Silver Investor Index falls to 50.1,
but investing positive by weight at New Year 2015...
SILVER INVESTING sentiment amongst private individuals in the West fell near
record lows at New Year 2015 as the metal's strong price rally invited
existing owners to sell.
That's the conclusion of our new Silver
Investor Index, launched today.
The metal's 10% rise during January saw
more private investors sell silver using BullionVault than any
month since summer 2011, very nearly equalling the number who chose to buy
silver VAT-free at live spot prices on the world-leading precious metals
exchange online.
That put BullionVault's new Silver
Investor Index – a companion to our widely-cited Gold Investor Index launched in 2012 – near the series low hit when silver sellers
outnumbered buyers in June 2014.
Five years since BullionVault first made
silver trading and storage available online, it has become a leading provider
of silver bullion to private investors online, now caring for 502 tonnes on
their behalf – all securely vaulted in the user's choice of London,
Singapore, Toronto and Zurich.
More than 55,000 people have now used
BullionVault to buy, store and trade physical gold and silver. Because in
contrast to silver coins or small bars from a shop, costs are very much
lower. You'll also sidestep VAT sales tax, running to 20% in the UK and Europe,
when you buy. Selling is as just as easy too, live online for instant
settlement of top-grade bullion.
January 2015 saw the number of people
choosing to start or increase their silver investing on BullionVault rise 39%
compared to December. It reached the highest level since September last year.
But the number of sellers rose 83% from
December, almost doubling from the 2014 average to hit the highest level
since August 2011.
That meant silver sellers very nearly
equalled the number of buyers, pulling the Silver Investor Index down from a
reading of 51.9 in December to just 50.1 last month.
A reading of 50.0 would signal a perfect
balance. Data for the last 3 years shows the Silver Investor Index peaking at
63.3 in March 2012 and hitting a low of 49.4 – its only sub-50 reading to
date – in June 2014.
That compares with the Gold Investor
Index's swing between 58.6 and 50.5 – the near-record low hit in both December and January.
The smoother lines above are the monthly
average prices for gold and silver. The left axis above for both the Gold and
Silver Investor Index is the same. In percentage terms, so is the axis for
gold and silver prices on the right of each chart.
Hence the much shallower drop in gold's
monthly average Dollar price per ounce. Silver fell much further from its
2011 peak to last November's new 5-year low, down 71% compared with gold's
40% drop.
You can also see how private trading in
silver, as shown by the Silver Investor Index, reflects the metal's greater
price volatility. Silver prices are 75% more volatile than gold on a daily
basis. So the metal appeals more to active traders looking for quick gains
than gold.
Private investors holding silver on
BullionVault are in fact 50% more likely to trade it each month than
investors holding gold.
Silver's volatility cuts both ways of
course, and many bargain hunters from the 2013 price crash have been wearing
bad long-term losses in silver. As we saw in gold, the New Year's sharp rally
in silver prices spurred both a rise in private investors buying but also a
surge in sellers.
With silver rising so sharply against all
currencies that should be expected.
Recording a monthly average of less than
$16 per ounce in November for the first time since summer 2009, silver prices
have since risen strongly. Dollar prices peaked in late January over $18 per
ounce, some 28% above end-November's new 5-year low.
That was twice the gain offered to US
investors holding gold. So if you were investing in both, taking profits in
silver – or cutting your losses – might have felt more urgent.
Outside the Dollar, the gains from silver
investing over New Year 2015 were greater still. For Sterling and Euro
investors respectively, silver rose 31% and 42% from end-November to late
January, hitting 16- and 21-month highs.
Note again: Silver's extra volatility
cuts both ways. It has already dropped more than 10% against all major
currencies from the peaks of less than two weeks ago. That compares with
gold's 6-7% drop for US, Euro and Sterling investors.
One last note too, as we launch this new
gauge of silver sentiment today. Because while the Silver and Gold Investor
Indices both showed near-record lows in January, only just above the 50.0
mark, total client holdings by weight went in different directions.
Gold holdings by weight last peaked at
33.2 tonnes in October 2014. Since then, BullionVault clients have been net
sellers by weight for three months running, cutting aggregate holdings by 9
kilograms in January for a 0.4-tonne drop overall.
Silver holdings, in contrast, rose again
in January, expanding as customers grew their total silver investing by
weight for the 8th month of the last twelve.
Indeed, since BullionVault first launched
silver investing and trading five years ago this month, clients have never
sold metal net-net. Private investors have only added more silver by weight –
a phenomenon confirmed by our friends and competitors across the silver
bullion industry – as the price has surged, fallen, surged again, crashed,
declined and now rallied since we added the metal to our world-leading gold
service in February 2010.
Whether that investing demand might pause
or reverse if silver prices keep rising in 2015 remains to be seen. Quite
where silver prices are heading, in fact, beware anyone who says they know
for certain. The one sure thing however, once you have made your own
investing or trading decision, is that silver will likely get where it's
going much faster than gold. Both up and down.
