March 23, 2008

Jason Hommel on Silver Shortage

Silver Shortage gets Worse, Price Drops Again!

(If you don't hold it, you don't own it)

Silver Stock Report

by Jason Hommel, March 20, 2008

Three more major silver dealers are reported to be out of silver today: The U.S. Mint, Kitco, and Monex. This, on top of the major dealers yesterday, Amark, Perth Mint, CNI Numismatics, and APMEX, all reported sold out. Further, nearly all of Canada is reported to be out of silver, from Vancouver to Toronto.

This is unprecedented, and is a perfect case of market manipulation in the paper market at COMEX and other futures exchanges to see silver prices continue to drop down to below $17/oz. today. Paper promises can be created endlessly, but real silver cannot.

This is NOT a case of the dealers getting spooked, and selling out to the refiners just in time, at peak prices. This is a case of the public buying up the stock at coin shops across the world ever since gold hit $1000/oz.. That event finally sparked a little of the public's buying of silver and gold. Thus, the typical coin shop flow of silver to the refiners just stopped in the last few weeks, and especially the last two days.

This is NOT a case of the public creating a top with 'everyone' in silver, because nobody's in silver yet. In 2006, only $1 billion was spent on investment silver, which is 0.007% of the $13.5 trillion of money in the banks. As I have long reported, the silver market is so small, there is no room for new investor demand, not even 0.1% of money could be spent on silver, because that would be $13 billion, which would push silver prices to $200/oz., and we are seeing only the tiniest beginnings of that.

$13 billion would be almost enough to buy all the silver produced by the mines in one year, which would leave nothing for industry. It would essentially double demand, but supply would remain the same.

Furthermore, this is not a top because the public continues to get to the coin shops, and is now getting on waiting lists for silver. The public is not yet in, so how can the price drop?

This is a case of price fixing and manipulation, like communism. Sausage is reported to cost 1 link per ruble, but there is no sausage. Silver price is quoted, but there is little to no silver.

Shortages are evidence of price fixing. Price fixing results in shortages. They are price fixing silver at a below market price over on the paper exchanges in New York and around the world.

How long can it go on? Until people stop trusting the paper exchanges, which could be after they default and fail to deliver silver. Or we could see a severe backwardation, as people refuse to trust and buy futures contracts, which would thus sell at a discount to real silver. Then, the spot price will really go up, maybe about double or more very quickly.

Regarding Monex and Kitco:

Monex has a shortage of 100 oz bars and silver eagles. They say that they are 5-7 days behind on orders for 100 oz bars and at least 10 days behind on silver eagle orders.

"This message has been placed on KITCO's buying board in large red letters. TT

IMPORTANT: Due to the volatility of the market, we are experiencing a significant increase in the volume of products that are being sold to Kitco. Although Kitco and HSBC Bank are working hard to stay on top of this, you may experience a delay in your package being processed. We apologize for any inconvenience this may cause, and appreciate your patience and understanding."

bulliondirect says:

High Activity Market Alert
The precious metals industry is experiencing a substantial surge in activity which may increase the possibility of logistical delays; including customer service response time and product processing (incoming and outgoing). Our goal is to keep our prices competitive while still delivering an exceptional transaction experience.

I now have 4 pages of reports that I posted to my member's forum, from people saying that dealers around the world are out. Here is a summary of their comments:

Apmex out.
CNI out.
One in the UK.
One in New Port Richy, Florida.
Ebay is selling silver over spot.
Toronto out except overpriced Eagles and Maples.
Kitco in Montreal is out of Silver Maples.
Local shop in Victoria BC is out of all bullion.
Mexico City's "Consultoria casa de cambio" is out of bullion.
There is no silver for sale in eastern Canada.
Perth Mint is out.
A world class gold and silver bullion dealer in Dubai, Lakhoo Jewelry, is almost out.
Most Utah coin shops say there is a critical shortage of silver available for purchase in Utah.
(Johnson Matthey, the largest refiner, is in Utah!) , there where 637 Mexican Libertad still left. Now, two hours later: nothing.
We could not find silver in canada from two days now.
Conejo Coin and Stamp run out of 100 oz silver bars too.
I just cleaned out the last 25 oz. of silver at my local coin shop.
scotia bank told me that they have no silver for about 2 days now.
Camino Coin of Burlingame, CA says, There seems to be a silver shortage.
In the Detroit, Michigan area, very few coin shops have any, I got the last 2 bars at one shop.
Bulliondirect having trouble mostly with Silver Eagles and Canadian Silver Maple Leafs.
The US Mint has said they are out of silver eagles - at least for a few weeks.
Portland, OR, Alder Gold Exchange., just a few bars, bought them out.

