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Silver’s slump these past few weeks has cast a shadow over the market, but some investors have used the downturn to snap up the metal in its physical form.
The silver price has been hammered this week, slipping Wednesday to $15.13 per ounce, its lowest point since February 2010.
Though it’s recovered a little since then, reaching a high of $15.45 Thursday morning before settling back down closer to the $15.35 level, the metal’s prospects still look shaky, with many questioning whether further losses are yet to come.
However, amidst all that gloom, there’s a bright side: silver coin sales. The US Mint on Wednesday said that it has temporarily sold out of American Eagle silver coins due to “tremendous” demand over the past few weeks. According to Reuters, it will keep producing 2014-dated coins, but has not said when they will be available.
October sales shine
The sell out is not exactly a surprise. Bloomberg reported on October 31 that the US Mint’s American Eagle silver coin sales jumped 40 percent in October, hitting a 21-month high. Specifically, it sold 5.79 million ounces worth of the coins, the most since January 2013, when it set an all-time sales record of 7.5 million ounces.
Beyond that, Michael Kramer, president of MTB, a dealer authorized to buy coins directly from the US Mint, told the news outlet, “[w]e saw demand surge over the past two days. Business was almost triple than what it has been over the past few months.”
Outside the US
Silver’s low price has also contributed to high coin sales outside the US. SilverSeek.com said earlier this week that German precious metals investors have jumped on the opportunity, with Andreas Heubach, CEO of Heubach Edelmetalle, commenting that on October 30 and 31, “people had to draw numbers in order for us to control the run. On both days we sold each around 40,000 silver ounces – incredible.” He added, “[d]emand is back — and hysteria as well.”
Meanwhile, Reuters notes in another article that the Royal Canadian Mint has been rationing its Maple Leaf silver coins since September due to high demand. “The premiums of silver Maple Leaf bullion are going to rise soon because dealers cannot get their hands on the coins,” Scott Spitzer, COO at Manfra Tordella & Brookes, commented.
Interestingly, the Perth Mint in Australia has not seen similar activity. Bloomberg states that silver demand there fell to 655,881 ounces in October from 756,839 ounces the previous month.
What about gold?
The gold price has also not fared well these past few weeks, but to the surprise of some investors, physical demand for the yellow metal has not surged as much as it has for silver.
Explaining why that’s the case, another Bloomberg article notes that it’s likely because the gold-silver ratio is currently at its highest point in five years. Essentially, relative to silver, gold is the most expensive it’s been in half a decade. That’s significant because it means gold is likely to fall more. If — or perhaps when — that happens, there may be a similar jump in demand for gold coins.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.