Texas Precious Metals

  • Historic Bounce in Gold at Key Fibonacci Level
    • Posted on March 25, 2020
    • By TPM
    • General

    Given the extreme recent demand in the precious metals markets, this is the first opportunity I have had to reflect on the charts. For those interested in my thoughts on rising premiums and the cause for falling spot metal prices in early March, please refer to the articles linked.
    I want to review price action in gold. Below is the long term, 40-year semi-log chart of gold weekly futures. I have drawn my fibonacci levels from the secondary high in 1980 ($720) to the bottom in 2001 ($250). The story is as follows:

    • Following a 20-year bear market, gold began its bull market after 9/11, with price finally retesting the secondary high at $720 before a pullback to the 61.8% Fibonacci retracement.
    • Support held there, and a second leg to a new all-time high at $1030 (161.8% extension) commenced before a retest of the $720 level at the 2008 bottom of the Great Financial Crisis (formerly resistance, now support).
    • The subsequent bull move took gold to new all-time highs at $1910, stopping perfectly at the 361.8% fibonacci extension.
    • The ensuing bear market backtested all the way to the prior peak at $1030 (161.8 extension) before finally breaking above the 261.8 extension in August of 2019.
    • Since August, gold has peaked at $1700, and the recent liquidity driven sell-off has simply backtested the breakout at $1450 (261.8 extension), where we have seen a powerful and historic rally this week of over $250 in two days.

    Read More

  • Tuesday, March 31st (estimated)

    1,000 - 10 oz Texas Mint Silver Bars
    10,000 - 1 oz Texas Mint Silver Bars
    100,000 - 1 oz Texas Silver Rounds (2020)
    2,000 - 1 oz RCM Voyager Coins
    5,000 - 1 oz Royal Mint Britannias
    1,250 - 2 oz RCM Mountain Patrol Coins (2,500 ozs)

    300 - 1/2 oz Gold American Eagles
    200 - 1/4 Gold American Eagles

  • Canadian Mint Shut Down! End of Week Update
    • Posted on March 20, 2020
    • By TPM
    • General

    Dear customers,

    I would like to offer you one final update for the week.

    Before I begin, my team has requested that I send a big ’Thank You’ to all of you who have called in this past week. In the midst of a very challenging week, with slower-than-usual response times, changes to billing and shipping methods, out-of-stock inventory, and other inconveniences - in what is admittedly a stressful time for many people - nearly every customer has been gracious, patient, accommodating, and diligent in providing information. We appreciate y'all. Personally, I want to especially recognize our accounting manager, Kris Hauptman, who has been working day and night (sometimes until 4am) taking personal responsibility for processing all of your payments. Thank you Kris!

    Big Picture

    As we suspected, more states are implementing shut-ins by the day, with New York and California being the two biggest and most recent. Of significant consequence to the precious metals industry was the revelation this morning that The Royal Canadian Mint - one of the largest suppliers of precious metals coins and bars to the United States - is shutting down operations for at least two weeks. The effects of this shut down to available supply in the market cannot be understated. With new supply from Europe already cut off, and the enormous volume of forward selling domestically, there is almost no physical supply left in the market, and there won’t be for weeks. I wrote this week about the demand shock in the industry. We now have a supply shock.

    Inventory and Premiums

    With supply chains cut off, and unprecedented demand, we are now paying historic premiums to acquire new material to satisfy even a fraction of the immediate demand. We have been active and aggressive buyers in the marketplace, but we simply cannot buy enough material. As I wrote in my article, Demand Shock, this is the direct cause of historic premiums. If you are looking to speculate in the precious metals market with physical bullion, the current premiums make it less efficient than buying a Silver ETF in a brokerage account. On the other hand, if you want physical metal outside the financial markets, the cost of acquisition is now high for everyone - dealers included.

    A full list of our forthcoming inventory is indicated below. We have been awaiting this inventory while in transit before making it available for sale. We will offer the full allotment of 125,000 Silver American Eagles to our clients next week, after which point we will have no more supply and will not be able to secure any more in volume for the foreseeable future. We will also offer an additional 50,000 ounces of various silver products, and a little over 1,000 ounces of gold. These products will be made live for purchase Monday morning, March 23rd.

    We will announce these products via email on Monday. To set up alerts for particular products, please refer to this link: https://www.texmetals.com/how-to-be-notified

    Shipping **IMPORTANT UPDATE**

    Our vault team has been feverishly shipping packages all week, including those originally designated for temporary storage. In discussions with our leadership group, the consensus from the team was that we ought to ship, ship, ship until we are told to stop by the government. Therefore, we are pushing out every order we can, reversing the announcement I made last week to temporarily hold orders in storage. Effective Monday, in the online checkout, you will again be able to select your shipping destination. If we are forced to shut in, we will hold all new orders in the depository free of charge until we can again ship.

