By SD Contributor SRSrocco:

As you can see from the chart below, 50% of all Silver Eagle sales have taken place in the past 5 years.  Since the inception of the American Eagle program, the overall ratio of gold to silver eagle sales has been 16/1.  However, in the past 5 years the ratio  has risen to 28/1!

Silver Eagle sales are showing the market where the REAL LEVERAGE is found.

 

2013 Silver Eagles IN STOCK As Low As $2.59 Over Spot at SDBullion!

 

 

 

  1. Possibly unrelated.
    If I’m not incorrect, over 50% of all people that ever lived, actually are alive today.
     
    One thing to consider is that many people can afford a silver Eagle form the average amount present in their wallet. A gold Eagle for nearly evveryone is a serious purchase. Selling a high ratio of silver eagles doesn’t say much about the perceived value of silver, when the prices are so vastly different, and the entry level for each is one ounce.
    For a shiny thing that you can barely use as money (hardly anyone knows that value), a silver eagle is just so much more accessible and attractive. You need to be dirty rich to decide on a whim to buy a gold eagle. And there are so many attractive alternatives for the same price, as well as 10x more afffordable coins from the same outlets that offer the gold eagles.
    When you enter a coin shop out of pure boredom or unexplicable interest. Deciding to buy something shiny, it’s hard to find something that offers better value for money in terms of instant satisfaction.
    Thats said, I sold all but one of my silver eagles, it’s an ugly coin for me. I much rather have a (cheaper) Maple Leafs that has 10x less non-silver in it. Or, for the price of an Eagle, I get a Bison or capsuled Koala. Maybe less recognized, but at least there is more uniqueness to those, and very potential collector value down the line. Especially if I unload it before or after a melting pot scenario.

  2. What strikes me about this chart is from 2000 to 2006 ASE sales were static at about 10 million coins.  Silver price ranged from $4.50 and $12.00 an ounce. The overall investment per year ranged from $45 to $120 million.
    Move to 2012 and we see 35,000,000 ASE coins sold.  If you use an average silver price of $33, this represents a $1,100,000,000 investment into ASEs.  This grand total is between 9.5 to 26 times the dollar volume in about 6-12 years.
    Yes, 2012 is 250% greater in raw numbers of ASE but in sheet dollars invested, the totals are very high and I think quite telling in the overall attention to precious metals and moving into the market now before events caused the prices to ramp much higher.

    • Indeed. Participation seems to be improving. And, people seem to go all-in now. I am. Isn’t that a bit of a new phenomenon?
      This really seems to be just the start for investment demand. The recently indicated price-demand divergence is very telling. My dealer saw it coming, but when it happened, he was bafffled all the same. He’s selling 20x more silver, Euro for Euro. Gold has become slow moving stock.

      My impression is that while awareness is spreading quickly, participation may still be dropping as a percentage of awareness. This could have reasons of awaiting sign (huge dips or long-promised ups), or just people being flat broke. Any investment is going to be from people with liquidity, or a stupid good credit rating.
      Eagles are hugely US-centric, and in economics I warn for being too US-centric. As the time is bound to come when they go from being leading to being irrelevant. I want to know what else we are buying. I have less than 0.1% in Silver Eagles, for instance. Just don’t care for them, if anything they’re just trading stock for me, and even for that I prefer other coins.
      How long will the US mint be prepared/allowed to sell as many eagles as demand makes them? USA are importing silver and Eagles sales are approaching US silver production? It used to be a nice treasury service and is turning into a liability. No money can be made from this, and since the USSA doesn’t promote PM ownership as China does, why continue? So yes, Eagles may be a collector’s shortage bet soon. But in my view, all minted silver may become such, as it turns into industrial silver supply.

    • @XC Skater:  Greetings.  So, you ask, “Isn’t that a bit of a new phenomenon?” 

      Actually, it’s not.  Bull market periods almost always come in stages.  Most people like to divided the time period into three categories:  1) smart money entry;  2) institutional awareness begins and partial entry by the public;  3) massive entry by the public and eventual blow-off top.  It’s to be expected that ASE sales were modest in phase 1.  What we see in the last few years is a start-up of phase two that was faded away by manipulation attack against the move to $50.  We’re still in late stage 1 to early stage 2 for silver.
       
