demand looks to be running at particularly high levels in January as
the Royal Canadian Mint follows US example and begins rationing sales of
its Silver Maple Leaf coins.
Author: Lawrence Williams
24 Jan 2013
Is there a shortage of physical silver available, or
have the official North American mints which sell silver coins just
heavily under-estimated demand – or, as GATA suggests, is this another
ploy to make sure demand for bullion is kept under control as a way of
helping prevent a physical shortage developing on the commodity markets
by putting a choke on demand and thus suppressing the metal price?
While we tend to discount the latter as GATA just finding another factor
to support its gold, and now silver, price suppression position, either
(or both) the former reasons would seem to fit the current halt or
suppression of silver coin sales by two of the world’s largest official
readers will be aware, the U.S. Mint announced that
it had suspended sales of its Silver Eagle coins around a week ago
following enormous early-year demand (see Over 6 million Silver Eagle bullion coins sold already this year
and would only be able to start supplying authorised dealers again, on
an allocation (rationing) basis, from next week. Now a report by
precious metals analyst Jason Hamlin in goldstockbull.com
notes that the Royal Canadian Mint announced yesterday that it too was
having to ration its sales of its popular Silver Maple Leaf coins.
As the U.S. Mint article we published suggests, demand for silver
bullion coins has been virtually unprecedented and, we assume, it had
not sourced enough silver blanks to meet new demand for this extremely
popular way for the individual investor to hold physical silver on its
release of the 2013 coins. It now looks as though the Royal Canadian
Mint too is seeing tremendous demand – perhaps as a knock-on effect of
the U.S. Mint’s sales suspension - with dealers in North America looking
to source coin supplies from Mints in which its customers have full
confidence. This is not to say that there are not other mints around
the world which are perfectly reliable sources of premium silver bullion
coins, but the North American investor obviously prefers to stick with
their local official coin suppliers and it the U.S. Mint can’t provide
enough to meet demand then perhaps the Royal Canadian Mint coins will do
as a substitute!
Although some U.S. Silver Eagles and Canadian Maple Leafs may remain
available through dealers who had built up their own stocks ahead of the
suspension and rationings, naturally the premiums charged on the coins
will have been rising, particularly on Silver Eagles.
reduce again should the allocation quotas be removed if demand falters,
but there are also other indications that silver demand in particular is
currently running at very high levels indeed. Reports suggest
particularly strong demand from areas like India and China where
precious metals ownership and giving is inbuilt into the psyche and
where gold prices are perhaps running too high for many individuals to
buy what they see as meaningful weights of metal. Silver ETF inflows
too are also seen to be at exceedingly high levels.
Even so there is, as analyst Ted Butler
makes a particular point of reiterating in his commentaries, a huge
short position overhang in silver on COMEX, which appears to make the
market particularly vulnerable to manipulation by major financial
entities with seemingly bottomless pockets. Whether the burgeoning
demand for physical silver can overwhelm the potential mega-losses of
the short position holders with a significant price surge remains in
doubt unless, and until, these mega short positions are unwound, which
doesn’t look to be likely to happen any time soon.