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Silver’s future the question

At the end of 2015 will I be writing a story declaring that sales of silver American Eagle bullion coins have declined 30 percent from the record 2014 level?

It is a distinct possibility.

Sales are falling dramatically.

In May, the sales rate was down by roughly 50 percent from the same month one year ago.

Authorized Purchasers acquired 2,023,500 of these silver coins in May compared to 3,988,500 in the same month last year.

And it is not a one-month aberration.

Each and every month since January has a lower sales figure this year compared to last.

Silver buyers are clearly not getting ready to enjoy a huge price spurt. They are acting as if the price of the precious metal will be depressed for a long time.

Why buy now when you probably will get the same price, or even a lower price six months from now?

You would just be unnecessarily tying up money.

Sales would have to stay down at the low May rate through the rest of the year to be able to generate the figures that would underpin a 30 percent decline headline.

As of the end of May, the decline in sales is 21 percent. So far, buyers have taken 16,946,000 compared to 21,436,500 sold in the first five months of 2014.

With numbers like this, it is no wonder the Mint was able to end its policy of rationing supplies last week.

Longtime market observers know that demand can pop higher virtually overnight, so the possibility of such a market turn always exists. It keeps many investment advisors in subscribers.

But really, how likely is such a pop higher during the rest of this year?

The possibility of a pop higher always existed as it ground lower and lower from $50 an ounce to less than $5.

Silver is $16.70 an ounce today.

It has never regained the $50 level of 1980, but it came close in late April 2011 when it was $48.

Most silver buyers of the last five years are nursing losses. Some are huge losses.

The present silver price is a decline of two-thirds from the 2011 high.

What does this show?

The most important qualities are that silver buyers are extremely loyal buyers and extremely patient.

But they are not stupid.

If they believe silver isn’t going anywhere for a while, they will quit buying.

Buzz blogger Dave Harper is winner of the 2014 Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper “Numismatic News.”

 

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