Today (Tuesday, April 16) Tulving reported 29% of its bar and coin bullion categories sold out and had almost no silver coin stock. The premium over spot on new gold eagles was $63.95. At large online retailers the premium was $71. Gainesville Coins has no silver Buffalos and lists shipment of orders to commence when coins are available, estimated to be May 10.
What I am reporting are facts, not a theory. We have just had two days of massive sales of paper claims on bullion, but during these days when the price of gold and silver collapsed under short sales, it was difficult to get your hands on the metal itself. On telephone orders you wait in long queues to place an order and are told that delivery awaits availability.
The physical bullion market, gold especially, is dominated by Asians. Americans are a minor player. Most Americans still believe in the almighty dollar, but few Asians do. The Chinese tomorrow would dump their two trillion of US dollar-denominated assets and purchase gold, except that the action would drive down the dollar and drive up the gold price. So, unlike the orchestrated attack on gold, China plays a slow hand, using the orchestrated attack on gold to acquire the metal at lower prices.
As I understand it, the open interest or future contracts on COMEX greatly exceed the bullion available for delivery. This is a paper market mainly settled in cash, not by taking delivery. If the contracts had to be settled in bullion instead of cash, the COMEX would fail.
One advantage of growing old is that one gains perspective. I remember when gold was $35 an ounce and silver $1 an ounce. If memory serves, until sometime in the 1960s, a person could still take a a paper dollar to a bank and be given a silver dollar. There were $1 dollar and $5 dollar silver certificates (paper money) that circulated along with Federal Reserve currency. At that time banks did not differentiate. A dollar was a dollar. Silver certificates today have collectors' value, but the Federal Reserve currency does not.
If memory serves, sometime after 1966 if a person presented a silver certificate to a Federal Reserve Bank, he received one or five ounces or raw silver in return depending on the denomination of the certificate, which looked like a Federal Reserve note except it said Silver Certificate. I have some of these envelopes of little pieces of silver.
When silver was taken out of US coins in the 1960s and copper was taken out of the US penny in the early 1980s, despite my opposition as Assistant Secretary of the US Treasury for Economic Policy, all real constraints on fiat money were removed.
These Fed purchasers are at the expense of savers and CD and bond purchasers who receive a negative real rate of interest.
Now, to protect its bank rescue policy, the Fed is attempting to drive down the price of bullion, thus depriving Americans of any way of protecting their life savings from the inflation that the Fed's money printing will ultimately cause.
Save a handful of corrupt banks, screw the American public--that is the Fed's policy. Like almost every other American institution, the Fed represents the mega-rich.
Anyone with open eyes can see that it is impossible for the US dollar to maintain its current exchange value and role as world money when its supply is being increased by $1,000 billion per year while the world is ceasing to use the dollar for international payments.
The attack on gold is a desperate attempt to protect the US dollar from the Fed's policy of quantitative easing. But the attack on bullion has apparently failed. The price was driven down, but the demand for physical possession has hit new highs.