Sales by US Mint of silver outpace gold over fifty-fold

Very interesting.

http://www.mining.com/sales-by-us-mint-of-silver-outpace-gold-over-50-fold-37478/

 

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Of course, its in terms of weight. I'll bet the Mint sells more silver than gold every year.

 

I wonder how much of the junk coins they sell.....non-PM's?

 

Probably a bunch to those wanting a proof set at an affordable price and rolls to collectors and bags to searchers.

 

Yes, retail investors have a bias toward silver because it is more affordable and because of its perceived upside due to the gold to silver ratio, but gold has an advantage because it is purchased in massive quantities by central banks as a store of wealth. Both are solid investments.

 

So long as the banks hold their gold, the price will remain steady. However, all it takes is one bank to sell off a sizable portion of their gold and the price could see a 40%-50% decrease.

 

Why is this suprising? The current ratio of silver to gold sales is 53. Guess what? The current ratio of gold price to silver price is 53. It's pretty much simple math. Duh!

 

In theory so many factors could cause silver and gold to plunge. But the reality is, given the relatively short life of fiat currencies, the central banks will be smart enough to stock up on gold. Currently this is what they are doing. Gold is going to continue moving higher as fiat currencies are devalued, and silver will tag along, and may even close the gap with gold depending on investor and industrial demand.

 

Good point! What it does illustrate however is that consumer demand for the two metals is equal, and with silver 50 times cheaper than gold it is depleting the inventories 50 times faster. Sure there is about 10 times more silver than gold mined every year, but that's still a 5:1 disparity loosely. Silver is already experiencing the early signs of a supply shortage such as big time metal dealers paying over spot for junk silver now, and COMEX inventories being at only 200 MOz (a mere 10 weeks of mining supply worth) which is higher than they would have been without usurping from MF Global and PFG Best.

 

Like I pointed out above, retail investors are just one part of the equation. Central banks are 800 pound gorillas. Another factor to take into account is the manipulation of silver by major institutions. With a fair and transparent market, silver might already be selling for over $100 per ounce.

 

This is a very good point.

Also, I think it only takes one 800 pound gorilla to have a sizable impact on the gold market. With silver, its a pond full of small fish where no one fish effects the market much. Now, if they all move together like they did near the end of Finding Nemo, then that is different. I think that was part of the reason silver finally took off.

 

Imagine if one of those 800 lb gorillas decided they wanted into silver though! Silver is such a small market that if any major hedge fund manager decided to put a few billion into the market it would make big moves. The fact is that there just isn't enough silver available for hedge funds to get in on the action until the price goes much higher. Nobody wants to be the straw that breaks the camel's back on the inventory side, but when us small fish eventually make that happen the big fish will finally be able to get on board.

 

Is this on paper because it is easier for the banks to keep physical possession of gold. Really, it still comes down to physical - gold has a much higher value to space ratio than silver.

 

If silver closes in on gold in value, then the wealthy will jump on the silver bandwagon. I suspect the super-wealthy are more inclined towards gold because it is something the wealthy feel they must have, and silver is considered the "poor man's gold." So I think, along with the advantage of gold in taking up less space to store wealth, that gold massages the ego a little more than silver at current prices. If we are to see the ratio get closer to 1:1, we may paradoxically see more buying of silver among the wealthy.

 

For years, platinum (silver colored) doubled gold in price. However, gold was what people purchased and still do today even though it is has exceeded platinum in price. I would not be surprised to see platinum have big jumps in the near future.