The U.S. Mint has sold nearly 5 million Silver Eagles in the first three weeks of the year compared to only 87,500 oz of Gold Eagles. This is a Big trend change compared to the previous three years, as the Silver-to-Gold Eagle buying ratio has more than doubled.
For example, the U.S. Mint Silver-to-Gold Eagle sales ratio ranged between 22/1 and 27/1 from January 2021 to 2023. However, the U.S. Mint has sold 56 times more Silver Eagles than Gold Eagles so far in January. It seems that investors are taking more advantage of the lower silver price than the $2,000+ gold price.
It just makes economic sense to acquire Silver Eagles when you spend $2,100; you can purchase (80) Silver Eagles vs. (1) Gold Eagle oz. With the Silver price now back in the low $22 range, it’s a pretty good deal with the Primary Silver Miners’ Cost of Production at $21-$22 per oz. However, investors are holding back on buying gold bullion because the $2,020 price is 20-22% above the Primary Gold Miners’ Cost of Production of $1,650.
Furthermore, Silver Eagle premiums are much lower than they were in 2023. Some dealers were charging 50% premiums on Silver Eagles. I saw some dealers charge $14-$15 premiums on each Silver Eagle. Interestingly, the largest Online Dealer, APMEX, charged some of the highest premiums on Silver Eagles last year and continues today. You will pay $7.50 over the spot (20-99 coins) to purchase a 2024 Silver Eagle from APMEX, while Cloud Hard Assets and Idaho Armored Vaults are charging in the $4 range over the spot. It always pays to shop around.
Royal Canadian Mint Silver Sales Plummet
According to the Royal Canadian Mint Q3 2023 Report, Silver bullion sales plummeted 64% in the third quarter of last year. While this information is a bit dated, it is interesting to see such a large DROPOFF in sales.
Royal Canadian Mint Silver bullion sales fell from 9.6 million oz in Q3 2022 to only 3.4 million oz in Q3 2023. Furthermore, total silver bullion sales fell nearly 6.7 million oz in the first three quarters of 2023. As we can see, most of the decline took place during Q3 2023. I can imagine silver bullion sales will be just as weak in Q4 2023.
Surprisingly, when the Royal Canadian Mint’s silver bullion sales collapsed during Q3 2023, the U.S. Mint was again selling Silver Eagles like hotcakes. The U.S. Mint sold more Silver Eagles in October (3,938,000) than the total Royal Canadian Mint silver bullion sales for the third quarter (3,412,600).
Again, it will be interesting to see the total Royal Canadian Mint silver bullion sales for 2023. I would wager they will be less than the total from the U.S. Mint. Total U.S. Mint Silver Eagle sales for 2023 were 24.7 million, up from 16 million in 2022.
Lastly, investors continue to sell silver back to dealers, which is keeping premiums low. It will likely take another major Financial Banking Event to get investors to buy silver in large quantities, enough to lower dealer stockpiles and cause premiums to rise once again.
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Was not going to comment, but, it isn’t in me, ha. Good info Steve. This somewhat shows what I have been reading for 25 years, and I know that you have said it many times…….. POOR MANS GOLD ….and it should blast off when the stock market and bonds blast DOWN…. at least I hope so. I will keep buying till it reaches $30 and then stop. What’s an old man to do with those $$$’s besides that? I am happy in life and have immensely enjoyed it with my children. It’ll make my heart good to know they will be able to continue my practice of getting up and first thing after coffee, seeing the silver price daily(an an article from Steve)….. not the worst habit….
It’s all about the gold/silver ratio, around 90 right now. Combined with the low physical premiums its a great time to increase your silver stack.
Correct, if one wants silver.
The price ratio has been something like 16 for most of human history before our current era. Keith Neumeyer and others point out that physically it comes out of the ground at something like 8 to 1 (certainly not 90:1). I’ve always puzzled over this dramatic difference between price and physical ratio. And certainly way more ounces of silver have disappeared into landfills over the last 100 years than gold. One would assume that if there is ever a monetary function for silver again, then the reversion to the mean could be dramatic.
Speaking as a Canadian, I find that most Canadians are unwilling to take responsibility for their personal finances. Blind faith in big government and endless, boundless credit and “free stuff” is indoctrinated from childhood. It must be so, considering the types of policies that find favour. For this reason, precious metals as a vehicle for investment and wealth preservation will be considered only as a last resort, too late for the vast majority of Canadians to participate. Those few who position themselves in advance will be considered ‘lucky’ and targeted for shakedown to fund social programs.