    To help accommodate the need for speed, we will make one adjustment to payment methods until further notice: we will accept payment by bank wire, credit card, and ACH (Electronic Check) only. We will not accept online bill pay or personal checks because of the time lag in receiving and processing those payments. For more information about setting up ACH payments, please click here: https://www.texmetals.com/ach

    A Request

    We anticipate call volume to be extremely high next week. If you are able to place your orders online and correspond via our contact form (which we monitor closely), we would greatly appreciate it. It would help to free up the phones lines for customers needing special assistance.

    Have a restful, safe, and germ-free weekend!

    Tarek Saab, President
    Texas Precious Metals

    INBOUND INVENTORY

    Monday, March 23rd:
    200 - Gold Krugerrands
    250 - Gold Britannias
    200 - Perth Mint Gold Lunar Series - Year of the Mouse
    100 - Gold American Eagles
    100 - Gold Kangaroos
    50 - Gold Texas Rounds
    500 - 1/10 oz Gold Kookaburras
    14 - Pamp Suisse Gold Bars (5 oz)

    Tuesday, March 24th:
    125,000 - American Silver Eagles (2019s)
    25,000 - Silver Buffalo Rounds (Private Mints)
    5,600 - Perth Mint Silver Coins
    $10,000 Face Junk Silver (7,150 ozs)
    440 - 10 oz Texas Mint Silver Bars (4,440 ozs)
    1600 - 2 oz Perth Mint Silver Crocodile Coins (3,200 ozs)
    1200 - 2 oz Perth Mint Silver Koala Coins (2,400 ozs)

    Tuesday, March 31st (estimated)
    1,000 - 10 oz Texas Mint Silver Bars
    10,000 - 1 oz Texas Mint Silver Bars
    2,000 - 1 oz RCM Voyager Silver Coins
    5,000 - 1 oz Royal Mint Silver Britannias
    1,250 - 2 oz RCM Mountain Patrol Silver Coins (2,500 ozs)

    300 - 1/2 oz Gold American Eagles
    300 - 1/4 Gold American Eagles

    April 4th:
    100,000 - 1 oz Texas Silver Rounds (2020)

  • Why is the price falling?
    • Posted on March 18, 2020
    • By TPM
    • General

    In response to my update yesterday - Demand Shock: The Forces Behind Rising Premiums - many of you sought to know an answer to the question: why are prices falling if demand is so unprecedented? I will seek to explain below. To clarify, yesterday I wrote about premiums; today I am writing about “spot price.”

    What is the Spot Price?

    The spot price of gold is the price of one ounce of gold as contained within 100 and 400-ounce gold bars traded on the commodities exchange at current market prices. For silver, it is the price of one ounce of silver as contained within a 1,000-ounce silver bar traded on the commodities exchange at current market prices. These prices for “immediate delivery” are distinct from futures prices, which indicate trade value for delivery at a future date. Large institutions, hedge funds, sovereign wealth funds, central banks, governments, mining companies, and many other large traders buy and sell futures contracts (and associated derivatives) for physical delivery, hedging, or simply long/short exposure. According to the World Gold Council:

    "The three most important gold trading centres are the London OTC market, the US futures market (COMEX, ICE, etc) and the Shanghai Gold Exchange (SGE). These markets comprise more than 90% of global trading volumes and are complemented by smaller secondary market centres around the world (both OTC and exchange-traded)."

    Liquidity Crisis

    As in the financial crisis of 2008, when markets collapsed across the globe, highly-levered institutions hit margin calls on underwater positions. In simple terms, this forces the liquidation of liquid assets. Real estate and large private equity holdings are not liquid. Other assets - especially metals - are highly liquid. The positions are quickly sold off to raise cash to meet margins. As the saying goes, cash becomes king. This is why the value of the dollar is rising despite the unprecedented volume of new dollars that are being injected into the system now and over the coming months. As defaults and bankruptcies accelerate across the globe, dollars will evaporate from the financial system, causing deflationary pressure. It will require ever increasing stimulus to offset the dollars leaving the system.

    No matter how much gold you own, when you need to pay your taxes, your rent, or your groceries, you still need to sell gold to buy dollars. The dollar remains the only viable means of exchange. It’s as simple as that. And this is happening in real-time, on a global scale, in multi-billion dollar transactional volume.

    Gold as Safe Haven?

    This begs the question: why, then, is gold perceived as a safe haven asset? Gold’s strength is popularly based on the notional price of gold in dollar terms. But price is not the same as value. Just as in 2008 following the Lehman Brothers collapse, when gold fell from a peak of $1,000/oz to $740/ounce in a liquidity squeeze, gold’s value relative to the S&P500 now (as it did then) is increasing. In other words, in this sell off, it takes less gold to purchase the same dollar amount in equities. Gold is strengthening on a relative basis. Price is not the same as value.

