Tag Archives: Silver

Bail-Ins, Coming to a bank near you?

Following similar steps already taken in United.States the European Commission recently ordered 11 members of the European Union (EU) to enact the Bank Recovery and Resolution Directive (BRRD). These rules theoretically aim to shield taxpayers from the fall out of another banking crisis similar to the recent fiascoes in Cyprus and Greece. The BRRD mandates that if a future banking crisis develops governments will not be obligated to prop up the banks. At any rate most countries are so far in debt that they would not have sufficient assets to bail out even a small regional bank. Instead the burden will be put on creditors and depositors to bail-in their troubled bank. In simple terms legislating bank bail-ins aims to remove government responsibility when a bank fails. This news was not covered by a vast majority of mainstream media outlets despite the serious risks and ramifications for depositors and savers in the United States, throughout the EU, and internationally (i.e. Canada, New Zealand)..

Bank bail-ins, what you don’t know can hurt you

There?s something really important to note here. Most individuals do not recognize that when one opens a bank account they become an ?unsecured creditor? of the bank. Most often this fact is lost in the fine print of the agreement individuals sign when opening a bank account. Under the template of ?bail-in? legislation unsecured creditors of a bank will be the first ones whose deposits will be used (a.k.a. stolen) to prop up a failing bank. In the case of Cyprus, unsecured creditors lost virtually 100% of their deposits over ?100,000 Euros. As most can envision, seniors who were responsible and saved throughout their lives for retirement, were in particular really hit hard by this.

Could it happen in the United States? You can bank on it!

In 2012 the United States’ Federal Deposit Insurance Corporation (FDIC) and the Bank of England co-wrote a paper on how their government’s should address failing banks. The following passage is from the Executive Overview:

“The financial crisis that began in 2007 has driven home the importance of an orderly resolution process for globally active, systemically important, financial institutions (G-SIFIs)… These strategies have been designed to enable large and complex cross-border firms to be resolved without threatening financial stability and without putting public funds at risk…

In the U.S., the strategy has been developed in the context of the powers provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Such a strategy would apply a single receivership at the top-tier holding company, assign losses to shareholders and unsecured creditors of the holding company, and transfer sound operating subsidiaries to a new solvent entity or entities.”

In simple term the United States followed the same template that its European brethren are now using.

Are you vulnerable?

Like the United States, each country in the EU will enact its own version of this ?bail-in? legislation. How vulnerable savers are in a specific country is difficult to tell at this time. However, the worldwide drive towards a cashless economy which has accelerated of late makes deposit holders and savers ever more vulnerable. Allowing for the confiscation of deposits is a retrograde step and may be the last straw for a western banking system already on life support courtesy of central banks. Central banks claim to be averting deflation and recession with quantitative easing (QE) and negative interest rates, not simply bailing out or aiding overly stressed banks. However, recent economic data suggests otherwise.

The Bank’s interest above yours

To reiterate, the current United States/EU legislated bail-in of deposits would again place the interest of banks over those of depositors and savers. Cyprus was devastated by bail-ins and shows little sign of recovery. However, the key lesson from Cyprus and the coming shift from bail-out to bail-in legislation is that a precedent has now been established in terms of deposit confiscation. Therefore, simply having ?insured? deposits in a bank can no longer be considered the safest way to save and protect one?s assets. Conservative wealth management, wealth preservation along with asset diversification should be the critical concerns as it pertains to your portfolio. Gold and Silver can play an important role protecting, preserving and potentially increasing your wealth in the face of the coming bail-in era.


100 oz. Hunt silver bar, the real story

 

A blast from the past.

Many of our wholesale and retail customers are unaware that Jack Hunt Coin Broker once produced and marketed of 100 oz. silver bars. It’s come to our attention recently that there are some who mistakenly believe that these bars are a rare collectors item, produced by the infamous Hunt brothers (no relation to Jack).

A little history

The brothers, Nelson Bunker Hunt and William Herbert Hunt, were the sons of oil tycoon Haroldson Lafayette “H. L.” Hunt, Jr. In addition, they were also brothers to Lamar Hunt, founder of the American Football League and the Kansas City Chiefs.

