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What's the silver crowd telling us?

There is a body of economic evidence saying there is a certain intelligence in the actions of crowds.

This is a positive counterpoint to crowds running amuck from time to time.

Whether there is any great wisdom residing in this collective, I will leave for you to research and consider on your own.

However, if there is, what are silver American Eagle buyers trying to tell us?

The actions in the silver Eagle market over the years seem to be more crowd-driven than any other market.

Over the last 15 years as the price of silver bullion has risen, we have seen shortage after shortage. The markups over melt value became very large, but rather than discourage purchasers, the crowd wanted all the more coins.

This year, we seem to be seeing the opposite situation. The Mint has caught up with demand by supplying record numbers of coins.

Last year’s sales total of 47 million was multiples of the 2001 sales total of just over 9 million pieces.

The demand pattern this year began with the usual shortage/rationing/high premiums that we have been used to.

Then in June it just stopped.

Demand fell by over a third.

The Mint caught up in producing supply. Demand has kept falling.

Through May, every monthly silver Eagle sales figure was over 4 million. January’s was over 5 million.

After May’s 4,498,500 sales number we saw sales of 2,837,500 in June, 1,370,000 in July and 1,280,000 in August. The August number is nearly 72 percent below May's.

Gold Eagle sales have not followed this three-month pattern. There was only a real dip in July. August sales then strongly rebounded by 67 percent from July for the one-ounce bullion coin.

Gold is less the province of crowds and more one of Exchange Traded Funds and central banks.

So what is the silver crowd trying to tell us?

Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."

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