Silver Slump Lures Buyers as Waiting Time Rises in Singapore
The slump in silver this month has spurred demand for products from Silver Bullion Pte, one of Singapore’s largest suppliers of coins and bars to retail investors, depleting inventories and doubling delivery times.
Holdings of bars fell to just 54 ounces from 60,000 ounces two and a half weeks ago, according to founder Gregor Gregersen. It now takes at least six weeks for new supplies to arrive in the country up from two to three weeks previously, he said. The company, set up in 2009, counts the Perth Mint in Australia and the Royal Canadian Mint among its suppliers.
Gregersen’s comments add to signs from across Asia that the plunge in silver, as well as gold, has triggered higher demand from physical buyers who see an opportunity to expand holdings. While silver has led declines in commodities this year, losing 20 percent in New York, the amount held in exchange-traded products worldwide remains 2.3 percent higher in 2013. The metal is used both as an investment as well as by industry.
“For many leveraged paper owners, this price fall was a disaster, for most physical bullion owners it was a buying opportunity,” Gregersen said. A batch of 23,000 ounces is expected to be delivered tomorrow, with almost all destined for existing customers who pre-ordered, he said.
Demand for Maple Leaf gold and silver coins is very strong, and has increased in Asia, Europe and North America, said Chris Carkner, managing director of sales for bullion, refinery and ETPs at the Ottawa-based Royal Canadian Mint. The facility continues to supply all its customers, he said.
“The Perth Mint is meeting the surge in demand for physical silver and gold by ramping up productivity as quickly as possible to ensure lead times are kept to an absolute minimum,” Ron Currie, sales and marketing director, said in an e-mailed response to questions.
Futures tumbled to $22 an ounce on April 16, the lowest since October 2010. The contract for delivery in July traded at $24.245 an ounce on Comex at 5:28 p.m. in Singapore after rising 2.5 percent. Prices peaked at $49.845 in April 2011.
High price swings may deter so-called bargain hunters, Peter Richardson and Joel Crane, Melbourne-based analysts at Morgan Stanley, said in an April 23 report, cutting this year’s silver forecast 19 percent to $27.17. Silver’s thirty-day volatility rose to 46.66 today, the highest since January 2012.
“Too high volatility usually scares investors away,” Steven Dooley, head of research at brokerage Forex Capital Trading Pty in Melbourne, said by phone today. Prices may test the low of $22 over the next 12 months as prospects for new U.S. monetary stimulus are low, while slower-than-expected economic expansion in China may hurt demand, he said.
Holdings in silver-backed ETPs stood at 19,353.38 tons on April 26, according to data compiled by Bloomberg. While that’s 1.6 percent lower this month, it compares with 18,916.92 tons at the end of 2012.
The plunge in prices wasn’t foreseen by some investors. A Bloomberg survey of 49 analysts published in December showed that the metal was expected to rally to as much as $40.25 an ounce, according to the median high figure.
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