By Storyleak precious metals contributor Emily Flitter.
There has long been talk of a silver shortage hitting supply and prompting a price zoom in this market but not all investors take these rumors seriously. However, now it appears that investors have no choice but to accept the facts: silver is no longer all that easy to come by.
The United States Mint has suspended sale of the 2013 Silver Eagles because the immense demand has absorbed every last one of them. We saw an astounding 3.9 million ounces of silver sell in the first few days of 2013 alone — an unprecedented number. The number rose to an even higher 6.1 million ounces sold in the month of January according to Reuters. The Mint has announced that new Silver Eagles will soon grace its shelves but it remains to be seen when this will be completed (or if).
Until then, investors should learn a valuable lesson from the substantial sales that have taken place over a relatively short period since these coins become available for the public.
The Market Wants More Silver
Clearly, the market is ready to buy more silver indicating that demand for the precious metal is escalating even further. The news of how quickly the Silver Eagles have disappeared from the Mint will only serve to support even higher demand in the marketplace as buyers fear they will not be able to get their hands on any silver in the future Fact is, the shortage of silver is a global phenomenon. Whether or not the issues behind that are legitimate or not, we are seeing a run on silver.
Not so long ago, the Canadian Mint began allocating supply of the 2013 version of the Canadian Silver Maples. The HSBC concluded a huge purchase of silver for the second time from KGHM Polska Miedź S.A. and analysts pointed this out as a clear indication of an impending silver shortage in the markets. The signs have been visible for a while and they are very clear — silver is in short supply and savvy market players have been buying into it slowly but surely.
Silver Premiums and Availabilities
At present, silver wields a market price of around $31.50. But in reality is it possible to even acquire at this price? The fact is that there is immense mark up in silver price which means that you may actually be paying close to $40 for one ounce of silver that carries a market price tag of $31.50. This has to do with various premiums and spot pricing complications.
And if it’s the uncirculated or proof silver coins that you want to buy, prepare to pay a huge premium. Over and above the pricing misalignments, there is a lot of overhead out there above and beyond the basic price of the metal itself. No one really wants to part with the white metal simply because the market expects a serious shortage and subsequent price peak to occur in the coming months.
If you have decided to buy silver, you may still want to buy in right now when the metal is still available in the market, premium pricing notwithstanding. There is an excellent possibility that when the marketplace is completely devoid of the metal you can sell your coins or bars at prices that are thrice or four times what you pay now.
Emily Flitter is a team member of national precious metals dealer Wholesale Gold Group, and a writer with varied interests who has been writing on various topics related to the economy, investment and financial spheres.