The 2008 Gold & Silver Shortage of Bullion Products

An industry wide gold and silver bullion shortage occurred during the 2008 Financial Crisis.

It began in early September 2008 and lasted all the way into the spring of 2009. During this time the world’s largest Government Mints and Private Mints could not supply enough bullion coins and bars to meet global demand.

In North America both online and local bullion dealers experienced product shortages and multi month delivery delays. What small silver and gold bullion inventory that was available then for sale and immediate delivery was typically priced exorbitantly high over fluctuating spot prices (large product premiums) especially when compared to more normal economic time spans.

An often used barometer to gauge the silver bullion market’s supply tightness is 90% Silver Coin premiums. Take a look in the following chart for 90% junk silver coin premiums soared during this late 2008 / early 2009 time frame.

The 2008 Gold & Silver Shortage of Bullion Products - Image 1
 

Bullion markets also witnesses disequilibrium spells in early 2013 and late 2015 mainly due to US Mint suspensions of American Silver Eagle Coin sales and followed supply rationings.

The Financial Crisis of 2008 not only caused a silver bullion shortage generating delivery delays and substantial bullion product price premiums, it also affected the world’s gold bullion market.

For instance the world’s most demanded modern gold bullion coin in terms of sales volumes, the US Mint’s American Gold Eagle Coin, saw its product premiums double with delivery delays and substantial demand as well.

The 2008 Gold & Silver Shortage of Bullion Products - Image 2

Don’t Believe the Hype?!

One of the best tools to use on the internet in order to verify claims of past occurrences is the Internet Archive’s Wayback Machine.

Let’s examine a then large volume gold and silver bullion dealer’s 1 oz American Gold Eagle Coins prices and premiums both before and then during the 2008 Financial Crisis.

June 13, 2008

Gold spot price: $864.80
1 oz Gold American Eagle Coin price: gold spot +$34.99 oz
( a 4% of premium )
Source
October 13, 2008

Gold spot price: $867.50
1 oz Gold American Eagle Coin price: gold spot +$99.99 oz
( an 11.4% premium )
The 2008 Gold & Silver Shortage of Bullion Products - Image 4
 

Let’s also examine another since bankrupt online bullion dealer’s 90% Silver Coin prices and premiums both before and then during the 2008 Financial Crisis.

May 16, 2008

Silver spot ask price: $17.00 oz
$1000 face bag, 90% Silver Coin premium: 0.9%
2008 Gold & Silver Shortage of Bullion Products - IMAGE 2
Source
October 24, 2008

Silver spot ask price: $9.43 oz
$1000 face bag, 90% Silver Coin premium: 40.9%
2008 Gold & Silver Shortage of Bullion Products - IMAGE 3

 Source

Certainly +40% premiums for 90% silver coins sounds outlandish but it is something the world could see again if another financial crisis occurs. Virtually every physical deliverable fine bullion product would have the potential of asking large premiums for sale.

The onset of the 2008 Financial Crisis marked a low point of US dollar values versus other large competing fiat currencies. The US dollar’s rebound starting in mid-2008 and ramped up even stronger in early 2014.

2008 Gold & Silver Shortage of Bullion Products - IMAGE 4

 Source

Over the last few year the US dollar has outperformed euros, yen, pounds, and other largely reserved fiat currencies. How long will this last? How about we take a larger look at the trend?

2008 Gold & Silver Shortage of Bullion Products - IMAGE 5
Source

What happens to silver and gold prices when recent US dollar strength reverses?

As a result of intense US dollar demand at the onset of the 2008 global financial crisis, both silver and gold spot prices decreased violently downwards.

Yet both monetary metals’ spot prices snapped back in early 2009. Today both gold and silver prices in US dollar terms are still up large percentages from their 2008 price lows (gold $692.50 oz and silver $8.88 oz).

2008 Gold & Silver Shortage of Bullion Products - IMAGE 6
Source
 

By the early fall of 2011, gold hit a record high US dollar spot price near $1900 oz.

2008 Gold & Silver Shortage of Bullion Products - IMAGE 7
Source
 

In another major financial crisis, it is likely we will again witness large money flows into physical silver and gold bullion causing wide product shortages, delivery delays, and large increases in product premiums across the industry.

If you believe recent US dollar strength cannot go on forever, perhaps exchange some dollars for physical silver and gold bullion products while products are available at reasonable prices and premiums.

All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.