Silver jumped to a 30-year high last week amid record levels of investor buying that has drained mints of silver coins.
The price of the precious metal hit over $31 a troy ounce on Thursday (17/02), which is up 16 per cent since mid-January and the highest since March 1980. The world’s leading mints have reported record sales of silver coins in January and some, including the Royal Canadian Mint and Austrian Mint, have had to ration sales.
“We have sold everything we can produce in silver and have demand for at least twice that volume,” said David Madge, head of bullion sales at the Royal Canadian Mint, which produces the silver Maple Leaf coin. Silver coin sales at the US Mint and the Austrian Mint also hit record levels in January.
The surge of buying has both boosted silver prices and helped push the market into “backwardation” – an unusual condition in which forward prices are lower than prices for immediate delivery. While investors are buying, miners have been selling their future silver production to lock in gains, which has depressed long-dated futures prices.
Dealers say that smaller investors see silver as a cheaper alternative to gold, with greater potential for gains as they look to preserve their wealth against rising inflation and currency weakness.
The Austrian Mint sold 1.53 million ounces of its silver Philharmonic coin in January, more than double the level a year earlier, according to Andrea Lang, Marketing Director.
“We could have sold more,” she said, adding that the mint would boost production to 2.2m ounces in February and March.
The US Mint sold 6.4m ounces of silver American Eagle coins in January, 50 per cent more than the previous record month, and have already sold 1.7m ounces so far in February.
Silver prices have outpaced gold in recent months as the improving economic picture has caused investment demand for gold to wane but has boosted silver’s industrial demand – which, in spite of rising investor flows, still accounts for 80 per cent of total silver consumption.
Both metals were buoyed by renewed concerns over political stability in the Middle East. Gold gained 0.6 per cent to $1,382.90 a troy ounce, the highest in a month, but off the all-time peak of $1,430.95 in December.