      Think back to the tech boom.  The early 1990s were pretty quite.  It was only by the time 1995 through 1998 came that we moved through the entire “phase 2″ period of the bull run. You all know what happened from 1998 through March, 2000:  “phase 3″ and the blow off top. This pattern happens over and over.  It’s a product of psychology. 
       
      We probably will never see a true “phase 3″ demand profile in ASE sales because the goofballs at the mint will be instructed to stop buying plancets indefinitely for fear of added pressure on physical silver — and yes, by doing so, they will be breaking the law, but what else is new?

    • @XC Skater:  For the time being, and under current law, the US sources all ASE silver plancets from US mined silver.  The plancets are produced by Sunshine Mint.  It’s possible that the law will be modified when silver demand permanently exceeds US domestic production.  For now, imports do not come into the picture.
       
      As for the logic of not holding ASEs on account of their association with the US economy, I don’t think that’s going to make much difference regardless of how things unfold.  As a commodity that is essentially the same worldwide, a 9999 fine silver coin will carry most of it’s value on the back of the silver content and will be recognized as such worldwide.  There might be different taxes applied to different bullion products in the future, however.  I can easily see $2 face of 90% US coinage not getting taxed, but a $1,000 face bag of 90% (universally seen as a “bullion product” and not pocket change of currently circulating [albeit in tiny quantity] coin of the realm).  Other twists and turns on the eventual “excess tax” front may come, making for yet one more reason diversification of holdings — types of coins, bars, etc. — makes sense.  Premiums drift around on different products too, making it possible to sell what’s getting most attention in the market at any given time.  This premium volatility is one of the reasons why I love pre-1965 90% US silver coinage.  The coins traded in excess of 20% over spot during the Y2K crisis and there will come a time in the not too distant future where 10% or higher premiums for 90% will be seen as the floor.  Only a couple of years ago, it was possible to grab the stuff at a 7% discount to spot, give or take a few percentage points.
       

    • “Bull market periods almost always come in stages.  Most people like to divided the time period into three categories:  1) smart money entry;  2) institutional awareness begins and partial entry by the public;  3) massive entry by the public and eventual blow-off top.”
       
      Yes, with the early part of stage 3 also being the smart money exit.
       

  3. @Flying Wombat
    Thanks for loosely addressing my points.
    Were there all-in silver investors for the mid-80′s to say the milennium? How many people can you name who were putting a significant part of their portfolio into the physical metal by 2000?
    In can see that in the tech bubble, many people went all-in those stocks. Terrible what happened to them.
    So many after the tech bubble, silver is the next thing (apart from the eternal real estate hype) that people go all-in on. Of course being all-in already myself, I welcome that to continue. I’d love to be able to follow stats on that though. 

    • In any given bull market, some folks go all-in.  Some don’t.  Some just watch, but still can’t get around the social embrace of the bull market that seems to be seen everywhere (e.g., in the tech insanity of the late 1990s, you couldn’t even go to a bar or gym or whatever without seeing CNBC on TV there was that much demand for the new spectator sport of tech stock watching).  These three rough phases almost always define the evolution of all bull markets.  It’s been this way for centuries.

  4. I know sales are brisk, but I don’t understand why more people don’t buy real silver.   I guess it’s because of all the great values and buying opportunities in the stock and bond markets (GAG!)   Why would anyone prefer cash in a CD earning zero in this environment versus silver at a price where most small silver miners can barely make a profit?

    • Primarily for two reasons.  The first being an almost complete lack of awareness of silver and gold as alternative currencies, which is to say money.  Brokers and other financial advisers do not recommend precious metals for their clients EXCEPT as paper versions of metals, such as ETFs and mining shares.  Reason:  selling these create commissions, while money invested in physical PMs do not and will be lost to the pool of funds that do.  
       
      The second being an effective propaganda campaign that cheer-leads for paper investments and tries to show gold and silver in the poorest light possible without actually lying about them.  This means that if gold and silver are being mentioned at all, it is far more likely to be a down day for the metals than an up day.  Air minutes are many for gold on down days and precious few on up days.  Has CNBC or Bloomberg EVER mentioned that gold and silver whipped the stock market for 12 years running?  No, probably not.  Yet, if a mutual or hedge fund manager did that, they would be having a stockgasm right on TV!
       

