The growing chasm between the fake and the real

keelba
By keelba on Mon, Sep 14, 2015 - 10:11am

I've noticed something in the past few days that I find very alarming. Every day I check the spot price of silver (kitco.com) and then I check the price of Silver Eagles on a bullion dealer's website (goldsilver.com). I always use the same sources as a benchmark. I'm always comparing the spread in percentage points between the paper price and the physical price. For the past several years the spread, or markup, was about 26-28%. On Friday (Sept. 11, 2015), when I checked, although the price of PMs was going down, this spread had jumped to 45%. This morning when I checked it was at 38%.

My prediction has always been that someday people will realize that the paper market is worthless and they will want the real thing. They will sell their paper positions, driving prices down, and try to buy the real thing, driving demand and prices up. Eventually, the paper market will plummet to zero while the price of the real things will skyrocket to astronomical highs. This spread that I've been tracking will be the evidence of that and it looks like it is beginning now.

Although I own a bit of PMs and I am excited to see what kind of highs will come of this, I am scared to death of the worldwide panic this event will cause. Exciting times are ahead indeed.

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