New Silver Exchange?

Silver analyst and investor Jason Hommel, has long been an advocate of silver and gold as money and free-markets. A couple weeks back he made a strong statement about creating a new precious metals exchange, as the current one is broken, due to the fact that silver can only be bought in limited amounts, and smaller denominations cannot be bought in larger quantities close to the spot price. I thought he was nuts.

In an action which I believed was completely unrelated he made an auction for a batch of 2,500 silver ounces in 100 oz. bars. The total lot sold to one bidder at a few dollars above the spot price. A few days ago, he did it again, this time auctioning off 50,000 1-oz. silver Olympic Maples, in 1000-5000 ounce lots. The auction just closed at a bid floor price: $3.00 over spot = $15.98/oz. The highest bid was $16.23 – about the same price silver sells for on eBay.

Could Hommel be structurally setting up a buyer-seller market for his exchange? It seems that all he now lacks is a matter of promotion. If he can sell 50,000 ounces in 3 days, opening almost 200,000 ounces worth of interest, I think the stage may be set for some COMEX-style competition.

Say hello free-markets!



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