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Silver Institute: Mint Allocations Reflect Tightness In Silver-Coin Market

(Kitco News) - An unprecedented allocation of silver coins around the globe reflects tightness in the market for silver coins, the Silver Institute said Tuesday.

“Retail investors in recent months have seized the opportunity to significantly increase their holdings of silver bullion coins and, to a lesser extent, bars,” said the organization in a special report. “Due to strong demand, the U.S. Mint, the Royal Canadian Mint, Australia's Perth Mint, the Austrian Mint and the British Royal Mint have put their silver bullion coins on allocation, where the volume of distribution of coins is controlled due to bottlenecks in the manufacturing process. This is an unprecedented industry-wide phenomenon.”

In recent history, this has been done only by the U.S. Mint, said the Silver Institute, an industry organization based in Washington D.C.

“The practice points to considerable tightness in the silver-coin business at the moment.”

Globally, silver bullion coin sales reached an all-time high of 32.9 million ounces in the third quarter, the Silver Institute said, citing data compiled by the GFMS team at Thomson Reuters. This volume was up 74% quarter-on-quarter and 95% year-on-year.  Sales in North America, Europe, Japan and other Asian countries (predominantly China) saw quarter-on-quarter growth of 74%, 72%, 95% and 202%, respectively. 

As a result, lead times for silver coins have been stretched from immediate delivery to three to four weeks in some cases, the Silver Institute said.

“This is an unusual occurrence in the industry, with several dealers stating this is the first time they have experienced lag times for certain coin products,” the organization continued.

The Silver Institute described the shortage as likely due to both supply and demand issues. While demand is strong, given the slow global economic outlook and “attractive” silver price, the mints are finding it difficult to source blanks needed to produce the coins.

"It is clear that investors are continuing to demonstrate their desire for silver-bullion coins and we encourage national mints across the globe to examine their manufacturing pipeline to ensure that this strong demand is met with immediate fulfillment," said Michael DiRienzo, executive director of the Silver Institute. 

Silver bars are also experiencing a “slight shortage,” although this is confined to bars less than 100 ounces, specifically one-ounce and 10-ounce bars, the organization said. Delivery times have increased from immediate to a 10-day delay in some cases, especially in the U.S. and Canada.

The increase in demand in recent months has been primarily driven by bargain buying, particularly after silver prices fell below $15 an ounce, the Silver Institute said. The demand remained buoyant when prices returned above this level again.

By Allen Sykora of Kitco News; asykora@kitco.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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