COMEX is the futures and options exchange where the price of many commodities is set, including silver. Since peaking at 138.5 million ounces in August 2008, the silver inventory dropped sharply for nearly three straight years and bottomed this past June at 98 million ounces. This rapid drop led many silver observers to believe we were on the precipice of a severe supply crunch in silver that would lead to a skyrocketing silver price.
Unfortunately for the silver bulls, the silver inventory level started a rapid rise in early July and by September had increased by nearly 10 million ounces. In October, the COMEX shed 1.2 million ounces of silver and ended the month with 106.7 million ounces. While this is a substantial drop it certainly doesn't make me think we are anywhere near a silver shortage. The recent reports of long delays for silver coin purchases are a result of industry-wide bottlenecks, not a supply shortage. The mints haven't upgrade their capacity to reflect the increased demand for silver bullion coins. For the most part, these mints are government sponsored entities with no motivation to maximize profits...which means they don't really care if they can't meet demand. That's what's causing the coin delays, not a supply problem.
