Silver coin sales hit record pace, outshine gold

Less than one year after silver’s breathtaking collapse from its record-setting rally, investors are again snapping up coins at an unprecedented pace, suggesting the white metal could leave gold in the dust.

Even before the U.S. Federal Reserve’s promise of further stimulus rejuvenated interest in precious metals last week, U.S. retail investors were already buying up freshly minted coins in droves, undaunted by last year’s painful volatility. Gold coin sales, while rising, have been far less robust.

At Dillon Gage Metals, a leading U.S. precious metals dealer, dollar sales of silver and gold products reached parity in January for the first time in its history – even though bullion costs 50 times more. Some hedge funds are now interested in silver coins, a top executive said.

Rival Blanchard & Co said it was selling now more 500 one-ounce Silver American Eagle “Monster Boxes” than ever. Last week, one client bought 17 of the $18,500 boxes at once — a more than $300,000 purchase, said vice president David Beahm.

While January is normally a strong month for sales as collectors rush to get the newest models, retailers say the current tone of demand is far beyond the norm. The persistent euro zone crisis, the threat of a declining U.S. dollar and simply a fear of the unknown are putting silver back on investors’ radar.

“We are breaking the record of past Januaries and it’s not an accident. People are showing a much higher comfort level with silver in wealth preservation,” said Terry Hanlon, president of Texas-based Dillon.

At the U.S. Mint, sales of the 1-ounce silver Eagle bullion coins – sold to investors only – were at 5.7 million as of Friday, within striking distance of its monthly record of 6.4 million set in January 2011.

Gold Eagle sales were at 250,000 ounces, double last year’s monthly average but nowhere near the levels seen during the 2008 economic crisis.

Strong physical buying has helped silver outpace gold so far this year; silver is up 21 percent versus gold’s 10 percent year-to-date gain. In 2011, silver notched a loss after it had sharply outperformed gold in 2010 and 2009 with double-digit percent gains in each year.

Silver, often used by speculators due to its relatively high volatility and thin volume, soared to a record $49.51 an ounce in April 2010, only followed by an almost $20 crash in just two weeks’ time. On Monday, it traded at $33.50 an ounce.

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Tags: Proof Silver Eagle coins, Silver, silver coins, US Mint

Posted by Silver Guru on Jan 31 2012. Filed under Silver Analysis, Silver prices. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry