Bloomberg News

Silver Coin Sales May Signal Bear-Market End: Chart of the Day

January 13, 2012

Jan. 12 (Bloomberg) -- The surge in the U.S. Mint’s sales of American Eagle silver coins in January may signal an end to the bear market in the metal.

The CHART OF THE DAY shows the Mint sold 4.26 million ounces of the coins to authorized purchasers Jan. 3 through Jan. 10. At this pace, full-month deliveries may reach 14.2 million ounces, more than twice the record 6.422 million ounces sold in January 2011.

Silver futures fell 48 percent from April to December, more than double the 20 percent drop associated with the start of a bear market. Prices are up 6.9 percent this year. Silver may rise as high as $42.20 an ounce this year, according to the median of 41 analyst estimates in a Bloomberg survey last month.

“When people see dips now in silver they are going to get in,” said Terry Hanlon, president of Dillon Gage Metals. The Addison, Texas-based company is one of 11 dealers authorized to purchase silver coins in the U.S. directly from the Mint. “There are more fund managers who are pulling out of the exchange-traded funds and buying physical metals, which is a new trend. They want a product that they can liquidate quickly and in increments they want. People do feel comfortable being in control over storing the product.”

Silver holdings by ETFs dropped 4.5 percent last year, the first annual decline since Bloomberg started tracking them in May 2006, data from eight providers show. Money managers increased their net-long position, or bets prices will rise, in silver futures and options contracts by 55 percent in the week ended Jan. 3, according to U.S. Commodity Futures Trading Commission data. Silver for March delivery on the Comex in New York traded at $29.835 an ounce by 10:17 a.m. local time yesterday.

Demand for silver coins usually soars in January as collectors and dealers target the newly minted Eagles, while higher availability of coins this year also contributed to the sales volumes, according to Hanlon. The Mint “geared to provide enough product to meet the demand, more so than they were able to do in the past,” he said.

--With assistance from Nicholas Larkin in London. Editors: John Deane, Claudia Carpenter

To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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