The dealers in Vancouver are offering 100 oz bars at $1875 preorder, but we wont get them for months.


Paul Mladjenovic, author of Precious Metals for Dummies, said to me today, the following about the current price manipulation and shortage of real silver:

Outside of Oil, there is no other commodity with more diversified uses. Silver will probably hit $50/oz. within 3 years, and exceed its all time high on an inflation adjusted basis ($150-$350/oz.) and hit tripple digits by the early part of the next decade.

Everything has a natural and artifical price, and an artificial low price stimulates demand, and creates shortages, but the false appearance of plenty, which will blindside those in the paper markets.

Artifical intervention only works in the short term, whereas natural supply and demand forces always triumph in the long term.


I want you to be able to buy on this dip, and not be discouraged by sold out coin shops. This is why I asked people to report to me who had silver in quantity, ready to sell.

"If you don't hold it, you don't own it" (And can't sell it!)

Yesterday, Robert Mish was slammed by my mention of his shop in my report. Next time, he says he can only handle orders for $10,000 or more at one time.

Here are a few more sources: has silver available, up to 400 x 100 oz. bars.
Bulliondirect is like the ebay for large silver orders.
They do have 100 x 100 oz. bars available, in several categories.

But they now post a warning:
High Activity Market Alert
The precious metals industry is experiencing a substantial surge in activity which may increase the possibility of logistical delays; including customer service response time and product processing (incoming and outgoing). Our goal is to keep our prices competitive while still delivering an exceptional transaction experience.


FideliTrade Incorporated in Wilmington, Delaware is reported to have silver inventory available for immediate delivery.

is an NYMEX/COMEX and CBOT licensed and CFTC approved depository for silver.


Mike of Gulfcoast Coin and Jewelry (239) 939-5636, In Florida
1 800 465 3909
Keeps a large inventory of bullion and rare coins. 90% bags, .999 silver, is a market maker.
Sells gold at 1% over costs, silver at 3%.
Self-reported that he has 50 bags of 90% now. -- but others report he "drop ships" from other sources.


Jason, I was forwarded your blog regarding silver. I'm a major precious metal dealer and have sold 25,000 yesterday. I still have plenty left. We have been selling plenty of pure silver dealer to dealer at spot + .50 cents.
Don Herres
Bellbrook, OH

I was unable to confirm.


It was reported to me that:
In Austria, Europe, there are plenty of sources where you can get massive amounts of silver: - this is the largest smelter in Austria, with an office for individual, private party walk-in customers in Vienna and they have lots of silver bullion available all the time. Silver bullion is not too interesting for Austrian citizens, because they have to pay V.A.T. on silver bullion purchases - VAT is the European equivalent of sales tax.

But if any American or other non-EU-citizen purchases silver bullion and keeps the receipt, they get the VAT back at the airport when leaving the country.

You can also purchase lots of silver at Austrian banks and coin shops - no shortage here! And if you go for coins, denominated in any current currency and not bullion, there is no VAT to pay for anyone. The Austrian Mint is currently offering the Silver Philharmonic coin, weight is not metric, but in troy ounces, the coin is denominated in Euros, so no VAT to pay - and you can purchase tons of it! They distribute them through all Austrian banks.

Yes, metric tons of these coins are available now. .

Here is the specific page at their website:

Sources sent by the owner of:


Ross Hansen of NorthWest Territorial Mint emailed me:

Dear Jason:

We are not out of silver!

Northwest Territorial Mint produces approximately 20,000 ounces of silver per day, and ships 200 orders daily. A quick audit of our vault today showed more than 300,000 ounces of silver in the production pipeline, in finished and raw form. (You are welcome to come up here to conduct your own audit any time.) Contrary to reports, there remains an ample supply of silver coming from mines and refineries. There is no shortage of silver in the world.

