Many silver bugs have been following the latest developments closely as the spot price plummets below $13. What we are starting to see is a decoupling of the paper and physical silver markets. Right now if you look online you won’t find anyone actually selling any physical silver for $13. In fact, it is becoming difficult to find and silver at all.

Under normal circumstances the physical market of silver is determined by silver contracts that aren’t 100% backed by silver (sometimes they are backed by less than 1%). These contracts are being sold now but demand for physical is high. This has resulted in a 40% premium on silver coins vs. the regular 20%.

Of course, UPMA members that wish to sell their physical silver will receive that same 40% over spot when redeeming silver. This phenomenon has actually occurred at least one other time during UPMA’s eight year history.