American Eagle silver bullion coins are poised to surpass 2013's historic sales record.
Year-to-date sales of 42.37 million ounces are within reach of 2013's annual sales of 42.68 million ounces. Given the first week of December's sales being 821,500 ounces, last year's record should topple this week.
There are several reasons behind this surge of demand.
Silver prices are very attractive. At $16.25 per ounce, silver prices are relatively low. Silver started this year at $20 per ounce and peaked at $22 per ounce in February before hitting a low of $15.32 in October. That is slightly higher than its five-year low of $14.98 and far short of its high of $48.48. Many investors sensed that silver has hit bottom and is now headed up.
The gold/silver ratio is higher than normal. On average since 2000, 1 ounce of gold could buy 59 ounces of silver. Today 1 ounce of gold can buy 73 ounces of silver. That either shows that gold is overvalued (unlikely) or silver is undervalued (likely). Many investors see an upside opportunity.
Silver is a much more affordable precious metal for individual investors. Individual investors can buy more silver for their dollar than they can gold. And because they do not have access to the same sophisticated financial instruments that institutional investors have, buying physical silver becomes Main Street's hedge against inflation and global economic instability.
And because of silver's volatility, there is more potential upside. A $2 increase in today's price of $16.25 is a 12.3 percent profit. Gold would need to increase by $147 at today's price of $1,194 to make the same margin. Silver has been as low as $6.41 and as high as $48.48 in the last 10 years.
How far the new sales record will blast by last year's record will depend on the U.S. Mint's production. Sales have been so robust in 2014 that the Mint ran out of them and had to ration them out as they were made from January through May and in November. And December sales will also be limited by the fact that the U.S. Mint needs to stop producing 2014-dated coins and have to begin building inventory of 2015-dated coins for sale in January of 2015.
Final sales for 2014 will likely exceed 43 million ounces. With the global economy worsening and all the fundamental drivers behind silver demand unchanged, 2015 should be another banner year for American Eagle silver bullion coins.
About the Author: Edmund C. Moy
Edmund C. Moy
is the Chief Strategist of Fortress Gold Group
and was the 38th Director of the United States Mint (2006-2011). He can be followed on Twitter @EdmundCMoy.
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