India’s secret affair with silver

Perhaps it is not terribly surprising to learn that recent silver demand numbers from India have set records. While gold still seems to be the typical precious metal of choice in the United States, silver is clearly making waves abroad.

Indian silver imports are up a staggering 259% at 857 tonnes in the April-July time period. That amount is approximately one third of the global monthly production of silver.

Furthermore, July’s Indian silver import amount of 275 tonnes is the second highest import figure of any month in the last five years.

A Large New Silver Vault Opens in Singapore

A silver vault that can hold 200 metric tons opens in Singapore this week to cater for increasing demand for physical precious metals among Asia’s wealthy, even as the commodity leads market declines this year. The new repository can hold $128 million of silver at today’s prices.

The new facility is already 30% booked at the opening said Joshua Rotbart, who is the precious metals general manager at the vault’s owner Malca-Amit Global Ltd. The storage facility will add to the firm’s five vaults at the Singapore FreePort, which are fully reserved for gold, Robart said in an interview.

Why are Indians Buying Silver?

Cheaper silver prices usually mean less demand, or they can also be indicative of an oversupply situation.

Was there a surge in any number of industries that use silver, such as electronic manufacturing, health care, solar energy or plastics? Has economic activity surged suddenly? Not by macro-economic growth indicators. Is silver being used as a cheaper alternative to gold in jewelry?

None of the above seems very probable. More likely it is simply good money pushing out the bad.

Perhaps at least some Indian investors are opting to buy silver as a temporary and cheaper alternative to gold given that their government has been attempting to thwart gold imports with tariffs. Of course, silver is easy to exchange for gold if and when necessary.

Basically, paper currency volatility goes hand in hand with traditional respect for the value of precious metals to support the ongoing demand for gold and silver on the Asian continent.

U.S. Mint Data and Rationing

This surge in Indian demand for silver parallels what can be observed from recent U.S. Mint data. Mint silver production surged once again in July and seems to be on pace for record annual sales, although at least 80 times more gold than silver was sold.

U.S. Mint rationing is also being reported by dealers, with the Mint often shipping out only fractions of orders each Monday. This has been exacerbating already unprecedented wait times for a growing legion of physical silver buyers.

This grass roots demand for silver seems especially remarkable at a time where sentiment is at historic lows and just after one of the most brutal engineered market take downs ever witnessed has occurred.

About the Author

Jeffrey Lewis has been an advocate for silver purchasing for the past six years. He writes regularly about it at silver-coin-investor.com

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