    It is also important to understand what happens after the liquidity crisis. When the dust settles on the global market sell-off, and the demand for the dollar wanes, gold and other precious metals tend to outperform on the way back, as happened in 2009-2011, when gold skyrocketed from $740/oz to $1900/oz, and silver moved from a low of $8.50/oz to $50/oz.

    Silver tends to be more volatile than gold, and the sell-off on the front end tends to mirror that of equities because of silver’s industrial demand, but the reversal on the way back tends to be dynamic. This is why you now see the gold:silver ratio at all time highs today.

    But What About All of the Retail Demand?

    The United States Mint - the largest domestic supplier of retail bullion - produced 120,000 Gold American Eagles in 2019 and 61,500 Gold American Buffaloes. There is an active and robust secondary market, but as far as new production, the total value of newly minted gold output was ~$281M (using an average $1550 gold spot price) in 2019. This equates to a little over $1M in gold production per business day. Meanwhile, the notional value of estimated gold trading per day on the various gold exchanges globally is $100B. Certainly, there are other mints producing gold for the retail market. And certainly the retail gold market worldwide is much larger than $1m/day. But trading previously-minted gold product does not create new demand on the open market - the only retail demand that would affect the spot market is that which is newly minted. So even if the US Mint increases output by 10x overnight, they would be producing only $10M in gold coins per day in a market that trades $100B per day.

    Even if all of the mints of the world could collectively output $1B of newly minted retail gold product per day, it would still represent only 1% of daily global trading volume.

    The arguments about whether or not the gold price is manipulated, or whether there is enough gold backing all of the derivative contracts, or whether the gold price should really be this or that price, are all red herring arguments. They are no doubt important debates for long term consideration, but they are not directly relevant to why the gold price is not moving today because of retail gold coin demand.

  • Demand Shock: The Forces Behind Rising Premiums
    • Posted on March 17, 2020
    • By TPM
    • General

    An Explanation of Rising Premiums

    Most of you are now aware that the inventory of most precious metals dealers has evaporated. Premiums on common products have skyrocketed. I am writing this to offer some insights into these price changes so that you can make informed decisions. I will use the US Mint as the proxy for all mints. Read More

  • Inbound Inventory Schedule + Update
    • Posted on March 17, 2020
    • By TPM
    • General

     

    INBOUND INVENTORY SCHEDULE (*****UPDATED MARCH 19th, 2020*****)
    Read More

  • (VIDEO) MARCH 15th, 2020: IMPORTANT UPDATE REGARDING FUTURE ORDERS

    Video topics:

    • - Thursday, March 19th will be our last day of shipping. All existing orders, as well as any orders placed on Monday, 3/15, will ship this week provided we receive payment before 12pm CST on Tuesday.
    • - If you have selected “Payment by Check” and you do not believe your check will arrive by Tuesday at 12pm CST, please email operations@texmetals.com and we can send you documentation that will allow us to pull funds from your account directly.
    • - If you order on Tuesday, March 17th, or after, your only shipping option will be to store at Texas Precious Metals Depository. We are offering two months of free storage to all customers who open an account in the month of March. When normal operations resume, you can choose to continue storing at normal rates, or we can ship your metal to you. If you intend to use this facility, please open an account at texasdepository.com.
    • - Effective immediately, we are temporarily raising our minimum order quantity to $1,000. This will not affect any pre-existing orders.
  • AN  UPDATE  REGARDING  ORDER  PLACEMENT

    Dear TPM clients,

    The market dynamics are changing rapidly, and the physical inventory situation industry-wide has worsened considerably since my message yesterday. I want to remind each of you that we will only sell products that we have in stock. We will not forward sell demand and ship after long delays. The future supply chain is uncertain at this point and we can only guarantee what we have in stock. Therefore, I need to apprise you of two important announcements. Read More

  • Limit Orders Temporarily Suspended

    Dear TPM Clients,

    A long running policy of Texas Precious Metals has been "If we don't have it, we don't sell it." Over the last few days the supply of most common items has greatly decreased, and we are only selling what we have in stock. We will not forward sell. Read More

  • Important Update

    Dear TPM Clients,

    As you all know, the effects of coronavirus (COVID-19) have accelerated what is now a precipitous decline in equities. Access to liquidity in the markets has become an issue, and all asset classes are being affected - including precious metals. This historic turn of events has created a demand shock in the physical precious metals industry. Following years of slow to moderate sales following the Greek crisis in 2015, the entire industry has been cautious to build large inventories. This includes the United States Mint, which experienced a terrible production decline of Silver American Eagles, down to only 14.9M ounces minted in 2019. Read More