Silver coin sales are at record pace

Less than a year after Silver's fall from its record-setting rally, investors are buying coins again at an record breaking pace, suggesting the precious White metal could leave Gold in its dust.

Even before the US Federal Reserve's promise of further stimulus rejuvenated interest in precious metals last week, US retail investors were already buying up freshly minted coins, undaunted by last year's painful volatility. Gold coin sales, while rising, have been not been as strong.

At Dillon Gage Metals, a leading US precious metals dealer, dollar sales of Silver and Gold products reached parity in January for the first time in its history, even though Gold Bullion costs 50 times more. Some hedge funds are now interested in Silver coins, a top executive said.

Rival Blanchard & Co said it is now selling more 500 1 oz Silver American Eagle Monster Boxes than ever. Last week, 1 client bought 17 of the $18,500 boxes at once, a more than $300,000 purchase.

While January is normally a Strong month for sales as collectors rush to get the newest models, retailers say the current tone of demand is far beyond normal.

The persistent EuroZone crisis, the threat of a declining USD and simply a fear of the unknown are putting Silver back on investors' radar.

At the US Mint, sales of the 1-oz Silver Eagle Bullion coins, sold to investors only, were at 5.7-M as of Friday, within striking distance of its monthly record of 6.4-M set in January 2011.

Gold Eagle sales were at 250,000 oz, double last year's monthly average but nowhere near the levels seen during the 2008 economic crisis.

Strong physical buying has helped silver outpace gold so far this year; silver is up 21% vs gold's 10% year-to-date gain.

In Y 2011, silver notched a loss after it had sharply outperformed Gold in Y's 2010 and 2009 with double-digit percent gains in each year.

Silver, often used by speculators due to its relatively high volatility and thin volume, rose to a record $49.51 an ounce in April 2010, only followed by an almost $20 fall in just 2 weeks. On Monday, Silver traded at 33.50 oz.

The closely watched Gold-to-Silver ratio, the measures how much Silver an oz of Gold buys, narrowed to around 50 after a 1-yr high of 57 set in December 2011. Some traders adjust their holdings if they think one is cheaper than the other.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.