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Physical Gold and Silver Supplies Are Tighter Than Reported ~ Patrick A. Heller
January 28, 2011
Issue 92
Issue 93

Physical Gold and Silver Supplies Are Tighter Than Reported
By Patrick A. Heller

There are two main markets for trading gold and silver: the London Bullion Market Exchange and the COMEX in New York. London by far has the higher volume. There are other exchanges elsewhere in the US and around the globe, but large traders tend to buy and sell in these two markets.

The London market is supposed to be for purchasing contracts for delivery of the physical metal at the maturity of the contract. In theory, there is supposed to be enough physical gold and silver in the London vaults to fulfill 100% of the outstanding contracts. This has not been true for some time. At the Commodity Futures Trading Commission March 25, 2010 hearings on gold and silver regulations, both Jeffrey Christian and Adrian Douglas testified that the London vaults only have enough gold and silver to cover 1-3% of open contracts.

The COMEX, in contrast, is more meant for the trading of paper contracts by investors who do not want to take physical delivery (although they can). The COMEX warehouses only have a fraction of the physical gold and silver that would needed if all long positions demanded delivery of physical metal at contract maturity. Realizing this potential problem, the COMEX allows contracts to be settled for cash rather than the commodity. Gold and silver contracts can also now be settled, at the option of the seller of the contract, with shares of exchange traded funds for the same metal.

In normal commodity markets, the price of future contracts trade at higher prices than those maturing this month. The price difference normally reflects the prevailing interest rate minus a bit for the cost of storage. This typical market order is called contango…

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Traditional Tea Party Rounds             

We are now offering the Traditional version of the Tea Party Rounds. These are high quality, highly polished bullion rounds and are available for sale now at Silver & Gold Shop.

Special Orders____                              

For those wishing to purchase quantities of 100 rounds or more, we have the ability to do custom divisible coins with the following Obverse designs: Morgan, Buffalo, Walking Liberty, Honest Value & Constitution. Custom Special Orders require payment via wire transfer, and are priced at discount. We suggest that you collaborate with friends and relatives to do a group order so you can take advantage of the special pricing and custom minting. Please call or email us if you want to take advantage of this opportunity.

New Shipping Policy                               

Since the 2010 holidays, we are seeing an increase in delivery incidents with our shipping vendor. For this reason, all FedEx shipping will be requiring ‘Indirect Signature’ upon delivery. Indirect Signature can be obtained from anyone at the delivery address, a neighbor, HOA manager, etc. This is not meant to present an inconvenience, but to ensure that if a loss occurs, it will be covered by the shipping vendor.

Quote of the Week                               

"If you want to remain slaves of the bankers and pay for the costs of your own slavery, let them continue to create money and control the nation's credit."

- Sir Josiah Stamp [1880-1941]   

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