Silver -- Where Is It?

By: David Morgan | Fri, Dec 19, 2008
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I received a phone call from Tarek Saab, a former finalist on Donald Trump's television show, The Apprentice. At first I was a bit suspicious because, believe it or not, there are a few flakes floating around the gold and silver arena, and having someone claim to be associated with The Donald did send up warning flags. I must state, however, that perhaps to an outsider, all gold and silver bugs probably seem nuts!

Tarek's call was followed by an e-mail and this gentleman sounded as bullish on the precious metals as anyone I have met. In fact he began something that many of my friends and associates have talked about for years. He began a peer-to-peer network where buyers and sellers can find true price discovery and deal in physical silver and gold.

His company,, is helping solve a "shortage" problem in the precious metals market by linking buyers and seller directly. In a previous article, I mentioned that one of my colleagues in Belgium has put together a method of tracking eBay prices; see Precious Metals Price Discovery.

The current situation is a huge spread between the paper derivative price on COMEX and the actual price paid for silver and gold by retail investors. This was discussed in my article "Silver Arbitrage"; People can take advantage of a price differential between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices.

There is without a doubt a price differential between retail silver product, such as 100-troy-ounce silver bars, and the spot price for silver on the Futures Exchange. In fact, this presents a very good arbitrage opportunity for those willing to take the risk. This is accomplished by selling lots of 1000 troy ounces in 100-ounce-bar increments and locking in the 1000-oz. COMEX bars for delivery. This process is achievable and, as with all arbitrage situations, will find some market participants willing to take advantage of this opportunity.

But is not an auction house. The company, described by Saab as a "virtual bullion dealer," has a simple transaction process: A seller registers and sends a picture of his inventory. The buyer, who must purchase a minimum of 500 ounces silver and 10 ounces gold, wires funds directly to the company, which acts as escrow. When the funds clear, the seller ships his bullion via registered mail, according to strict packing instructions.

Now it must be impressed that this seems to be a rather simple idea, and in fact it is, but to my knowledge it is just beginning to be implemented. Saab's is not the only one, however; we are seeing more and more Web sites pop up that are selling precious metals.

There is another Web site that has begun business recently that is known as and has some of the expertise from and The founder of came to one of my first appearances at the Wealth Protection Conference in Phoenix, Arizona, and we have been friends ever since.

According to their Web site, "™ is an online precious metals/bullion auction Web site that deals with trusted pre-screened authorized dealers (sellers).™ is a division of and, Gold Seek LLC, founded in 1995.™ aims to create a new marketplace for bullion products at competitive rates, whereas other auction Web sites will charge several percent on auctioned products which increases the cost to both parties.™ aims to greatly reduce the cost of bullion auctions with the trust and integrity of Gold Seek LLC, the premier global leader in precious metals information and financial truth."

A third Internet site that deals in silver in According to their Press Release, "Flett Exchange LLC is introducing a new silver market. 100 oz and 1,000 oz silver bars are now listed on Flett Exchange, LLC, to buy and sell. For hundreds of years silver has been recognized as a superior form of monetary currency and is internationally accepted. It has retained its intrinsic value by backing paper currencies and has many versatile industrial uses. Our 100 oz and 1,000 oz silver bar markets will allow participants to convert cash into silver and silver into cash.

100 oz and 1,000 oz silver bars are proficient way for investors to gain access to a growing silver market. These premium bars are easily shipped, conveniently stored, uniformly stacked and are dependable forms of financial liquidity. Our silver bar markets are live, anonymous, two-way market determined by Flett Exchange, LLC, users. Customer price-negotiation eliminates the premium buyers pay and the discount sellers incur, when transacting with major bullion houses and other auction platforms."

These are just three of the recent websites that have seen an opportunity and capitalized upon it. To be clear I have not personally dealt with any of them, so I am not necessarily endorsing any of them but do find it interesting that market participants and proving the free market still exists. In closing, this will be the last weekly article in the public domain as we are working overtime on the January issue which is by far the largest issue of the year. Those interested in viewing our work in full can click here.

Some readers outside of the U.S. have asked us where can I buy without huge premiums and one place that works with industrial size bars can be found by clicking here.

So, in closing out another year, I wish everyone Peace in the New Year!

It is an honor to be,



David Morgan

Author: David Morgan

David Morgan

David Morgan

David Morgan ( is a widely recognized analyst in the precious metals industry; he consults for hedge funds, high net-worth investors, mining companies, depositories and bullion dealers. He is the publisher of The Morgan Report on precious metals, the author of Get the Skinny on Silver Investing, and a featured speaker at investment conferences in North America, Europe and Asia. You can receive a free 30 day trial subscription here

Mr. Morgan has been published in The Herald Tribune, Futures magazine, The Gold Newsletter, Resource Consultants, Resource World, Investment Rarities, The Idaho Observer, Barron's, and The Wall Street Journal. Mr. Morgan does weekly Money, Metals and Mining Review for Kitco. He is hosted monthly on Financial Sense with Jim Puplava. Mr. Morgan was published in the Global Investor regarding Ten Rules of Silver Investing, which you can receive for free. His book Get the Skinny on Silver Investing is available on Amazon or the link provided.

Information contained herein has been obtained from sources believed to be reliable, but there is no guarantee as to completeness or accuracy. Because individual investment objectives vary, this Summary should not be construed as advice to meet the particular needs of the reader. Any opinions expressed herein are statements of our judgment as of this date and are subject to change without notice. Any action taken as a result of reading this independent market research is solely the responsibility of the reader. Stone Investment Group is not and does not profess to be a professional investment advisor, and strongly encourages all readers to consult with their own personal financial advisors, attorneys, and accountants before making any investment decision. Stone Investment Group and/or independent consultants or members of their families may have a position in the securities mentioned. Investing and speculation are inherently risky and should not be taken without professional advice. By your act of reading this independent market research letter, you fully and explicitly agree that Stone Investment Group will not be held liable or responsible for any decisions you make regarding any information discussed herein.

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