Physical Graffiti

Is it every time I fall, that I think this is the one
In the darkness can you hear me call
Another day has just begun
--Led Zeppelin

We're seeing a big disconnect between the paper and physical markets for precious metals. Despite a 50% decline in paper silver since March, for example, dealer supplies of silver coins and bars are low. On ebay, I currently see rolls of silver eagles being bid at spot + $4 to $5, more than twice 'normal.' Gold coins are in similarly short supply.

What gives? I believe we're seeing forced liquidation in the precious metals (as well as all commodity) markets as speculators unwind leveraged positions. This has pushed futures prices lower. Retail buyers, sporting less leverage and more cash, are seeking to pick up physical metal at bargain prices.

Over time, physical demand should steer these prices.

My personal plan is to purchase some gold each month as long as price stays below $1000/oz. I like the value here.

I like to think of physical metals as pure tangible wealth that should not be traded. Rather, it is to be methodically accumulated at a deliberate pace, and then passed down to future family generations.

position in gold, silver