Stalwart Silver Bullion Demand Amid Low Prices

Mark O’Byrne makes some very good points in the following article on how, despite staggering demand for silver, the price is falling. Read on to learn more about Mark’s findings. Read the blog here.

Bullion prices might be moving sideways, but with reporting coming in tomorrow and the following day for US Mint sales, it is likely we could see a continuing march towards a year record.

The U.S. Mint has sold nearly 60,000 ounces of American Eagle

With only three business days left until the end of October, the U.S. Mint has sold 59,500 American Eagle bullion one ounce gold coins. On a year-on-year basis, U.S. gold coin sales in October are up 21% from 48,500 ounces in October 2013.

Store of wealth silver bullion buyers continue to stack silver at a steady clip. They bought 4.12 million ounces of American Silver Eagle coins so far this month, versus 4.14 million ounces in September.

This means that nearly 68 times more silver in ounce terms was bought than gold. Silver buyers continue to see silver as severely depressed with silver below $20/oz and the gold silver ratio at 71 or $1,228/oz divided by $17.24/oz.

The gold bullion coin sales from the U.S. Mint are the highest monthly sales since January and are higher than the 58,000 that were sold in September. The 58,000 ounces sold in September was more than double the demand in August, mint data shows.

“(Islamic State), Ebola, Putin and Ukraine… There is a litany of these things which have risen in the last year or so which have provided a negative backdrop,” Scott Spitzer of MTB told Reuters.

Sales to European buyers rose on the belief that a proposal to prohibit the Swiss National Bank from selling any of its gold reserves and a provision that the SNB may have to have a 20% gold backing to the Swiss franc may lead to increased demand both from the Swiss central bank and from other central banks.

It is important to note the following:

• Bullion coins are purchased by long-hold collectors and financial insurance buyers
• Bullion coins attract demand from savers and store of wealth buyers, rather than speculative investors and speculators
• Bullion coins are used frequently to store intergenerational wealth and pass wealth from one generation to the next Gold and silver bullion coins remain the preserve of a tiny minority of buyers who are more risk conscious and generally more aware of geopolitical, monetary and indeed systemic risk than the broader public.

Smart money is willing to pay a small premium to own actual coins and bars rather than have the exposure of an ETF or digital gold platform.

Prudent diversification into physical coins and bars will again reward those who take a long term view.