from Truth in Gold:
The U.S. Mint and others are controlling the distribution of silver coins.
Silver bullion coins are so scarce that certain countries have set limits on the amount they distribute, but prices for the metal haven’t budged much from their recent six-year low.
Silver is experiencing an “unprecedented industrywide phenomenon,” with strong demand for the physical metal prompting mints in certain countries to put silver bullion coins on allocation, according to The Silver Institute. In recent history, allocations have only been put into practice occasionally by the U.S. Mint.
Silver prices have yet to catch up with the strong demand for physical silver. They settled at $15.84 an ounce Thursday, not far from their six-year low in late August near $14 an ounce on Comex.
“This is the kind of disconnect you often see before a reversal or breakout,” Sean Brodrick, an editor of the Oxford Resource Explorer, said in a recent article.
Weaker industrial demand for the metal on the back of a slowdown in the global economy is part of the reason prices have been reluctant to climb. Industrial fabrication accounted for 55.8% of physical demand in 2014, according to The Silver Institute, while coins and bars accounted for 18.4%.
“When Western speculative sentiment turns against the precious metals, the price of silver can be pressured ever lower, despite high physical demand,” said Brien Lundin, editor of Gold Newsletter. “And those lower prices, which don’t reflect the true market demand for physical silver, serve to create even greater physical demand.”
The Royal Canadian Mint, Australia’s Perth Mint, the Austrian Mint and the British Royal Mint have all put their silver bullion coins on “allocation”—meaning that they are controlling the distribution of coins “due to bottlenecks in the manufacturing process,” according to a recent report from The Silver Institute.
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