Last week saw the market lose yet another major producer to the COVID virus. The United States Mint, North America's largest producer of gold and silver bullion products, announced the closure of its West Point, New York facility on Wednesday, due to concerns for their workers' safety. The closure throws yet another wrench in the industry's already fragile supply chain. And the timing couldn't be worse; in March, the US Mint sold more 1 oz Gold Eagle coins, its staple product, than it had in over 3 years.
The impact of the US Mint's West Point facility closure, combined with the ongoing shutdown of the Royal Canadian Mint and other refineries, means premiums for their products and those produced by secondary producers, will continue to rise.
US Mint 1 oz Silver Eagles are now selling at a premium upwards of $7.50/oz over spot or nearly 50% (and higher in some cases).
Thankfully, there is some relief in sight. PAMP Suisse is delivering 1 oz gold bars at reasonable premiums and other 'deals' do exist, including 1 oz silver rounds and 10 oz silver bars. Speak to our traders for product availability and cost.
Is The World Running Out of Gold and Silver?
Over my career, I've noticed that some industry media and commentators like to hype gold and silver shortages at times like this. The threat of the world running out of gold and silver makes for an exciting headline, but in fact, it is very misleading.
The fact is that there is plenty of gold and silver available in the form of raw mine output, unrefined metal and secondary market products like recovered scrap metal and jewelry.
All of this metal will eventually find its way into the form of finished bullion products if the market demand continues to justify it. As precious metal prices continue to rise based on demand for investment grade bullion, the mines, refineries and the general public selling their old silverware and jewelry, will provide the supply necessary to meet demand and production will eventually catch up.
The challenge that we face at the moment is that recent demand surged so quickly it resulted in a formidable gap in the supply chain that will take time to resolve, compounded greatly by the COVID viruses' disruptive nature.
So to all those out there that claim the world is running out of gold and silver, I say to you, 'fake news'!
Understanding Precious Metals Better
On the subject of providing factual information, we've just published two new videos as part of our Inside The Vault series on YouTube. Both episodes are designed to educate investors on subjects that are fundamentally important when investing in precious metals:
Premiums, Discounts and Total Spreads Explained
Fully Segregated vs. Allocated vs. Unallocated Storage Explained
Enjoy these educational videos. Until next time, be well.