this is from casey research:

no matter how many silver eagles the mint produces, they still can't keep up with investor demand. more than 7 million eagles in the first quarter, and the coins still sell at substantial premiums. as a point of reference, back in 1995-7, the mint used to produce about 4 million silver eagles in an entire year. but the situation will only get worse in the second half of the year when the mint switches over to production of the 2010 coins. unless they give up on the program first. this is the result of letting the comex paper market dictate prices; in the real world, investors have to pay real prices for real silver:

Silver noodled along little changed until the second hour in New York, when it bumped up about 15 cents, to $13.25, but then it hit an abrupt and savage waterfall decline that shoved it all the way down to $12.60, after which it was able to cut some but not all of its losses, as it clawed back to a close at $12.97/oz., still down 9 cents. Overnight, silver is little changed. (Click here for charts)

In the real world, it was a mixed day for the precious metals, as gold and platinum eked out gains but silver was whacked on the head like poor Wile E. Coyote. Gold fanciers surely hoped for a better result as the dollar weakened and oil staged a bit of a comeback, but it was not to be.

What to make of silver. It continues to struggle in the face of enormous physical demand from investors. The U.S. Mint has released its quarterly figures, and in 1Q09 it stamped out a staggering 7,157,000 1 oz. Eagles. Folks, that is a lot. It took 222.6 metric tons of silver to make that many coins. In the past, there have been whole years in which the mint didn’t produce as many.

Here’s the odd thing. Despite this massive infusion of Eagles into the market, they’re still hard to find. Demand remains so high that dealers, such as our own Kitco, are charging an average of around 35% over spot for the things. And expect shipment delays, Kitco warns on its own website.

On eBay, our purest free market trading platform, the situation is even more frantic, with buyers willing to pay, in some instances, more than 50% over spot to land a roll of 20 Eagles.

That’s no joke. So what on earth is going on here? Obviously, the paper-controlled Comex silver price is completely out of synch with the action on the ground. If you can afford it, the smart move would seem to be to buy a silver contract on the Comex (5,000 ounces) and stand for delivery.

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