this week at financialsense.com, jim puplava interviewed franklin sanders. it is in the second part of the third hour, and the interview starts about 25 minutes in.

sanders has been a bullion dealer for a long time. he has been through the 1980 top and the y2k scare, but he said he has never seen anything like the de-coupling of physical from paper silver in the current market.

he said it is more typical that when silver was low at $4, no one wanted it, and when it was up at $20, everyone wanted it. this time, low prices are driving demand by the public. he expects to see a 30-40% premium for real silver over the futures market. a lot of paper silver has been generated irresponsibly, and has no backing. he thinks when that causes some kind of scandal, there will be a race into silver which will drive the price much higher.

silver is a small market, and overwhelming demand will make it unavailable, a process we are starting to see with delivery times of 2-8 weeks and premiums well above paper silver.

he feels that prices must rise to clear the market, and not even the us mint can ramp up production by 25-50%, let alone enough to satisfy demand. the disparity between physical and paper silver is a strong non-confirmation of of the decline in the price of silver. either the public is wrong, or the futures market is wrong, and he doesn't think it's the public.

some wholesale dealers will not sell anything. they have no ask price because they don't know when or if they can buy anything. sanders has to pay a $2/oz premium for 1 oz rounds or 10 and 100 ounce bars instead of the normal 20-40 cents. silver eagles now command a premium of $3.25-3.50.

he thinks 90% "junk" silver coins are the best value now, because they sell for only 85 cents over spot, instead of the normal 25 cent discount, and those are the only form of silver he can keep in stock. both the smart money and big money are moving into silver, and he thinks it is likely we will see a "v" bottom later this fall.

if you have any doubts about whether silver is really worth only $11 in view of the recent sell-off, this interview is well worth listening to.