Why Are Silver Sales Soaring?

Why Are Silver Sales Soaring?

The U.S. Mint just reported another record, but this time it wasn’t for gold. The Mint sold more Silver Eagles in March and in the first quarter of the year than ever before. A total of 9,023,500 American Silver Eagles were purchased in Q110, the highest amount since the coin debuted in 1986.

While this is certainly bullish, there’s something potentially more potent developing in the background. Namely, how this matches up with U.S. silver production. Like gold, the U.S. Mint only manufactures Eagles from domestic production. And U.S. mine production for silver is about 40 million ounces. In other words, we just reached the point where virtually all U.S. silver production is going toward the manufacturing of Silver Eagles.

Yikes.

This is especially explosive when you consider that roughly 40% of all silver is used for industrial applications, 30% for jewelry, 20% for photography and other uses, and only 5% or so for coins and medals.

To be sure, mine production is not the only source of silver. In 2009, approximately 52.9 million ounces were recovered from various sources of scrap. Further, the U.S. imported a net of about 112.5 million ounces last year. (Dependence on foreign oil? How about dependence on foreign silver!) So it’s not like there’s a worry there won’t be enough silver to produce the Eagle you want next month.

Still, why so much buying? The silver price ended the quarter up 15.5% from its February 4 low – but it was basically flat for the quarter, up a measly 1.9%. We tend to see buyers clamoring for product when the price takes off, so the jump in demand wasn’t due to screaming headlines about soaring prices.

I have a theory.

For some time, silver has been known as the “poor man’s gold.” Meaning, silver demand tends to increase when gold gets too “expensive.” The gold price has stubbornly stayed above $1,000 for over six months now and spent much of that time above $1,100. You’d be lucky to pay less than $1,200 right now for a one-ounce coin (after premiums), an amount most workers can’t pluck out of their back pocket. But Joe Sixpack just might grab a “twelve-pack” of silver.

What would perhaps lend evidence to my theory is if gold sales were down in the face of these higher silver sales.
The U.S. Mint reported a decline in gold bullion sales of 20.8% this past quarter vs. the same quarter in 2009. Further, other world mints have seen sharp declines in gold bullion coin sales as well: the Austrian Mint reported an 80% drop in sales for the first two months of the year and the Royal British Mint a 50% decline in gold coin production for the first quarter.

What’s even more dramatic is the difference in the dollar value of the sales. Gold Eagle sales in the U.S. dropped $10,263,500 from a year earlier – but silver sales increased by $61,855,290. So, not only did silver sales make up the drop in gold sales, they exceeded them by $51,591,790.

Is the rush into “poor man’s gold” underway?

Read the full article here

If you read the entire article it makes some sense, at least to me. I have some silver saved up, but not as much as I'd like to have. I've been trying to get my family to buy into more silver for a while, and it's definitely not a bad idea. I think that people should definitely include silver in their portfolios - as said in the article - along with whatever other precious metals you may be hoarding.

Someone left a comment on this article and I thought I'd share it because I never looked at things this way...

But keep in mind:

Here's an illustration...

TODAY:

Loaf of bread = $2.00.

GLD 1oz = $1159.00

Therefore : 1oz GLD = 580 loaves of bread.

Have you ever put it into perspective like that before? I haven't.

Anyway, the reason I'm sharing this article is because I think anyone with some extra cash should get in on the silver market ASAP, this is my opinion though so don't go out and drop $20,000 on silver without doing your own research first.

If anyone has been following silver as well, what do you have to say about all of this? Do you believe silver will be climbing up even more?

***Edit to add graph:

This is the silver prices over the last year, if you can't see how profitable it's becoming then I don't know what to tell ya.

[atsimg]http://files.abovetopsecret.com/images/member/55edca3f837e.png[/atsimg]

[edit on 10/4/2010 by highlyoriginal]

Silver is harder to fake like the tungsten filled gold bars.

Silver is not oversold like gold is right now.
There is more paper gold on the market then there is gold to cover the paper.

You think the crash of the mortgage market and banking was bad just wait till the gold market crashes.

I spent 40 years in the gold mining business and will not touch paper gold shares. or now not even metal gold due to what i am seeing in the gold market.

The bubble will burst big time and when it does a lot of people will lose every thing.

And don't expect a bailout of the gold market because the government want it to crash big time as the US dollar will raise when it does.

The only thing you will see when the gold market crashes is a lot of arrests of the crooks pushing paper gold.

