Silver Demand Surges To Record For February

Tyler Durden's picture

We noted the strange divergence between the surge in physical demand for precious metals and the falling price of gold and silver yesterday and today; sure enough, just as they give back some short-term gains, we find that with one day left in the month, the US Mint has seen the largest demand for physical silver coins ever for a February at 3.37mm ounces. We are sure this all makes perfect sense somewhere in the leasing, backwardation, securitization, paper world of precious metals pricing but one thing appears sure, more than just Russia is backing up the truck for physical bullion.

 

 

Data: US Mint

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Edward Fiatski's picture

God damn barbarians!

nope-1004's picture

Nice to see some folks are sourcing out "real" money.

 

The Juggernaut's picture

And surprising how there are no reports of tungsten in any of them...

Dr. Richard Head's picture

Core drilling one ounce coins is a pain in the ass I guess.

MillionDollarBonus_'s picture

It’s only a matter of time before silver reverts to fair value at $18 an ounce. When you take an objective look at the silver market (without the Zerohedge hype), I’m afraid the outlook is bleak. Let’s review the facts:

  1. Mining output of silver at these inflated prices is increasing faster than ever, and new supply is flooding the market at an ever increasing rate.
  2. Graphene is replacing silver in almost all of its industrial utilities, rendering silver almost worthless as an industrial metal.
  3. To the horror of silverbug goons, more and more funds are dumping silver as an investment in order to invest in stocks and bonds.

I’ve warned the silverbug cretins to protect their savings and stay away from this dangerous market, but it seems that these suicidal lemmings are so invested in their dream of becoming kings of the universe, that they simply cannot be reasoned with.

CPL's picture

So we should be buying T-Bills and Facebook?

nope-1004's picture

The fiat whores always try to sway public opinion by bringing up "industrial" uses of a monetary metal.  LOL.  In 1850, what were the industrial uses of silver?  Or the 3,000 years before that?

 

EscapeKey's picture

i do actually think that from a monetary perspective, gold offers more safety than silver. a huge percentage of silver is industrially applicated, if a worldwide recession kicks in, industrial use will be reduced, and hence more is available to the investment market. of course, a lower price would effectively reduce supply as well, but i doubt it'd be as much as the reduction in industrial use.

gold, however, is generally too expensive for industrial use. or at least common industrial use.

nope-1004's picture

"too expensive" is a relative term.  All you simply stated was that the Fed has debauched the USD so much that it put gold out of reach for any practical industrial application.  If you don't think silver is headed that way, being a better conductor and harder to mine, then that is your choice.

 

James_Cole's picture

"gold, however, is generally too expensive for industrial use. or at least common industrial use."

430T went to industrial in 2012, 1.5x the amount moving into ETFs

Also, worth noting that industrial use was down & ETF demand sharply up.

Jack Napier's picture

Mining output may be increasing, but it still falls short of total demand every year by roughly 200 million oz. Another fail for the million dollar bogus.

FEDbuster's picture

I'll stop buying silver, when Ben stops buying T-bonds.

Xibalba's picture

What's the 'fair value' for a dollar?  Can't even buy a bottle of water with it anymore...

Papasmurf's picture

There's only so much you can mine from "we buy gold and silver" campaigns.

RockyRacoon's picture

Nothing like a little confirmation bias to accompany the morning coffee:

Silver price backwardation, corrections and perception shifts
By Dr. Jeffrey Lewis | February 28, 2013
The price of silver futures contracts have been regularly flirting with a state of backwardation ever since the 2008 financial crisis, which is a sign of a growing physical silver shortage.

EscapeKey's picture

surely this could also indicate the-ever increasing squeeze on any yield-producing asset?

James_Cole's picture

"surely this could also indicate the-ever increasing squeeze on any yield-producing asset?"

Yeah, but as I point out regularly, half the gold supply goes to jewellery. Jewellery demand has dropped off sharply because of the price increase over the past decade. Between jewels + Industrial you dwarf investor demand, if those two keep moving down what picks up the demand?  

Everyone who's looking at these markets lucidly right now is very nervous. There will be many a long faces at the PDAC this year. 

I'll get junked to death for saying this, but ETFs have been picking up a lot of the demand slack in gold - that's a fact. I remain optimistic about gold in general due to the currency envrioment, but the numbers look bad. 

akak's picture

And as I keep trying to point out to you, James, well more than half of the worldwide demand for what you dismiss as mere "jewelry" IS in fact gold investment demand!  Why are you, like Jon Nadler, continually unable or unwilling to acknowledge the truth of that fact?

In fact, most of the gold purchased and held as an investment and as savings by South Asians is in the form of high-karat gold jewelry.  It has been so for thousands of years.  And while this gold jewelry (which being very high-karat gold, often pure 24kt, is actually impractically soft from a pure jewelry standard) may be worn on weddings and the rare special ocassion, its primary function is NOT as decoration or frippery, but as a form of SAVINGS that is immune to fiat currency depreciation.

As I have also stated repeatedly here before, to you as well, you could just as (il)logically claim that all the investment gold in coin form is nothing more than "collectables".  You and I both know, though, that claiming so would be idiotic and a lie.  Yet you continue to make an equally egregious lie regarding gold "jewelry".

It is the purpose for which gold is bought and held, NOT the form, that truly matters!

James_Cole's picture

"It is the purpose for which gold is bought and held, NOT the form, that truly matters!"

Clearly it matters the form. ETF & bars both fall under "investor" but I know you'd see a world of difference between the two. So it makes a lot of sense to separate ETF tonnage demand from bar / coin. 

Just as it makes sense to separate jewellery out as it is fundamentally a different market. 

akak's picture

 

Just as it makes sense to separate jewellery out as it is fundamentally a different market.

NO, it is NOT fundamentally a different market!

In the Middle East and South Asia, gold jewelry IS in fact the "investment market".  Gold as a form of savings and investment in that region of the world has traditionally been, and continues to be, held overwhelmingly in the form of jewelry, NOT as coins or bars.  The extremely high-karat, impractically soft nature of most of that gold "jewelry" is alone proof enough of that fact.

I will repeat this again, as in your dishonesty you refuse to acknowledge it: your specious and untruthful argument is exactly akin to trying to suggest that all the investment gold in the Western world that is held in the form of coins is nothing more than "collectables".

It is now quite clear that, due to your obstinant, blatant and repeated lying regarding gold (and not on just this one issue), you are a purposeful anti-gold troll.  I suspect you may even be Jon Nadler himself, as your every post literally reeks of the many anti-gold half-truths and outright lies that he loved to incessantly repeat in his inexplicable role as official spokesman for Kitco in the course of more than five years.

James_Cole's picture

NO, it is NOT fundamentally a different market!

In the Middle East and South Asia, gold jewelry IS in fact the "investment market"

It's a differnet market for a lot of reasons, but a few obvious would be it's bought in smaller denominations by a larger group of people & at a much higher premium. It also regionally has particularly unique aspects. 

The person buying a 100 oz bar is a very different investor than the people buying gold jewellery (whether for investment or whatever). 

In any case, your point (that people buying gold jewellery do so as an investment) is moot at best so I don't see why you get all up in arms about it. 

akak's picture

 

It's a differnet market for a lot of reasons, but a few obvious would be it's bought in smaller denominations by a larger group of people & at a much higher premium. It also regionally has particularly unique aspects.

More distraction, more irrelevancies, more lies.  Welcome to ZH Jon Nadler!

I keep proving to you that the bulk of what you lump together as the world "jewelry market' is fundamentally NOT a different market from that which you narrowly define as the "investment market", as it IS in fact the "investment market" for that vastly signficant (from the standpoint of gold) part of the world.

The facts regarding the "denominations" (an utterly inappropriate and meaningless word in this context, as 'denomination' refers to coins only and NOT jewelry) in which that jewelry is purchased are irrelevant and nothing but a red herrings argument --- an empty distraction from the fundamental realities of the situation.  And if you knew anything about Indian gold jewelry, you would know that the effective premiums are quite low, and quite in line with those applying to Western gold coins, at least those of fractional-ounce denominations. 

Furthermore, the fact that Middle Eastern and South Asian demand for investment gold in the form of jewelry is "regional" has utterly nothing to do with the reality that it is in fact investment demand --- would you dismiss American and European investment demand for gold coins purely because such demand is "regional" as well?  How about the traditional Asian demand for gold in the form of bars --- that is regional as well, so can it likewise be dismissed from considation as "investment gold"?

Really, the illogical arguments you continue to throw out make me more and more suspect that you may actually be Jon Nadler, as they are SO representative of the many dishonest anti-gold arguments that he made in his capacity as the daily voice of the gold-hating bankster elite while spokesman for Kitco.  All you lack (so far) is his smug and insufferable condescension and arrogance.

James_Cole's picture

Three things:

First no I'm not Jon Nadler.

