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UK Royal Mint Silver Production Surges 100% - Sovereign Edward Supply Tight But Bullion Premiums Low

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From Gold Core

UK Royal Mint Silver Production Surges 100% - Sovereign Edward Supply Tight but Bullion Premiums Low

Gold is marginally lower in pounds and dollars and marginally higher in euros ahead of the key interest rate announcement from the European Central Bank (1245 GMT). The Bank of England kept interest rates at historic lows of 0.5% and the ECB is expected to increase rates by 25 basis points to 1.5% today despite the Eurozone debt crisis.
 

Safe haven demand for gold is continuing due to the eurozone debt crisis, the risk of financial contagion, the threat of rising inflation and the reality of negative real interest rates. Official inflation figures show inflation well above current interest rates meaning that savers and those on fixed incomes are continuing to see their savings and income eroded by the increasing cost of living.


Bank of England Interest Rates  – 1700 to Today - Courtesy of Money Week

Gold and silver remain undervalued from a long term historical perspective and from the all important inflation adjusted perspective. See excellent inflation adjusted chart (from Chart Works Ross Clark, Shadow Statistics and Erste Group) which shows gold is currently some 75% below the inflation adjusted high seen 41 years ago in 1980.

The U.K.’s Royal Mint said that first-half silver production in 2011 doubled, while gold production climbed 8.9% over 2010 levels.

The Royal Mint, established in the 13th century, used 36,219 ounces of gold compared with 33,266 ounces the previous year, according to data obtained by Bloomberg News under a Freedom of Information Act request.

Silver use more than doubled to 324,421 ounces in the period. The Royal Mint makes Britannia silver bullion coins and other collector silver coins.

324,421 ounces of silver at today’s prices ($36/oz) would be worth less than $12 million dollars. Mere chump change to many wealth investors and savers concerned about their investments and savings.

This shows that interest in silver as an investment and store of wealth is increasing but it remains tiny when compared to money spent on consumer goods or when compared to allocations to cash, bonds, equities, currencies and other asset classes.

Silver bullion remains the preserve of a small but active minority of people. This is changing but owning silver, like gold, has not ‘gone mainstream’ yet. Despite the worst financial crisis in modern history and global currency debasement on a scale never seen before in modern history.

The Royal Mint moved to Llantrisant in Wales from London’s Tower Hill in 1968. It makes coins including the 22-carat 2011 U.K. Sovereign Proof, weighing 7.99 grams (0.26 ounce) and costing 400 pounds ($644). Sovereigns are 22-carat gold coins which is a purity of 91.6%.

Sovereign sales increased at the outset of the financial crisis and have remained robust in recent years. The increase in capital gains tax in the UK in June 2010 saw additional demand for sovereigns in the UK due to them being ‘coins of the realm’ or legal tender coins and therefore not subject to CGT.

British sovereigns are gaining popularity again as the increasing price of gold means that one ounce coins and bars are increasingly unaffordable to many buyers. Also, many buyers, including some high net worth buyers, like the liquidity of sovereigns but also like the divisibility whereby when one wishes to sell one can sell smaller amounts at a time (quarter ounce rather than one ounce format).

Sovereigns are also used as pure financial insurance and are very popular with those who wish to take delivery of their bullion in order to protect themselves from financial contagion and an economic collapse.

Premiums on sovereigns and bullion coins and bars remain very low.

This is typical for the summer months when premiums normally dip due to a slight drop in liquidity as holidays are taken. But the lower premiums are surprising given the scale of the continuing financial and economic crisis and the very significant buying of sovereigns from Greece. We have firsthand experience of this buying.

Interestingly, King Edward sovereigns in particular have been difficult to source in volume in recent days. Thus, these low premiums are unlikely to last for long and should be taken advantage of by those wishing to accumulate British sovereigns and other bullion coins and bars.

