There Is No Raw Silver Shortage
Discussion about whether or not there is a silver shortage has divided the silver community. More information about the situation has recently come out. The discussion usually revolves around to points of view: that there is no silver shortage, merely a coin shortage as certain Mints run out of blanks to mint coins. The other says there is not enough silver in the world. As David Morgan:
“A pet peeve of mine is when an article is published talking about a shortage in silver or gold. Recently, we have seen an increase in articles claiming that there is a precious metals shortage simply because both the U.S. Mint and Royal Canadian Mint ran out of blanks. Both Government Mints predetermine a rough amount they will mint at the start of the year. When demand surges, a “bottleneck” can occur and this has happened in the past. Why is this such a pet peeve? Because a shortage in a specific silver product does NOT mean a shortage in the raw material. It would be like saying there is a rice shortage if Rice Krispies stopped being produced momentarily.”
Another sources disagree. For instance, according to The Silver Institute the world’s silver supply is in deficit by 57.7 million ounces. Nonetheless, news sources seem to only confirm a shortage of American Silver Eagles, Canadian Silver Maples, Austrian Philharmonics, Brittanias and Perth Mint silver coins. Others wonder if so many blank shortages at once has happened before. As Reuters reported:
Government mints around the world are struggling to keep up with unprecedented demand for silver coins, spurred by a drop in silver prices to six-year lows.
The mints in Canada, Austria and Australia have told Reuters they are rationing sales of silver bullion coins.
ROYAL CANADIAN MINT:
The mint has been rationing sales of its silver Maple Leaf coins since July after record monthly sales, an official said. Sales have hit records in August and September.
The Austrian Mint has been rationing sales of its Philharmonic silver coins and has increased production of silver blanks after higher-than-expected demand in July and August, a spokeswoman said.
It expects supplies to return to normal by mid-October.
U.K. ROYAL MINT:
The U.K. Royal Mint has seen a 600-percent increase in sales of its silver 1 ounce Britannia coins so far this year on “unprecedented demand,” said Chris Howard, director of bullion at the Mint.
It is increasing production and has significant pre-orders for 2016-dated coins, he said.
The Perth Mint, owned by the government of Western Australia, has begun rationing supply of a new line of coins this month as it is unable to keep up with robust demand, an official said.
It has sold over 2.5 million ounces of silver so far this month, which is a record and three and a half times more than August.
The U.S. mint has been issuing a weekly sales quota for its flagship American Eagle silver coins since the end of July.
A spokesman said its Westpoint production facility is operating three shifts and paying staff overtime to meet demand.
The mint was forced to stop selling its popular silver coins for three weeks in July after selling out of inventory due to strong demand.
I spoke with traders at major bullion wholesalers recently and they said that things would return to normal in 3-5 weeks in terms of silver delays on the most popular products at the retail level.