Silver Shortage Intensifies As Premiums Reach Another Record High

Even mainstream media has noticed it: silver coins are going through a true squeeze, with demand up significantly and premiums reaching an all-time high.

Reuters reported today that “the global silver-coin market is in the grips of an unprecedented supply squeeze, forcing some mints to ration sales and step up overtime while sending U.S. buyers racing abroad to fulfill a sudden surge in demand.”

At the U.S. Mint in West Point, New York, where the American Eagle is made, the plant is operating three shifts and paying staff overtime, a spokesman said.

The Austrian Mint, which has begun allocating sales of its Philharmonic silver coins, has increased production of silver blanks after higher-than-expected demand in July and August, a spokeswoman said.

The U.S. Mint began setting weekly sales quotas for its flagship American Eagle silver coins in July because it can’t meet demand, and the Canadian mint followed suit after record monthly sales in July. In Australia, the Perth Mint sold a record of more than 2.5 million ounces of silver this month, nearly four times more than in August, and has begun rationing supply of a new line of coins this month, a mint official said.

 

According to Reuters, Roy Friedman, vice president of sales and trading at one of the biggest U.S. wholesale coin dealers, said he could not recall seeing a squeeze in supplies of North American silver coins spilling over to coins made in Austria and the U.K. to the degree seen this year (in his 35 years of dealing precious metals).

In fact, the chart says it all. Courtesy of Goldchartsrus, the premium % over spot price for the silver American Eagles has gone through the roof (black line, lower pane), even as the silver price is stabilizing (upper pane, blue and grey lines).

silver_american_eagles_Premiums_september_2015

As we have said repeatedly, the silver market will go through an unseen silver shortage as soon as the wholesale silver market gets a shortage. It could be that we are getting close to that point.

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