Perth Mint Silver Sales Jump As Prices Fall to Six-Year Low

Updated on
  • Silver coins, minted bar sales jump to 3.35m oz. in September
  • Holdings in silver-backed ETFs shrink to 2013 low, data show

Silver sales from the Perth Mint, which refines bullion output from Australia, surged to the highest level in at least three years as declining prices boosted demand.

Sales of silver coins and minted bars jumped to 3.35 million ounces in September from 707,656 ounces the previous month, the mint said on its website on Friday. That’s the highest on record according to mint data compiled by Bloomberg dating back to 2012. Gold sales rose to 63,791 ounces, the highest in a year, from 33,390 ounces in August.

Silver tumbled in late August to the lowest in six years and has fallen for four straight months amid a broader retreat in commodities on concern that weaker economic growth in China will curb demand. While sales at the Perth Mint soared, the U.S. Mint reported a 23 percent decline in sales in September from a month earlier. Silver is inexpensive relative to gold, and the market for bars and coins is small, so it doesn’t take much extra demand to overwhelm suppliers, according to Dublin-based brokerage GoldCore Ltd.

“In many respects strong silver demand is a reflection of very cheap prices over recent times, which has encouraged investor buying,” Gavin Wendt, managing director at Mine Life Pty in Sydney, said by e-mail. “Many investors like to own physical metal, whether it be gold or silver, in order to protect them from volatility elsewhere. It’s like the ultimate insurance policy.”

Demand Surge

An unprecedented surge in demand for silver coins has led to delays at the U.K.’s Royal Mint. Purchases of 1-ounce silver coins increased 340 percent from April to August, compared with a year ago, according to the mint.

“Particular interest lies in the silver-coin market, which is in the midst of an unprecedented supply squeeze,” Wendt said. This “has resulted in the rationing of sales by some mints,” he said.

A temporary scarcity of coins available for sale does not necessarily mean a shortage of the metal in the global market, and may reflect constraints in the production capacity of bullion mints around the world, the Perth Mint said in August.

While sales of silver coins and bars have expanded, assets in exchange-traded funds backed by the metal contracted. Holdings shrank 1.4 percent last month and were at the lowest since July 2013 as of Thursday, data compiled by Bloomberg show. Silver for immediate delivery has dropped 7.5 percent in 2015 for a third year of losses.

— With assistance by Eddie van der Walt

(Updates with analyst comments in fourth paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE