Strong Retail Demand Puts Strains on Bullion Dealers

A new Money Metals client reported to us significant trouble retrieving of his silver American Eagles which were supposed to be held for him in a segregated storage account at another prominent bullion dealer.

As it happens, he was taking Money Metals up on our offer to buy his Silver Eagles at historically high premiums over spot.

However, it took six weeks for him to extract all his Silver Eagles stored at this other company – and it only happened in dribs and drabs and only after some complaining.

First off, a single report like this is not enough to confirm a larger problem exists, so we will not name this other dealer.

That said, we have enough detail to see what may be happening.

Times when we see higher strains in the industry are especially good times to remind retail bullion investors to be careful.

If a business isn’t making delivery on the timeline you expected – whether it be extracting your metals from storage or receiving delivery of a new purchase – it could be a sign of serious trouble.

In the case of precious metals you are already holding in a segregated storage account, we can think of no good reason for a dealer or depository to take several weeks or more to return your property. After all, items in a segregated account are supposed to be laying on a vault shelf with your name on them, ready to go.

To be sure, poor management as well as staffing challenges can explain many issues. But experience tells us that the first signs of truly serious trouble is when a business in our industry systemically fails to meet commitments.