Nelson and William used their vast wealth in an attempt to corner the silver market in the late 1970s. They acquired over 195 million ounces (estimated to be 1/3 of the world’s liquid, non-government held, supply of silver). At silver’s peak in early 1980 their ‘stash’ was worth nearly $10 billion (at $48.70/oz). In March of 1980 the silver market collapsed, loosing an astonishing 80% of its value. As a result both the brothers went bankrupt but ultimately regained their wealth years later.

The real story

Now while it would be a far more interesting story if the the Hunt brothers had minted the 100 oz. Hunt silver bars they were actually produced by Jack Hunt Coin Broker. Their were two versions of the Hunt bar.

Hunt-Bar-Stamp-Feature-Image

The stamp for original Hunt bar now serves as a paperweight in Jack Hunt Coin Broker’s offices.

The first was produced at a manufacturing facility Jack Hunt setup in Upstate New York. The second was produced by Leach Garner in Toronto, Ontario, Canada (just a 90 minute drive north of Jack Hunt’s home office in Kenmore, NY).  Peter Sherlock, Jack Hunt’s former VP of Precious Metals Trading, recalled when Jack Hunt first started production of Hunt bars.

“The fact that the bar said ‘Hunt’ on them didn’t mean anything. There was a shortage of generic silver bars at the time and the Hunt bars were produced in response to the shortage. Eventually the silver market caught up and it was no longer profitable for Jack Hunt to produce its own bars.”

100-oz-Hunt-Silver-Bar

The original 100 oz Hunt bar. Rare but not a collector’s item.

The Original Hunt Bar

Weight: 100 Troy oz.
Fineness: .999+
Dimensions: 155 x 78 x 28 mm
Number Manufactured: Approximately 5000
Manufacturer: Jack Hunt Coin Broker 1981-1982

Hunt-100-oz-Silver-Bar

Hunt Bar Version 2. Also rare and not a collectors item.

Second Version of Hunt Bar

Weight: 100 Troy ozs.
Fineness: .999
Dimensions: 160 x 80 x 25 mm
Number Manufactured: Approximately 5000
Manufacturer: Leach Garner 1982-1983

Hunt to Hunt

On a side note, Jack Hunt was once in contact with Nelson Bunker Hunt. In 1981 they corresponded regarding the sale of US90%. Nothing resulted from their communication but it was a great source of pride the Nelson personally responded to Jack’s inquiry.

Nelson-Bunker-Hunt-Letter

Hunt to Hunt letter dated August 5th, 1981.

Where are they now?

On rare occasion a retail customer returns to sell Hunt bars they originally purchased over 30 years ago. To those customers who still hold their original purchase receipt, we continue to honor the 97% of spot buy back guarantee they were offered at time of purchase. Yet we believe have overwhelming majority of the Hunt bars have since been melted or are buried treasure for future generations to find.

 

Now Available 2016 U.S. Silver Eagles


Silver In The Long Term…Is It Time To Buy?

 

The most frequent question asked of us here at JHCB by the public goes something like this? ?What?s a better buy, silver or gold?? Our simplistic answer is a polite ?We don?t really know?, or a similar non-committal response usually followed up with our question for you? ?Why are you buying precious metals?? We?ve found over the years that our precious metals customers can be separated into two categories. The first group are those looking to make a long term profit buying low and hopefully selling high several years down the road. Our second category of buyers want tangible metals to act as an ?insurance policy? against weakening paper based assets.

This article will focus on why many believe silver is the most attractive precious metal to our clients from the first group I mentioned, those whose focus is solely on profit.

There are several reasons why many believe silver has more profit potential than gold:

1. Silver has dropped in value by nearly 300% since its recent high in 2011, gold has dropped ?only? 35% in the same time frame.

2. The US and most global stock markets appear to be entering into a bear market. In this scenario some paper wealth always moves into tangible wealth with silver being far more affordable to the masses.

3. Numerous charts show silver to be in a technical position similar to 2008. Silver at $9.00 per ounce in 2008 became $40.00 silver in less than three years.