What you fail to understand is that, like the U.S. Mint and the Royal Canadian Mint, Northwest Territorial Mint manufactures its own silver products. During times of extreme price fluctuation in the precious metals markets such as we are experiencing now, demand increases substantially. Since November, our sales have increased more than 300%. Because all mints have a finite manufacturing capability, this increase strains every aspect of our business infrastructure, from sales to manufacturing to shipping.

Unlike our smaller competitors who just resell used silver products, Northwest Territorial Mint sells factory-fresh products. While, in your eyes, our products should be shipped quicker (and we agree, and are expanding to meet this increasing demand), no one has ever complained about the quality of our products or any failure to deliver them.

With over 140 employees, Northwest Territorial Mint completed more than 69,000 individual transactions last year. The Governor of Washington named us Medium Private Employer of the Year. With an office in the Pentagon, we are the mint of choice for the U.S. military and numerous other governmental and corporate entities.

Because of the backorders created by current high demand, U.S. Mint and the Royal Canadian Mint have temporarily suspended shipments of their silver coins. Northwest Territorial Mint, while stretching its delivery times, is still shipping every day. Your inaccurate representation has generated numerous calls, taking us away from the important business of serving the people who buy silver from us.

And, yes, we expect that free advertising you are offering.

Very truly yours,

Ross B. Hansen

Northwest Territorial Mint
P.O. Box 2148
Auburn, WA 98071-2148
Direct: (253) 833-7780 | Toll-Free: (800) 344-6468
Fax: (253) 735-2210 |


Ross Hansen, I'm sick of hearing your excuses, and so are many of your firm's clients. I do very well understand that you are running a mint, one of the largest private mints around, you flew me out to see it, remember? I've never reported, and neither has anyone else, that silver is not being mined in sufficient quantity. And I don't care how long you ship, that's not the point.

The point is that you ought to tell people the truth about how long it takes you to ship! If it is going to take you 8-9 weeks, or 12-16 weeks to deliver, then report that at your web site so you are not so bothered by people who freak out about how long it takes. You will be able to keep your customers, have better customer relations, and it will greatly help your business to tell the truth. If you are telling people it will be 30-40 days, and it takes 2-5 months, you have a serious problem. And no surprise, people don't like it.

Furthermore, I will reiterate that the Washington State Attorney General logged 82 complaints against your company.

Furthermore, 26 people complained online here:

Furthermore, I received 18 complaints about Northwest Territorial Mint in the last 24 hours, which I posted to my member's forum, summarized below:

1. 1,000 oz of Canadian Maples, it took almost 12 weeks to get here!
I used to order another 1,000 ounces of Canadian Maples about 9 weeks after I ordered my NWT Mint silver, and the silver came before my NWT Mint suff!

2. I wire transfered the money to them on the SAME day I placed my orders. I ordered a 100.00 face bag of dimes on 2-05-08, from NWTM, and received them today. 3-19-08. That's about 6 weeks for delivery.

3. Last year I had LONG delays with my orders. One was delayed at least 2 months. It was ridiculous.

4. They were 3 months getting my order of 50 oz to me. This was about 1 year ago as well.

5. I ordered 500 Pan American silver rounds from NW Territorial Mint on Nov. 30th 2007. I sent them a check for $7,240 the next day. My coins arrived last Friday March 14th!!!!!!!!!!!!!!!!! (3.5 months, or 14 weeks.

6. I have given up hope with NWT Mint. I bought bars and coins from them 5 times, and sometimes I had to wait for many months to get my silver. Once, they simply asked if they could buy it back from me, and send me a check for the difference. I got so upset that I sent them emails for months, and apparently, they've done nothing to sort out their shortage issues. (I have a lot of emails between NWTM and myself, so I can support my claims in writing).

7. Ordered 100 oz. from them early Jan. due to deliver this Friday. Way too long.

8. Dear Mr. Hommel, I can also verify the poor customer service and LATE delivery over 6 months ago. It took them just about 2 months to deliver my silver from the time they received my check.

