Silver Shortage Or Not? That Is The Question, Paper Silver Vs. Silver Bullion - Gold Prices

Jan. 28, 2013 - PRLog -- Many of the gossips talk about the connection between physical silver-actual silver bullion-and paper silver, which is the silver that exists just on paper in the form of exchange-traded funds (ETFs) or futures contracts. How High Will Silver Go? Learn More >> http://www.silver-dollar-values.xtz.cc

A few market observers have speculated there isn't enough physical silver currently available to make delivery to all of the owners of silver futures, which would result in a "default" through the Comex where the silver contract is exchanged.

This would be a major interruption to trading in silver, gold and other hard commodities. The actual price of physical silver, gold or other contract deliverables might spike higher until there is enough of the underlying commodity to fulfill demand from the futures marketplace. But is this likely to occur? According to Kitco, a major London-based bullion agent, this is not likely at all.

Kitco Senior Analyst Jon Nadler at Kitco stated in a video interview that there are 207 million oz. of surplus silver overhanging the actual markets. "...It's pretty sizable and it is a quantity which needs to be absorbed in one way or even another either by ETFs or even by physical purchases or else we'll have a price problem." Rare Coins, Silver Coins, Gold Coins >> http://www.silver-dollar-values.xtz.cc/SELLING-GOLD/

Referring to the suspended sales of U.S. Silver eagle coins, Nadler said,"...there is absolutely no shortage of material to create these types of coins. It's just a question of fabrication capability."

What does this mean with regard to silver prices? Clearly, silver has been in a lower trend since rising above $48 an oz back in the spring of 2011. From today's price of $31.18, silver appears to be in a fairly narrow trading range from support around $30.75 and opposition in the area of $32.50. This particular price action would seem to confirm Nadler's declaration that there is still a lot of silver overhanging the market.

Yet, as the bulls will explain, new silver production has been moderate because of the lower price and, with deals such as HSBC's purchase form KGHM, it is only dependent on time before the surplus is worked off and prices start to rise once again. Silver bulls also cite increased commercial production in China as a reason behind higher silver prices. Our recommendation is to buy silver and gold today while the prices are in dips. How High Will Silver Go? Learn More >> http://silver-dollar-values.xtz.cc