The Rest of the World Learning About Physical Shortages of Silver and Gold!
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February 2021, Volume 27 Issue 2 Liberty Coin Service’s Monthly Review of Precious Metals and Numismatics February 3, 2021 The Rest Of The World Learning About Physical Shortages Of Silver And Gold! It seems like the year 2021 has already 2021 Year To Date Results Philippines Peso -0.4% brought forth a year’s worth of financial Through February 2, 2021 Taiwan Dollar -0.5% and political turbulence. Unfortunately, China Yuan -1.1% Precious Metals there is almost another eleven months to U.S. Dollar Index 91.189 +1.44% Platinum +3.9% go where I expect there will be many Silver -0.1% more crises and catastrophes to rattle US And World Stock Market Indices Gold -3.2% Russell 2000 +8.9% people. Palladium -9.3% NASDAQ +5.6% 1) All month long, there was strong Tokyo Nikkei 225 +3.3% public demand for bullion-priced physi- Numismatics US MS-63 $20 St Gaudens +6.1% Australia S&P/ASX 200 +2.7% cal gold and silver coins and bars. As an US MS-65 Morgan Dollar, Pre-1921 +3.2% Down Jones World (excluding US) +2.5% example, the US Mint in January 2020 US MS-63 $20 Liberty +2.3% Standard & Poors 500 +1.9% sold 60,000 ounces of gold among all Shanghai Composite +1.8% four sizes of American Eagle coins and US Dollar vs Foreign Currencies Frankfurt Xetra DAX +0.9% 3,846,000 of the Silver Eagle Dollars. In Argentina Peso +4.3% London FT 100 +0.9% January 2021, the US Mint sold 220,500 Brazil Real +3.4% Dow Jones Industrial Average +0.3% Chile Peso +3.2% Sao Paulo Bovespa -0.7% ounces of Gold American Eagles, an in- Colombia Peso +3.2% crease of 267% over the prior January. It Russia Ruble +2.9% 10 Year US Treasury Note interest rate also sold 4,775,000 Silver Eagles, an in- 1.12% +20.45% Israel Shekel +2.7% crease of 24%. South Korea Won +2.5% Energy and Other Metals Literally almost every mint and private South Africa Rand +2.2% Cobalt +34.3% fabricator of these bullion products have Sweden Krona +2.2% Tin +21.7% exhausted their inventories and are being Japan Yen +1.7% Molybdenum +21.0% forced to ration new production. Euro +1.5% Natural Gas, Henry Hub +12.1% 2) The people who invaded the US Denmark Krone +1.5% Crude oil, Brent +11.8% Capitol building on January 6 were stun- Switzerland Franc +1.5% Nickel +7.4% Mexico Peso +1.4% ning enough to the political establishment Lead +1.9% Australia Dollar +1.3% Copper +0.2% and to the public that precious metals Singapore Dollar +0.8% Aluminum -1.0% prices jumped on January 7. When it be- Malaysia Ringgit +0.6% Zinc -6.8% came clear there were not any follow-on Peru New Sol +0.5% actions to this event, precious metals Canada Dollar +0.2% Metal Content Value Of U.S. Coins prices started to retreat the next day— Thailand Baht +0.0% Lincoln cent, 1959-1982 2.33¢ Indonesia Rupiah +0.0% Lincoln cent, 1982-date 0.67¢ especially silver. Jefferson nickel, non-silver 5.13¢ 3) The following week, then President Hong Kong Dollar +0.0% New Zealand Dollar +0.0% Roosevelt dime, 1965-date 2.33¢ Trump signed into law HR 1923, called Washington quarter, 1965-date 5.81¢ the Circulating Collectible Coin Rede- Great Britain Pound +0.0% India Rupee -0.1% Kennedy half dollar, 1971-date 11.63¢ sign Act of 2020. Details will be dis- cussed later in this issue. However, en- like a vulnerable asset to repeat the process. physical silver. actment of this law is almost certain to As buyers started to purchase physical and With mounting delivery delays (which also spark over the next few years possibly paper forms of silver above and beyond al- spilled over into gold products), both the the greatest increase ever in public inter- ready strong demand, the price started to price of silver and the premiums on most est in coin collecting (even greater than climb. From the COMEX closes last Thurs- products soared. The COMEX close on Feb- the release of the Kennedy Half Dollars day to Friday, the price rose 3.6%. ruary 1 at $29.40 was 9.3% higher than it in 1964 or the debut of the US Statehood Over the weekend, when commodity mar- closed the previous Friday. This was the Quarter series in 1999). kets were closed, there was enough demand highest COMEX silver close since it settled 4) Last week, some mostly non- to purchase bullion-priced silver coins and at $29.41 on February 19, 2013! professional investors took on hedge bars online that many of these sites were The change in the silver spot price on Mon- funds that had massively sold short forced to halt operations. day understated the increase in physical sil- stocks of selected publicly traded compa- When markets opened two