silver Investment Report 2021
 
Last edited:

The_Trigg

Robin
The Silver Squeeze seems like it might be bearing fruit:
My understanding is that Comex can change the rules at any time to avoid a squeeze. They can force settle in cash. Can anyone confirm this?
 

NoMoreTO

Ostrich
My understanding is that Comex can change the rules at any time to avoid a squeeze. They can force settle in cash. Can anyone confirm this?
Deleted that message. I'm not really quite sure. I think what they do is work the phones and try to convince owners to take delivery in coming month or accept a partial delivery. I can't speak for sure about the cash. I know SLV can do this, but that is obviously different than the COMEX. It's a good question
 
Last edited:

The_Trigg

Robin
Deleted that message. I'm not really quite sure. I think what they do is work the phones and try to convince owners to take delivery in coming month or accept a partial delivery. I can't speak for sure about the cash. I know SLV can do this, but that is obviously different than the COMEX. It's a good question
I think when it comes to SLV and PSLV that have to hold physical, then a squeeze of sorts could happen, but as Mike Maloney says in the following vid, the COMEX can change the rules, which applies to futures. I thought I remembered that from somewhere.

Time Stamp 1:45

 
Last edited:
Top