9. hello jason;
about 3 years ago bot some gold and palladium coins from n w mint....sent them 2 checks--one, 7k check was either lost or stolen.,,,after a number of phone calls to the firm, i got no answers, so i cancelled the check....i did receive my 2nd check coins, but weeks later, and only after repeated phone calls....did some internet investigation, and found one of the owners had a criminal record, so i'm not surprised you're having difficulty in dealing with n w mint

10. They delayed me way past the time alloted. I find them to be full of shit. When I started to complain 5 weeks after I was to be shipped their staff was rude to me. I eventually got the owner invoved. He even screwed up the order. I find them to be incompetent and would not do business with them again. I find most coin dealers that are large shady.

11. I had problems receiving an order about a year ago from NW the order did finally arrive BUT I will never do business with NW again.

12. My friend and I have been waiting on NWT Mint since Jan17th and it suppposedly just shipped out this week. So that's 48 work days or 64 days total and counting so far. So, guess it does average close to plus or minus 60 days. But We couldn't get anyone to answer our emails to them and no one would explain WHY it was taking so long.

13. My last (and I do mean last) order from Northwest Mint took 2 months to receive. I had to make numerous calls to finally get it. Never again.

14. I also had a bad experience, it took several weeks to get my silver (only 200 ozs). I never thought that I would get it at all after waiting a very long time. I was given all kind of excuses, I had paid right away with a certified money order, they still held the transaction to clear my money order. A certified money order should not have to go through a waiting period. I promised myself that I would never deal with them again.

15. Jason, I've been waiting over 60days now for my order. I was told on Monday that they had sent it out. I live in in Ontario Canada and getting more and more worried.

16. I ordered 1200 Oz. Ag from NWT mint on 11/7/07. Paid by wire so it cleared the next day.
Received said silver on 2/20/08. .......... 104 days after the payment cleared.

17. I purchased about 800 ounces from NWT mint about a year ago. It took 4-5 months to get my package. Talked with the owner, who claimed bullion was "only 20% of their business" and most of their production resources were tied up in time-sensitive government contracts (medals) for operation Iraqi Freedom. Well, they should either take down that 30 day delivery claim on their website and replace it with something accurate or stop selling bullion.

18. Jason, I ordered two 100-oz bars last August when it dipped below $12 & didn't get them until late November.

Ross, if you want the names of these people, email me, and I'll provide you with a username and access to my member's forum, so you can check your records, and deliver silver promptly. I hope you can buy all the silver you need on this dip, and I hope the sources I quoted above can help you locate the silver that you need to fill your orders. I'm just trying to help.


March 8, 2008

Howard Ruff: The Silver Lining

The Silver Lining: Part II

This continues Chapter 10 of my new book How to Prosper During the Coming Bad Year in the 21st Century. It completes the my last posting on the Kitco website.

Modern Usage

Silver is a ubiquitous and essential industrial metal with literally thousands of uses, many of which are irreplaceable. Jim Cook,President of Investment Rarities (800-328-1860), has recently listed just a few of silver’s thousands of modern uses, many of which are infinitesimal in amounts per unit, but multiplied by many millions of units, it’s thousands of tons of silver. (I can’t vouch for each one of these statements, but at least most of them are true).

Both rechargeable and disposable batteries are manufactured with silver alloys. Billions of silver oxide-zinc batteries are supplied to the world’s market yearly, including batteries for watches,cameras and small electronic devices,tools and TV cameras.

Steel bearings are often electroplated with high-purity silver. Silver solder facilitates the joining of materials. Silver-brazing alloys are used in air conditioning, refrigeration, power distribution, automobiles and airplanes.

Silver is of first importance to plumbers, appliance manufacturers, and electronics.

Chemical reactions use silver as a catalyst; approximately 700 tons of silver are in continuous use in the production of plastics.

Silver is essential for producing a class of plastics which includes adhesives, laminated resins for construction, plywood, particle board finishes, paper and electronic equipment, textiles, surface coating, dinner ware, buttons, casings for appliances, handles and knobs, packaging materials, automotive parts, and electrical insulation materials.

Silver is necessary for producing soft plastics used in polyester textiles. It is used for molded items, for insulating-handles for stoves, and for computers, electrical control knobs and Mylar tape(which makes up 100% of audio, VCR and other types of recording tapes). It is also used to produce antifreeze.

