By Nathan Slaughter
On Monday, Jan. 7, the U.S. Mint began taking orders for 2013 American Eagle silver coins. Officials were bracing for an onslaught of sales, but I doubt they were expecting this. By the end of the day, the Mint had sold more than 3.9 million of the 1-ounce 99.9% silver coins.
Silver may be trading well off its highs above $40 per ounce, but investment demand has never been stronger. That opening day marks the highest one-day tally in the history of the Silver Eagle program dating back to 1986.
The U.S. Mint sold out of 2012 silver coins early (Dec. 12, 2012), so buyers were understandably eager for the release of the 2013 issue. And opening day in general is typically busy. There were nearly 2.1 million coins sold on the first day they were available in 2011.
Still, this year's kickoff nearly doubled that. In fact, the 3.9 million Silver Eagles sold on Jan. 7 were more than the entire total from any month between 1986 and 2009.
Lest you think this was just a one-day phenomenon, I should say that dealers, collectors and speculators gobbled up another couple million coins in the following week. By Jan. 17, sales had soared past 6 million.
And on that day, authorized buyers received this notice:
"The U.S. Mint has temporarily sold out of 2013 American Eagle silver bullion coins. As a result, sales are suspended until we can build up an inventory of these coins."
Sales resumed later in the month, but even then coins were rationed among primary distributors. All told, Silver Eagle sales passed the 7 million mark, surpassing the record of 6.1 million set in January 2012.
Clearly, investors have a hearty appetite for physical silver -- and they're expressing interest in other ways as well.
Following an unprecedented cash inflow in January, the iShares Silver Trust (NYSE: SLV) is now brimming with about $9.5 billion in assets. Investors poured a record $603 million into the exchange-traded fund in a single day on Jan. 16, stockpiling 18.4 million ounces (572 tons) of silver in the fund's bank vaults. The fund's total assets now stand at around 342 million ounces.
And that's just one fund.
Investment through silver-backed ETFs now stands at a record of 19,114 tons globally, according to Bloomberg and Barclays. For the record, those holdings are equivalent to about nine months of mine output.
It's amazing to think that ETFs -- a source of demand that didn't even exist 15 years ago -- have now hoarded nine months of silver production. And there are plenty of buyers fighting over the rest.
Aside from coins and other investment demand, remember that silver is also a versatile metal with many commercial uses. And with the auto, manufacturing and construction sectors all rebounding, industrial demand is intensifying, particularly in Asia.
A recent study by Thomson Reuters forecasts that industrial silver use will rise to 511 million ounces next year, accounting for 57% of the world's silver production -- a new record high. With investors and industrial buyers tugging silver in the same direction, the metal is poised for continued gains in 2013.
All of this is welcome news for several of my Scarcity & Real Wealth holdings. One of my holdings just posted its eighth consecutive year of production growth.
The company dug up nearly 4.5 million ounces of silver in 2012, a solid 20% increase from 2011 (incidentally, the firm's gold output soared 77%). Management chose to stockpile much of its fourth-quarter production as inventory rather than sell it. That move looks to be prescient given today's stronger prices.
All told, if you sold out of silver when it was at its highs above $40 an ounce, then now may be a good time to reconsider getting back into the game.