When The Global Silver Shortage Arrives… It Will Be Too Late

by Steve St. Angelo, SRSrocco Report

If you are waiting for a signal that a global wholesale silver shortage has begun, it will likely be too late to acquire physical metal.  Why?  Because it has never happened before.  So, when the world bond and stock markets finally collapse under a mountain of paper, leverage and debt, we will witness one hell of a GLOBAL RUN ON SILVER. 

When this occurs, individuals running to their local coin shop or calling a precious metal dealer on the phone requesting to “get sum silver”, will find out there are hundreds of poor slobs waiting in line before them.   Now, when I say “poor slobs”, I am not being derogatory here.  I am just using a term suitable for the masses by the banking elite.

Investors need to realize, this will be nothing like the 1979-1980 time-period when Americans stood in line to purchase silver as the price surged to $50.  We must remember, this huge silver buying frenzy was mainly focused in the U.S. and a few western countries.  Furthermore, most Americans had very little debt in 1980, and the total U.S. Retirement Market was only worth $1 trillion compared to $25 trillion today.

Orthodox Analysis Will Not Prepare You For What’s Coming

If we look at the chart below, we can see the failure of Wall Street and the Main Stream Media (MSM) to warn investors of the impending disaster in 2008.  In less than a year’s time, the U.S. suffered a collapse of the housing market, financial institutions and investment banks:

Collapse Charts SRSrocco

The once proud AIG – American Insurance Group, saw its stock price fall from a high of $1,155 (chart figure above is incorrect) in 2007, to a low of $25 in 2008.  Citigroup’s stock went from a high of $551 in 2007, to a low of $30 in 2008.  Even though Citigroup’s stock has gone up a bit lately, its current price of $55 is still 10 times less than its high reached in 2007.

You see, this was a market that went rotten virtually overnight.  Here’s another chart showing the same kind of slaughter:


As the chart describes, 98.81% of Bear Stearns value was lost due to bad bets that were leveraged via borrowing.  Did the markets learn anything from this mistake?  Of course not.  Companies are still borrowing money at near zero interest rates to buy back their stocks while the major banks are leveraged up to their eyeballs with massive derivative exposure.

So, this next financial and market collapse will make investors beg for 2008-2009 all over again. 

Retail Shortages Are Tremors For The Upcoming Global Silver Earthquake

In a recent article, Silver Doctors:  Wholesale Silver Shortage… Confirmed, it was stated that shortages were occurring in the retail and wholesale market:

•The Exclusive Distributor for the leading private mint 100 oz Silver bars in the US advised SDBullion on Thursday that the mint had been scheduled (and promised) to deliver 10,000 100 oz Silver Bars on Wednesday (1 million oz of a single private mint product), but was only able to deliver a little over 3,000 bars.

•The Royal Canadian Mint reportedly did not release a single 1 oz Silver Maple to any of the Authorized Purchasers SDBullion spoke to this week.
This comes on the heels of a severe issue with the Royal Canadian Mint’s production of 10 oz Silver bars.

New orders for Sunshine Mint 1 oz Rounds are shipping to dealers/distributors on a 9 WEEK DELAY! Nearly the end of October!!!

•The 3rd largest US wholesaler/distributor of precious metals with 21 warehouses usually stocked to the rafters with bullion advised SDBullion they have been CLEANED OUT.

Many readers responded to this article by saying a “Wholesale shortage only occurs when it takes place in the 1,000 oz silver bar market.”  Bron Suchecki from the Perth Mint also responded by stating in an article, Coin Shortage FAQs: Telling A Real Shortage From A Capacity Shortage:

Shortages of retail forms of gold and silver, which are anything less than 400oz gold bars or 1000oz silver bars, does not necessarily tell us about whether there is a real shortage/price disconnect in the wider precious metals markets. Retail shortages to-date have reflected a shortage in production capacity, rather than a shortage of wholesale gold or silver.

How can I tell if it is a real shortage, or just a production capacity shortage?

A real gold bank run will manifest itself in the wholesale markets for 400oz gold bars or 1000oz silver bars, so to identify a real physical-paper disconnect occurring you need to look at the premium above spot for 400 oz or 1000 oz bars.

Let me start off by saying, “I agree with Bron that a chronic wholesale shortage will occur in the larger 1,000 oz bar market.”  Bron goes into detail in the article describing how retail bar and coin products may be in short supply, but investors can still purchase 1,000 oz silver bars on the wholesale market without delay.

However, when the shortage makes itself shown in the wholesale 1,000 oz bar market, IT WILL BE TOO LATE FOLKS.  This is the problem.  And this is where I may differ with Bron on the present silver market situation.  While Bron and many others who say, “We need to see a shortage of 1,000 oz silver bars for a real shortage to occur,” unfortunately, this is a signal that tells us the SHIP HAS ALREADY SUNK.

Investors need to realize the market has suffered several retail silver shortages since 2008.  You need to understand that these were “Tremors” for the massive earthquake to come.  Who wants to wait for an earthquake to get prepared??  Folks, these huge spikes in retail (and minor wholesale) demand are blinking red lights and sirens going off warning of the major global silver run in the future.

Silver Has The Highest Concentration Of Short Positions vs Days of Production Than Any Other Commodity

This chart says it all.  According to the data found on Sharelynx.com, the top eight traders (COT Report) held a concentrated short position equaling 181 days of global silver production.  Compare this to platinum at 119 days, palladium at 95 days, gold at 65 days, copper at 10 days and oil at a paltry 3 days:

Short Concentration vs Days of Produciton

Basically, the top eight traders are short half a year’s worth of world silver mine supply.  That’s a great deal of leverage by these traders as the world enters into the next financial collapse.  I would imagine this leverage just might add serious fuel to the rising paper price of silver, as these traders experience one of the greatest silver short-squeezes in history.

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