days ago, retail- ver product prices. At the COMEX close on nies. By purchasing these stocks, they ers and wholesalers were almost cleaned out Monday, the LCS selling price for a $1,000 hoped to force the short sellers to scram- of immediately available inventory. Liberty face value bag of US 90% Silver dimes and ble to buy back their short positions, Coin Service and just about every coin and quarters was 19.5% higher than we were sell- forcing up prices dramatically. bullion dealer across the country were be- ing it at the COMEX close the previous Fri- 5) As this strategy worked profitably, sieged by customers scrambling to purchase day. (When we checked with eight national many of these same people scoured the financial landscape seeking other oppor- tunities to take advantage of massive Inside this issue: How Large Are The Silver Short Positions? page 2 short selling. They identified one mar- Interest In Numismatics Starting To Soar page 3 ket—silver—that, on the surface, looked LCS Celebrating 50th Anniversary page 4 (Continued from page 1) likely to be covered. Consequently, it should not ing over time. competitors earlier that day, we found surprise anyone that today’s issue had the front The only way to prevent the eventual de- that six of them were not even willing page main headline reading “GameStop, Silver struction of the US dollar would be for the to accept orders at any price, but LCS Plummet As Trading Terms Get Tighter.” A US government to extremely cut expendi- had live product available for immedi- headline with the word “plummet” obscures the tures (probably at least 90%), cut taxes, and ate delivery.) fact that yesterday’s COMEX silver close was run massive budget surpluses for years or 6) As the excitement over a push to still 3.8% higher than it was just six days earlier decades. That’s just not going to happen. buy silver developed late last week, we and that gold was down only a minimal 0.8%! Long before the dollar is destroyed, people posted on Liberty Coin Service’s Face- The action in gold and silver markets the past will realize what is happening. As much as book page (which you can like at few days are really just a temporary distraction. I possible they will get out of US dollars and www.facebook.com/ still expect gold and silver prices to end 2021 sig- into other assets that will retain their value. LibertyCoinService) an explanation nificantly higher than they finished 2020 for the Physical gold and silver, with multi- that the effort to push around the short fundamental reasons that 1) the US government thousands of years of a track record of never sellers in the silver market was not go- is spending extreme amounts of dollars beyond failing, will be among the most popular op- ing to eventually prevail. the resources it has which will drive down the tions. The major reason why it would not purchasing power of the US dollar, and 2) there What could accelerate the destruction of ultimately succeed was that the short are long-term continuing physical shortages of the US dollar would be a massive campaign sellers are backed by “all the money in gold and silver that will eventually overcome all to acquire physical gold and silver. To be the world.” Specifically, that is the US the paper market price manipulations. successful, those buying gold and silver government because it is the largest How Gold And Silver Prices Will would need to have the financial clout to beneficiary of lower gold and silver withstand the US government and its allies. prices, the entity who has manipulated Explode Upwards In my opinion, the Chinese government gold and, to a lesser degree, silver since A group of mostly non-professional investors would have the best prospect at causing the the creation of the Exchange Stabiliza- with perhaps billions of dollars of resources will huge short positions in the paper gold and tion Fund in 1934 (which now has over not be sufficient to overcome the determination silver markets to crash by demanding deliv- $600 billion of assets). It also has sup- of the US government to hold down gold and sil- ery of physical metal. port from the 24 primary trading part- ver prices. ners of the Federal Reserve Bank of Before describing how such manipulation can How Large Are The Silver New York (several of which are major be overcome, it makes sense to review why the (And Gold) Short Positions? short sellers of silver), the Bank for In- US government has such a huge interest in sup- In commodity futures markets, for every ternational Settlements, and allied cen- pressing the prices of gold and, by association, contract there is a party on the long side who tral banks.