Silver Eagle Sales & Ratio To Gold EaglesWhile owning precious metals will be a very wise store of wealth and investment in the future, silver will actually turn out to be the “King of Investment Gains.”  A good barometer of the retail gold and silver market is shown by eagle sales on the U.S. Mint.
In the first three months of the year, investors were purchasing silver eagles at an average ratio of 48 to 1 to gold eagles.  However, after the huge April 12th precious metals take-down, investors overwhelming purchased a great deal more gold eagles in percentage terms that month as the price of the yellow metal fell $200 in two days.
However, something startling has taken place in the month of July.  Investors have been purchasing silver eagles at ratio of 95 to 1 compared to gold eagles.
Investors are presently buying, nearly 50% more in silver eagles than in gold eagles in dollar terms!

2013 Silver Eagles As Low As $3.29 Over Spot!

2013 Silver Eagle

From The SRSRocco Report:

Silver Eagle Sales & Ratio To Gold Eagles

Here we can see the result of that price action as the ratio of silver to gold eagles declined from 54 to 1 in March, down to 20 to 1 in April.  According to the U.S. mint, 4,087,000 silver eagles was sold in April, while investors purchased  209,500 oz of gold eagles.

Below are the total amount of gold eagles sold each month in 2013:

GOLD EAGLE SALES 2013 (total oz)

JAN = 150,000

FEB = 80,500

MAR = 62,000

APR = 209,500

MAY = 70,000

JUN = 57,000

JUL = 36,500

Now, if we look at the chart above, we will see that the ratio increased after April and moved up to 49 to 1 in May and then to 57 to 1 in June.  However, something startling has taken place in the month of July.  Investors have been purchasing silver eagles at ratio of 95 to 1 compared to gold eagles.

This is indeed a very interesting trend taking place.  If we take the average price of gold and silver for the month of July (Kitco) and multiply it by the sales of each, we find that investors have purchased approximately $46.6 million in gold eagles and $68 million in silver eagles.  Investors are presently buying, nearly 50% more in silver eagles than in gold eagles in dollar terms.

Furthermore, silver eagle sales for the first seven months of the year are a staggering 45% higher than they were in 2012.  If we look at the chart below, we can see that silver eagle sales are setting new all time records:

SIlver Eagle Sales 2011-2013

In the first seven months of 2012, the U.S. mint sold 19.67 million silver eagles which were down 22% compared to the year before.  Not only have the sales (28.5 million) in 2013 surpassed 2011 by 45%, they are also higher than 2011 by 3.2 million or 13%… and this doesn’t include a final update to take place next week when the final July figures are posted.

The prior annual record for silver eagle sales were nearly 40 million in 2011.  If the present trend continues, silver eagle sales may reach 44-46 million in 2013.

SILVER: The King of Future Investment Gains

Even though gold is the king monetary metal, the real gains in the future will be made in silver.   Some of the more prominent precious metal analysts believe gold and silver are stores of value, and not true investments.  While I believe the precious metals are an excellent store of value, they will also behave as great investments in the future.

The reason why gold and silver will be more than just stores of value, is due to the serious misallocation of supposed wealth in the world.  I am not going to get into details here, but the world has invested itself into paper assets which only a fraction could be redeemed today.

The problem with these supposed paper assets, is that they are based upon the burning of energy to create economic growth in which these are settled or repaid.  Only so much energy can be burned in a year which means only a small fraction of these paper investments can be satisfied.  The quality of these paper investments will degrade substantially as the world is impacted by energy constraints in the future.

If we compare the total global investment in gold and silver over the past 5 years, we can see that silver is barely on the radar screen.

Global Gold Investment

According to the World Gold Council, total gold investment, increased from $69.5 billion in 2007 to over $234 billion in 2012.  Thus, the world has invested 3.4 times the amount of money in gold in 2012 than it did in 2007.

In the next chart, we can see just how much less investment funds have been flowing into silver compared to gold:

Global Silver Investment 2007-2012

In 2007, the world invested $500 million in silver, but by 2012 this amount increased nearly 16 times to $7.9 billion.  In addition, the amount of world silver bullion investment increased more than 5 fold from 40 million oz in 2007 to 253 million oz in 2012.

If we compare the data from the two charts, we can see a very interesting trend.  In 2007, there were $139 invested in gold for each dollar invested in silver.  However, in 2012 this ratio declined significantly when investors purchased $30 dollars of gold for every dollar in silver.  I would imagine as the world’s fiat monetary system continues to disintegrate, the demand for precious metals will increase exponentially.

