Record Silver Coin Demand Signals Financial Trouble Ahead

Sprott Money's picture

 

 

 

Record Silver Coin Demand Signals Financial Trouble Ahead 

Posted with permission and written by Steve St. Angelo of SRSrocco Report (CLICK FOR ORIGINAL)

 

The world doesn’t realize it, but record global silver coin demand is warning that big trouble is coming to the financial system. More investors are waking up to the fact that there is something seriously wrong with the financial industry and broader stock markets and are buying more physical gold and silver than ever.

This is especially true for silver. During the huge surge in physical silver investment demand from June to September this year, I heard from several dealers that investors were buying a lot more silver than gold. And this wasn’t just from the typical Mom & Pop buyers… there were large silver volume purchases from wealthy clients.

According to the Silver Institute 2015 Interim Report, total sales of official silver coins will reach 130 million oz (Moz) this year. If we look at the chart below, we can see the huge increase in official coin sales since the first collapse of the U.S. Investment Banking and Housing Industry in 2008:

Global Official Silver Coin sales ranged between 35.7 Moz and 42.4 Moz from 2003 to 2007. However, demand surged to 64.3 Moz during the 2008 financial crisis and continued to increase to 110 Moz in 2011 when the price of silver peaked at $49. Then in 2012, as investors were unsure of the silver price trend, Official coin sales declined to 84.6 Moz that year.

Well, this all changed in 2013 as the price of silver fell from $30 down to $18 in just six months, motivating investors to purchase a record 116.4 Moz of official silver coins. Even though demand fell modestly in 2014, official silver coin sales are forecasted to hit a record 130 Moz this year.


 

Royal Canadian Mint Silver Maple Leaf Sales Hit Record Q1-Q3 2015

  The Royal Canadian Mint just released their newest Q3 Report showing a huge increase in Silver Maple sales to 9.5 Moz, up 76% compared to 5.4 Moz during the same period last year:  

Total Silver Maple sales Q1-Q3 are 25.2 Moz versus 20.8 Moz last year… up 21%. Here is my forecast for total 2015 Silver Eagle and Maple sales:

As we can see, Silver Eagle and Maple Leaf sales are estimated to reach 78 Moz compared to 73.2 Moz last year. This is one hell of a lot of 1 oz silver coins from just these two mints. Furthermore, total sales of Silver Eagles and Maples were only 9.5 Moz in 2005.  In just ten years, sales from these two official coins have increased more than 8 times.


 

Gresham’s Law: Bad Money Drives Out Good… Official Silver Coins

 If we take the global official silver coin data from the first chart above, and divide it into two periods, we have the following result: 

Before the first collapse of the U.S. financial industry and economy in 2008, total global official silver coin sales for the period 2000-2007 were 292.1 Moz. Now compare this figure to the second period from 2008 to 2015 at 786.8 Moz. If we average the annual global silver coin sales, the first period (2000-2007) shows an average of 36.1 Moz per year versus 98.4 Moz after the U.S. financial and economic meltdown (2008-2015).

This huge surge in official silver coin demand represents a percentage of investors who have decided to exchange increasing worthless paper currency for sound money. This trend started in the 1960’s when the United States sold off the majority of its huge silver stockpiles and removed silver from its coinage.

I am working on THE SILVER MARKET REPORT using figures and information starting in the 1960’s. Investors need to understand the trend change in the silver market has been going on for more than 50 years. Understanding this ongoing silver market trend is important for investors who want to protect their wealth when the next major financial crash occurs.

Even though the forecasted 130 Moz of Official Silver Coin Sales did not translate into higher silver prices, it did hammer a few more nails into the Greatest Financial Ponzi Scheme in history. That’s how investors need to look at the silver market. I realize it’s frustrating to see that record buying of silver coins does not seem to impact price.

However, investors need to understand that Greatest Financial Ponzi Scheme in history can only survive if global oil production continues to increase. Unfortunately, we are about experience a peak and decline of global oil production shortly starting first with the collapse of the U.S. shale oil industry.

I will be writing more articles explaining the connection between skyrocketing debt and rising oil production. One can not take place without the other. Which means, when the massive amount of global debt finally collapses, it will take down world oil production with it.

Some of the safest assets to own at this time will be physical gold and silver.

 

Please email with any questions about this article or precious metals HERE

 

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fowlerja's picture

Wow...record silver demand signals financial trouble...it must be a canary in the coal mine moment...don't see anything else that would suggest financial problems...

SILVERGEDDON's picture

fowlerja - I think he is just pointing out yet another symptom that has measurable metrics that show people voting with their wallets for the future.

I like silver relative to gold for the following reasons.

Problems with gold start with the unit cost ratio versus silver.
Almost all gold mined is still in existence.

