Silver ETP holdings hit a record high as silver coin sales already surpass the whole of last year

Posted on 05 September 2013 with 1 comment from readers

The silver price crash this spring has done nothing to dent demand for the precious metal amongst investors. Quite the opposite in fact: the US Mint has sold more coins so far this year than in the whole of 2012 and silver bullion holdings by exchange traded products are at a record high.

Holdings in silver ETPs are up six per cent this year and hit a record 20,082 tonnes at the end of August. Silver investors have simply held their ground in the sell-off and actually bought more at cheaper prices.

Coin sales jump

The US MInt’s website reveals that 33.75 million ounces of the silver coins have been sold thus far in 2013 against 33.74 million ounces for the whole of last year.

In January, silver coin sales reached an all-time high of 7.498 million, and have averaged 3.65 million a month since then. It looks almost certain that 2013 will be the previous annual record of 39.9 million set in 2011.

Silver prices have bounced almost 30 per cent from a 34-month low on June 28th, amid high demand for precious metals as an alternative asset, particularly in China.

Futures market bets on higher prices for silver have advanced for three straight weeks, according to US Commodity Futures Trading data. The future for the shiniest of metals has seldom looked brighter.

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Caveat emptor

However, Fed tapering could smash all financial markets this autumn with higher bond yields re-setting global asset prices lower. Silver was the biggest loser in 2008 and it could be the same story this time round.

High volatility is, nonetheless, the price you pay as an investor for long-term outperformance. Silver has outperformed gold by around 50 per cent since the start of the precious metals’ bull market in 2001.

Buy-and-hold has been a great strategy over time and that perhaps explains why investors in silver have been so reluctant to sell in 2013 despite the 30 per cent price drop.