Explanation of the recent increase in precious metal pricing

The past 6 weeks have seen unprecedented activity in the precious metals market due to repercussions from the COVID-19 virus and the governments reactions to mitigate its effects.  A quick and substantial drop in spot pricing created a strong wave of physical demand for both silver and gold products.  This caused sales to surge and inventories to be depleted nearly overnight.  This increase in demand has created challenges throughout the entire precious metals supply chain from the minting facilities to the retail shops. 

Products sold out overnight for both retail and online sellers. Almost as fast, premiums over spot for both gold and silver exploded to record highs due to the depletion in overall inventory.  As a result, we saw a decoupling of the physical and paper bullion markets creating two different spot pricing structures.  Confusion has led to a vast difference in spot prices used to calculate the buy and sell pricing of physical products.  This new pricing structure continues nearly 7 weeks after the initial drop.  A quick search of online sellers will show a wide disparity in spot prices.

Here at Xavier Coins and Currency, we have been able to locate and stock most gold and silver products with only limited, short-term outages.  Because of our business relationships with both local and national wholesalers, we are able to locate quantities of silver and gold on a nearly daily basis and take delivery of product.  While the premiums on bullion have increased, we remain competitive when compared to online retailers and other retail shops in our local market.  In nearly all cases, our sell prices can’t be beat.

For the foreseeable future, there will continue to be challenges in locating and stocking products.  International mining companies and government/private mints are operating at reduced levels or have ceased production entirely as required by local and national government.  Just recently, mining in Mexico and Peru have shuttered production resulting in the elimination of over 40% of the world silver supply. 

As is the case with every other industry in the world, returning to normalcy will be a huge challenge.  Unlike the quick shutdown that occurred in March, the ramp up to “normal” supply and demand will take much, much longer.  For now, expect high premiums and limited supply to continue, if not worsen over time.

Xavier Coins and Currency is maintaining shortened hours of operation. We are open Tuesday – Saturday 10am until 4 pm. You can call us during business hours for current inventories and pricing. Continue visiting our website xaviercoin.com for future updates. We sanitize our retail shop throughout the day and follow CDC guidelines to help keep everyone healthy.