As precious metal prices drift lower, retail investor interest has been sparked by lower prices. Last month, the U.S. Mint hit record sales of the gold American Eagle coin with sales surpassing 2012 totals; and the American Eagle silver coin seems to be mustering the same kind of demand after selling over 40 million ounces in coins.
The all-time high of 39.9 million ounces purchased two years ago is edged out this year as authorized purchasers buyout the full weekly allocation of 500,000 silver eagle coins. 40.2 million ounces have been purchased to year-to-date, while January would bring in a record 7.498 million ounces.
“The retail demand has remained very strong especially for silver,” said Scott Carter, the chief executive officer of Lear Capital, a precious-metal dealer. This is because silver is considered vastly undervalued compared to gold where over 60 ounces of silver can be purchased versus one ounce of gold. Silver broke $21 an ounce this evening, trading at $20.74. Gold is also getting hammered, falling to $1,265 before seeing a few dollar pullback.
The shrinking supply and increased demand in silver could continue to boost premiums that are roughly 18 percent but have been as high as 25 percent in August.
The mess out of the US capital is giving investors and inflation hedgers more than enough reason to buy precious metals. Although there is a place for metal buying, they will continue to decline as long as inflation remains low globally and growth continues to steadily increase.
This is creating a buyer’s market, allowing allocation to precious metals at lower levels.