Then the government will make money sizing all there property and assets for the governments use.
They will use the RICO laws
en.wikipedia.org...

Originally posted by ANNED
Silver is harder to fake like the tungsten filled gold bars.

This is another good thing about silver. You don't have to worry about buying fake gold, although no one really knows how much is out there - I still wouldn't want to take any chances of spending all my extra cash (if I had some) on gold though.

What's better to invest in? Silver Eagles that are not totally 100% silver, but easily tradeable or small Silver 1oz. bullion bars?

Why are they rising?

Hard Economic times.


Also, someone is messing with them. George talks about it all the time...

Silver is awesome. It is diverse, it is conductive, and it is beautiful. Malleable. Warm. Natural. And please, siller, keep goin up !

Originally posted by thepixelpusher
What's better to invest in? Silver Eagles that are not totally 100% silver, but easily tradeable or small Silver 1oz. bullion bars?

If you have the money bullion is always best - although having *some* coins would be good to have just in case the SHTF and you need the silver for trade... but bullion comes in all different sizes so it's really up to you. I recommend you do some research on precious metals and see what best suits you.

Quick tip though, buying larger amounts (i.e. saving your money up and buying more instead of buying little amounts every time you have a little saved money) of any precious metal is always the best way to buy.

Originally posted by CestLaVie
Silver is awesome. It is diverse, it is conductive, and it is beautiful. Malleable. Warm. Natural. And please, siller, keep goin up !

The diversity of silver is one of the great things about it. It's many positive properties makes it a wonderful precious metal to have and it's overlooked so much by people because it's not gold... well news flash, gold isn't everything! Some people even prefer silver to gold or even platinum... okay well I admit I'd rather have tons of platinum than silver, but still you get my point.

In the case of a total economic collapse, silver would definitely be used in trade because it has such a variety of uses.

[edit on 10/4/2010 by highlyoriginal]

I speculate it is due to the high probability of the economy collapsing.

seekingalpha.com...
Chinese Investors Encouraged to Buy Silver
August 09, 2009

With 1 ounce of gold selling for $955 and an ounce of silver selling for only $14.63, gold is currently about 65 times the price of silver. Last year the ratio was only 50 times. This is significantly above the long-term historical ratio of gold being worth 16 times more than silver. Even in nature, silver is about 17 times more abundant than gold, and unlike gold, the quantities above ground are constantly diminishing because of its industries use.

By these standards, silver is undervalued when compared to gold. Check out this Chinese news video advising investors to buy silver.

www.stockhouse.com...

Why China is about to buy a lot more silver

8/21/2009 7:43:50 AM | Matt Badiali, DailyWealth

Citizens urged to put 3% to 5% of their net worth in precious metals

Two years ago, on August 21, China's government allowed its citizens to invest in an entirely new asset. It allowed them to invest in Hong Kong-listed stocks.

Hong Kong is a special region of China. It's one of the most dynamic, capitalistic places on Earth. The move from the government was a move toward "investment freedom" for the Chinese people.

On that day, Hong Kong's benchmark stock index rose 8.74%. Over the next two and a half months, it skyrocketed from 11,000 to over 20,000. It was a chapter in a story that you should get used to over the coming years: When the Chinese decide to invest in something, it causes giant ripples across the world.

This sort of situation is starting to happen again: This time it's happening in precious metals, especially silver.

www.bestsilverinvestment.com...

The Chinese government recently decided to allow the 1,300,000,000 Chinese citizens to invest in silver. China is no longer a poor, third-world country with no investable money. To put the importance of this into perspective just take this into consideration: Coca-Cola sells more products in China than they do in the United States….now think about how many Coca-Cola products you consume annually and guess how many Coca-Cola products the average Chinese citizen consumes annually…(drum roll)….1! What if every Chinese citizen bought just one ounce of silver! Get your Silver Snowball rolling before the Chinese buy it all!

Video at this link also.


China has been very busy in the silver market tha past year+, because the gold market was too high for common peoples to invest in.

This has pushed silver into very high popularity, especially in the jewelry industry.

Silver jewelry is being adorned with precious and semi precious gemstones, and being marketed to people that would have formerly bought gold.

The growing polular use of precious and semi precious gemstones has made silver more attractive to people who used to shy away from it in preference to gold, as well.

Silver jewelry is fetching high prices, not because of it's increasing value, but because of the jewelry marketing.

