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Silver shortage overblown…

So there are so many interesting aspects to the claims of shortages. First and foremost, if price discovery is in place, there is no such thing as a shortage, at least with respect to the market place. (Maybe users who cannot afford it within their constraints might call it a shortage.) Is it a free market? I sure don’t know.

So then you have the debates between the shortage crowd and those (such as at FSN) who say that there are plenty of 1000 ounce bars and that it is only the highly processed coins that are short. Now you get the following article dismissing the shortage as well…


I looked for Nadler’s name at the bottom and didn’t find it; he must be on vacation and they found a replacement. Curiously, though, I found the following sentence odd:

“CPM Group explained that the tightness comes from the fact that refiners do not make 1,000 ounce bars, rather they make something called “silver shot” – also known as grain, powder, flake and/or sponge – because of demand from manufacturers.”

Now they are saying the 1000 ounce bars are just a temporary tightness? Couple of sentences down they clarify this:

“One-thousand ounce bars in silver purity of 0.999, the good delivery grade, are plentiful, but they said there is tightness in the higher purity 0.9999 and 0.99999 for two reasons. One, investors are buying more metal and two, refiners would rather sell higher purity silver in sponge, not bars.”

Once again I find myself scratching my head: they say the highest grade stuff–so-called 4n pure silver–is short because of investor demand? I don’t know about you guys but I get past 2n-pure silver and I couldn’t give a damn. I even like the 90% junk silver for hoots. (Gets my collector juices flowing just looking at older coins.)

They go on to make the claim that “CPM Group said it has heard of only a specialized instance of actual supply tightness in the physical market.” What was that stuff in the previous paragraph? I feel like I am getting a reach-around.

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