The Window to Buy Gold & Silver With Paper Money is Closing

Update 24 March

In addition to the shortages arising due to the overwhelming demand for physical precious metals, bullion supply from refineries has now been more or less been completely shut off with most major mints and refineries including Valcambi, Argor-Heraeus and PAMP, suspending production.

BullionStar is still open for orders and still have items in stock due to aggressive stock purchasing in the period leading up to the crises.

The minimum customer buy order is currently SGD 499.

BullionStar’s Shop at 45 New Bridge Road

BullionStar’s shop is open and taking orders. Where possible, we encourage everyone to place their orders and transaction requests online to limit waiting times.

BullionStar has implemented safe distancing measures in the shop to reduce the risk of local transmission of the coronavirus. After taking a queuing ticket, please wait in the allocated spots marked out with tape on the floor. The allocated spots are marked out with a minimum distance of 1.2 m in between.

Update 20 March

Physical supply continues to be incredibly tight.

We have further increased the buy back prices for gold coins and silver coins.

More and more refineries, mints and fellow bullion dealers are suspending their operations indefinitely. At BullionStar, we are facing significant operational and stock inventory challenges. There’s an acute shortage for particularly Gold Coins, Silver Bars and Silver Coins. For Gold Bars, some of the private refineries are still open and take orders but have long backlogs.

COMEX and London OTC Spot Price Discovery Failing

What does this mean for price premiums?

Due to the paper spot and futures precious metals markets not reflecting the demand and supply for physical precious metals, premiums are high and are fluctuating a lot.

The precious metals price premium mechanism is there to balance physical demand and physical supply of precious metals.

Despite higher than normal premiums, demand for physical precious metals continues to be overwhelming. We receive several hundred orders each day. We’ve had two hour waiting times in the shop even though we just expanded the shop to 5 counters and even though we have an extremely efficient system for serving customers. At BullionStar, we currently have about 8 customer buy orders for every customer sell order which is the highest we have seen in years.

Extreme Demand – Scarce Supply

Precious metals have been hit by a double whammy. Demand is truly extreme and unprecedented, and at the same time due to the COVID-19 situation, the bullion supply chain is facing the same issues as other scarce good supply chains.

The underlying problem here is that price discovery for precious metals is a farce and is broken as we have warned about and pointed out so many times over the years such as here, here, here, here and here.

Disconnect between the Paper Price and Physical Price

There is  a disconnect between on the one hand, the COMEX futures and London spot OTC market and on the other hand, the physical precious metals market.

Unless there is a very strong rally in the paper market that balances physical demand and supply, the disconnect between the paper market and physical market may widen until the paper pricing system (COMEX futures and LBMA unallocated system) implodes.

In a scenario where the paper spot market doesn’t rally to balance physical demand and supply, physical precious metals will no longer be priced based on the spot market. Bullion dealers will stop pricing metals. Many have already done so by suspending the accepting of orders.

When preferences in the derivatives paper spot and futures markets, which are unbacked or only partially backed by precious metals, differ from supply and demand in the physical market, prices disconnect.

The Window to Purchase Precious Metals with Fiat Currency is Closing

The window for purchasing physical precious metals with fiat currency is quickly closing. At this time, it is still possible to settle physical precious metals purchases in fiat currency with some bullion dealers. At BullionStar, we are still accepting orders for precious metals settled in fiat currencies, and priced based on spot with a premium, but that is subject to change.

I would strongly recommend everyone to value and count their physical precious metals in weight i.e. in grams or troy ounces, not in fiat currency.

If you don’t hold physical precious metals yet, the window for acquiring metal is closing in. At BullionStar, we still have inventory stock of some items but are running out quickly. By traditional means, our premiums are very high but still not high enough for physical demand and supply to balance.

If you as a saver or investor find actual bullion in stock with another bullion dealer that has better conditions than us, go for it. At this time, any fiat currency price quoted for physical metals is a good price.

Freegold

When physical precious metals are no longer quoted in fiat terms, it’s too late to buy, and it doesn’t matter what paper gains you may have made in the past because you cannot use fiat to change your paper into real money, gold.

At the point where physical precious metals are no longer quoted in fiat terms, price discovery on the physical market will eventually be re-established and be based on the physical supply and demand. This is how free markets work.

The gold price needs to be determined by the supply and demand for actual physical gold. 

This transition is called Freegold.

Freegold is the adjustment mechanism that corrects the imbalances between the artificial debt/credit/paper system and the real physical world represented by gold.

As I write this, our debt based monetary system where money is created out of thin air as debt, is imploding.

We are facing a strong hyperdeflationary pressure and governments have already started to, by all means available, monetise credit with newly created base money/cash. When people realise that the governments will not be able to bail everyone out like in 2008, confidence will evaporate quickly with resultant hyperinflation.

So far this financial and monetary crises is playing out just like I have repeatedly predicted since starting my first bullion dealer, Liberty Silver in Sweden in 2008. The only difference being that it plays out much quicker than I can fathom, which makes it feel surreal. The broken financial and monetary system was in fact the reason I started Liberty Silver in 2008 and subsequently BullionStar in 2012. I’m certainly not being self-congratulatory though. The monetary crises we are facing will no doubt be challenging for humanity. We are not well prepared. People have substituted knowledge and crises preparedness for belief in governments.

I’m also stressed about how we at BullionStar can assist as many customers as possible without being completely cleaned out of inventory and without our staff members being overwhelmed. And how are we going to service the bullion market when the current monetary system burns?

This is a systemic crises which I believe will bring an end to our current monetary and financial system. Stay safe and prepare as well as you can!

Read this blog post for an introduction to Freegold and an explanation of the mechanisms playing out currently i.e. hyperdeflation –>  monetising credit with newly created money –> hyperinflation.

BullionStar Customer Buy Orders

We have never before had any minimum order size, and under normal market conditions we provide everyone with the opportunity to buy precious metals. However, we are now flooded with orders and it would be impossible for us to physically handle the situation if we don’t adopt purchasing restrictions. Orders below the minimum amount of SGD 1,000 or equivalent in other currencies that were placed before the restriction went into place will of course be honoured.

As always, your price is locked in once your order has been placed and confirmed.

We endeavour to process vault storage orders for items in stock within three business days.

Domestic and International Shipment via Courier
We endeavour to process and send outgoing shipments within three business days. However, please be aware that items in transit to you may be delayed due to couriers being impacted by the current COVID-19 crises where many international flights have been cancelled.

BullionStar Customer Sell Orders

Sell Back Premiums have been increased significantly. We are currently paying the following.

Gold
BSP Grams Gold: Spot + 2%

Gold Coins ~ Major bullion gold coins such as Gold Maples, Gold Kangaroos, Gold Philharmonics, Gold Krugerrands, Gold Buffalos, Gold Britannias: Spot + 1.5%.

Gold Bars: Above spot for most major sizes like 1 oz, 10 g, 20 g, 50 g, 100 g bars

Silver
BSP Grams Silver: Spot + 12%