JHGS.US-silver-eagle-20124. Recent history shows that physical silver isn?t always readily available during noteworthy price dips. Physical silver shortages show up in higher premiums above the ?paper? COMEX prices. It is important for the buying public to note: There is no shortage of paper contracts for silver. They can be created in an instant with digital currencies backed by nothing except a compliant central bank. Physical silver cannot be so easily created and consequently can experience shortages. Buy the tangible metal!

5. Most western governments including our own are hopelessly insolvent. Since it would take a rational approach by politicians, and a lifestyle change for those ?entitled? to resolve our debt, it?s safe to assume our financial system won?t be corrected anytime soon. Debt based fiat currencies simply do not stand the test of time.

To those who want to own precious metals, regardless if the motivation is profit or peace of mind, silver offers an affordable option in the realm of liquid precious metals.

 

2016 Canadian Silver Maple Leafs Available Now


2016 Silver Market Trends

Reprinted courtesy of The Silver Institute

(Washington D.C. ? January 28, 2016) Silver is prized primarily for its dual role as a monetary asset as well as an important industrial metal utilized in a wide-range of existing and growing applications. Factors driving the silver market include supply and demand fundamentals, global economic performance, geopolitical issues, interest rates, currency fluctuations and investor sentiment, among others. Against this backdrop, the Silver Institute offers the following thoughts on this year?s silver market trends.

Silver Demand

Silver Eagle & Silver Maple Leaf Coins

Demand for U.S. Silver Eagle and Canadian Silver Maple Leaf coins will continue to be high in 2016

Silver industrial demand, the largest component of total silver offtake, is set to increase its share of total demand in 2016. Silver is incorporated into a variety of industrial applications and is generally price-insensitive given the small quantities that are used in some applications and its critical contribution to these applications? functionality. In 2015, industrial fabrication demand accounted for an estimated 54 percent of total physical silver demand.

Silver?s use in photovoltaics for solar energy is projected to rise in 2016 and surpass the previous peak of 75.8 Moz (million ounces) set in 2011, as global solar panel installations are expected to grow at a high single-digit pace. Moreover, silver?s use in this application may account for more than 13 percent of total silver industrial demand in 2016, up from 1.4 percent a decade ago.

Silver demand from ethylene oxide (EO) producers is expected to jump to over 10 Moz this year, a more than 25 percent increase over 2015. Ethylene oxide is critical in the production of plastics, solvents and detergents. This growth comes off a very robust 2015, when demand grew by well over 40 percent. The bulk of demand is expected to continue to come from new EO plants and expansions at existing ones located in China. China is expected to account for an estimated 80 percent of silver requirements for new EO capacity in 2016.

Jewelry fabrication is expected to increase by 5 percent in 2016, in contrast to a modest contraction last year. While the market will likely see a decline in Chinese silver jewelry demand, which accounted for around 16 percent of the 2015 total for silver jewelry fabrication, growth in other countries should more than offset China?s slippage in demand.

Coin demand is expected to be robust once again in 2016, following a record 130M oz of demand last year. Demand will remain elevated this year as investors take advantage of relatively lower metal prices in the first few months of the year. Increased interest in safe haven assets, as already seen in the first few weeks of the year, will also be positive for physical silver investment demand. In 2015, coin demand made up an estimated 12 percent of total physical demand.

Silver exchange-traded-funds (ETF) holdings fell by 2.8 percent by the end of 2015 compared to year-end 2014. Notably, the decline in silver ETF holdings was smaller against gold?s 8 percent contraction. Silver ETF holdings should continue to remain in stickier hands than those of gold?s investors, partly a reflection that silver ETF holdings have a larger proportion of retail investors.

Indian silver demand in 2016 is expected to grow on the back of increased investor interest and growth in jewelry, decorative items and silverware fabrication. India, long a mainstay of global silver demand, imported a record high 228 Moz of silver bullion in 2015. Imports rose largely due to a decrease in scrap flows, necessitating new supply to meet annual fabrication requirements, a trend projected to continue.