NEWS

PRECIOUS-Gold holds below $1,530/oz ahead of ECB
http://www.reuters.com/article/2011/07/07/markets-precious-idUSL6E7I70GZ20110707

Gold May Gain for a Third Day on China's Rate Increase, European Debt Woes
http://www.bloomberg.com/news/2011-07-07/gold-may-gain-for-a-third-day-on-china-s-rate-increase-european-debt-woes.html

Gold futures edge higher in electronic trading
http://www.marketwatch.com/story/gold-futures-edge-higher-in-electronic-trading-2011-07-07

ETFs Face U.K. Serious Fraud Office Review
http://www.bloomberg.com/news/2011-07-05/exchange-traded-funds-marketing-said-to-face-u-k-fraud-prosecutor-review.html

Iranians go for gold amid inflation and currency fears
http://www.reuters.com/article/2011/07/06/us-iran-gold-coins-idUSTRE7652JG20110706

COMMENTARY
William Rees - The Dangerous Disconnect Between Economics and Ecology
http://ineteconomics.org/video/interview/william-rees-dangerous-disconnect-between-economics-and-ecology

Whistleblower Maguire - This Will Destroy Gold & Silver Shorts
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/7/6_Whistleblower_Maguire_-_This_Will_Destroy_Gold_%26_Silver_Shorts.html

Gold is already the true reserve currency and silver will join it - BNN Sprott Interview
http://watch.bnn.ca/business-day/july-2011-/business-day-july-6-2011/#clip496389

Commentary: What will replace the dollar as global currency? Gold? Renminbi?
http://www.marketwatch.com/story/what-will-replace-the-dollar-as-global-currency-2011-07-07

Societe Generale -The Coming "New World Order" Revolution: How Things Will Change In The Next 20 Years - A Kondratieff Cycle Perspective
http://www.zerohedge.com/article/coming-new-world-order-revolution-how-things-will-change-next-20-years-kondratieff-cycle-per

 

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Thu, 07/07/2011 - 07:45 | 1431953 KlausK
KlausK's picture

PM. Best things in life aren't free. But you can still BTFD.

Thu, 07/07/2011 - 10:43 | 1432394 Ahmeexnal
Ahmeexnal's picture

Meth Man -the Jesus Christ of ZH ("I just want to save you guys!")- says it only costs 5 bucks to dig an ounce of silver outta the ground.

Thu, 07/07/2011 - 14:07 | 1433306 jerry_theking_lawler
jerry_theking_lawler's picture

after some research, i agree with MM's assessment.....$5 to dig out of ground. probably $10-15 for exploration, $5 for environmental permitting (for mines) from the lefties, another $5-10 for refinining, $5 for shipping/minting. There you have it: $35-40/oz.

So yes, MM's assessment is correct, just not complete.

Thu, 07/07/2011 - 08:11 | 1431979 pitbull pappa
pitbull pappa's picture

Silver Bitchez!!

 

 

Thu, 07/07/2011 - 08:20 | 1431993 moriarty
moriarty's picture

Here in Blighty Maples, Eagles & Philharmonics are all better value than Britannias and when SHTF it all silver after all.

Half Sovereigns also very convenient to use when thay are the only real money again.

Thu, 07/07/2011 - 10:01 | 1432263 Sabremesh
Sabremesh's picture

Maples, Eagles & Philharmonics are "cheaper" but they are not legal tender. The premium for Britannias is offset by the fact that they are exempt for CGT, unlike your "cheaper" options.

Thu, 07/07/2011 - 11:10 | 1432523 moriarty
moriarty's picture

Thanks for the heads up, just shows what can happen to the ignorant.

I have them as a hedge to use for their bullion value if we lose faith in paper and I am relying on the fact the silvers silver and in such a time the local purveyor of the goods I need will not care.

Thu, 07/07/2011 - 08:28 | 1432001 Lmo Mutton
Lmo Mutton's picture

Silver Eagles.

 

That is all.

Thu, 07/07/2011 - 08:43 | 1432036 Manthong
Manthong's picture

9.75:1 Ag/Au sales ratio is interesting.

Thu, 07/07/2011 - 08:58 | 1432068 flacon
flacon's picture

Very interesting.

Thu, 07/07/2011 - 09:06 | 1432098 PaperBear
PaperBear's picture

As silver retakes $36.50/oz, I think we are leaving $33/oz silver behind.

I bought some more physical silver this week - WOOHOO.

Thu, 07/07/2011 - 09:17 | 1432145 Major Priapus
Major Priapus's picture

In a related development:  If current German finance minister Schäuble gets his way; the German Treasury will be able to ignore civil rights as defined by the rule of law!  
 
