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Catching a Falling Financial Knife

India Doubles Silver Imports - Bullion Coin, Bar and ETF Demand Surging

Commodities / Gold and Silver 2013 Sep 06, 2013 - 01:07 PM GMT

By: GoldCore

Commodities

Today’s AM fix was USD 1,368.25, EUR 1,042.24 and GBP 877.87 per ounce.
Yesterday’s AM fix was USD 1,391.75, EUR 1,054.60 and GBP 891.06 per ounce.

Gold fell $25.20 or 1.81% yesterday, closing at $1,368.70/oz. Silver slid $0.32 or 1.36%, closing at $23.21.


Gold traded near its two week low in London, on track for its first consecutive weekly drop since July, as investors await the U.S. employment data (12:30GMT) that will foreshadow the U.S. Fed’s imminent decision on tapering. Yesterday, The Bank of England and European Central Bank kept their policies unchanged. Last night, the Bank of Japan did the same in line with expectations. The G-20 meeting in St. Petersburg of political and finance ministers began yesterday and has already created clashes amongst superpowers regarding the U.S. military strikes planned against Syria.

Silver Prices Dow Despite Lack of ETF Selling - (Bloomberg)

U.S. Mint gold and silver eagles sales fell sharply in August but it is important to note that demand for the entire year is set to be close to or at a new record and the fall comes after the huge record demand seen in recent months.

The U.S. Mint’s sales of silver coins are heading for a record again this year, with sales of 33 million ounces (1,026 tonnes) to late August already matching the level of the whole of 2012.

Many other mints including the Perth Mint, the Royal Canadian Mint and the Austrian Mint have also seen a fall in sales recently but are set for record or near record sales again this year.

The Royal Canadian Mint has just this week reported a surge in revenue and profitability for the second quarter of 2013. Revenue increased by 93.8% to $1.05 billion, while profit increased 93.0% to $11.0 million. This represented the first time in the Mint's history that quarterly revenue exceeded $1 billion. The strong results were driven by a sharp increase in bullion demand.

“This unprecedented result was due to the soaring demand for the Mint’s world-renowned gold and silver maple leaf bullion coins and sustained popularity of our expertly handcrafted numismatic products,” said mint president and CEO, Ian E. Bennett.

There was a 144% jump in gold maple leaf sales over the same period last year and a 60% surge in the the sale of Silver Maple Leaf coins to 6.4 million ounces from 4.0 million.

Silver Maple sales look like they may reach 24 million oz in 2013 which will beat the sales of 18.1 million in 2012 and possibly the 23.1 million record seen in 2011.

If one combines, Silver Maple and Silver Eagle sales, they look like they may be more than 68 million oz in 2013.

This demand from retail and high net worth store of wealth buyers, from just two mints, represents more than 10% of total world silver production of 787 million ounces in 2012.

Adding the sales of commemorative silver coins as well as sales from the other official mints, total figures for 2013 will more than likely top 2011's total of 118.2 million oz (2013 World Silver Survey).

Import restrictions and the war on gold in India, once the largest buyer of gold soon to be surpassed by China, has led to a surge in Indian silver imports which have doubled.

Thomson Reuters GFMS analyst Sudheesh Nambiath, estimates that India’s total silver imports have more than doubled from last year, reaching nearly 3,000 tonnes in the first half of 2013 compared with 1,900 tonnes in the whole of 2012, according to the Financial Times.

EU trade data show silver exports to India from the UK – traditionally the country’s top supplier – were 1,415 tonnes in the quarter to June, more than triple the previous year’s level and the highest quarterly total since 2008.

“Because of the restrictions on gold, traders shifted towards silver,” Mr Nambiath told the Financial Times, adding that demand for silver jewellery was likely to rise 20% year-on-year and that manufacturers already had full order books through to December.

There are also some positive signs from increasingly important China. Chinese investors demand for silver helped push prices to 31-year highs in 2011.

Inventories of silver on the Shanghai Futures Exchange have fallen sharply, down 60% since mid-February. And silver trading volumes on the Shanghai Gold Exchange (SGE) in the first half of the year were 36% higher even than the first half of 2011.

Another important bullish factor is investment demand in the western world which has remained robust. Silver ETF holdings have risen 6% since late 2012 from 0.608 billion ounces to 0.644 billion ounces today.

Silver ETF holdings have held up extremely well relative to gold ETFs, as investors have increased purchases for the past two years. As silver plummeted in value, certain silver investors continued to accumulate on the dip .

This is in marked contrast to the gold ETFs which have seen significant liquidations this year.

SPDR Gold Holdings fell 0.2% to 919.23 metric tons yesterday meaning that holdings have dropped 32% this year according to the SPDR data. Overall gold ETFs have seen a 25% fall in holdings or a liquidation of some 680 tonnes - much of which has been gobbled up in Asia.

“The smart money is getting in,” one trading house executive told the Financial Times. “I think lower prices are really starting to have an effect on demand.

Silver Shorts Cover En Masses As Price Rebounds - (Bloomberg)

Silver prices are down 21% in the same period, year to date despite robust demand for silver coins, bars and ETFs.

Silver has recently begun to recover from very oversold levels and has already risen 30% from the low of $18.23/oz seen on June 28th.

For the latest news and commentary on financial markets and gold please follow us on Twitter.

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Catching a Falling Financial Knife