In less than one week, the price of Silver gave up some 9 months of gains in a move from $40 per ounce to $28.  The current price for silver, which is the lowest price in 9 months, is sure to create shortages for physical silver.

The physical silver market is very much its own market, one which is dominated by small silver investors and coin collectors.  Compared to Wall Street, where margins change in a matter of minutes, and global issues permeate throughout trading floors, the local coin dealer hasn’t changed in decades, let alone the past few weeks.

Coin dealers, who are almost always best described as a small business operation, are not often hedged to their exposure.  Many who open coin shops realize that the trend is up, and hedging would, over the long haul, be detrimental to potential earnings.  Capital appreciation, for many dealers, may have been as profitable in 2010 as selling metals to customers.