I have seen items in sterling with quartz selling in the thousands of dollars range as designers are also moving into the silver arena. Celebreties are choosing more and more to adorn themselves in silver, it is definitely a growing, and for now, very quiet, market.

Originally posted by LibertygalCelebreties are choosing more and more to adorn themselves in silver, it is definitely a growing, and for now, very quiet, market.

Thanks for adding all that to the thread. And yes, it is a *somewhat* quiet market, but people are catching on, there's more articles coming to life and people are doing research... just like we all have been doing (well most of us).

Thanks OP for this thread, I am a silver/Gold buyer, processor. Lately business has been VERY good. But mostly silver, very little gold, and here is the reason my clients are giving me.

" by now anyone who had the extra money to invest in the metals market has spent those funds on other things, such as keeping thier mortgage afloat, due to job loss etc. The only money left is the daily household income"

Mind you we arent talking about folks with millions to spend, we are talking about Joe Blow off the street here. So when they look at something to invest in, they want something they can afford- silver is it.
While it may not be as valuable as gold, in some cases its more so due to its applications. But to the average guy its a safe place to put some extra change, at this time its affordable also.

I have to be honest I wouldnt touch the paper forms of gold or silver with a ten foot pole. Its nothing , no matter what your told its not backed, you cant turn in your gold/silver bond at a ticket window and get cold hard metal back. So dont go for it.

If you want a way to invest in say silver, you can buy coin, or rounds, or bars, but the easiest most transportable way is what we see in stores every day-Jewelry. solid 925 silver is the same across the board, 999 silver is also. Same purity same worth, and you put out alot less cash for a 1 oz silver necklace than you would a 1oz gold necklace. The thing is, just buy it and hang onto it, it'll rise in value more than you think.

Originally posted by ANNED
Silver is not oversold like gold is right now.
There is more paper gold on the market then there is gold to cover the paper.

The [naked] short position in silver dwarfs the [naked] short position in Gold.

This gargantuan , expanding , illegally concentrated silver short position , and the threat it poses to the structural integrity of the Comex futures exchange has been a topic of discussion/concern for the past 10 years.

Ted Butler is widely recognized as point-man on the topic of Silver manipulation and the out-sized commercial short positions....

Further, it is not just JPMorgan’s 200 million ounce COMEX silver short position that threatens the continued orderly functioning of COMEX silver trading. As extreme as JPMorgan’s position is, there is a total true net short position of 500 million ounces (100,000 contracts) in COMEX silver futures. Try to put that 500 million ounce short position in perspective. It equals 75% of world annual mine production, much higher than seen in any other commodity. This makes claims that the COMEX short position represents a legitimate hedge of mine production a lie. The total short position represents almost 100% of the total visible and recorded silver bullion in the world, and 50% of the total one billion ounces thought to exist. These are truly preposterous amounts. By comparison, the net total short position in COMEX gold futures, admittedly no slouch in the short category, represents a little over 2% of the gold bullion that exists (45 million oz total net COMEX short position versus 2 billion oz). When it comes to the amount of real material, or mine production, in the world backing up the COMEX silver short position, the word “inadequate” takes on new meaning.

Full Text

Readers can review the latest COT report here. Each Silver contract = 1000 ounces...Gold contract = 100 ounces.

Originally posted by ANNED
You think the crash of the mortgage market and banking was bad just wait till the gold market crashes.

Silver investment will not protect against a "crash" in Gold. Where Gold goes...Silver follows , and in exaggerated fashion.

Historical Comp Chart

Originally posted by Rossa
If you want a way to invest in say silver, you can buy coin, or rounds, or bars, but the easiest most transportable way is what we see in stores every day-Jewelry. solid 925 silver is the same across the board, 999 silver is also. Same purity same worth, and you put out alot less cash for a 1 oz silver necklace than you would a 1oz gold necklace. The thing is, just buy it and hang onto it, it'll rise in value more than you think.

I thought the best way to buy any precious metal, like I stated above, was to get as much as possible and in the purest form (obviously)? Why would you spend money on a "1oz silver necklace' that is going to be more money than it's actually worth in silver because of the price that they tack on from the quality of the necklace itself (as in the style or fashion it's been made into), when you can buy pure silver bullion in many different formats, including 1oz. coins which are easy to buy in large quantities, or bars? I would go for coins if you only have a limited supply of money - if you have more, go for the bars!

