While attention in the bullion market has most often been focused on gold, silver has also proven popular with many investors.
In truth, 2013 was a difficult year for the silver market, but ironically lower prices in the first part of that year may have fuelled speculation. Meanwhile silver has been popular in India because of import restrictions placed on gold in 2013. The current price, of $19.71 US at press time, is about 36 per cent lower than a year ago.
While comparing numbers before the end of the year can be difficult, the United States Mint has been the chief beneficiary, willing 42.4 million one-ounce American eagle bullion coins between January 1 and mid-November of 2013. The sales set a new record for that body, topping the 39.9 million ounces sold in 2011, its previous best year. Sales in December have topped one-million ounces. The year 2011 was a high-water mark in silver sales, with the metal reaching a record high of $49.85 US per ounce on April 25 of that year, a 30-year high.
Our own Mint is so far in second place, with sales of 19.7 million ounces of silver maple leaf bullion coins between January 1 and September 20 of 2013. The Royal Canadian Mint (RCM) has not yet reported figures for the final quarter, but its third quarter report showed strong demand and the Mint expects to pass its 2011 record of 23.1 million ounces. The sales are expected to be augmented by bullion products issued late in the year, including a special edition silver bullion coin for the 25th anniversary of the silver maple leaf.
Australian powerhouse the Perth Mint appears to have made third place, with reported sales of 7.8 million ounces of silver between January 1 and the end of November, 2013. That mint’s best month was April when it sold 1.113 million ounces, well above the monthly average of 708,000 ounces. The future of the precious metals market remains a matter of speculation. In late November, Edward Meir, an analyst for Barclays PLC, suggested that a strengthening U.S. dollar and buoyant equity markets points to an “unfavourable backdrop for gold.” However, some observers suggest that silver may buck the downward pressures facing the gold market. Estimates of the average price of silver for 2014 ranges from a Canadian Imperial Bank of Commerce low of $19.00 to a Merrill Lynch high of $23.13. At press time, silver was trading at $19.71 per ounce.
Unlike gold, silver has substantial industrial uses. Industrial demand for silver, traditionally weak during economic slowdowns, would grow during an economic recovery. Silver is used in catalytic converters, control rods for nuclear reactors, solder and brazing alloys, and wound dressings. According to the silver institute, industrial applications demanded more than 465 million ounces of silver in 2012, nearly half the total worldwide demand. Coins and medals accounted for just 92.7 million ounces.
Canada is the 11th largest producer of silver, producing 21.3 million ounces in 2012. The top producers were Mexico, 162.2 million ounces; China, 117.0 million ounces; Peru, 111.3 million ounces; and Australia, 56.9 million ounces.