In August, demand for bullion had slacked a bit from the frenetic pace set over the past two years. But buyers came back with a vengeance during September, and inventories of the most popular products are showing the strain.
Premiums are back on the rise and delivery delays have returned for many items, with silver inventories being hardest hit. Money Metals’ weaker competitors are especially struggling.
As buyers turn away from higher-priced silver coins (particularly the problematic Silver Eagle, one-ounce silver rounds and bars of various sizes are now experiencing supply issues.
The major constraint, once again, is in the capacity of mints and refiners to produce retail bullion products. While demand for 1,000 oz silver bars also appears strong, premiums for those large bars are holding steady.
If 1,000 oz bar premiums rise, it would be signaling a true shortage of silver. For now, though, the shortage is in the fabrication capacity of mints and refiners who convert large bars into smaller products.
The pressure on premiums has been driven, at least in part, by the U.S. Mint. Despite its obligation to produce coins in quantities "sufficient to meet public demand," the Mint has done nothing to increase supply.