How Is The Silver Bullion Product Shortage Impacting Gold?

As wait times for certain silver bullion products reach upwards of 2 months, investors are now switching over to buying gold.  How much gold?  Heck of a lot more when look at the figures.

While Gold Eagle sales started to surged in June (76,000 oz), due to the possible Greek Exit of the European Union, they peaked in July at 170,000 oz and then declined to 101,500 oz in August.  In the beginning of September, it looked as if Gold Eagle Sales were going to be lower than August.  However, with the huge wait times for high demand silver products such as Silver Eagles, Maples and Philharmonics, investors switched over to buying Gold Eagles.

Gold-Eagle-Sales-AUG-vs-SEPT-2015new

According to the most recent update, the U.S. Mint sold 91,000 oz worth of Gold Eagles in the first half (Sept 16th) of the month.  Thus, half month Gold Eagle sales in September are already 90% of total sales for August.  I estimate that total Gold Eagle sales will reach 165,000 oz in September.

While its true that Gold Eagle sales were higher in July at 170,000 oz, this was due more to investors fear of financial contagion stemming turmoil out of Europe.  The current increased trend of Gold Eagle buying is due to investors switching over as many silver bullion products are unavailable… unless individuals want to wait 6-8 weeks.

I spoke to several large precious metal online dealers and they told me that in June and July and part of August, more investors were buying silver than gold.  However this has changed recently, where some dealers are seeing days where 2/3 or more sales revenue are coming from gold.

Third Quarter Gold Eagle Sales Surge Due To Financial Turmoil & Silver Bullion Product Shortages

Not only have Gold Eagle sales increased significantly in the third quarter, they are three times greater than either Q1 or Q2:

Gold-Eagle-Sales-Q1-Q3-2015

Currently, third quarter Gold Eagle sales are at 352,500 oz and I estimate they will reach 430,500 by the end of the September.  Thus, estimated Q3 Gold Eagle sales of 430,500 oz will be three times higher than Q1 (146,000 oz) and Q2 (127,000 oz).  Furthermore, just to show how much of a surge third quarter Gold Eagle sales have been, let’s compare them to full year 2014 sales:

GOLD EAGLE SALES

Estimated Q3 2015 = 430,500 oz

Full Year 2014 = 524,500 oz

Gold Eagle sales just for Q3 2015 (430,500 oz) are 82% of full year sales in 2014 (524,500 oz).  That’s a big jump.  I would imagine sales may continue to be elevated if we experience increased volatility in the broader stock markets due to the Fed Rate Hike decision.

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11 Comments on "How Is The Silver Bullion Product Shortage Impacting Gold?"

  1. Do you think it is possible for the price of silver to rise with excess oil production? As the two last highs in the late 70s and 2011 were periods of oil deficits.

    • Good point. Between lower oils prices and manipulation silver spot price is unlikely to rise unless price manipulation breaks and that has been and still may be a ways off.

      • I have been buying silver since 2008. I went to my dealer, who is the biggest in Australia, and they had no silver just gold. This is the first time including the 8 dollar fall that they have had no silver for sale. I am not saying there is a shortage but this is definitely something I have not seen before.

  2. Interesting, but still meaningless for now, IMHO. 180k ounces is 5.6 metic tons a month. That’s NOTHING compared to the off-take of metals in the east, a rounding error at best. While it’s nice to see some pickup in demand we need much more still to overcome the paper scam of the west. To that end, every once removed from the system counts.

  3. “As wait times for certain silver bullion products reach upwards of 2 months, investors are now switching over to buying gold. How much gold? Heck of a lot more when look at the figures”

    “However, with the huge wait times for high demand silver products such as Silver Eagles, Maples and Philharmonics, investors switched over to buying Gold Eagles.”

    I could see people who prefer to save in gold switch to the cheaper silver if they couldn’t get gold without a wait. I don’t see it the other way around. One large online dealer in audio recently stated most of their customers were buying silver with an average purchase of $500. Many bought like that monthly or even more often. But that isn’t in the price entry point for gold except fractionals.

    Besides delays aren’t long to get silver in the U.S. Just checking right now for quantities 20 or 25 [a tube] to 499 ounces [where I guess most purchases are]. Source Provident Metals.

    10 to 15 business day delay on ASE’s. No delay on Silver Maples [although there has been]. No delays on Austrian Phils. No delays on Silver Brittania. Yes to delays on the lowest premium 1, 5, and 10 ounce generics.

    • OR, people with more to spend are getting wise to the corruption and this is the beginning of the end of easily accessible protection.

  4. I thought the issue with the alleged delay time is already clarified?

  5. Steve,

    Whereas the volume and timing of events make sense for this to be happening, I do get hung up with this:

    Silver is the poor man’s gold. I buy silver because I cannot afford gold.

    If silver is cheaper, then I buy more silver, and if it is more expensive, then I wait until it becomes manipulated lower (as sad as how this market works).

    If there are delays, I don’t switch to gold, because I don’t have that kind of purchasing power.

    The silver-to-gold ratio is approximately 74-to-1. That’s like 3 Maple Leaf tubes (75 oz of silver) to a single 1 oz gold coin.

    Although I may be an outlier demographic-profile wise….

    When is the new report coming out? 🙂

    • DannyBoy,

      While it’s true that folks who buy $500 worth of silver aren’t buying gold, its the wealthy who are switching from silver to gold. I am not saying this will continue, but from some of the dealers I spoke to, they are seeming more gold buying due to the availability of gold.

      Again, instead of a wealthy individual buying $500,000 worth of silver, they are buying $500,000 worth of gold.

      steve

  6. Although Gold Eagle sales can show a bit of a trend you are making headlines out of an ant hill. Annual mine production is around 50 tonnes a week and so far this year Eagle sales of 638,000 oz and Gold Buffalo sales of 165,000 combined is only 25 tonnes. SGE withdrawals on the other hand were 73.69 tonnes for just the WEEK which ended Sept 11 – the 4th largest ever (which beat the previous 4th largest ever just 3 weeks earlier). That’s an annual rate close to matching annual world mine production. India is on target to import almost 1,000 tonnes this year. Russia just added another 1 million oz to their stash in August. The big mystery is where is all this gold coming from and when will that source run dry. Hah!, maybe the US has a secret space program and they are mining it on Mars or the Moon. Sounds as plausible as any explanation you might read on the internet.

  7. I have been purchasing silver now since 2010. Just recently, for the first time, I was actually looking at gold coins in different weights in consideration of buying.

    This gives credence to your thesis, ie: Only silver purchases before, NOW looking at buying gold (I believe I was considering the difference in premiums as the main purchasing point, between silver vs gold)

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