Silver Bar Premiums Rise To Highest Level In 9 Months

Retail investors have been selling back silver at higher than normal levels over the past year, which had left local coin shops burdened with excessive inventory. That helped to keep premiums low. 

Although in the past 3 days there's been a substantial change in silver premiums.

Matt Reilly of EF Bullion reports that wholesale premiums for generic bars have risen from 10 cents to 50 cents in the past few days. A level he says premiums haven't reached in at least 9 months.

We also talked last week about how Matt has been seeing silver coins and bars melted down into investment bars that are being used to meet industrial demand. Which makes it even more interesting to see the change in premiums.

Later this week we'll examine whether the bulk of the retail selling has already occurred. But the premium increase is worth taking note of, as we've seen several periods since 2020 where there's been a surge in demand, that's driven premiums higher for extended periods of time.

In some cases significantly higher, such as when American Silver Eagles were trading as high as $18 over spot in 2022.

Keep in mind that a shortage of a particular retail product is different from an outright shortage of physical silver needed to make those products. But with the election, the Fed's rate cuts, and the BRICS meeting still on deck this year, it certainly wouldn't be a surprise to see another surge in premium levels.

(Miles Franklin Precious Metals CEO Andy Schectman Talks About The Recent Changes In Silver Premiums)

Miles Franklin Precious Metals CEO expects that to eventually occur. Especially with China, long a net exporter, and the world's second-largest silver producer, recently becoming a net importer. Meanwhile the silver market remains in a deficit, and there’s also the looming possibility of a shortage if the current dynamics don’t change.

Additionally, with gold recently soaring to new all-time highs, silver still has a bit of catching up to do. Especially with the gold to silver ratio currently at 86 to 1, while the ratio it’s coming out of the ground at is 7 to 1.

Of course we'll keep you updated in our column here over the weeks and months ahead. 

Source: ArcadiaEconomics.com

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