  5. In the recent edition of Morgan’s Money, Metals and Mining, there was a telling statistic that might, and I state, might be illustrative of the potential for ASE  and other silver products that are commonly purchased by the public. It could impact gold prices too.
    In early 1979 silver as about $6 an ounce.  Within a year it touched $50.  But more notable was the cream of the move. That  took place in the last 37 days of the silver rush when it   moved to $50 frm $16 an ounce..  These stats may provide a platform for silver price increases in the next year. It may even be mathematically provable to reoccur today.  We’ve been range bound between $26 and $50 for nearly two years.  The see saw of price movements has steadied in the last year with a trading range of $6-8  per oz for the better part of the 12 month period.
    If we use the present price of $29 to represent an equivalent $6 per oz  lower end of the 1979-1980 silver spike, then the psychological step up you note, Flying Wombat, may be coming soon.  It is the mentality of the crowd that drove the last spike. It would not surprise me to see a $5 increase by summer with $35 as a price point.  But the idea of seeing a 200% increase in a year could hold true for both the psychological as well as the supply/demand and fear factor increases. 
    In the last 3 months $130 billion in small investor funds have rotated back to the equity markets.  Another $100 billion plus moved from the FDIC insured accounts when the Feds removed the unlimited insurance coverage for $250,000 accounts.  These funds moved to the MMAs that earn, at best on a good day with a tail wind, maybe 10 BPS.
    If there’s $50-100 billion out of $250 billion in liquid funds looking for home after equities drop and MMAs break the buck, this could represent a liquidity surge of incredible proportions.  The entire silver market in 2013 is $100 billion.   The liquidity shift of $50 billion to silver would be breath taking.  Most silver is spoken for now since demand exceeds supply.  The exact ratio is not known today but the time it takes deliver, 3-6 weeks in some cases,  junk bullion shortages and large orders nearly unfillable, it would take only a modest amount of liquidity to jack the price.  The buying public is not broke by any means. They may not be flush but there are plenty of people with deep pockets with $50,000 to $1,000,000 looking for a home.
    Gold is even more difficult to source since every ounce is spoken for.  Gold supply and demand is inelastic. As Dr Willie mentioned, gold has a Giffen Good that dictates a spike in demand as price rises.  He notes that when gold hit $250, at the Brown Bottom, demand was miniscule.  With a price now at $1,600, every ounce finds a home.  When no more ounces or tons can be sourced,  the price will increase through a critical escalation to some unknown number, either dragging or being dragged up by silver prices.  These metals are bought for different reasons but fly in tandem much of the time. 
    As for the liquidity to jack gold prices, sovereign wealth funds and holdings of reserve currencies are measured in the trillions of dollars, if not the tens of trillions. That’ll be enough to make gold very popular with a price that cannot be estimated.

    • Just as an off-the-wall thought, AG, it occurs to me that since the time when gold was priced at $35 an oz., it has increased in price by about 45 times.  If it were to do that again (not impossible since anything that HAS happened can certainly happen again), we would have a gold price of just over $73k per oz.  Yes, that sounds insane to me too but then, it IS a crazy world out there and all of the fiat currencies are being beaten down without mercy.

  6. Ed If we took something even as modest as the $250 price in early 2001 and used the 4000% increase experienced in the gold rush from $40 to $800, we could see $10,000. Thus we may have a 6 fold potential increase.  Silver is trickier but with a GTSR ratio at the peak of 16 or $50 vs $800 in 1980, this might bring silver to $625   That is too much pie in the sky but GTSR of 50 to 1 might bring silver to $200. I think we’d all be happy with this low end.

  7. I see the increase in silver eagle sales a direct result of the uncertainty many Americans have for the dollar. Those who are smart are moving money into something that will never be worth nothing.

  8. Yet, the price of silver is still really low since five years even with all of these demands. Even when the price of silver is low while the numbers of American Silver Eagles sold are a lot according to the Drutter Divergence. Plus, the demand for precious metals are really small compare to the demands for fiat currencies! Also, there aren’t enough physical silver for everyone to own a single ounce of it! 

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