A few years ago, a commentator on silver investing websites encouraged all of his readers to buy out Silver Eagle one ounce coins from their local coin dealers (they cannot be bought directly from the Mint). It is arguable if his advice had an imapct on the market or not, but it is true that the Mint cannot keep up with demand for Silver Eagles, and has had to limit sales (which violates the law that orders the Mint to produce them) or end a year's production run. The Mint claims it is a bottleneck in the production and manufacture of the round blanks used to create the coins.

What this has affected most is the premium paid for silver coins. What's a premium? When you go into a coin shop to buy a silver bullion coin, the dealer will charge you an additional cost above the daily spot price called the premium. This is subjective, and based upon the coin's relative availability. It can range from just a few percent when there are lots of coins available, to as much as 25% when the availability is low.

Oh, and you'll also pay sales tax to buy legal US tender. And capital gains tax when you sell it. Whaaa?

There are other silver coins, of course, Mapleleafs from Canada, Pandas from China, etc., but they are all sold the same way. Now, if the demand for silver coins goes up, then it will have some impact on the spot price, but the greatest impact will be on the premiums you'll pay for the coins. And this will hurt the JPM not at all. Coin dealers will profit, as will those who begin to sell their collections on E-Bay at huge premiums. This is a market within a market.

Now you could also buy old pre-1964 US coins, which are 90% silver, and typically have a smaller premium. Which would change as the other coins get held tighter in rising demand. Not really going to shake the market, as all that silver is in private hands. Ingots have the lowest premium, and would have the greatest effect on changing the spot price, as they are produced by smelters, and if that demand goes up, it removes silver from the real market, the COMEX, where contracts are settled in 3000 ounce units.

There was a movement withing the silver investing community to protest the silver short concentration by demanding delivery of COMEX contracts when they came due. Commodity trading is complicated, over my head, but basically when a contract is closed, it can be rolled over to the next period, settled with cash, or with silver. Not surprisingly, settling with silver is mostly used by the people who need it for manufacturing. They are actually buying the stuff. With the investment community, much of it is just a paper market. The biggest buyers these days are the exchange traded funds (ETF's) which have accumulated tens of millions of ounces in the last few years. They are supposed to keep it stored, but have also been suspected of leasing it out to other investment houses. Like I said, it's complicated.

So, I really doubt that any ground swell run on the silver market will have any effect on JPM, unless it is done by the big players, and not with coins.

Silver is entering a very volitile phase. There is evidence of manipulation in the paper trades, investment demand is increasing, ETF's are removing much from the market, stockpiles are dwindling, production and recycling are stagnant, it has increasing industrial demand. All are bullish indicators, and subject to change.

What this guy wishes for might come true of its own accord, the carefully crafted schemes torn assunder at the seams. Considering the resulting chaos, I cannot believe any of us are really ready for that scenario.

(By the way, I didn't like the guy in the video at all; made my skin crawl.)

For more info on the silver market and the manipulation, read Ted Butler, he's been documenting its oddities for years now.