If that is the case,
“The few who position themselves in advance”
better buy with cash and keep their mouths shut.
Authoritative, totalitarian, or dictatorial governments are increasing.
Bingo. Buy, bury, say nothing… and I mean, if you need to say something to someone, share it with God.
I don’t think the average bullion buyer has any idea what the actual cost of production is on either gold or silver. So I don’t agree with your statement that people aren’t buying gold because the price of gold is 20% over the cost of production. Just my opinion but I think the reason why people aren’t buying gold is they don’t have the money for it. If you look at the number of people behind on student loans, car payments, rents and so on it is just the lack of funds driving the decline in gold purchases.
Demand is the driver on commodities not the cost of production. You can have a commodity that production cost is $100 a ton and if demand is high enough and the customer needs the product they will pay a $1,000 a ton the cost of material is irrelevant it is what do they need it for that drives the cost.
Example :
HCL ( Hydrochloric Acid ) cost of material was $20 a ton or free because the producer manufactured the acid as side stream at a Chlor alkali plant. The average cost on the market to industrial customers was 60-70 a ton. Throw in the frackers who use railcars per fracked well and demand goes through the roof but production costs don’t move but if you need the acid and the market cost is now $1,000 a ton either pay or don’t get the acid.
Gold and Silver get their demand from perception of economic outlooks. People were afraid of the future and were paying $15-$20 over spot for eagles when the perception was they either need some before the collapse or needed to add to their position. Cost of production didn’t enter the minds of the buyer of eagles it was FOMO.
Your point is good. When I worked in tourist retail in Banff, Canada as a kid in the boom years of the 1990s, our cost to produce and import fancy sweaters and woolens out of the UK was irrelevant to the tourists who paid 800-900-1000% markup. Naturally, we charged whatever the market would support, which sometimes drove prices to ridiculous heights. That said, if the retail prices goes below cost, obviously supply dries up pretty damned quick — and that’s what happened to the entire tourist retail sector, which is pretty much a ghost town now compared to what it was 30 years ago. I think the same can be said of almost all discretionary retail over the next handful of years: people have no money to spend on anything but essentials — and that’s why we’re not seeing more sales of bullion coins and bars and pretty much anything else that isn’t required to survive and put a roof over your head. When this bull market finally heats up, most people will be on the sidelines, wondering what happened.
That’s probably true about people not knowing or caring about the cost of production. But “lack of funds” doesn’t really explain why more rich people aren’t interested in bullion. There’s a lot of currency out there that could be chasing PMs but is instead inflating the stock, bonds, real estate bubbles. I suspect that gold is perceived by many in the upper classes as a pet rock sitting there costing storage fees but otherwise doing nothing and not providing any yield.
Agree; many are struggling with bills, but there are also plenty of high net worth individuals.
And as long as the equities markets are doing well, more millionaires are created everyday
I was at a local pub yesterday where for the third week in a row, the resident lush slumped over my table and bragged about his stock portfolio, how the exchange keeps hitting new highs, his portfolio is just shooting up like a rocket, and he’s celebrating and spending his kid’s inheritance, hahahah, “Bottoms up.” If this isn’t a contrarian indicator, I dunno what is.
Boy howdy. I was with nokia’s dsl divison during the tech boom, and there was a point when every waiter at any restaurant had a stock tip and everyone was trying to get a real estate license. In a number of different arenas today, I see similiar symptoms of, er, irrational exuberence. Just the number of folks I meet weekly who all loudly insist they ‘do their own research!’, which is invariably one headline deep as a crooscheck…sigh. Most days its hard to believe we still exist as a top level society per se.
It’s all about the “yield.”
When asked how much money was enough, Rockefeller responded, “Just a little bit more.”
Everybody is a Rockefeller now. No one is satisfied with “enough,” because it is never enough. The rich see no need to protect their wealth with PMs. And as Steve so often points out, PMs don’t offer yield that increases their “mailbox money.”
I really appreciate the above comments. The comments are smart and thoughtful in my opinion.
I second that!
DocRich,
As are your frequent, excellent comments on this blog/forum!
Best wishes to you and all our other “travelers” through life’s coming complexities.