Record Silver Coin Demand Signals Financial Trouble Ahead

The world doesn’t realize it, but record global silver coin demand is warning that big trouble is coming to the financial system. More investors are waking up to the fact that there is something seriously wrong with the financial industry and broader stock markets and are buying more physical gold and silver than ever.

This is especially true for silver. During the huge surge in physical silver investment demand from June to September this year, I heard from several dealers that investors were buying a lot more silver than gold. And this wasn’t just from the typical Mom & Pop buyers… there were large silver volume purchases from wealthy clients.

According to the Silver Institute 2015 Interim Report, total sales of official silver coins will reach 130 million oz (Moz) this year. If we look at the chart below, we can see the huge increase in official coin sales since the first collapse of the U.S. Investment Banking and Housing Industry in 2008:

Global-Official-Silver-Coin-Sales-2003-2015

Global Official Silver Coin sales ranged between 35.7 Moz and 42.4 Moz from 2003 to 2007. However, demand surged to 64.3 Moz during the 2008 financial crisis and continued to increase to 110 Moz in 2011 when the price of silver peaked at $49. Then in 2012, as investors were unsure of the silver price trend, Official coin sales declined to 84.6 Moz that year.

Well, this all changed in 2013 as the price of silver fell from $30 down to $18 in just six months, motivating investors to purchase a record 116.4 Moz of official silver coins. Even though demand fell modestly in 2014, official silver coin sales are forecasted to hit a record 130 Moz this year.

Royal Canadian Mint Silver Maple Leaf Sales Hit Record Q1-Q3 2015

The Royal Canadian Mint just released their newest Q3 Report showing a huge increase in Silver Maple sales to 9.5 Moz, up 76% compared to 5.4 Moz during the same period last year:

Silver-Maple-Leaf-Sales-2014-vs-2015

Total Silver Maple sales Q1-Q3 are 25.2 Moz versus 20.8 Moz last year… up 21%. Here is my forecast for total 2015 Silver Eagle and Maple sales:

Silver-Ealge-vs-Silver-Maple-Sales

As we can see, Silver Eagle and Maple Leaf sales are estimated to reach 78 Moz compared to 73.2 Moz last year. This is one hell of a lot of 1 oz silver coins from just these two mints. Furthermore, total sales of Silver Eagles and Maples were only 9.5 Moz in 2005. In just ten years, sales from these two official coins have increased more than 8 times.

Gresham’s Law: Bad Money Drives Out Good… Official Silver Coins

If we take the global official silver coin data from the first chart above, and divide it into two periods, we have the following result:

Official-Silver-Coin-Sales-2000-2015

Before the first collapse of the U.S. financial industry and economy in 2008, total global official silver coin sales for the period 2000-2007 were 292.1 Moz. Now compare this figure to the second period from 2008 to 2015 at 786.8 Moz. If we average the annual global silver coin sales, the first period (2000-2007) shows an average of 36.1 Moz per year versus 98.4 Moz after the U.S. financial and economic meltdown (2008-2015).

This huge surge in official silver coin demand represents a percentage of investors who have decided to exchange increasing worthless paper currency for sound money. This trend started in the 1960’s when the United States sold off the majority of its huge silver stockpiles and removed silver from its coinage.

I am working on THE SILVER MARKET REPORT using figures and information starting in the 1960’s. Investors need to understand the trend change in the silver market has been going on for more than 50 years. Understanding this ongoing silver market trend is important for investors who want to protect their wealth when the next major financial crash occurs.

Even though the forecasted 130 Moz of Official Silver Coin Sales did not translate into higher silver prices, it did hammer a few more nails into the Greatest Financial Ponzi Scheme in history. That’s how investors need to look at the silver market. I realize it’s frustrating to see that record buying of silver coins does not seem to impact price.

However, investors need to understand that Greatest Financial Ponzi Scheme in history can only survive if global oil production continues to increase.  Unfortunately, we are about experience a peak and decline of global oil production shortly starting first with the collapse of the U.S. shale oil industry.

I will be writing more articles explaining the connection between skyrocketing debt and rising oil production.  One can not take place without the other.  Which means, when the massive amount of global debt finally collapses, it will take down world oil production with it.

Some of the safest assets to own at this time will be physical gold and silver.

Please check back for new articles and updates at the SRSrocco Report.  You can also follow us at Twitter, Facebook and Youtube below:

Enter your email address to receive updates each time we publish new content.