Silver is used in commemorative and proof coins around the world. There is wide silver use in silverware, jewelry and the decorative arts.

Silver is the best electrical conductor of all metals and is used in contacts and fuses and ordinary household wall switches. The use of silver for motor controls is universal in the home, and is even a better conductor of electricity than copper. All of the electrical appliances, timers, thermostats, and some pumps, use silver contacts. A typical washing machine requires 16 silver contacts. A fully-equipped automobile may have more than 40 silver-tipped switches.

Silver relays are used in washing machines, dryers, automobile accessories, vacuum cleaners, electric drills, elevators, escalators, machine tools, locomotives, marine diesel engines and oil-drilling motors. It is also used for circuit breakers. It is widely used in electronics, membrane switches, electrically heated automobile windows and conductive adhesives.

Every time you turn on a microwave oven, a dishwasher, clothes washer or TV set, you have activated a switch with silver contacts. The majority of computers use silver-membrane switches. They are used for cable television, telephones, microwave ovens, learning toys and keyboards of typewriters and computers and in prepaid-toll gizmos. These silver-containing , radio-frequency-identification devices will soon make an appearance, imbedded in credit cards and passports.

Silver is used in circuit boards and is essential to electronics to control the operation of aircraft, car engines, electrical appliances,security systems, telecommunication networks, mobile telephones and TV receivers.

Silver is used in windshields in General Motors all-purpose vehicles because it reflects some 70% of the solar energy. Every automobile produced in America has a silver ceramic line in the rear window to clear the frost and ice.

Silver plating is used in Christmas tree ornaments, cutlery and hollow ware. Because it is virtually 100%-reflective after polishing, it is used in mirrors and coating for glass, cellophane and metals.

A transparent coating of silver is used on double-paned thermal windows.

Silver has a variety of uses in pharmaceuticals. Silver sulfadiazine is the most powerful compound for burn treatment worldwide. Catheters impregnated with silver diazine eliminate bacteria. It’s increasingly being tapped for its bactericidal properties from severe burns to Legionnaire’s Disease to dressings for wounds.

One out of every seven pairs of prescription sunglasses incorporates silver. Silver-based photography has superior definition and low cost; it is still the biggest user of silver.

Digital photography is considered by many to be a threat to old-fashioned film photography, which at one time was the biggest user of silver, as digital cameras are becoming the camera of choice for millions of people. Ergo, physical silver use will decline in the film business, and that is considered by many to be a bearish factor. Kodak was at one time the world’s largest user of silver in manufacturing film. Because they used silver in every roll of film in the ‘70s, silver photographic use was touted as one reason for the silver bull market of the ‘70s.

There is a counter argument, and a counter, counter argument.

It is not generally known, but much of the silver used in film is recycled to be used again by the film companies. That is also true of silver in medical x-rays.

But more than offsetting this is the fact that silver is also used in glossy photographic print paper at Wal-Mart, Kmart and Costco and other supermarkets, for people to print out their digital photos, and that paper is never recycled. One of my daughters informed me that now that she has a digital camera, she takes 12-times as many pictures of the boys as she did with her old-fashioned film camera, and she usually prints them out.

But also, the film companies will still sell one-billion rolls of film this year.

Silver is widely employed as a bactericide and algaecide. A doctor friend of mine told me that when there is an open wound or big burns, a silver compound is used on the dressing. Silver ions have been used to purify drinking water and swimming pools for generations.

Silver ions in house frames help resist mold and mildew. Silver compounds are providing doctors with powerful clinical treatments against antibiotic-resistant bacteria.

I could go on and on, and I guess I already did, but that’s one reason why our silver inventory is under assault, and if Butler is even partly right, that could be one reason why silver is turning into the supply/demand investment of the century.

Will the growing assault on silver inventories trigger a switch to some as-yet-unknown substitutes?In some cases, probably yes. Copper can do some of the things silver can do, but copper is rocketing up in price in a solid bull market, and is becoming a more and more expensive substitute. Usually the thousands of silver uses are so small in each individual unit manufactured, that they are only a small part of the cost of manufacturing the units that incorporate it, so there is not enough incentive to change at these prices, but collectively, they add up to thousands of tons of silver.

