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Newsletter explores bullion-banking links

Weekly online newsletters have become part and parcel of what Numismatic News does. We have a Tuesday letter called Market Update. Numismatic e-News goes out on Friday.
One of the most popular writers in the Tuesday newsletter is Pat Heller. He has been following the precious metals markets for many years. He also is an active dealer in Michigan, writes his own newsletter and even is a volunteer for the American Numismatic Association where he serves as chairman of the budget and finance committee.

What Pat has been writing about lately has had a lot to do with the unfolding banking crisis in the United States and its impact on the prices of bullion coins.

We have been reporting about the shortage of American Eagle bullion coins in the newsletter and in these pages. The shortage is ongoing. Pat made some interesting observations on this topic as this issue was being prepared. With the Eagle shortages, he wrote, the waiting time for a serious buyer to acquire American Eagle gold coins is two weeks and this is actually less than the waiting time for other popular bullion coins.

There is a two-week waiting time for the old standard $1,000 face value bags of 90-percent U.S. silver coins dated 1964 and before. This is the quickest way to get skin in the silver game today.

The silver American Eagle, Pat says, is available within a few weeks if you know the right dealer, but no other one-ounce bullion coin is available more quickly.

All of this information is important. It won’t make potential buyers of physical coins and bars particularly happy, but it does help explain how the markets are currently working. Demand is high. Supply isn’t matching it and this sense of shortage is egging on buyers all the more.

The banking situation is an interesting issue because as it deteriorates, it seems also to be egging on buyers of physical bullion. Is there a direct connection between banks and bullion, or are they coincidental?

Does the banking situation make bullion buyers nervous?

These questions can be asked. What answers there are often are based on guesses and suppositions. I do know that bullion buyers and owners are keenly following the banking situation. You see it all over the Internet. This does not necessarily mean that more bank problems mean higher bullion prices. In fact, much of gold’s recent run to $1,000 time wise was accompanied by the real estate boom and the lending that made it possible.

What is less clear is whether the current unwinding in the booms in real estate, banking, oil and even in base metals like copper, zinc and nickel will affect precious metals positively or negatively.

It is clear that some believe that bank failures equate to higher gold and silver prices. What if they don’t over the long run? What if after a few exciting days bank failures add to downward pressure on all prices, including gold and silver?

Silver has been more than cut in half from its high. Gold has fallen less, but it still has dropped. What if the demand for physical bullion is simply the last link in the current chain of events?

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