The Curious Case of Silver Coins

Twice I remember reports of silver coin shortages. I vaguely remember a third, but was unable to verify. The first was in January 2013. I remember it well because of the size of the short positions in precious metals I was carrying at the time. The 2013 shortage was touted as a sign of sharply increased demand, foreshadowing a sharp price appreciation ahead.  In the event, precious metals had their worst few months ever, culminating in the waterfall decline of mid-April.

The most recent case was in early July, on the 7th. The US Mint again announced they had sold out of silver coins. It was met with a similar response from the usual commentators: harbinger of sharp price rises.

Precious metals then went on to have the roughest month since 2013, losing some 7 percent. For reference, the euro declined by about 1 percent over the same period and the yen, less than 1 percent.

To be honest, I can’t for the life of me come up with a compelling story as to why retail demand for silver coins might presage a price decline—other than mumbling something weak about dumb money.

Fear not, though, I’m sure there will be no shortage of conspiracy types who will step in and fill the void with different stories having the same conclusion, so stay tuned. As for me, for now, I’m going to lock up a physical copy of the relevant material in my secret locker in Area 51, pending further investigation.