FUD Update
In the FUD blog of 31 August, I suggested two scenarios. I was leaning more towards scenario 2, which was that Mints/Refineries would gear up in “a few months” (fact is industry bar production in sizable quantity is not like turning on a tap) and meet retail demand.
With the credit crisis becoming hot topic since then, scenario 1 (retail market going nuts) is happening quicker than I expected. Manufacturers will respond to this, but it will take time. But, if the retail shortage continues and starts to register on the general public's mind, combined with uncertainty about banks and holding cash, the fact is that after years of poor gold prices in the 1990s, as a whole the industry does not have the capacity to meet the sort of volumes that would from mass market/general public interest in coins and bars. Premiums above spot (and spot means, by definition, the price for wholesale 1000 oz silver and 400 oz gold bar) will increase dramatically as a result. Scenario 1b then becomes a possibility.
See this SilverAxis blog for some comment on the retail market situation.
I would also recommend this other blog from SilverAxis on the US Monetary Base.
With the credit crisis becoming hot topic since then, scenario 1 (retail market going nuts) is happening quicker than I expected. Manufacturers will respond to this, but it will take time. But, if the retail shortage continues and starts to register on the general public's mind, combined with uncertainty about banks and holding cash, the fact is that after years of poor gold prices in the 1990s, as a whole the industry does not have the capacity to meet the sort of volumes that would from mass market/general public interest in coins and bars. Premiums above spot (and spot means, by definition, the price for wholesale 1000 oz silver and 400 oz gold bar) will increase dramatically as a result. Scenario 1b then becomes a possibility.
See this SilverAxis blog for some comment on the retail market situation.
I would also recommend this other blog from SilverAxis on the US Monetary Base.
Comments
Post a Comment