But remember, whatever money you spend on buying these precious metals, you better have money set aside to protect it - and I mean some sort of safe, or protection... People who own a ton of gold often spend hundreds of thousands of dollars to keep it safe, in fact I know someone who in fact does spend a lot of money keeping their gold bars in a safe place... it isn't cheap but it's obviously worth it! And yes I'm talking about people who have spent lots and lots of money investing into the gold/silver and other precious metals, market.

Originally posted by highlyoriginal

Originally posted by thepixelpusher
What's better to invest in? Silver Eagles that are not totally 100% silver, but easily tradeable or small Silver 1oz. bullion bars?

If you have the money bullion is always best - although having *some* coins would be good to have just in case the SHTF and you need the silver for trade... but bullion comes in all different sizes so it's really up to you.

The Silver American Eagle is bullion. SAE's contains 1 troy ounce of .999 pure silver. Since the SAE is considered "legal tender" it also contains a small % of copper as a hardening agent against scratching , making the SAE a bit heavier than unhardened bullion coins like Canadian Maple leafs (blemishes seem to be a growing concern amongst small retail purists). Because of their advantages , SAE's carry a higher premium than silver bars & ingots but the difference is recoverable on resale.

My preference is a combination 100oz investment bars for compact storage, sealed 20oz SAE mint tubes for their widespread recognition/desirability, assorted generic rounds for their economy...and I have personal penchant for Mexican Libertads.

My strategy involves taking incremental profits on successful mining trades , and allocating a % of that $ to physical bullion holdings...a hedge of sorts.

A primary motive for physical precious metals ownership is protection...the elimination counter-party risk...ergo; always physical over paper imo. In crisis , will a certificate pool account dealer be capable of handling a literal flood of redemption requests ? Does he actually hold unencumbered Gold/Silver in the amounts sold ? Fundamental analysis of the Gold/Silver markets says: Doubtful.

In a currency crisis , owning certificate Gold would be the equivalent of confronting an armed intruder waving a gun permit.

When to buy ?

When everybody else is selling

Cognoscenti buy the dips/corrections when bearishness prevails...with weak hands abandoning their positions out of fear...and everyone screaming "It's a bubble , get out now!"

But unfortunately most retail folks buy at , or near the tops , and often constitute the next round of fear driven sellers

reply to post by thepixelpusher


Saw your question about silver eagles vs silver bars. You can buy .999% pure silver 1oz eagle coins as well. They are as much pure silver as any bar and guaranteed to be the correct amount/weight by the US gov. so buy the 1oz silver eagles!

The gold bubble is about to burst, and the people who know this are hedging with silver.

Here comes the uppercut. Lights out.

With the markets manipulated so heavily and the majority of people unaware of fiat money and fractional banking, gold/silver will be whatever the powerful investment banks wantit to be. I imagine the insiders are exceeding rich off the knowledge of where this all goes each day.

Today I just heard the funniest thing from someone who doesn't know economics in New Zealand,they said Powerball or Lottery will save them in Economic Collapse,I said Not True as money would already be worthless and shops will refuse to accept paper money

Where would be the best place to buy silver today? Online or a broker? non paper of course. If you have bought some in the last couple months who did you go through?

Thanks,
Paradise_watching

Originally posted by OBE1

Originally posted by highlyoriginal

Originally posted by thepixelpusher
What's better to invest in? Silver Eagles that are not totally 100% silver, but easily tradeable or small Silver 1oz. bullion bars?

If you have the money bullion is always best - although having *some* coins would be good to have just in case the SHTF and you need the silver for trade... but bullion comes in all different sizes so it's really up to you.

The Silver American Eagle is bullion. SAE's contains 1 troy ounce of .999 pure silver. Since the SAE is considered "legal tender" it also contains a small % of copper as a hardening agent against scratching , making the SAE a bit heavier than unhardened bullion coins like Canadian Maple leafs (blemishes seem to be a growing concern amongst small retail purists). Because of their advantages , SAE's carry a higher premium than silver bars & ingots but the difference is recoverable on resale.

I said that wrong, thanks for correcting me. I meant to say that larger bullion is better if you can afford it, ingots/bars will do the trick. Coins, like I said, are great for the average person. They come in different varieties but 1oz. coins are easy to get and easy to buy in large quantities - best chance to collect/save towards your portfolio is to buy big, not small amounts at a time or you will find yourself losing lots of money (buying small amounts of any precious metal will kill you in prices, larger amounts=cheaper overall).