By Debarati Roy & Maria Kolesnikova - Nov 13, 2013 6:23 AM ET
Source Bloomberg
Sales of American Eagle silver coins by the U.S. Mint since the start of the year surpassed the annual record as the futures market rallied from the lowest in 34 months.
Sales reached almost 40.2 million ounces, the mint said yesterday in an e-mail. Authorized purchasers bought the full weekly allocation of 500,000 coins, boosting the total this year above the previous all-time high of almost 39.9 million ounces in 2011, it said.
“Strong demand for silver coins should be a supporting factor for the price,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. Physical demand has limited the price drop in 2013, during which silver has retreated 31 percent, he said.
Surging sales of bars, jewelry and coins helped to support gold and silver prices this year after they plunged into a bear market in April as some investors lost faith in precious metals as a store of value, amid a U.S. equity rally and concern the Federal Reserve will taper its stimulus program. Sales of gold coins may rise to a record this year, Richard Peterson, the acting director of the mint, said in June.
Silver futures on the Comex in New York are heading for the biggest drop since 1981. Gold futures have dropped 24 percent, heading for the first annual decline since 2000.
Retail Demand
“The retail demand has remained very strong especially for silver,” Scott Carter, the chief executive officer of Los Angeles-based Lear Capital, a precious-metals dealer, said in a telephone interview. “The lower prices and uncertainty because of the government shutdown made silver very attractive” for coin buyers, he said.
Silver futures advanced 14 percent to $20.765 an ounce from $18.17 on June 28, when the metal touched the lowest since Aug. 24, 2010. Futures trading volumes today were 72 percent higher than the average for the past 100 days at this time, data compiled by Bloomberg show.
Imports by China, the world’s second-biggest silver user, advanced each month from May to August. The U.S. is the top consumer of the metal.
In January, the mint’s sales reached an all-time monthly high of 7.498 million ounces. The U.S. Mint suspended sales of silver coins for more than a week in January because of a lack of inventory. The mint plans to issue its last weekly allocation of 2013 coins on Dec. 9.
Sales Halt
The halt in sales next month may push up the premium that wholesale dealers charge to customers, Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview.
The premium, around 18 percent last month, “could jump again as the demand remains buoyant and supplies will shrink,” he said. The premium surged to 25 percent in April, the highest since 2008, according to Richard Nachbar, a coin dealer based in Williamsville, New York.
Silver futures reached a 31-year high of $49.845 on April 25, 2011, and gold rose to a record $1,923.70 an ounce on Sept. 6, 2011.
To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Maria Kolesnikova in London at mkolesnikova@bloomberg.net
To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net; Claudia Carpenter at ccarpenter2@bloomberg.net