Silver as Money

Silver has an important monetary role, according to economic history. One disagreement I have with Butler is that he has discounted the monetary role of silver.

Silver has been consistently used as money throughout history, even more than gold, but as I have said several times before, whenever paper money fails (every 50 to 75 years), the world is subsequently littered with useless paper currencies. That’s when silver is resurrected and comes back into its own.

For example, when the Chinese government fell at the end of World War II, paper currency became distrusted, but almost like magic, U.S. silver and gold coins became the currency of choice all across that huge, primitive country. Everyone knew what an American silver dime was worth. This held true until the Communists imposed a new “fiat currency” (one that is money just because the government says it is) and enforced it with the heavy hand of government.

Could that happen here in America? No one knows for sure, but that remote possibility is becoming less remote every day. That’s why you need some silver for insurance purposes, because the dollar’s fate seems to be sealed and delivered by our present rate of internal monetary inflation. Whether it will take one year, ten years or 30 years, I don’t know, but eventually the world will be littered with worthless paper dollars, and governments will be forced to go back to a gold standard to back a new currency. At some future time, silver coins will be minted again in massive quantities, and silver and gold will both reign triumphant over the world’s monetary system until we have a monetary system we can trust. I don’t know exactly how it will work, and probably nobody else does either, but for that reason, I repeat, you should buy at least ½ bag of junk silver (pre-1965 American dimes, quarters and halves) for your family, just for the silver content. This is not for investment (even though it will go up), but as an insurance policy against a possible inflationary calamity.

Silver always rises during gold bull markets, usually twice as far and fast as gold, but the supply/demand situation (ETFs and jewelry and industrial usage) dwarfs all other reasons why silver will soar in price, perhaps much more than twice as much as gold.

One other supply/demand factor that really matters is that COMEX, (The New York Commodity Exchange), which is by far the biggest commodity exchange in the world, has a monster silver futures exposure. Many of the “longs” have bought a silver contract from the shorts contracting for the silver, in the hopes that silver will be rising, and so will their contract. It can be settled either with a cash payment or by delivery of the physical metal. But a lot of the longs are silver users and need the metal and have only bought the contracts for delivery. They won’t settle for cash, but only for delivery, because they need the metal.

The “shorts” have sold silver they don’t have, assuming they will be able to buy it back at a lower cost in the future and thereby profit handsomely. They are pure speculators, betting that the price will go down so they can buy it cheap. Steadily rising prices are their worst nightmare.

The longs are even more dangerous than the shorts. Remember, for every long contract, there is a corresponding short. As silver has soared, shorting paper losses have mounted to billions of dollars.

I guess the short speculators never learn. That’s exactly what they did back in the 70’s, and when the Hunt brothers tried to corner the silver market and drove the price to $50, most of the governors of the COMEX were short, in effect betting against the Hunts. Their losses mounted day by day, and as they became more and more insolvent, their need to cover their shorts, either with cash or by buying silver to deliver, was way beyond their financial ability to handle. Technically the COMEX should have been shut down, as many of the shorts were governors of the COMEX, but this was unthinkable, as we couldn’t allow the world’s most important commodity exchange to close down.

Eventually they won the battle with the Hunts by, among other things, changing the rules to “liquidation only.” That’s when I decided to tell my subscribers to sell their gold and silver at $35 an ounce, before the $50 top, as when the elephants are fighting, we mice should scurry into the underbrush. Yes, it went to $50, but $2 to $35 is good enough.

This is similar to where COMEX finds itself today. But this time they are short so much silver, that if they had to buy enough silver to cover all their shorts, especially if the longs are silver users who need the physical silver for their industries (many are) and won’t accept just a cash settlement, that this could soak up as much as 100% of all silver production. Also, the short’s cash position is so dire, as their paper losses have mounted as silver has risen, that they won’t have enough money for a cash settlement. Sooner or later they will have to buy silver, and the stability price of silver could soon be above $100 an ounce (my best guess) in order to induce holders (you) to give up yours.

Silver is the investment of the century. It will move with gold, but further, as has already been demonstrated. Gold is up about 200%, and silver is up more than 300% over the last couple of years. We will eventually find that silver at today’s $15 to $20 is the bargain of the century. Silver and silver-mining stocks will be a license to print money.