Silver Supply

Global mine supply production is projected to fall in 2016 by as much as 5 percent year-on-year.  This would represent the first reduction to global silver mine production since 2002. The lower price environment provided little incentive for producers to invest in expanding capacity at existing operations.   Looking further ahead, many analysts expect global silver mine production to fall through 2019 as primary silver production from more mature operations begins to drop.

Scrap supply, which has been on the decline for several years, should further weaken in 2016.  This outlook is based on additional losses in photographic scrap, a depleted pool of near-market silverware, jewelry and coins, and slowed scrap flows from industrial sources. Industrial scrap such as electronics cost more to recycle and the current price environment has weighed on the profitability of recovering silver from these end-of-life items.

Silver Market Deficit

The silver market deficit (total supply less total demand) is expected to widen in 2016, drawing down on above-ground stocks. The larger deficit is expected to be driven by a contraction in supply.

Silver Price

The silver price is expected to find solid ground this year. As of January 26th, silver prices are up 3.7 percent from the end of last year. This price appreciation is on the back of increased safe haven demand amid volatile and weakening equity markets across the globe.

Contact The Silver Institute:
Michael DiRienzo
Tel: +1 202-495-4030
e-mail: mdirienzo@silverinstitute.org

Now Available 2016 U.S. Silver Eagles

2016 Canadian Silver Maple Leafs Available Now


Why You Should Own Tangible Precious Metals

gold-coin-pileIt appears precious metals are once again enticing investors. After ignoring gold and silver for much of 2015, investors added nearly $400 million to U.S. exchange-traded funds backed by precious metals through October 20th. That figure represents the largest ETF inflow since February. Bullion sales at both the U.S. and Royal Canadian Mints surged over the summer. Gold and silver seem to be gaining favor based on expectations that the Federal Reserve could wait until early 2016 or later to raise interest rates. Statistical data attempting to show a correlation between interest rates and commodity prices are inconclusive. Higher interest rates have historically taken money out of the stock market. Whether those funds go into precious metals or fixed income options often depends on the political climate at the time.

Gold and silver have rallied nearly 10% off their five year lows in July after the Fed kept interest rates unchanged in its September meeting, citing global risks of deflation and lack of economic growth. While numerous Fed officials have suggested a rate increase might be warranted in 2015, traders in Fed-fund futures believe otherwise. Approximately 66% of Fed-fund traders are betting the Fed won?t increase interest rates until early 2016, if at all. If that scenario plays out precious metal prices could appreciate due to fading interest in equities.

However, the price of gold is ultimately not a function of interest rates. Like most commodities it is a function of supply and demand over the long run. Of the two, demand is the stronger component. Rising or higher interest rates may in fact be bullish for gold prices, simply because they are typically bearish for stocks.JHGS.US-silver-eagle-2012

From our perspective at Jack Hunt Gold & Silver, owning an ETF or mining shares is not the same as owning tangible precious metals. An ETF is a security indexed to the price of gold and silver, with no real claim to the actual metal. Mining stocks rarely correlate to volatility in metal prices. If you want gold or silver in your portfolio, consider buying the real thing.

A frequent criticism of owning tangible metals is that they don?t offer yields or interest. It should be noted that yield is compensation for risk. Physical metal in your possession does not have third party risk.


Lower Metal Prices Creating Supply Issues

Recent depressed prices for precious metals have led to the usual market response, a surge in physical demand for bullion coins and bars globally. This is not only confirmed by the volume of our local and national sales of late, it’s confirmed by sales figures and production issues at both government and private mints and refiners. There have been frequent shortages of many of the most popular silver and gold bullion items both locally and nationally over the past several weeks. Here at Jack Hunt Gold & Silver we have been out of virtually every product we offer at one point or another over the last month. Ultimately these production glitches, delivery issues and shortages have led to rising premiums on physical metal.

Meanwhile the U.S. Mint has reintroduced sales of its Silver Eagles, albeit on a strict allocation basis, following a three week suspension in July. On July 7 the U.S. Mint was forced to suspend sales having exhausted its inventory. That action suggests there was either a shortage in physical silver blanks or the physical silver bullion needed in the manufacture of the blanks. Since the lifting of the official suspension the mint has placed restrictions on distribution and Silver Eagle sales remain “allocated” to wholesalers like ourselves in order to maintain a minimal inventory at the mint.

