Is Silver Losing Steam?

Is Silver Losing Steam?
When April arrives, the second anniversary of silver’s near miss in regaining its 1980 price of $50 an ounce will be upon us. The present price is hovering at around $30 a troy ounce. this is roughly where it was in 2011 when its price started to shoot upwards towards it record value. Will silver meet or break its old record? This is certainly a question that is on the minds of many coin collectors and investors. What conclusions can we draw from the early demand for 2013 American Eagle bullion coins?

On one positive note, buyers purchased a record number of American Eagle bullion coins in January alone. The total is around 7,498,000 1-ounce silver American Eagle bullion coins to be exact. The purchasing stampede was so intense that the Mint ran out of bullion coins for 11 days of that month and had to ration the supply when it finally resumed sales.

This initial burst of demand really shouldn’t be a surprise. It happens nearly every year as collectors want to acquire the new date and investors fall into the same mindset. However, the magnitude of the sales burst was the real surprise. February sales of the silver American Eagle bullion coins stand at 1,438,000, which is definitely lower than the January figures. But the February sales results are distorted by the Mint’s rationing of the silver bullion coins.

One clue to what might take place, could be provided by the demand for gold American Eagle bullion coins. Demand for gold and silver bullion coins often runs in tandem. Gold American Eagles set a record of their own in January with sales of 124,000 of the gold bullion coins. Now if you factor in the demand for the fractional coins, the Mint sold 150,000 troy ounces of gold in January. February gold bullion sales figures fell significantly from the January figures. Buyers have acquired 32,000 1-ounce gold bullion coins, or 36,000 if you add in the fractional sizes of gold bullion coins.

The gold bullion figures are not skewed by the Mint’s rationing of silver coins. So what conclusion can you draw from these figures? Unless some type of crisis event happens that would reignite the demand for bullion coins, silver is most likely not going to break nay records this year. It probably will hover around the value it is currently maintaining. After April, there are still eight months to go until the end of 2013. That stretch of time may be another topic to talk about.

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