May 28, 2022

American Eagle Silver Bullion Coin Sales Drop Sharply from Previous Month and Year

american-silver-eagleSales of the US Mint American Eagle silver bullion coins dropped sharply during February from both the previous month and comparable prior year period.

The US Mint reported total sales of 3,022,000 ounces during February which is down by 19.4 percent from the comparable prior year period and down by a considerable 45.4 percent from the previous month.  Due to strong January sales, however, total sales of the silver bullion coins is up slightly by 0.3 percent on the year.

There were four months during 2014 in which monthly sales of the silver bullion coins dropped below the 3 million level and yet sales hit an all time record high of 44,006,000 troy ounces.  Average monthly sales of the silver bullion coins during 2014 came in at about 3.6 million ounces per month while the average monthly sales year to date during 2015 is at 4.3 million ounces.  The silver bullion coins remain extremely popular with precious metal investors despite the decline in the price of silver since 2011.  Long term silver investors allocating a portion of their portfolio to physical precious metals view the current bargain price of silver as an opportunity to load up as evidenced by 2014 record breaking sales.

The chart below shows the trend of sales for the US Mint silver bullion coins since 2000.  Sales for 2015 are year to date through February 28, 2015.  Ever since the financial crisis when the banking system can close to completely imploding, sales of silver bullion coins have exploded by about 500 percent and remained strong despite the so called recovery in the economy and banking system.

While the sales of gold bullion coins has declined since the financial crisis, silver bullion coins remain as popular as ever with investors seeking a store of value in physical precious metals.

The price of silver has declined sharply since the highs of 2011 as investors have fled what seems like a losing proposition, especially in comparison to stocks and bonds which have been pumped up in value by the Fed’s easy money policies and zero interest rates.  Silver has seen volatile price action since the financial crisis but most investors who have made purchases since 2008 are now at about a break even price level or sitting with losses making this an interesting price juncture for silver investors.

10 year silver

Whether it be stocks, bonds, or precious metals, it is classic psychological behavior for investors to pile in at the top as prices are reaching bull market highs and then refuse to buy at the bottom when everyone is bearish.  No one can predict the timing of future price moves, but with silver prices in the bargain bin and little interest by investors, this is probably an area that deserves additional investment by long term buy and hold investors.  Silver has been considered money and a store of value throughout the ages and this is not likely to change, especially as desperate and over indebted governments rely upon printing press money from the central banks to keep the wildly over leveraged financial system from crashing again.

The sales of silver bullion coins by year since 2000 is shown below.  The figures for 2015 include year to date totals as of February month end.

American Silver Eagle Bullion Coins

               YEAR

OUNCES SOLD

2000

 9,133,000

2001

 8,827,500

2002

 10,475,500

2003

 9,153,500

2004

 9,617,000

2005

 8,405,000

2006

 10,021,000

2007

 9,887,000

2008

 19,583,500

2009

 28,766,500

2010

 34,662,500

2011

 39,868,500

2012

33,742,500

2013

42,675,000

2014

44,006,000

2015

8,552,000

             TOTAL

 327,376,000

 

American Eagle Silver Bullion Coin Sales Up From Previous Year and On Track For Record Breaking 2014 Sales

silver eagleThe US Mint American Eagle silver bullion coins remain more popular with investors than ever, despite the decline in the price of silver.  Apparently there are plenty of long term silver investors who prefer to hold the physical metal and are viewing the decline in the price of silver as an opportunity to load up at bargain prices.

The latest report from the US Mint shows that November sales of the silver bullion coins totaled 3,426,000 ounces, down from the previous month but up by 1,126,000 ounces or 49% from the previous year.  October 2014 was the highest selling month of the year with total sales of 5,790,000 coins.

Sales of the American Eagle silver bullion coins year to date through November 30 now total 41,547,000, just shy of the all time record sales year of 2013 when the Mint sold 42,675,000 coins.  If December sales of the silver bullion coins surpass 1.1 million coins, which is very likely, 2014 will be another record breaking sales year.

Gold and silver investors can only shake their heads and wonder at investor confidence in central banks as an orgy of money printing continues worldwide and leveraged debt piles up at a rate and amount never seen before in history. The attitude seems to be “who cares – my stocks and bonds and real estate are going straight up.”

At some future point that no one can predict you can count on another financial accident on par or greater than that of 2008-2009 that will destroy confidence in paper money and the ability of governments to repay debt with sound money.  At that point the exchange rate between dollars and precious metals will amply reward the investors now buying bargain gold and silver.

Silver has now given back the bulk of its gains from the highs reached in early 2011 and could well go lower given the bearish sentiment and declining price pattern.

