Each month The Perth Mint releases its minted coin/bar sales for gold and
silver (see here for the latest). Data hoarder Nick at Sharelynx takes those
figures and produces the chart below, which converts the ounces into dollar
amounts (using a month end rate as an approximate).
On average, our minted coin/bar customers spend between 20%-25% on silver
as they do on gold . Contrast that with the US Mint, which as you can see
from the chart below, often spend dollar for dollar on gold and silver.
The average ratio for the US Mint over the same time period as The
Perth Mint chart is 74%. The Royal Canadian Mint’s customers spent 62% on
silver compared to gold in 2014. The difference between the mints is probably
due to a different mix of customer preferences – for gold, silver, or for
both.
Trying to establish the ratio for other precious metal businesses is
difficult, because few report sales volumes in such detail. However we can
work it out backwards for those who do report their total holdings of gold
and silver.
To get a reliable figure we need a business which offers both gold and
silver to the same customer base over the same time period. To eliminate the
effect of the different price peaks in gold and silver and any reductions in
holdings thereafter, I also think we need to compare the period March 2008 to
March 2011, which is a period where inflows into gold and silver were strong
and consistent. The ETFs are a potential source of inflow information, but
the data I think is unreliable as the ETFs have different mixes of customers
(individuals vs institutional) so we aren’t comparing like customer with like
customer.
From Nick’s data there are three businesses that fit these criteria: Gold
Money, Bullion Management Group and Central Fund of Canada. The respective
ratios of dollar amount of silver bought to gold bought over those three
years are: 103%, 99.4% and 99.8% – surprisingly consistent.
I also found a note from Eric Sprott in late 2012 that observed that the “last
Gold Trust issue in September 2012 raised US$393 million and the last Silver
Trust issue raised US$310 million”, which is a ratio of 78.8%, close to
the US Mint ratio.
This prevalence of equal dollar investment in gold and silver is something
that we see in the Perth Mint’s Depository business. When we segment our Depository
customers by the metal they buy, around 35% buy equal dollar amounts of gold
and silver. However, there are also clear groups of customers who either only
buy gold, or only buy silver. There aren’t many who have mixes outside of
those three groups.
So it seems that precious metal investors are either goldbugs, silverbugs,
or balancedbugs.
