Demand for Silver Coins Jumps 148 percentAs central banks around the world are now net buyers of gold bullion, I’m getting more bullish on silver. (Don’t get me wrong. I love gold, and I am a big believer of gold prices moving higher.) But gold bullion may have become too expensive for small investors to own…and silver could just be that low-priced alternative for investors to protect themselves from coming inflation.
At present, both gold bullion and silver alike are experiencing significant negative sentiment. In the midst of all this and severe pressure from the bears, the demand for silver hasn’t declined; as a matter of fact, the demand for silver is increasing and robust to say the least.
In February 2013, the U.S. Mint reported that it sold almost 3.7 million ounces of silver in coins. In the same period of 2012, it sold 1.49 million ounces of silver. Simple calculation would show that’s an increase of more than 148% in demand for silver coins in one year! (Source: U.S. Mint, last accessed March 5, 2013.)
Looking at the long-term chart of silver below, we see it is still in a bull market:
$SILVER silver spot price stock market chart
Chart courtesy of www.StockCharts.com
Technical analysis of the chart above would indicate a significant amount of support available for silver prices at the $28.00-an-ounce level. This level has been tested multiple times, with silver prices bouncing higher on heavy volume each time $28.00 an ounce was hit.
With central banks around the world printing paper money and working overtime to devalue their currencies, even if they stop now, the damage to fiat currency (and the inflation issues we will have to deal with in the future because of too much paper money in circulation) has been done.
Just look at the value of the U.S. dollar. What you could buy in 1913 for $1.00 would now cost you $23.26. This means that one century later, we are paying 2,300% more for what we paid for an item in 1913. (Source: U.S. Bureau of Labor Statistics web site, last accessed March 5, 2013.) Now, with all the new money created in the past five years, just imagine how inflation will play out over the next century. A 2,300% increase could easily turn into a 23,000% increase!
While the bears continue to put pressure on the price of both gold bullion and silver, I believe the prices of both metals are poised to rise as the “cloud of optimism” currently surrounding the market dissipates.
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