The Phaserl


The Fragile Precious Metals Supply Chain

by Bill Holter, Miles Franklin:

We are now 3 weeks out from the paper massacre of the gold and silver prices. We immediately saw (as in THE first day) massive physical demand from all over the world explode as shortages and premiums in gold (and particularly silver) came about. The stretching of delivery (if even available) times and increases in premiums over “spot” prices came about from day one and so far show no signs of easing. “Is this the one?” Do the paper and physical markets separate from here further or do they converge again?

I obviously don’t know the answer to this and personally didn’t think that we could have time wise even lasted to this point but what is happening now shows just how fragile the supply chain really is. You can look at this from front to back or back to front to see the supply chain. The mines mine ore and then pour dore, the refiners refine the dore and then mint coins and bars, then the coin dealers get product and it’s sold. The problem is this; the mines only (in gold’s case) produce 2,500 tons per year. There are no recent “big finds” and have not been for at least 10 years or more.

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