Search Blog Posts

Thursday, May 30, 2013

Severe Oversupply of Silver Liars - Silver Coin Bag Trading on COMEX

Most don't know or have forgotten that US circulated "junk silver" coins $1,000 bags used to trade on the COMEX in 5 bag lots/contract. I used those trades as my indicator for coin premium values vis-a-vis the bullion futures/options. The Commodity page of the WSJ reported daily. Maybe if someone had a paid WSJ subscription the archives are still there for the 1970s!

Charles Savoie did a yeoman's job of assembling the below factoid which runs for 217 benchmarks!

Severe Oversupply of Liars
Copyright August 2003 Charles Savoie

Butler’s reference to a Chinese official, Wujun Tang, as claiming China to have a “severe oversupply of silver” (reported by Dow Jones newswire on July 7, 2003) calls for an examination of the same source to see what has been happening long-term with world silver supply.  Dow Jones is the parent company of the Wall Street Journal.  

Let’s consider this source and the statements it’s made over a time frame of a generation, about silver supply.  The time frame I chose was 1961 through early 1980; lack of time disallowed a check of the past 23 years.  We keep hearing about being in the 14th year of a big silver deficit. 

As you will see, actually this deficit extends at least to 1949, as one of the references (#214) shows.  While you read these documented references, you might recall that on American supermarket shelves there used to be a drink called Tang, which was an orange powder mixed with water to produce fake orange juice.  Fake, like Mr. Tang’s claim about severe oversupply of silver in China!  To locate these shortage references, I reviewed the index to microfilm of the Wall Street Journal, 1961 through early 1980.  Shortage references cannot be found by only reviewing the index; the entire article must be printed and reviewed.  I may have missed some of these references in the review of hundreds of articles.  

 Many other references to a long term silver shortage undoubtedly can be found, including the Wall Street Journal, April 1980 through the present; New York Times; London Times; other dailies, and business magazines.  All references below except the first one are from the Wall Street Journal.  During this time frame, the only sources alleging a shortage wasn’t present were the Silver Users Association and a certain bullion bank in London still active as a partner to them, as we shall see.  As we come to the close of the long era of suppressed silver prices we may anticipate that the severe oversupply of liars will include voices other than that of Tang.  We have seen others in responses from CFTC, COMEX and Congress!  As the phrase I feel lucky to have coined has it, “silver is in danger of falling below the price of manure” (because of the severe oversupply, according to shorts and users)!
1) “It is clear that during 1903-1920 the demand exceeded the supply.” (American Review of Reviews, New York, November 1926, page 512, article entitled, “The Amazing Adventures of Silver” by J. Laurence Laughlin, Emeritus Professor of Political Economy at the University of Chicago, reference to India and China)
2)  “Predictions of a critical silver shortage in the near future.”  July 17, 1961 page 6
3)  “Use of silver has exceeded mine production for the past several years.”  July 17, 1961, page 6
4)  “Silver supplies fall.”  October 16, 1961, page 1
5)  “Supplies nearly exhausted.”  October 16, 1961, page 1
6)  “Near-exhaustion of the supply of metal.”  October 16, 1961, page 1
7)  “Fast-dwindling supply.”  October 16, 1961, page 1
8)  “The shortage” October 16, 1961, page 22
9)  “Declining supply of silver.”  October 16, 1961, page 22
10)  “The Treasury became a net seller of silver beginning in 1959, and sales since then have nearly wiped out the accumulated “free” Government silver.”  November 29, 1961, page 3 (“free” silver was metal not needed to back redeemable silver certificates.)
11)  “The consumption gap has been filled by imports, used silver and until now the Treasury’s stock of silver.”  November 29, 1961, page 3
12)  “World silver consumption has outrun production consistently over the past decade, with a gap of nearly 140 million ounces last year between production of 211 million ounces and consumption of 350 million ounces in the non-Communist world.”  August 20, 1962, page 20 (Note---this reference states shortage extends back to at least 1952!)
13)  “The U.S., the world’s largest consumer and second largest producer, used more than 159 million ounces of silver in 1961 but produced only 41 million ounces.”  August 20, 1962, page 20
14)  “The silver supply for industrial users is likely to be contracted further this year by copper production cutbacks announced last month by a major U.S. copper producer.  A reduction in copper production cuts silver supplies because two-thirds of the silver produced in the U.S. is a by-product of ores mined for copper, lead and zinc.”  August 20, 1962, page 20
15)  “Scarcity of silver” March 12, 1963, page 4
16)  “The silver shortage” March 12, 1963, page 4
Finish reading the benchmarks and commentary>>SILVER INVESTOR