Second, you don't seem to recognize my point. The reason I highlight the jewellery market is because it's a market we can all agree is physical - that's the main reason I bring it up. It's also a particularly robust market with a long history. 

Thrid, as far as 'regional' I meant the jewellery market can be vastly different depending on where in the world you are looking, basically there are a lot of unique characteristics depending on the location. I didn't mean 'regional' in a negative way. 

The take-away is that a big physical marketplace with a long history has been shrinking while ETF's have expanded, to me that's disconcerting. 

akak's picture

And you STILL continue to lie, and badmouth gold in every possible way!

If you are not Jon Nadler, you are his doppelganger.

Why do you LIE and try to claim that "the big physical (jewelry) marketplace with a long history has been shrinking"?  Where do you have any proof of that?  Because any numbers that I have seen over the past few years do not bear that up in any way --- quite the contrary, in fact, as Indian gold purchases and net investment have been robust even in the face of the reimposition of government import fees levied against gold.

Also, it is a fact that precious metal ETF stockpiles (assuming they are all unrehypothecated and held as claimed) have been roughly flat over the past three years, and in recent months been experiencing net OUTFLOWS, not inflows (see GLD here).  But I see how you once again dishonestly try to boost and take the side of the manipulated 'paper gold' market over the honest and transparent physical market.

I can smell an anti-gold troll a mile away, you SOB, and you reek.

James_Cole's picture

"Why do you LIE and try to claim that "the big physical (jewelry) marketplace with a long history has been shrinking"?  Where do you have any proof of that?"

http://www.perthmintbullion.com/Libraries/News_Reports/Gold_Demand_2012....

The link you supplied from SA is for SPDR GLD.

Here's the bigger picture:

Detailed numbers on all categories (ETF breakdown  by q / yr on pg19):

http://www.gold.org/investment/research/regular_reports/gold_demand_tren...

I can smell an anti-gold troll a mile away, you SOB, and you reek.

Lol, I'm not anti-gold - anyone who takes ten seconds to look at current economic policy has a strong case to make for holding gold. I think it's important to cut out some of the noise though, a lot of snake oil salesmen in the gold market telling people to hold no matter what, selling their crappy etfs, moronic newsletters etc. etc. 

My attitude is it's a very good idea to hedge your positions and take profit strategically + scrutinize the supply / demand fundamentals.

akak's picture

Lol, I'm not anti-gold - anyone who takes ten seconds to look at current economic policy has a strong case to make for holding gold. I think it's important to cut out some of the noise though, a lot of snake oil salesmen in the gold market telling people to hold no matter what, selling their crappy etfs, moronic newsletters etc. etc.

Then why have you repeatedly, and dishonstly, tried to dismiss much of Middle Eastern and South Asian gold investment demand as mere "jewelry", as if the form of the gold held really matters to its intended function?

Furthermore, why do you again LIE about increasing ETF demand for gold, when YOUR OWN LINK unambiguously demonstrates that that demand has FALLEN over the last several years?  LOL!

Given that a number of demonstrated anti-gold, ptr-bankster shills, such as Jon Nadler, have consistently engaged i the same disingenuous arguments as you have here, I find your refusal to acknowledge any of the irrelevancies, untruths and misrepresentations inherent in those arguments revealing.

 

James_Cole's picture

 

 

Furthermore, why do you again LIE about increasing ETF demand for gold, when YOUR OWN LINK unambiguously demonstrates that that demand has FALLEN over the last several years?  LOL!

Are you referring to the graph? The graph doesn't break out ETFs as a separate component of investment, from the report (of which that graph originates):

"A 17% drop in demand for bars and coins together with a 51% increase in ETFs and similar products created a 10% reduction in investment demand. Adding in a positive contribution from OTC investment and stock flows (a measure of the less transparent institutional elements of the market, as well as being a statistical residual) gives total investment of 1,582.5t, 3% lower than 2011.

Barring a flat second quarter, ETFs benefitted from steady inflows throughout the rest of the year, with a wave of buying seen in Q3 on expectations of further monetary policy easing across the globe"

On pg13 you can see ETF demand trends yoy since '09.

Then why have you repeatedly, and dishonstly, tried to dismiss much of Middle Eastern and South Asian gold investment demand as mere "jewelry", as if the form of the gold held really matters to its intended function?

Why would I dismiss it?? My whole point (again) is the worrying trend that that area of gold buying is going down while ETF's are expanding - obviously, I value the jewellery segment of the market.

