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Tuesday, October 6, 2015

Silver is Shining Bright, Sales are Through the Roof

People see the perfect buying opportunities for silver and have been stockpiling the metal. Demand is currently through the roof, so, what will this mean for the future of the metal? Find out here.

Reuters reports that the global silver-coin market found itself under an unprecedented supply squeeze. Both the U.S. and Canadian Mints had to set weekly sales quotas in July because demand was too high. Australia's Perth Mint responded to a record of 2.5 million ounces sold in September by rationing supply of a new line of coins.

When North American and Australian coin producers could no longer keep up, demand spilled over to Asia and Europe, creating a worldwide “domino effect”. Roy Friedman, vice president of sales and trading at a large U.S. coin dealer, says he never witnessed demand spilling over to other markets in his 35 years as a precious metals dealer.

“Silver [coin] demand is absolutely through the roof,” said Perth Mint wholesale manager Neil Vance. “There seems to be a bit of frenzy as people think there is a shortage of silver. But in fact it is a (crunch in) manufacturing capacity.”

While the U.S. Mint in West Point is operating three shifts and paying overtime, the Austrian Mint had to increase production of silver blanks and has begun allocating sales of its Philharmonic coins. But what is really driving the frenzy?

As the article notes, some investors like using these precious metals to protect themselves from volatility, especially in currencies and stocks. Since the Chicago Board Options Exchange (CBOE) Volatility Index briefly jumped to its highest since January 2009 earlier this year, it's easy to see why one would want to seek shelter for their assets.

Regardless of investors' reasoning, the industry will continue feeling the effects of increased demand for the time being. “We can only get a fraction of what we could sell,” said Terry Hanlon, president of Dillon Gage, with dealers adding that this buying binge has lasted longer and been more pronounced than previous ones.

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