Just a brief post today concerning a couple of anecdotal demand indicators.
Let's start with Gold and Silver Eagle sales from the U.S. Mint. First, chew on these little factoids that Uncle Ted shared a couple of weeks ago: (https://www.butleresearch.com)
So, anyway, Silver Eagle sales, though not the be-all-end-all, are clearly a significant force in global silver demand. And where are we with this demand? Let's take a look.
Year Jan sales Feb sales March sales Total year end YoY %chg
2008 2,170,000 200,000 1,855,000 19,583,500 +98%
2009 1,900,000 2,125,000 3,132,000 28,766,500 +47%
2010 3,592,500 2,050,000 3,381,000 34,662,500 +20%
2011 6,422,000 3,240,000 2,767,000 39,868,500 +15%
2012 6,107,000 1,490,000 2,542,000 33,742,000 -15%
2013 7,498,000 3,368,500 1,601,500 (1-12) proj: 60,000,000 +78%
For 2008, Q1 sales were 21.3% of total. Q1 2009 was 24.9% and Q1 2010 was 26.0%. Q1 2011 was 23.6% of all 2011 sales and Q1 2012 was 30.0%. So, on average, Q1 accounts for about 1/4 of all annual sales. Also, for the first 12 days of March, total sales are 1,601,500. This projects March 2013 total sales of 4,137,500. Projecting Q1 2013 sales forward gives us a total 2013 sales figure of just above 60,000,000.
As Ruprecht would say: "That's a lot." That's a 50% increase over the record from 2011 and an 80% increase over 2012.
Now let's turn our attention to gold.
Year Jan sales Feb sales March sales Total year end YoY %chg
2008 26,000 27,500 50,000 860,500 +334%
2009 92,000 113,500 136,500 1,435,000 +67%
2010 85,000 84,000 102,000 1,220,500 -15%
2011 133,500 92,500 73,500 1,000,000 -18%
2012 127,000 21,000 62,500 753,000 -25%
2013 150,000 80,500 26,000 (1-12) proj: 1,190,000 +58%
Using the same math as we did with silver, the projected March sales for this year are 67,000 and this provides a Q1 total of 297,500. Gold Eagles, like silver, average about 25% of their annual sales in the first quarter each year. This projects total 2013 sales of 1,190,000 and a nearly 60% increase over 2012.
And what do you make of the continued drawdown in the GLD? As of last evening, the total amount of gold allegedly held by the fund is 1,236.31 metric tonnes or about 39,748,500 troy ounces. Now, going back to the beginning of 2013...On 1/2/13, the fund held 1,349.92 metric tonnes or 43,401,000 ounces. That is a truly staggering drop of 8.42% or 113.61 metric tonnes. This could also be stated as 3,652,646 troy ounces or 9,131 London Good Deliver bars or, at $1600/ounce...about $5.8B in gold.
So, Gold Eagle sales are soaring, projected to rise by nearly 60% in 2013 vs 2012. At the same time, gold is being drained from the largest, easily-available stock on the planet, the GLD. Of course, metal leaving the GLD is due to liquidations but how much of that liquidated gold is being returned to AP vaults and how much is being delivered out? I wish I knew. And then consider this:
There were 13,910 contracts that stood for delivery of Feb13 gold. That's 1,391,000 ounces. Looking back, there were only 4,623 that stood for delivery in Dec12, 5,178 in Oct12 and 5,807 in Aug12. Adding together those three, previous delivery months you get 15,608. Again, last month alone in February, 13,910 stood for delivery. Hmmmm. I wonder how many will stand in April?? The good news is: We won't have to wait long to find out. First Notice Day is March 28.
So, anyway, I'm not sure what this proves, if anything. However, as you can plainly see, a trend is afoot for physical delivery of metal, both gold and silver. Will this trend continue? Probably. Does that imply higher prices in the future? Probably.
Econ 101 teaches us that higher demand with stable supply leads to higher price. Consider, too, that in the metals, lower price makes mining less profitable, especially in the face of high energy prices. Less profitable mining leads to less production. Again, what does Econ 101 teach us? Higher demand with less supply equals even higher prices.
Therefore, please hang in there. It may not look like it but we are winning. Keep the faith and keep stacking.
TF