I hope that you find SRSroccoReport.com useful. Please, consider contributing to help the site remain public. All donations are processed 100% securely by PayPal. Thank you, Steve

24 Comments on "Record Silver Coin Demand Signals Financial Trouble Ahead"

  1. What you are doing here, providing a Lamp of Truth, is a service to freedom and liberty. If you have moments when courage wanes, I hope you will take heart. Myself, I do not know the future. I think “the issue is in doubt.” However, it is also true that this is the same exact message telegraphed to Washington from Wake Island just before they were overwhelmed by the Japanese. Personally I think the three outcomes are, we are rich, we are dead, we are slaves. Just like in football, when you pass, two of the three outcomes are not good. But, the issue is in doubt.

  2. Very good work on the demand side Steve. I have been reviewing the issue of declining grade.

    In the ‘The Complete Cost Of Mining Silver’ you said,
    ‘I believe I proved that if silver was anywhere near $15 an ounce, several mining companies would have suffered big losses. I sometimes wonder the motivation of so called gold and silver analysts who offer such splendid advice and forecasts.’

    So how is Hecla travelling today?

    • Counterfiat,

      What do you mean by “How is Hecla traveling today? That article was my first stab at cost analysis for the mining industry. Regardless, the cost to mine silver in 2011 was higher than it is presently due to the oil price being $110 for the year versus $41 today.

      steve

  3. My main interest is ore grade going forward, and if there seems to be declining grade the deeper we go for ag. I suppose high grading by miners and cheaper oil may keep financials looking better than otherwise in the short term.

    • Since about 70% of silver comes as a “byproduct” of base metal mining, that 70% is all very low grade ore. The “low hanging fruit” of high grade ore from primary silver mines has largely been picked. Steve can probably dig up figures on the [declining] average ore grades from the primary silver mines.

      Silver isn’t “high-graded” as much as gold is. One obvious reason is where 70% comes from.

      • I am not sure what the point is regarding the Source of Silver.

        When you purchase 99.99% Pure Silver, probably, all the other material it was found in has been fully separated. It would need to be, in order to get 99.99% Pure Silver as the end result, right?

        It is the same with food. All food starts with dirt.

    • Counterfiat,

      Yes… lower oil prices and some high-grading producers lower costs for some mines and companies. However, I don’t believe a lot of high-grading is taking place in the primary silver miners compared to the primary gold miners.

      I have not done the Q2 Primary Miners Estimated Break-even and will do the Q3 shortly. I will have both Q2 & Q3 shortly.

      Again, I don’t believe the costs going forward are going to matter as a pricing mechanism as they are currently. This will be due to the collapse of U.S. and then Global oil production.

      steve

  4. This analogy isnt true for all history, Steve, but i think you’ll appreciate the symbology:
    Gold and Silver are the ‘final frogs’
    What i mean is that the accumulation of wealth, in the context of inflation, monetary supply growth, and (currently) growing populations, has generally been a game about finding an assett class that is underappreciated, buying it, and holding it until the rest of the investment community wake up to your realisation.
    But the game afoot is that it is always easier to talk up the value of assett classes like financial instruments, property, etc, knowing that the government apparatus will always seek to suppress silver and gold prices to ensure a certain falsified ‘price stability’ (i.e. so that the wealthy have a better chance to participate in the assett leap-frog than do workers and small business owners)

    Eventually, though, gold and silver are the frogs at the back of the game, and for the game to go on into history, gold and silver need to be given the space to leap to the fore.
    Anyway, thats my ‘Final frog’ theory and im calling it that now is the time that they are at the very back of the line

  5. Steve,

    Do you have any statistics on: “Out of the people who purchased all those silver coins between 2008 to 2011, how many coins were sold by them during silver’s top(s)?”

    I had asked same question to David Morgan in person, but he didn’t recall the answer off the top of his head. But at the same time, he acknowledged the question wasn’t to be brushed aside either.

    Basically, your charts show cumulative purchases & surely they have been skyrocketing. But to be fair, do we know for sure if all purchasers from going back to those days held on to all of their purchases? And if not, what are the figures for “net acquisition by investors”?

    • Theravaida,

      There is no way to get that sort of data. I have had several email exchanges with the team at Thomson Reuters GFMS about silver bar & coin data and will share it in an article shortly.

      However, silver bar out of India is sold back more into the market than official coins or private rounds. Regardless, the amount of silver sold back into the market is a much smaller percentage than what is purchased.

      steve

    • Theravaida, if we net out the 2000-2007 silver that was sold back into the market, it would make the actual 2008-2015 silver sales even better than the chart shown by SRSrocco. I myself have bought mostly old silver bullion from my LCS which doesn’t get registered in the mint sales figures.

