SILVERBUGS (SILVER)

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Surge in retail selling activity hits jewelers and dealers; shortages cause silver premiums to rise again
David Lin David Lin (Kitco)
Tuesday July 28, 2020 17:08


Excerpt: Silver is a different story; demand continues to surge as prices climb higher, to the point where there is now a shortage of silver products, Hug said.

“There are now starting to be more shortages again in certain silver products, specifically silver Eagles, silver Maple Leafs, and 100 ounce bars. The allocation and demand for silver in those three categories has grown significantly since silver broke up through $20 [an ounce],” he said “Some people thought maybe people would be selling silver in the mid-$20s, actually there’s been relatively aggressive buying of silver as the prices moved higher.”

Unlike gold, silver has not yet touched the 2011 highs of $48.58 an ounce, and investors are still chasing the white metal higher.

This shortage in silver products has caused supply issues, but no such issues exist in the gold market, Hug said.

“You’re starting to see shortages and delays in getting silver products out to investors. Some dealers are anywhere from three to five weeks out in delivering products,” he said. “Gold is not an issue. The demand in silver is far outstripping the supply and production capabilities of both the Royal Canadian Mint and U.S. Mint. Gold in the mid $1,900s, even though it’s projected to break $2,000 in the short term and possibly go higher, we’re not seeing the same investment offtake in gold at $1,950 and mints seem to be able to produce enough gold.”

On premiums, gold is still trading above pre-COVID levels, although it is normalizing, while silver premiums are starting to rise again.

“This new demand cycle from the retail investors chasing silver up over $20 has created a situation, because of the supply not meeting demand, where the premiums are starting to edge up again on the physical silver products,” he said.

Hug added that he sees $2,000 gold as a near certainty.

“Taking $2,000 out is not an if, it’s a when,” he said.