This is when silver will outshine gold.  We are currently witnessing a run on the Global Gold banks of the world.  Rumors are that gold is being drained from the GLD ETF to help meet the insatiable demand since the price of the yellow metal has declined nearly $400 in 2013.

At some point in time, the availability of physical gold bullion will dry up, forcing large and small investors to purchase the next best precious metal… silver.  Because the price of silver is currently 65 times less than gold, any sizable amount of currency to flow into this metal will push its value significantly higher in percentage terms compared to gold.  (You will notice I used the term “currency instead of money… as fiat currency is not money).

Investors who believe that the FED may taper soon due to improving economic indicators, need to read my new article coming out next week on U.S. Energy Consumption vs. the GDP Growth Rate.  If the FED decides to taper to a large degree, the U.S. economy will receive a stroke and begin to fall into a coma in the following quarters.

Silver will be the KING precious metal as it pertains to investment gains.  Only a few realize this potential… but I bet my bottom silver dollar that in time, the world will find out this hidden secret.

War Bird

  1. Top of the morning Steve  Any idea when the camel’s back is broken and we see the reversals of silver prices.  I plan to sell some overpriced silver at the gun show. You are my guru as to these matters. I like to be able to talk the talk with the silver buyers and address their concerns about price and availability of silver

  2. AGXIIK, we are in the typical summer doldrums right now, and prices will trend up as summer fades into our rear-view mirror.  This is the annual pattern.
    Disclaimer:  Past performance does not necessarily guarantee future results.

    • “Disclaimer:  Past performance does not necessarily guarantee future results.”
      Other than death and ever increasing taxes, there are NO guarantees.  Past performance is, however, one of the very few indicators of what the level of performance is that the investment is capable of producing.  

  3. (Off topic, but…)
    From the ‘You can’t make this sh!t up dept’
    There is a bill in congress to replace the dollar bill with a coin.  It seems almost nobody is using those gold-colored $1 coins which the .gov has filled warehouses with.  Anyway, the question arose it was suggested strippers could suffer in a $1 bill-less economy, with G-strings and garter belts far less accommodating of cold metal.
    76-year old presidential election LOSER John McCain reportedly said, “I hope that they could obtain larger denominations.”

    • If the Gov wants us to USE a $1 coin, they should stop producing paper $1 bills and destroy all of the worn ones that are turned in.  Until they do, it is clear that they are not all that serious about it.  If they are not, why should we?

  4. Mammoth actually got one correct!
    On Wednesday I wrote here:
    Looks as though all those folks who jumped back into PM’s in order to not ‘miss the bus’ during this week’s price bump just got their weenie smacked.  Thankfully, I am not among them; seen this happen too many times so I’ve just been sitting on the fence, waiting for this to happen.”
    In the past I have observed – and given into – the emotional impulse to dive in when PM prices bumped up after being low for a while, only to feel like a sucker when the Big Traders took their profits.  The best way to learn anything is by one’s own experience.
    Some arrogant puke here then said, “You should just admit you were wrong in overstating the significance of a .30 intraday move in silver…It’s ridiculous.”
    I will still stand my ground and point out that somebody who restrained their trigger-finger until today could purchase more PM’s for their money than they could’ve earlier in the week.  We are currently down nearly $0.75 from the week’s high.  It is easy to dismiss the insignificance of a ~4% price drop, but if a person buys just 25 oz, that is one additional oz.

    • As a LAST resort, perhaps the free market will set the prices of gold and silver via REAL competitive bidding?  Nah, who would think that could possibly work?   :-/

  5. These statistics are very interesting.  However, I have a problem with SRSRocco leaving the gold buffalos out of the comparison. When you buy gold coins from the mint, you  basically have a choice of the eagle or the buffalo. With silver, it’s basically just the eagle. To leave the gold buffalo out of the comparison makes no sense, other than to make the writer’s case for silver look better. I’m all in with silver, but let’s make the case without fudging the numbers. 

  6. He also did not include 1/2 oz., 1/4 oz., and 1/10th oz. coins with their higher per oz. premiums… and I’m just fine with that.  Eagles are the symbol of US Mint gold and silver coinage.  Also, the US Mint does not produce any silver Buffalo coins, so that would not be a direct comparison.  Shrug.

    • Ed B– He did include the gold eagle fractionals. He’s giving you the total amount of gold american eagle ozs. That includes the fractionals. Again it does not make any sense not to include the buffalos. He’s comparing the gold coin sales in ozs. to the silver coin sales in ozs. So you can’t leave out the buffalos. The reason the buffalos are being minted is because they are 99% gold whereas the eagles are 92% gold. It was feared that investors would buy the many foreign coins which are also 99% instead of the 92% eagle. So you have a choice between the 92% eagle and the 99% buffalo. 

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