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19 January 2011

Silver Shortage Rumours

Rumours of Silver shortages help white metal rally

Rumours of Silver shortages circulated in the market yesterday, which in itself is not particularly unusual except for the fact that they were even picked up in a blog post by FT Alphaville which may or may not indicate a little more gravity than much of the talk that circulates day to day.

At BullionSupermarket, we are seeing a tightening of silver supply, again particularly so within the UK territory. Reduced availability of silver bullion coins, lead by lower than usual availability on Silver Philharmonics has seen premiums squeezed higher even on 500 ounce lots of Silver and above. In smaller lots around the 20 troy ounce mark, premium difference between the US at around 21%, and UK at around 63% has become startling. At the larger end of the scale fixed price lots of 2000 troy oz Maples are asking for a 14% premium in the US compared to a 34% premium in the UK.

The level of duty which imported Silver from the US attracts, in comparison to Gold, which can be imported without duty, is seen as a major factor in the huge variance in premiums. However the unusually wide variance in premiums would indicate that shortages are perhaps more than just rumor.

Fixed price 10 oz Silver Bars in the United States asking a 34% premium over the Silver Price, while the same 10 oz Silver Bars in the United Kingdom were priced at some 57% premium.

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