The U.S. Mint is legally required to supply as much silver as needed to meet demand. Their inability to do so suggests demand remains very robust. July Silver Eagles sales are estimated at slightly over 4 million units compared to the June totals of 4.8 million coins. However, considering sales were suspended for three weeks in July the sale of 4 million Silver Eagles in less than ten days suggests extraordinary demand.

The U.S. Mint is also seeing strong demand for Gold Eagle coins, especially the one ounce coin. July sales of over 136,000 one ounce Gold Eagles easily doubled June sales and represents the highest monthly sales total since April 2013.

There has been an excessive amount of negative publicity directed towards precious metals over the past several months. This negativity is not supported by market activity in physical silver and gold where shortages are common despite falling prices.


Texas to Repatriate Gold Reserves?

Gold Bars

Recently, Texas Governor Greg Abbott approved a law creating the Texas Bullion Depository, the first state-level precious metals depository in the United States. The bill would also allow Texas to repatriate approximately $750 million in gold bullion back into the state, gold allegedly stored in the Federal Reserve?s vaults in Manhattan. The law will go into effect immediately, though it is still unknown exactly where and when the Depository will be built.

In passing this law, Texas joins the ranks of major global economies that want to bring their gold home. Germany, Austria, the Netherlands and other European nations have already begun to repatriate gold from the New York Federal Reserve or have proposed doing so.

In the midst of uncertain currency issues, countries want to bring this essential reserve asset back home in case of financial crisis. Some analysts also see it as a lack of trust in the Fed and an indication that the Fed may not hold as much gold bullion as it claims.

The Texas Bullion Depository will accept deposits from businesses, state government agencies and most importantly, individual citizens. The Depository regulations also lay the groundwork for day to day transactions to occur in gold or silver. Account holders in the Texas Bullion Depository may eventually be able to write checks or possibly use a debit card to draw funds directly from their physical precious metal holdings. In short, a person will be able to deposit gold or silver and pay debts electronically (or by check) in sound money.

However, one has to wonder if each gold or silver ?withdrawal? will be subject to IRS regulations, specifically capital gains or losses via Form 1099-B. Assuming federal and state tax ramifications can be resolved, making gold and silver available for traditional ?bank? transactions to the masses has the potential for wide reaching effect. If the general public in multiple states and locations actually start using gold and silver instead of Federal Reserve Notes, it could severely limit the Federal Reserve and end the federal government?s monopoly on money creation.


Why is HSBC Long Term Bullish on Gold?

bullish-bearish

The US economy hasn?t fully recovered from the last recession, what many have referred to as the worst since the Great Depression, but another economic downturn could be looming in the not too distant future, according to one prominent economist.

In a recent article from the Financial Times, HSBC Chief Economist Stephen King commented on the historical trends of recessions and depressions. Mr. King stated that most recessions historically occur every eight to nine years and the last US recession ended about six years ago. If history does indeed repeat itself the US could be facing another recession in the not too distant future. What?s worse, Mr. King noted, is that US policy makers don?t appear to have the ammunition to fight off the next significant economic slump.

Mr. King suggested several potential triggers for the next recession; a collapse in overvalued equity markets, a sizeable slowdown in the Chinese economy, systemic failures across the pension fund and insurance industries and a possible premature tightening of interest rates by the Federal Reserve.

Mr. King did note that the government had several options to minimize the impact of a future recession although none seemed very appealing.

He stated the Federal Reserve would have to restart its quantitative easing program, historically beneficial to the price of gold.

The government could also allow for even more significant budget deficits and pass stimulus measures similar to Franklin Roosevelt?s Depression era social programs. Unfortunately it?s not the 1930?s and increasing government spending nowadays could create a pension and healthcare fuelled debt spiral. Such measures historically weaken the US Dollar versus foreign currencies and are bullish for gold and silver.