  6. All is fake as it was told when silver was trading at 21. That the financial crissis are coming silver will go up but it went down. Now again are these talks and once again be prepaired for a big fall in prices of gold and silver.
    The atracting inveters by providing these news….

    • “be prepaired for a big fall in prices of gold and silver.”

      No, not from this point. Anyone believing that hasn’t followed the facts and fundamentals. The fundamentals haven’t mattered much, but they do when the price of mining drops below the price of mining and refining.

  7. John Galt III | December 2, 2015 at 7:05 am |

    Gold never gets used up. Silver on the other hand is partially used up industry. It remains in inventory if it is in jewelry or in coin/bars.

    Nevertheless, at this rate that will be a lot if silver at the next top whatever the price. That 1.1 billion since 2001 is in addition to the SLV, CEF, Sprott and other silver trusts that hold over 500 million oz. Add to that the billions of ounces in India in jewelry and there could one huge pile in 5 to ten years when many expect gold and silver to peak.

    My advice: buy silver and gold. At the top if you can catch it sell most of the silver but keep most of the gold. Gold may be used to back the new currency regime but not silver. So when the next peak is hit silver will decline much more than gold as it always has.

  8. On high grading, I had read that generally speaking silver mines are easier to get back into production than gold mines. Does that mean that after a reset one should divest physical silver before gold? Does it mean that on the mining side, silver is more valuable?

    • I have no idea if a “mothballed” primary silver mine can be restarted less expensively than a mothballed primary gold mine. I don’t think there is much “mothballing” experience to rely on for an answer to that.

      I do know high-grading a gold mine damages it’s future potential for mining the lower grades on the same property.

      Steve might be able to supply the % of mined gold that is a byproduct of base metal or silver mining. It is a lot less than the 70% figure for silver. Real commodities deflation for copper, zinc, etc. prices, and the resulting decline of mining base metals will put a real squeeze on silver supply in the future.

      “Does that mean that after a reset one should divest physical silver before gold?”

      Assuming one had both to divest, that person might want to look at GS ratio in the future…and the trend at that time.

      • i think some mothballed silver mines can generally be more easilly restarted, because of the amount of silver that is a by-product of massive open-cut mining of less precious metals.

  9. silverfreaky | December 2, 2015 at 9:34 am |

    Tomorow they give us the rest.

  10. I thought this is interesting. I was looking into the state of the Kennecott mine which at one point provided 15% of U.S. Silver production. It had a collapse in 2013. I wanted to understand the state of the mine today.. so I went to their website. I noticed that they are doing layoffs due to current metal prices.
    http://www.kennecott.com/newsroom/news-releases/rio-tinto-kennecott-reduces-local-workforce

    Streamlining and near-term challenges force Kennecott to eliminate 65 roles and permanently close 74 vacant positions

    Article describing mine collapse in 2013. The mine was so big that the collapse caused earthquakes.
    http://www.bloomberg.com/news/articles/2014-01-07/massive-2013-mine-collapse-caused-small-earthquakes-today-s-pic

  11. I took the web tour of the Kennecott mine. Its incredible. Its incredibly expensive and hazardous to mine ore and process it to get copper and metals such as silver and Gold. I recommend the tour to anyone that wants to gain a better understanding of the energy to metals relationship. It takes a lot of concentrated investment and energy to get finished PMs. $14-$15 Dollar silver is a gift.
    http://www.kennecott.com/visitors-center#virtualtour

  12. steve – don’t think oil demand will outstrip supply anytime too soon.
    Iran is coming online with greater volume and with the recession, demand won’t ramp up easily.
    Another 3-5 years of cheap oil minimum.

    Eventually, you’re right, but it won’t be that soon.

  13. Great news Steve! Glencore is laying of 3,500+ people losing 16% of their supply of silver. Another
    mine closed due to a landside and coin demand is skyrocketing. Great! But silver just went under
    $14 spot. I suppose that’s because all primary miners are now producing silver around $12 when in
    the first of 2015 you stated costs were near $20 per ounce and a few years before that $30+ an
    ounce. What is the truth about mine production? Every time silver sets a new low, miner’s production
    costs go lower?????

    • Joe, it is possible miners can lower extraction cost as metal price drop. Remember, energy prices also dropped big time too. Also, miners high grade production by shutting down money losing mines and ramp up money making mines. This of course come at a future cost as they stop doing exploration. Let say there are more fiat money out there than ounces of profitable mines left to milk from.

    • Silver could go back to 8 in a couple of hours and stay at that level for years because producers will not be bankrupt before years : look at lonmin, they did a 46 to 1 shares issue !

Comments are closed.