The Hump Day Hike ~ 11/05/2014
Today marks a monumental day in the physical silver market, at least one we have not seen in a couple of years. Not only did the US Mint suspend Silver Eagle sales, but wholesale premiums jumped considerably.
The last 3 months have shown a depressing price action in silver, namely a 25% decline. The decline has been steady, up until the last few days. I have been surprised that we have not seen an increase in wholesale premiums in the face the declining price. Well today the physical market exerted its force on the camel’s back.
At approximately high noon eastern time today the US Mint halted Sales of Silver Eagles. Wholesale premiums immediately jumped $0.30 per ounce. Upon release of the announcement demand only increased further and within another two hours dealer wholesale premiums jumped another $0.50 per ounce. By wholesale I mean large dealer orders of several thousand ounces of Silver Eagles.
This $0.80 jump in Silver Eagle wholesale premiums within hours is a massive shift. This is a very telling sign. We have not seen these premiums move in almost two years, since the early 2013 price collapse.
Both premium increases today were announced once the silver price had already bottomed. This means sales likely increased dramatically off the low, drying inventories, only to surge again in the face of the US Mint sales halt announcement. After personally witnessing today’s action on a wholesale level, I am closer to believing a bottom is in place, at least for physical. You may see $10 paper silver with no physical on the shelves. Time will tell, and it nears…