Across the country the general sentiment is that dealers have begun to lower their spot premiums in light of the fact that more and more individuals are offloading their gold and silver stockpiles.  Silver especially has seen a major up-tick in private party to dealer sales, and spot premiums are coming down, albeit very slightly, but they are certainly on their way down.  All of the incoming silver is beginning to flood some dealers’ inventories and if forcing them to question whether people are deciding that now is the time to get out of the metal or if something bigger is happening. 

Instead of selling as a necessity, many individuals are selling now because they have to.  Perhaps they have lost their jobs or are working less and they now need to supplement their income more than ever.  The sheer volume of sales has indicated that a silver shortage might not be that far off, so jump into the metal while the premiums are still low and it’s sitting at less than $13 an ounce.  It’s almost impossible to think that silver could, even in the very near term, drop below the $8-9 an ounce mark, since many mines and miners would be out of business if it ever fell that low again for an extended period of time.

Without polling each and every person who is offloading their silver to dealers nationwide, it’s very tough to say whether times are just tough for people and they need some extra financial liquidity or there is a general feeling that silver has hit its peak.  The latter statement doesn’t tend to hold very much merit considering the fact that world demand for the metal has fallen sharply in the wake of decreased industrial demand.  Right now, the world’s largest consumer of silver, China, has recently announced it will be building its precious metals reserves up in the near to mid term, and many of the countries silver consuming industries have slowed down or stopped production entirely.  Get ready for the whip to crack when industrial demand increases and there are less and less people holding silver as the demand begins to snowball once again.

Adding to the idea that silver may soon begin a climb upward is the fact that SLV, the world’s largest silver ETF, has not found a new custodian.  As of last Friday, SLV had not filed with the SEC to name a new custodian for their fund, giving the impression that SLV will have to continue to hold more silver than they previously had intended to, creating a surplus in the short term.  This surplus could quite possibly also stem from private parties wanting, or more likely needing to sell the silver nest egg they have been building for years, perhaps decades.  Never before have we seen such an immediate increase in dealer supply while at the same time staring an imminent demand increase dead in the face.  It’s a great time to add some silver to your investment portfolio since may of the facts mentioned above point to a bullish outlook on the white metal.