Physical shortage developing: silver forward curve is close to backwardation (Mar 19th 2020)

[swissaustrian]

It seems that an actual physical shortage is developing in silver. Forget coin dealer spreads and premiums, thats just temporary adjustments because of their higher purchasing prices on current inventory and volatility. Coin demand has increased for sure, though: https://www.zerohedge.com/news/2020-03-18/massive-surge-physical-silver-buying-totally-distorted-broken-markets

BUT that is dwarfed by the big boys. The best indicator is the forward curve of futures prices. As soon as the spot price is higher than the futures prices (backwardation) we know that a systemic shortage is emerging. This has not happened in 10 years and after the last backwardation, silver rose to $49/oz.
Beware, though. It is on the brink of backwardation as of March 19th 2020. It is NOT there yet!
https://www.cmegroup.com/trading/metals/precious/silver.html

Also watch the commitment of traders for silver. If commercials (hedgers) are close to net long, then it will be time to buy. Again, we are not there yet, the commercial number should be (close to) positive. Please note that this data is usually delayed by about a week:
https://www.barchart.com/futures/commitment-of-traders/technical-charts/SI*0

 

[oyarde]

Spot is 12 , that's free if you can find it in physical. Only silver markets left are paper , coin shops or ebay .

 

[swissaustrian]

you can still buy everything here in switzerland, especially the standardized 1000 oz bars at very low premiums

 

[Okie RP fan]

Glad I got my order in last week.

 

[pmbug]

... then it will be time to buy ...

If you can find any.

 

[RonZeplin]

Couldn't help myself, bought some Cien (100) Peso coins this morning for $1.49 over spot.
https://monumentmetals.com/1977-1979-mexico-silver-100-pesos-avg-circ-asw-643-oz.html

.925 Sterling Silver - 500 oz Lot $1.99 over spot. As low as $7,110.75

Gonna pass on the silverware.

 

[pmbug]

Hey sa, how is the suspended production from the Royal Canadian Mint and big 3 swiss mints (Argor, Valcambi and PAMP) likely to affect physical inventories for or futures trading on the CME?

 

[RonZeplin]

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[swissaustrian]

Hey sa, how is the suspended production from the Royal Canadian Mint and big 3 swiss mints (Argor, Valcambi and PAMP) likely to affect physical inventories for or futures trading on the CME?

royal canadian is a buyer of mining supply, so that is negative.
but obviously refining (the 3 swiss companies are also refiners, not just mints) is processing of mining supply, so that is super positive (supply shrinkage)
about 1/4 of mining supply world wide is shut down, including Peru.