by George Resch, August 20, 2008
In recent days, the gold and silver markets have been in a turmoil. Many of the
products that had been actively traded
– Silver Eagles; 1 oz., 10 oz., and 100 oz silver bars – were unavailable. The United States Mint announced that they were discontinuing
the minting of 1 oz. American Gold Eagles. In addition, the premiums on those
products still available jumped dramatically. These events have retail
customers and dealers scratching their heads in disbelief.
We decided to check with the Dean of Bullion Dealers, Burt Blumert, (now
retired), what he made of these markets. Burt said that looking back 50 years
he could not recall on instance of premiums jumping so quickly in the absence
of some dramatic external event. He went on to say that this market had all the
earmarks of a few super massive purchases of physical products
“for delivery.” Such massive orders – 50,000 oz. plus – are usually handled as “paper transactions” with the buyer never taking actual delivery of the material. In this instance
it is likely that the merchandise was actually taken possession of.
If this is the case with higher metals prices, we should see merchandise flowing
into the market, and hence premiums receding to lower, earlier levels.
