Courtesy of our friends at Thomson Reuters

12-Nov-2013 16:52

• American Eagle silver coins at over 40 mln oz year to date
• Investors buying more 500-oz monster boxes -wholesaler
• US Mint has been rationing silver coins since January

By Frank Tang

NEW YORK, Nov 12 (Reuters) – The U.S. Mint’s American Eagle silver coin sales rose on Tuesday, bringing this year’s total to the program’s record high, highlighting retail investors’ strong appetite for silver physical products.

Sales of the 2013 American Eagle silver bullion coins made for investors rose by 500,000 ounces on Tuesday, said U.S. Mint spokesman Michael White. That lifted the tally so far in 2013 to 40.175 million ounces, higher than 2011’s total of 39.869 million ounces.

The U.S. Mint launched the precious metals bullion coin program for investors in 1986. Bullion coins are less polished but also cheaper compared to higher-quality proof or uncirculated coins targeting collectors.

Year to date, silver prices are down 32 percent, their largest decline in 29 years. That exceeded bullion’s 24 percent drop which might lead to gold’s first annual loss after a 12-year winning streak.

“As the price has gone down, people find silver a very attractive investment because they can participate in precious metals without having to spend a significant amount of money,” said Roy Friedman, executive vice president at Dillon Gage, a major U.S. coin wholesaler in Dallas which distributes to dealers and institutional investors.

Friedman said customers are buying more of the 500-ounce silver “monster boxes,” the standard unit which U.S. Mint delivers to its authorized dealers. At current prices, each monster box is valued at over $10,000.

Consistently strong physical demand is one of the few bright spots in the precious metals sector.

On Nov. 1, the Mint’s American Eagle gold coin sales vaulted to a two-year high, lifting this year’s sales above the total tally for all of 2012.

The U.S. Mint has been selling its silver coins at a steady pace throughout the year, after January’s all-time monthly high of 7.5 million ounces set the tone for the year.

Since late January, the U.S. Mint has limited its silver Eagle coin sales to its dealers through an allocation process, essentially rationing silver coins as unprecedented demand depleted coin blanks.

Between April 12 and 15, silver plummeted $5 an ounce while gold posted a record $225 an ounce drop in two days to unleash pent-up demand from retail investors who scrambled to buy everything from coins to jewelry at bargain prices.

Analysts said better industrial demand should underpin the price of silver, but the market will likely tumble on gold’s coattails if the Federal Reserve decides to cut its massive bond-buying stimulus.

(Reporting by Frank Tang; Editing by Gary Hill and Jim Marshall)