Since 2000 investors have purchased over 300 million American Eagle silver bullion coins.  Below are the sales by year with the 2014 total through November 30.

 

Gold Plunges After Swiss Voters Reject Central Bank Gold Buying

SNBGold can’t catch a break lately as Swiss Voters Reject Measure Forcing SNB to Acquire More Gold.

Swiss voters rejected a measure in a referendum requiring their central bank to hold a portion of its assets in gold, a measure its President Thomas Jordan termed an “invitation to speculators” that could have hurt the economy. Bullion tumbled to a three-week low.

The “Save Our Swiss Gold” proposal stipulating the Swiss National Bank hold at least 20 percent of its 520-billion-franc ($540 billion) balance sheet in gold and never sell any bullion was voted down by 77 percent to 23 percent, the government said yesterday. Polls had forecast the initiative’s rejection. Two other initiatives on tax privileges for foreign millionaires and immigration limits also were rejected.

SNB policy makers estimated they would have needed to buy 70 billion francs worth of gold if the referendum had passed. Some economists estimated the SNB wouldn’t have had to sell euros to meet the requirement, given its dollar holdings. At the end of the third quarter, it held 45 percent of its 460 billion francs of foreign currencies in euros and 29 percent in dollars.

Even though the Swiss gold referendum was expected to be defeated gold prices plunged by over $38 per ounce in late Sunday trading and silver was pulverized with prices down almost 8%.

As stocks and bonds continue to soar on liquidity provided by central bank quantitative easing investors have been dumping gold by the tons from their portfolios.  The Swiss Gold Rejection simply gave investors another reason to stay away from gold which has been in a vicious bear market.

Gold has lost 19 percent since peaking in March and investor holdings of exchange-traded products are near a five-year low. While prices probably won’t be affected too much by the “no” vote of the initiative called “Save Our Swiss Gold,” approval would have improved sentiment and increased prices by as much as $50 an ounce, HSBC Holdings Plc estimated in November.

“Gold had received some support in the last couple of weeks” before the vote, Georgette Boele, an analyst at ABN Amro Bank NV in Amsterdam, said by phone. “We’ll get more pressure on gold. The overall outlook is not looking great.”

2014-proof-gold-eagle

Even the surprise news that India had ended curbs on gold imports did nothing to support prices.  In a bear market all news is bad and gold can’t seem to find a support level.  The irony of it all is that the massive euro holdings of the Swiss National Bank were purchased with Swiss francs manufactured out of thin air by the SNB to prevent its currency from appreciating against the euro.  Governments world wide have turned an experiment with quantitative easing into  national policy and are churning out trillions of dollars of printed fiat currencies.  Last I heard the value of anything depreciates as the quantity increases.  Although it’s a tough market right now, long term I’m betting that it’s a smart move to have some gold on hand.

Silver American Eagle Bullion Coin Sales in Summer Slump

silver eagleLet’s face it – no one likes to invest when prices are falling, whether it be stocks, bonds, gold, or silver.  Nonetheless, history has shown time and time again, across all asset classes, that investing after prices have collapsed and when there seems to be little reason to buy is usually the exact right time to buy.

This is something that investors in gold and silver may chose to ponder as demand for precious metals continues to decline.  The demand for both gold and silver has fallen as precious metal prices decline and investors turn to other rising asset classes such as real estate and stocks.  According to BullionVault which buys and sells physical gold and silver for its clients, precious metal demand  retreated to a four year low during August.

The weak demand for precious metals was reflected in the latest report from the US Mint which showed lower sales for both gold and silver American Eagle bullion coins (see Gold Bullion Coin Buyers Go On Strike).

Sales of the US Mint one ounce American Eagle silver bullion coins during August continued the sales slump that has lasted throughout the summer.  Although August sales of 2,007,500 coins increased slightly from sales of 1,975,000 in July, sales during August were off almost 45% from August 2013.

Sales of silver bullion coins during 2014 have declined substantially during the June to August time period compared to the prior year.  Total sales of silver bullion coins during the summer months of June through August 2014 totaled 6,674,500 ounces compared to 11,306,500 ounces during the previous year for a decline of almost 41%.

Earlier this year it appeared that the ever popular silver bullion coins would rack up another  record breaking year, above the record sales of 42,675,000 ounces during 2013.  Although sales of the American Eagle silver bullion coins have been robust during 2014, breaking last year’s record may remain an elusive goal.

Silver American Eagle Bullion Coin Sales Plunge in June

silver eagleSales of the one ounce American Eagle silver bullion coins plunged in June from both the previous month and previous year.  After hitting sales of almost 4 million ounces during May the US Mint reports that sales of the silver bullion coins for June totaled only 2,682,000.