 

 

Bay of Pigs's picture

The ETF's are a bankster sham. Wake the fuck up.

Ctrl_P's picture

This is getting so narrow we might not even fit in a godwin's law arguement.

 

outamyeffinway's picture

Perhaps you should rethink that. In the latest OMFIF report about including gold in SDR's, which page was it that they mentioned silver?

 

Where was silver mentioned in Executive Order 6102?

 

In my view there is much more political risk in gold than in silver.

silverisgold's picture

Well, if a worldwide recession kicks in, and industrial use is reduced, then of course since silver is mostly a by-product of other mining activity, which will also fall off, supply will fall off sharply as well, which should support price.

CPL's picture

It's a very tough metal.

www.lbma.org.uk/assets/5b_dirienzo_lbma2006.pdf

Please note that RFID's are made from silver.  In fact it's the main component because of the hygiene factors.  It's how quality prosthetics are manufactured to not kill the person with a surgical pin, bone graft, screws, new hip, etc.  All the bits used to bolt someone together are made of silver because it's so benign.

Alternatively you could also view it from a darker angle.  The western world has a shadow bank of silver stashed in it's own population.

outamyeffinway's picture

Hey nope-1104, that's not fair. It's different this time!!

BLOTTO's picture

LULULEMON

.

Great 'track pants' - for $250.lol

 

 

fijisailor's picture

OK.  I'm patiently waiting to buy a shitload at $18.

AllThatGlitters's picture

With all this demand, the price tanks and you can still buy silver for less than a $0.50 - $0.99 over spot.

Is this going to snap back soon? Live spot getting cheaper by the minute: http://www.pmbull.com/silver-price/

AllThatGlitters's picture

Lest you think I'm whining, I love it when the chart looks like the link above.  

It's the best time to buy.

The fact that dealers are selling cheap with free shipping makes it that much better.

fijisailor's picture

I'm a patient person.  Let's see where this goes

WmMcK's picture

+1 - But I'm not that patient -- below $26 (or GSR > 57.4) my truck and boat get backed up.

EscapeKey's picture

'Fair' is a made-up word.

But you're probably referring to fair from the perspective of the Ricardian Labour theory of value - which is at best questionable, as an item has the worth man is willing to pay for it, not what it costs to manufacture.

MillionDollarBonus_'s picture

"an item has the worth man is willing to pay for it, not what it costs to manufacture"

But if the market value is four times mining costs, then miners will flood the market with supply. Sadly, we're already starting to see this happen in silver. This avalanche in new supply is going to knock most feeble silverbugs off their toes so fast they won't even know what hit them.

francis_sawyer's picture

<== Facebook hits $18 first [& they do a reverse split]

<== Ag hits $18 first

AllThatGlitters's picture

Silver was $18 once, before Facebook was a public company, so I choose Silver.

EscapeKey's picture

so given your arguments, an iphone 5 is really supposed to sell for $150, because that's what it costs to put together, right?

Temporalist's picture

EK the trolls have been in hiding for a long time on ZH but that is the same argument that other trolls have made on ZH.  I always use designer clothing as the counter argument because everyone knows someone that paid $50 for a t-shirt or $150 for sneakers or $100 for jeans that cost fractions to produce.  It seems nobody has a problem with companies that are selling products for 20x, 30x, 100x what they cost to manufacture except for miners apparently.

 

Incidentally the gold miners just updated their cost per ounce:

For Barrick and Goldcorp

"The new measure averaged $941 an ounce between the two companies in the fourth quarter. That’s 50 percent higher than the $626 average so-called cash cost they disclosed in the preceding three months."

"The average cash cost of 10 of the biggest gold miners was $694 an ounce in the third quarter, 49 percent higher than in the same period two years earlier, according to data compiled by Bloomberg. The average gold price rose 35 percent in the same comparison."

http://www.bloomberg.com/news/2013-02-27/gold-miners-come-clean-on-costs...

James_Cole's picture

"The average cash cost of 10 of the biggest gold miners was $694 an ounce in the third quarter, 49 percent higher than in the same period two years earlier, according to data compiled by Bloomberg. The average gold price rose 35 percent in the same comparison."

This is because they are mining lower grade deposits, as the price of gold goes up projects which were unthinkable a decade ago have been finally coming online.

If you look at projects 5 years out, the only ones that have any level of interest are the ones with cash costs of ~$500 and proper infrastructure ready to go.

Bay of Pigs's picture

Quit talking out of your ass. Production costs have been skyrocketing across the board for the miners.