Cash on the barrel will be against the law i.e. Cash Transactions in excess of 1 000 Euros will no longer be permitted.
 
This extends to the purchase of precious metals.  After 2012 - any transaction in excess of 1 000 Euros or any purchase of precious metals in excess of 1 000 Euros will be considered  potential money-laundering and any such transaction must be registered with the authorities together with presentation of identity documents.
 
Sceptics could consider this a belated attempt to prevent a run on the Euro...  or even a transparent mechanism to aid future government expropriation  - particularly any cache of precious metal by prudent Germans who mistrusted the Euro-experiment all along.

for more - http://tinyurl.com/6js254h

Thu, 07/07/2011 - 12:04 | 1432813 Cthonic
Cthonic's picture

Interesting, thanks.  Dovetails with what the U.S. tried to pull with the 1099 fiasco.

Thu, 07/07/2011 - 09:32 | 1432176 Clint Liquor
Clint Liquor's picture

From the link below:

One year ago, COMEX REGISTERED inventories were at 61,996,400 oz. as of 6/23/2010. Today they're at 27,517,070 oz. If we want to see what the depletion rate for that set of data is, we simply divide the inventory loss by 365 to get a daily loss of 94,464 oz. This becomes the daily average depletion rate (including weekends and holidays). Projecting how long it might take to deplete the entire inventory then becomes a simple division exercise where we divide the current inventory by the average depletion rate: 27517070/94464=291 days=0.79 years.
Using the above data, you might conclude the comex will not default for another 291 days. However looking at more recent data, the depletion rate gets worse.

If I use this same exercise on the last 100 days as my time frame, the loss becomes 135,912 oz./day resulting in a depletion projection of only 202 days.
It gets worse and worse as the depletion rate is going exponential and will soon go hyperbolic.
Using the last 25 days of data, we see a depletion average of 143,424 per day resulting in a total comex depletion projection of 191 days.
This Means that the "COMEX REGISTERED WILL BE COMATOSE" by December 31st 2011. Using the data from both "Total and Registered Categories", we might conclude that the comex could default anywhere between Dec 31st 2011 and Feb 21st 2012---Take your pick.
Again, I thought you all my get a kick out of this.

http://silverdoctors.blogspot.com/2011/07/registered-silver-also-at-high.html

Thu, 07/07/2011 - 09:40 | 1432198 Dr. Gonzo
Dr. Gonzo's picture

Bullion premiums for 2011 Britianias at APMEX $10 over spot. That's not very low.

Thu, 07/07/2011 - 10:11 | 1432283 Vlad Tepid
Vlad Tepid's picture

324,421 ounces may only be worth $12 million, but they cost considerably more...

Thu, 07/07/2011 - 10:15 | 1432300 Sabremesh
Sabremesh's picture

The article is remiss in referring to "King Edward" sovereigns. There have been eight King Edwards in English history, two of which reigned in the 20th century. There are no more than a handful of Edward VIII sovereigns in existence and these are worth a fortune. Now, Edward VII sovereigns are relatively common, but do command a small premium over most other modern sovereigns (Victoria, George V, George VI, Elizabeth II), and this is presumably what the article is referring to.

Thu, 07/07/2011 - 10:17 | 1432301 JW n FL
JW n FL's picture

http://www.royalmint.com/store/BritishSilver/BR11AGN.aspx

 

1 British pound sterling = 1.5969 US dollars

so 47.50 ='s $75.8528 that is not a proof coin.

 

Thu, 07/07/2011 - 10:47 | 1432418 Ahmeexnal
Ahmeexnal's picture

maybe those britannias cost 5 pounds sterling to dig outta the scottish highlands.

Thu, 07/07/2011 - 11:28 | 1432611 HungrySeagull
HungrySeagull's picture

You mean blast, haul and crush the rock. Not dig.

No. They simply let the Aussies and other ex colonies do the work.

 

I am content with the state of affairs re metals. yeehaw!

Thu, 07/07/2011 - 11:43 | 1432691 Problem Is
Problem Is's picture

UK Mint: Won't See Me Buying Their Coins
I'd check that shit for silver plated lead... Nothing is more corrupt and fraudulent than anything out of the City of London...

You could be buying Charles' nickle plated balls...

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