Bill Holter- You Think Premiums Are Big Now???
SilverDoctors.com
September 8, 2015
Premiums on silver over the past weeks have exploded!
You think premiums are big now???…
Submitted by Bill Holter, JSMineset:
Premiums on silver over the past weeks have exploded!
Generally speaking,
10-25%+ seems to be the norm and anywhere from two – six weeks delay for delivery. We have talked about the dichotomy between silver being panic “sold” and “shortages” occurring simultaneously. In a free market, this is an impossibility.
What I’d like to do today is get you to think forward or around the corner. If premiums exist today in what has been a declining market, what will happen in a rising market?
If we look at the move in 1980 when silver traded to $50, what was the backdrop? There was actually more silver above ground (we still had Manhattan project silver as supply) and the uses were far less than they are today. Also, the amount of debt, money supply “people” with a living standard high enough to buy silver were much smaller than today. Debt and money supply have risen maybe tenfold and those with the ability to purchase silver around the world has at least doubled, maybe even tripled.
If there are currently very high premiums for real metal, is this a function of low prices? The answer is yes and no. (I am not hedging as you will soon see). Premiums are a function of real demand being greater than real supply. The premium has risen presumably because the gap between supply and demand is widening and sellers are less willing to let go of product as the price approaches zero.
Now, what would happen to premiums if the same supply demand dynamics were applied, but rather than the price declining …it was rising? In a rising market, buyers will pay a premium out of fear! This fear will arise not only because other assets are crashing around them but because owners of fiat don’t want to be stuck with something worthless. The other side of the coin, the supply side, will also be a source of fear. “Fear” of metal going “no offer” (which it will) and having no exit door at all!
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