Paper gold has not been as mercilessly manipulated as silver paper because of the influence of institutional and governmental gold asset holders.

Silver mining has dwindled to incidental recovery as a by product of copper, nickel, and lead mining - pure silver mines were played out for the most part over one hundred plus years ago.

Down turn of economy will not deter the most significant modern day usage of consumer electronics - the smart phone. Silver is the most efficient conductor of electricity on a unit cost basis.

Economic recovery of silver in consumer electronics is not feasible, even in China. Economic recovery of silver used in most other modern day applications of silver is not feasible either.

The ten percenters will never stop wanting new consumer electronics, and they survive down turns to the economy just fine it seems.

Add in the newer industrial uses of silver that also shrug off economic issues out of necessity - medical wound dressings, water purification filters, etc., and you have a continuing demand for a metal whose annual production has been falling for decades.

So, you have an indispensable metal being consumed by industrial use constantly, declining in mining production, and under supply pressure to serve both the industrial and monetary silver markets.

Take away the paper manipulation of 2 - 300 times the available physical silver available in the market, and there's a problem with price discovery for the real deal versus fantasy paper silver that never existed.

Lastly, the uncertainty of a major economic event always moves people to seek out safe haven for their hard earned money. Fiat currency has a history of failure for thousands of years, a near perfect track record of failure.

Silver and gold have a five thousand year history of recognized value in times of uncertainty, more so than any other commodity you can name that is portable, incorruptible, stable, and internationally recognized.

I can also point to the out of whack gold / silver price ratio, a leading indicator of how fake paper silver held by large institutional market players has manipulated reality for metals completely out of proportion to historic value ratios.

To summarize, with silver spot trading for substantially less than the total cost of production and profit margin for miners, I see no down side to investing in it as a safe haven.

If the whole world burns, silver will be a recognized form of currency far easier to trade with than anything else short of 22 LR ammo.

I would rather dance with the silver devil than take on Wall Street, Goldman Sacks Biters, JP Morgan Chase, banks, politicians, the Fed, the CIA, NSA, DHS, IRS, and all of the other thieves on the loose out there.

ghostzapper's picture

People pimping gold and silver coins no different than those pimping IQD.  It's gonna RV to a million $ per ounce baby!!!!!!

Scrape off a $2 commission selling a $14 coin that's not a bad ROI at all.  

SILVERGEDDON's picture

The US Mint, and Royal Canadian mint actually charge a lot of the premium over spot for minting cost. I don't begrudge my local coin shop a profit for exchanging Yellin Clown Bux for real currency.

In 1964, a paper dollar, backed by metals, or it's equivalent in silver coin, bought about 4 gallons of gas.

Today, the paper dollar buys about a half gallon of gas.

Take the 1964 silver dollar, and it's spot metal price buys you about 6 gallons of gas.

Gamblers like paper.

I like a sure thing.

You should, too.

Augustus's picture

Report of some additions to gold supply.

 

The 'Holy Grail' of Shipwrecks Was Just Found, With $17 Billion in Loot

The San Jose is found after more than 300 years. Inflation adjusted, it has a metric boatload of money on board.

http://www.popularmechanics.com/adventure/a18444/the-holy-grail-of-shipwrecks-was-just-found-with-17-billion-in-booty/

 

Xploregon's picture

There will always be a shipwreck...until there isn't. Just how many shipwrecks do you think there's out there? How much sovereign claims to found treasure makes it into the free market?

Want to find a shipwreck? Look under the obscuring waves for the global and western economies.

ghostzapper's picture

No chance in hell that I believe there is only 170K MT ever mined and above ground.  None of us here know with certainty how much gold exists and where it is located.  I can only imagine how much was shifted around and hidden during WWII and the years leading up to it and after.  The entire Pacific Theatre conflict was about looting gold and bonds and moving it around.   

bombdog's picture

Of course there's a shipwreck, they always find a shipwreck when gold makes an important bottom or top.

Conax's picture

+1

I read of it somewhere yesterday, then it was claimed to be a $1 billion find.

The Colombians were going to keep the treasure in a museum.

Now it's $17B?  And popular mechanics again, eh?

They were also the mag used to try to debunk the entire 911 fiasco.

Never trust poplar meks. Or the damn Colombians.

 

 

InnVestuhrr's picture

My long treasuries pay interest and whenever there is a stock market sell-off, a flight to safety or the FED does QE, then I get EVEN LARGER capital gains.

I am in AWE at how much capital gain I already have on my treasury portfolio - anytime I want a little high, I just look at my brokerage gains position - love it!!! :-))

Dragon HAwk's picture

Hey I'm trying to do my Part...

El Oregonian's picture

It looks like I'll have to take the tarps off my boat and get ready to take a long trip across the bay...