Tag Archives: Provident Metals

There’s A Supply Problem In The Silver Market

We’re seeing more buying interest than at any time since the 2008 financial crisis. If we see a further spike in demand, the whole supply chain could be cleaned out. – Money Metals Exchange LINK

I spent a lot of time discussing the Provident Metals situation with my friend on whom Provident defaulted on delivery of the 10 oz RCM bars.  It’s not Provident’s fault per se, other than the fact that they took his money for a bar that they represented as being in stock.  Instead, Provident was waiting for the delivery of the bar from the Royal Canadian Mint.

In the past after 2008, pre-selling silver that was presented as “in stock” but was on order from the U.S. or Canadian mint was not a problem.  Supply of silver blanks was adequate.  It’s not a problem til it’s a problem.  And now it appears to be a problem.

Provident made the situation worse for itself by using the old “the dog ate my homework” excuse when it stated that it had an internal inventory problem.  That excuse is an insult to the precious metals audience.   This segment of the market is not the CNBC audience.

An now we have unintended consequences of the U.S. Governments effort to drive physical gold and silver out of the system:

Public demand for gold and silver coins, rounds, and bars suddenly skyrocketed since mid-June – particularly among first-time customers – to multiples of earlier demand levels, according to Money Metals Exchange, a national precious metals dealer in the U.S.

From June 16 to July 31, Money Metals Exchange experienced a 135% surge in gold and silver sales over the prior 45-day period (which was representative of the early months of 2015). Since June 16, the number of first-time customers rose even more dramatically, with 365% more new purchasers than the prior period.  – ( Mac Slavo’s SHTFPlan.com as sourced from Silverdoctors.com)

Not only is retail mint demand spiking up to the extent that it’s depleting the ability of western mints to provide enough supply, but Indian demand for gold was unusually strong in July:

There is growing speculation that around 80 tonnes of gold may have been imported into India in July – though this will not be confirmed until the first official estimates are published mid-month.

If confirmed, the number would be nearly double initial market expectations of 40-50 tonnes. In July 2014, official estimates valued gold imports at $1.8 billion – which at the time equated to around 43 tonnes.  – Fastmarkets.com

Furthermore, massive deliveries continue to flow into the Shanghai Gold Exchange, as delivery volume Monday was “an immense” 85.5 tonnes, which followed Friday’s 45.6 tonnes (sourced from John Brimelows “Gold Jottings” report). As JB ominously states: “Something is happening in China.”

When I first started looking at the precious metals markets in 2001 – and all of the related geopolitical and economic issues connected to gold and silver, aka real money – I was intrigued by GATA’s assertion that eventually the demand for physical gold that was required to be delivered to the buyer’s possession would eventually blow up the paper gold/silver manipulation scheme.

While it’s taken a lot longer than any of us could have possibly predicted as I don’t think any of us foresaw that extreme degree of fraud and corruption that has been allowed to completely engulf the western political and financial systems, I believe that we are on the cusp of Bill Murphy’s “commercial signal failure.” This occurs when the bank manipulators are unable to fulfill paper gold and silver delivery obligations and the price of physical gold and silver completely disconnects from the fraudulent paper prices set on the Comex and the LBMA.

Provident Metals Defaults On Delivery Of RCM 10 oz. Bars

Just remember, when it comes to buying and claiming ownership on gold and silver bullion, possession isn’t 9/10ths of the law, it’s 11/10ths of the law.  – Investment Research Dynamics

A good friend of mine scraped together $150 and sent a check to Provident Metals in order to buy one of the Royal Canadian Mint 10-oz bars they were advertising as being in stock. He used Provident for the time ever because they advertised the lowest premium on this bar.  He was told by Provident that he had to wait until his check cleared and then wait another five days before they would process his order.

I can understand the first requirement but I knew something didn’t smell right when he told me the second condition.  So up to this point they’ve had his money for about 10 days and have not processed his order or sent him an update.

Today – ironically one day after he told me the above story – he gets this email note from Provident:

The Royal Canadian Mint has suspended RCM 10 oz Silver bar sales indefinitely. Due to a sudden surge in demand for RCM products, there has been an unforeseen production and allocation error by the Royal Canadian Mint. We will not be receiving our shipment of RCM 10 oz Silver bars. This coupled with an internal inventory discrepancy has effected a few of our customer orders. We have been working diligently each day to secure RCM bars through various sources for our customers at any cost. Unfortunately, we were unable to fulfill some orders, including yours.

We are committed to each of our customers, and we would like to discuss with you how to reconcile this dilemma. Please call our Customer Service Department (800-313-3315 option 4) at your earliest convenience.

I highlighted the section in red and underlined it for point of emphasis.  That is a pile of bullshit that Provident has served up to people who prepaid for these bars.  They took money in and pre-sold bars they did not have in inventory after representing that they did have them in inventory.

While this part of the story is extremely interesting and everyone needs to be careful about sending money to any online bullion dealer – especially after the collapse of Tulving and the very recent collapse of Bullion Direct – the more interesting part of this story is the RCM suspension of production and sales of the 10-oz bar.

Why has the Royal Canadian Mint suspended production of a silver product that has a lot of demand but they have not suspended production – yet – of silver maple leafs? Because suspension of 10 oz bars doesn’t make news but suspension of 1 oz maple leafs does make news.  They stopped the bars because they can’t get ahold of enough refined silver to make both.

There were no news announcements like there would have been if the RCM had suspended sales of maple leafs.  The only reason I knew about this is because Provident defaulted on delivering the bars to prepaid customers.

This gets to more serious issue.   At some point there is going to be a severe shortage of available silver in all forms.  Bill Murphy’s source in London is right when he warned about rumors circulating around LBMA traders that there was going to be a serious shortage of silver at refiners this fall.

Retail demand is starting to go parabolic.  APMEX today sold 100,000 silver eagles in 5 hours.  They have announced on their website that they are out of stock of the “random year” 1 oz silver eagle coin product – click to enlarge:

APMEX

My bet is that the U.S. and Canadian Governments have directed their mints to do whatever is necessary to keep producing silver eagles and silver maple leafs. But they will not be able to contain the wave of demand for gold and silver at the retail level:

Bullion coin sales soared for a second month in a row, U.S. Mint figures for July show, with American Gold Eagles the highest in 2-1/4 years and American Silver Eagles the best since January despite a nearly 3-week suspension in sales.   CoinNews.net

Not only that, but India’s demand for gold is accelerating as we enter India’s largest buying seasonal buying period in a couple weeks: Gold imports up 61% at 155 tonnes in April-May – LINK

And we know that deliveries of gold into the Shanghai Gold Exchange is starting to go parabolic (see my post from August 6th – LINK).

The manipulation of the price of gold and silver is starting to show serious unintended consequences. There is a serious shortage of available bullion coming at us and the first sign of this is the email notice above my friend received today.

As I told my buddy:  from here on out, if you want to make 100% sure that you will get the bullion you pay for, take the $150 you should be getting back from Provident and go to a local coin dealer with cash and buy from him. At least you will have the bullion in your pocket at the same time you tender payment.