Finally, another option would be to raise the age of retirement. However, that might be political suicide considering the increasingly larger bloc of senior voters.
In reaction to Mr. King?s comments, HSBC precious metals analysts issued their own statement saying that any of the aforementioned scenarios offered by Mr. King would be very positive for the gold market. History tends to support that line of thought.


So Now That I Bought Gold & Silver, Where Do I Keep It?

gold and silver bullionYou?ve just left our offices with a huge sack of gold and silver and suddenly it hits you? “Where do I put all of this valuable metal?” Maybe you should think about properly storing and protecting your metal prior to buying it.

It is often said that gold and silver have no counter party risk and in a monetary sense that?s true. However, even though there?s no counter party risk there is the risk of loss or theft to contend with.

In my opinion, a mistake made by many bullion buyers is to store their precious metals in a bank safe deposit box. Why? First, safe deposit boxes are not FDIC insured. Second, safe deposit boxes are susceptible to ?bank holidays? and seizure. In actuality, safe deposit boxes expose what should be a very private investment to the laws and regulations of the banking and financial system.

Thankfully, most of our clients choose to keep their bullion purchases on their property. When it comes to storing or hiding your metal, try to think outside the box and go against conventional thinking. Everyone usually thinks of the most common options such as purchasing a safe or installing an alarm system, both good ideas. However, try to be creative in thinking of different ways to hide or store your metal. Potential options include burying it underground, hiding it in a secret compartment or a stairwell, or within your walls. I had a client who elevated a washing machine off his basement floor with several one hundred ounce silver bars spray painted black! Also consider ways to store your metal multiple layers deep. keep your bullion safeFor example, store it in a strong box, under the floor boards, under a throw rug, under the china cabinet. These multiple layers effectively deter your typical ?grab and run? burglar.

It should be noted that it is very important to confide in a trusted friend, family member or loved one the location of any well hidden metal. You really have to tell someone or risk losing these assets to a future owner of your property ? quite possibly a complete stranger. Once you are comfortable with the idea of having your bullion in your personal possession, and once you have taken reasonable safety measures, you?ll feel more at ease having physical possession of your gold and silver bullion nearby.


Silver: Is it a Commodity or a Currency?

solar-panelWhen most of us think of precious metals gold tends to be our first thought. Silver, the less expensive of the two, tends to be relegated to second place. Silver is often thought of as similar to gold in that it?s pretty in jewelry and has always had value, but it?s fundamentally of no use to society. You could make that argument about gold which is why investors should look at gold as more of a currency than a commodity. Silver, contrary to gold, does have significant industrial and practical applications. Approximately half of all the silver produced globally is used by industry, the balance being used as jewelry or for bullion.

Whether you believe silver is a good long term investment or not may depend on if you consider silver a commodity or a currency. If you feel the global economy is improving, then silver?s industrial uses make it a logical investment from a commodity perspective. However, if you view silver like gold, as a safe haven in tough economic times, silver would likely fare poorly in a world economic slowdown. So, is silver a commodity or a currency? I believe it is both.

First let?s examine Silver from the commodity perspective. Historically industrial demand for silver came from the photographic industry, a sector where demand has clearly dropped off significantly. However this drop-off in demand from one industry has been offset by demand in many new technologies and products. Most notable of these new products are photovoltaic cells used in solar energy production and in smart phones and tablets as well. Production in both of these fields, particularly in consumer electronics, is sensitive to global growth. Recent lower prices for silver and other commodities can be partially attributed to concerns for slower world economic growth. Still, slower growth is still growth and demand should ultimately increase.

silvereagle2A case for silver as a currency can be made as well. Central banks, notably in Japan, the US and the European Union, traditionally respond to sluggish economies by pursuing expansionist, easy money policies. This has the eventual effect of devaluing currencies and potentially encouraging inflation. With ongoing economic problems in many parts of the world, gold and silver, when viewed as currencies, may be the best tangible method of storing value.

Whether you view silver as a currency or a commodity, a solid case can be made for buying it at current levels. It represents an opportunity for a risk controlled trade to those who view it as a commodity, or a hedge against inflation or currency debasement if that is your concern.