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Gold and silver premiums surge

Thom Calandra
0 Comments|April 23, 2013

Public paying 30% on coin purchases

Tiburon, California -- Andy Hoffman at Miles Franklin in Denver created a chart to show how much folks are willing to pay extra for so-called junk silver -- roughly 90 percent silver, the silver found in older (pre-1964?) USA quarters and dimes, half-dollars and so on.

Richard Nachbar, a former coin dealer in western New York state who does other transactions these days, tells me as well "the American public wants silver."

Our TCR is not going to retread the "physical" quizzicals that are rolling across the Internet right now. (Hong Kong sold out of this; Canada-waits for Maple Leafs are out the door that; and so on ad inf.)

Andy, a former colleague from and Torrey Hills Capital, the publisher of this website, created the chart last week using various sources. Miles Franklin is a bullion dealer.

His chart shows a single week. If you are purchasing silver (or gold), in coin form, today, you are paying 30 percent premiums, or you are waiting a week to three weeks for delivery. Or both.

I hold to the notion that Central Fund of Canada (CEF and TSX: T.CEF.A) is an economic way to purchase gold and silver, more or less at par right now. The fund trades just below its net asset value, if we are reading the chart correctly. I bought some the other day at lower prices.

Stefan Spicer (J.C.) tells me that all of Central Fund’s, Central GoldTrust’s and Silver Bullion Trust’s gold and silver bullion bars have been purchased and delivered directly from Canadian based refiners who are on the LBMA’s good delivery list "... other than a few silver bars that have been delivered directly from one of Johnson and Matthey’s northern U.S. refineries to the Regina vault due to logistical issues."

CEO Spicer says the CEF complex in Ottawa conducts semi-annual physical inspections of the bullion with Ernst & Young "and we plan to continue this verification practice into the future."

I throw this in there to keep TCR family members and readers of BabyBulls who want a quick fix on their physical. If our TCR thesis is correct, the day that gold and silver rocket is the day the CEF premiums start rising thickly, as they have done many times since year 2000.

The TCR view holds to a rising probability the gold price will approach $2,000 an ounce in coming weeks.

Note: Try to track down what extra-large shipments of LBMA bars sell for these days. Dare you. It is an over-the-counter market: the exchange of jumbo-sized bullion lots. Probably $100 million and more per trade. I have queries into the London Bullion Market Association and others.

Sizing up what kinds of premiums are attached to jumbo bullion shipments this month will be difficult to confirm and re-confirm from several sources.

That is it for now. Except: today I bought another 80,000 shares of Golden Valley Mines (TSX: V.GZZ). The prospect generator in Quebec owns 60-odd percent of Abitibi Royalties (TSX: V.RZZ), which almost surely will start dividend-ing NSR income that it starts to get from the Osisko venture it has at Malartic in Quebec. RZZ is tough to buy; GZZ thus far is not -- at 6 cents.


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