Letter Re: COMEX Precious Metals Market Dips

Sunday, Apr 14, 2013

James,
Many reader may be stunned by the drop in COMEX silver prices. However, holders of physical silver need not despair. The price to obtain actual coins has hardly been affected at all.
Both Kitco and eBay testify to this:

On Kitco
, single silver eagles are now $29.10, or $4.15 over the Friday silver Comex close of $25.95 and a monster box of 500 eagles at $14,300 is still $28.60 each.

Kitco at present is not even listing "junk silver bags", they're just not available through them (sometimes this happens), but others are selling the $1,000 face value bags of 715 ounces for $21,403, or $29.93 per ounce. Wow! That is about $4.00 per ounce over spot! (Just before year's-end, Camino Coin was selling junk silver at $0.50 over! And that was at just a minimum purchase of $1,500 to avoid California sales tax!)

More telling however are eBay actual completed auctions:
Rolls of 20 Eagles are going for at least $645, and often over $650 or $660 a roll. At $650 that is $32.50 each.
And individual coins are even selling for up to $36.00 each. ($10 over spot!)

The divergence between the paper and physical markets is here and we can expect it to remain, and even widen.
No one who holds physical needs despair. The optics of the COMEX are for the sheeple.

Maybe a far-fetched notion, but with the bank raids on deposits in Cyprus as a precedent for the future of all, and PMs beat down on the COMEX, but the DJIA at record highs (nominal) a slightly paranoid outlook may be the central bankers are herding the sheeple of means from off the sidelines and back into the stock market. Meanwhile central banks stock up on gold and billionaires and corporations are quietly divesting of the market. Caveat Emptor.

Respectfully, - Douglas C.

JWR Replies: I still remember the angst that my friends and readers expressed back in October of 2008, when spot silver briefly dropped below $9.00 per troy ounce. (It had been over $19, in July of that year.) One SurvivalBlog reader even demanded an apology. But I held fast to my prediction, and time proved me right. Later that same month I observed that the COMEX market and the physical market had become disconnected. Some folks laughed at my "buy" advice, but thankfully most others heeded it.

Silver had slumped to $25.85, when I last checked. (Saturday, April 13, 2013.) Yes, that is down substantially from the high of $33.23, back on January 23rd. But look at the big picture-- look at the ten year chart. The current sell-off is another buying opportunity in a long term bull market. I've said it before and I'll say it again: Buy on the dips! In the long run, the U.S. Dollar is doomed. Invest accordingly.

Mark my words: In ten years we'll look back and laugh about the current metals market slump, and wish that we'd stacked more silver.


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