Thursday, October 30th, 2014 MST

100-oz silver bar shortage developing in US

A shortage of 100-oz silver bars is developing in the US, and presently buying, while strong, is not what I would call robust .  When buying picks up, the shortage will be on us.

As for orders for new silver bars, Academy Corp’s popular stackable 100-oz bars are two months out; JM bars are a month out; Royal Canadian Mint 100s are “two weeks out;”  Sunshine Minting 100-oz silver bars are “not on the horizon.”  Buy order for 100s are picking on this price decline.  If buying continues, dealer vaults will be emptied.  Then buyers will have to wait weeks or months before receiving delivery of their bars.

Already, premiums are climbing on 100s, which happens as demand out paces supply.  Higher premiums are a natural “allocation process” in this market.

In the secondary market, where investors sell when they need to convert bullion to cash, premiums also are rising, and 100-oz silver bars are scarce on the inter-dealer networks.  Small dealers, which make up the networks, usually are quick to offer 100s when they come in “across the counter.”   That 100s are not offered on the networks is evidence that 100s are not being sold in quantity and that when they are sold they are quickly purchased by the smaller dealers’ clients.

Another sign of the scarcity (soon to be a shortage?) of 100-oz silver bars is a rising premium on junk silver coins (pre-1965 circulated 90% silver coins).  Because many dealers do not have or cannot get in a timely manner 100-oz silver bars, buyers are switching to junk silver coins, which are more readily available.  As the demand for 90% coins has increased, so has the premium, a normal function of the junk silver coin market.

What’s next?

If silver sees a further price drop from here, I believe that buying will be so strong that existing inventories of silver bars (and other silver bullion products) will last only a few days (yes, days).  Then buyers will have to wait on delivery of newly-manufactured bars, which, as noted above are weeks or months out.  Additionally, premiums on all silver bullion products will increase, thereby somewhat negating any lower prices.

A final note about waiting on lower prices before buying:  Pick a price at which you would like to buy.  If silver hits that price, buy.  Do not, if silver drops to your target price, put off buying because you think that maybe prices will go still lower.  In fact, they may.  But, at some price you have to jump in if you want to own silver.

In this bull market, which now is about eleven years old, I’ve seen many investors decide to wait on lower prices and be correct in waiting as prices did fall.  However, after the fall many decided to wait on still lower prices.  After all, they were right to wait the first time.

But what happened many times was that prices turned to the upside, leaving those investors still watching the market but not buying.  Some never bought at all, as they psychologically could not enter the market as prices marched above the levels at which they started watching.  Others  later bought at prices higher than when they started looking for lower prices.  Do not get caught in this trap because you may still be sitting on the sidelines when silver roars through $50.

10 Responses to “100-oz silver bar shortage developing in US”

  1. Hal

    Bill:

    I checked other sources and am finding 100 oz bars (sans the Sunshine Bars which have been in short supply for months) are available depending on dealer, although not necessarily in big volume.

    Are you judging/projecting that we are going to see shortages? Because it sounds from you like it is imminent (i.e., 2-3 days away). Or do you have more current new information?

    I think supplies are tight but not necessarily as tight as your comments suggest–at least not yet (although we could be close, especially if you have good intel.

    Reply
    • Bill Haynes

      Hal,

      If you will read the post closely, you will see that I said a shortage could occur on a price drop that resulted in increased buying.

      Further, as for the “2-3 days,” that how fast there could be no bars on big buying.

      We haven’t seen “big buying,” but steady buying. The question now is can the fabricators catch up. Stay tuned.

      Reply
  2. RK

    Well, there can’t be too much of a shortage yet, since you are presently offering some of those same bars at only 45 cents over spot! Should we expect that to change soon? ?

    Reply
    • Bill Haynes

      RK, please re-read the post. Note the word “developing.” Note that the shortage is dependent on the price of silver dropping, resulting in “strong buying.” Price of silver did not drop, but rallied, which caused some buying. A shortage could still develop.

      The bars offered on our Silver Specials Page at .45/oz over are not the popular Academy, JM, or RCM bars in quantity. The quantities are small (500 ounces), and the JM bars are tarnished, perhaps because they have been buried and exposed to the elements.

      Reply
  3. garyspan

    I think its interesting that the article is hinting that there is a shortage and hinting not to put off buying, whilst the authors are in a position to sell to you today. Is this not the case of the seller leading the market?

    Reply
    • Bill Haynes

      No hints intended. It was an analysis of the 100-oz silver bar market. Is CMIGS in a position to sell 100s now? Yes, because we carry an inventory and do not sell out of the wholesalers’ inventory. However, when our inventory is gone, replacment bars are three to four weeks out for us.

      Reply
  4. Plate

    Forgot to mention that other posters have been keeping track of inventory and have been rapidly depleting for about a week. The surprise came when even the Apmex 100 oz bars were sold out followed by Sunshine.

    Things are really accelerating

    Reply

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