Sunday, December 2, 2012

Small Physical Silver Bars Disappearing From Dealers in Tokyo!

Several pieces of news have really gotten me worried about the Japanese (world) economy (again). The biggest one was reported in Proof Again Japan IS (Has?) Collapsing - Bank of Japan Posts ¥233 Billion Loss - Red Ink on Balance Sheet Hits ¥156 Trillion! From articles like this, I have been getting a ton of direct mail from folks asking me where they should buy physical silver and gold in Tokyo.

I saw this gold teapot in the window at a metals dealer near Ueno... ¥2,300,000!!! (that's about $27887.00!!! Sales tax would come to another ¥139,385 ($1690)! Grand total of: ¥2,928,085 (about $35507.73 USD)!!!..... No, thanks, honey. The instant coffee is good enough for me! 

Good question.

I have also been reading in many places that while the price of silver continually fluctuates up and down and that the performance of silver prices in 2012 have been disappointing, the real story is that those price fluctuations are paper silver, not physical silver. The real story, or so I have read, is the difficulty of obtaining physical silver from dealers.

With that, I have been noticing the tightening of the rules for buying silver. One of the big red flags for me was Australia's Perth Mint listing standard one-ounce silver rounds as often being sold out and no longer offering delivery to foreign countries. I also noticed that the US Mint lists this year's silver as sold out.

I have been recommending to my friend that he buy only silver or gold bars from reputable company with a good name. If something bad happens, then you'll want an easily recognized and trusted name so that you won't have a hard time selling your metals if you must. Tanaka is about as good as you can get in Japan. Last week I went with a friend to Tanaka Precious Metals to investigate the status of the market availablity of silver. What I found was a shock.

The last time I was at Tanaka over a year ago, they sold silver bars in sizes from 25, 50, 100, 500 and 1000 gram bars. A 1000 grams is a kilogram. After that, they sold only 30 kilogram bars (that's a hefty piece of metal!) 

When I arrived at Tanaka Precious Metals, they were packed with customers - selling metals! But they had a notice up saying that they no longer sold bars of silver in any size under 30 kilograms! 

There were no longer small bars that the regular folks (like you or me) can buy. The 30 kilogram bars are for industrial use and corporate investors. Sure. A 30-kilogram bar of silver costs about ¥2,790,000 (about $34,000 USD!)

My friend only wanted a 1000 gram bar that's about $1000 ("only," right?)... So we called around.

The results blew my mind. After calling five dealers, we only found ONE Tanaka marked 1 kilogram bar in all of 6 Tokyo dealers I called. I took him over to the one that had the bar and he bought it. 

It was the last one. What's going on?

I asked the clerk about the situation and she told me that it is still relatively easy to obtain shiny silver rounds as those carry a high premium price over spot, but standard bars are getting harder and harder to obtain.

That's points, my friends, to something going on here.

Some folks say that gold and silver prices are in a bubble. That's doubtful. Why? From what I witnessed, regular folks were selling off yet the dealers had no stock.

What's going to happen when Japan's currency crisis really hits and those people who are selling all of a sudden turn around and realize that they need to have those 50, 100 gram bars and they can't?

We are living in interesting times. Scary.


PS: Reader Ron in Ibaraki asked me the best place to store precious metals. Well, Ron, if you have a good built-into-the floor safe and total alarm system built into your home or office, then I would say that is the best place... (Yeah, I know. I know. "Who has one of those!?") So may I recommend what I do? Try the small (never-heard-of) local Savings and Loans. I use Kosan Shintaku Ginko(興産信託銀行). My bank is NEVER crowded. They have been in business for over 90 years. They are not a part of the Japanese banking giants so they are not in serious debt and close to fialing. Also, since they are small and unknown (virtually) if there is a bank rush, I know that I can just leisurely walk over there and get my money. Even on payday I have never had to wait in line (not like the 30 minute waits you have at a Japanese Mega-Bank!) If you go to Kosan, tell them, "Mike sent me!" 

PPS: I like Ishifuku for buying small bars of gold... But forget them for silver. Their silver markup is waaaay too high. Their silver bar was priced almost 10% higher than the Tanaka that my friend bought at a different dealer than Tanaka.


Anonymous said...

MMJ: "Also, since they are small and unknown (virtually) if there is a bank rush, I know that I can just leisurely walk over there and get my money."

Whoa, you got stones.
I think maybe those words have been said before in one form or another...
I couldn't do that.

You must actually trust them.
That is a foreign concept for me with regards to banks.

Also, what if they turn out to be leprechauns?

MMJ: "They are not a part of the Japanese banking giants so they are not in serious debt and close to fialing."

Probably so, however; reminds me of the bit about honesty being the requirement for a criminal to perpetrate a fraud. Your bank might seem like a tasty meal for some fascist org. But who knows.

You hang at a high end gold shop there.
Tea pots and giant bars, wow. Fancy stuff.
For years there was always a small pile of little silver bars for sale on the counter at my local coin shop.
They were popular.
Now that I think about it I did notice awhile back that - that pile hasn't been anywhere to be seen - Poof!

I don't do the bar thing much, I'm surprised you do. Coins seem to be the best route, but I suppose if you're spending $20,0000 a pop you need a big chunk.
Five ounces of gold was the heaviest bar I ever hefted, it was a rush holding it, I couldn't imagine holding that tea pot.
It's hard enough imagining that tea pot as solid and not gold plated.

- IndividualAudienceMember

mike in tokyo rogers said...

You kiddin'? If I can part with $50 for some precious metals, I think I'm doin' fine! ¥2 mil.???? If only in my dreams!

Anonymous said...

There's a place in Kobe called KGB that sells bars of gold and silver in smaller amounts. They will also deliver anywhere in Japan. I don't know how competitive the prices are, but it might be worth looking into.

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