June sales plunged by over 32% from the prior month and by almost 18% compared to June 2013  when sales were 3,275,000 ounces.  Monthly sales of the silver bullion coins can show dramatic month to month changes based on supply and demand so it is difficult to read much into the current month’s sales figures.

Reflecting the drop in current demand the US Mint recently suspended its allocation program which had been implemented a year ago in the face of soaring demand for silver bullion coins during 2013.  Sales of the American Eagle silver bullion coins reached a record during 2013 with sales of 42,675,000 ounces, up 26 % from 33,742,500 ounces during 2012.

The American Eagle silver bullion coins remain extremely popular with small investors and sales have remained extremely robust ever since the near implosion of the financial system during 2008.  Sales of the silver bullion coins prior to 2008 ran from eight to ten million ounces per year compared to yearly sales of 30 to 40 million ounces per year after 2008.

Sales of the American Eagle silver bullion coins could easily hit another all time record high during 2014 if sales continue at their current pace.  If sales for the next six months match the first six months, sales of the silver bullion coins for 2014 could come in at close to 50 million ounces, shattering last year’s record high sales of 42,675,000.

The American Eagle silver bullion coins cannot be purchased by individuals directly from the U.S Mint.  The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of silver and a markup by the U.S. Mint.  The authorized purchasers sell the silver coins to coin dealers, other bullion dealers and the public.  The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

Shown below is a graph of sales of the silver bullion coins by year since 2000.

Soaring Gold and Silver Prices Should Not Be a Surprise to Anyone

bars-of-goldThe precious metal markets caught on fire in a big way today.  Gold prices surged the most in nine months by over $40 per ounce and silver closed in on $21 per ounce.  After losing 28% last year as short term hot money investors sold out their holdings, gold and silver were ready for a huge rally from both a fundamental and technical standpoint (see Why Gold and Silver Could Outperform Every Other Asset Class in 2014).

Precious Metals June 19, 2014

METALS PRICE CHANGE PER CENT GAIN
GOLD $1319.00 +40.50 3.17%
SILVER $20.89 +0.88 4.45%
PLATINUM $1472.00 +24.00 1.66%
PALLADIUM $841.00 +12.00 1.46%

The reasons for today’s huge gains in precious metals varied in the mainstream press but soaring prices should have been no surprise to long term investors who understand why gold and silver should be a part of every portfolio.

Gold and silver constitute a fundamental defense for wealth preservation against the rapidly eroding value of paper currencies backed by broke governments which is Why All Governments Hate Gold.

The various governments of the world and their central banks produce and distribute a product – paper currencies. Those currencies are backed by confidence, faith, and credit, but not by gold, oil, or anything real. Those currencies are digitally printed to excess, since almost all governments spend more than their revenues. The UK, Japan, and the USA are prime examples.

Politicians want to spend more money, but they also need to maintain the illusion that the money is still valuable, that it will retain most of its purchasing power over time, and that inflation is under control. The illusion weakens when food, gasoline prices, and other consumer goods are wildly rising in price. At a more abstract level, gold indicates the same lack of confidence in the printed pieces of paper that our central banks distribute.

If last year’s price correction shattered your conviction in owning gold and silver please consider The Fundamental Reasons for Owning Gold and Silver Are Stronger Than Ever.

One of the best methods for protecting wealth against a constantly depreciating paper currency is to own precious metals.

The bull case for precious metals remains intact as central bankers worldwide have become the lenders of last resort for nations that have exhausted their borrowing capacities.  Very little has changed since 2008 when the world financial system stood at the abyss of collapse.  Unsustainable debt levels continue to increase even as the capacity to service the debt diminishes.

Virtually every government in the world has taken on debts and liabilities that are clearly unsustainable.  Governments “don’t go broke” is the sustaining mantra for those with faith in paper currencies but governments do and will continue to print money that accelerates the loss of purchasing power of fiat currencies.  Please consider the following charts courtesy of John Mauldin Economics.

Eventually, as people realize that the central bank emperors have no clothes it will become clear Why There is No Upside Limit for Gold and Silver Prices.

The increase in the value of gold and silver is due to the fiscal and monetary policies of nations struggling to deal with massive levels of debt – policies that virtually guarantee a continued rise in the price of gold and silver.  Central banks, having exhausted all conventional means of monetary easing, have moved on to the last resort option of quantitative easing and currency debasement.

Government officials argue that unprecedented deficit spending and quantitative easing are necessary to stimulate economic  growth, but this theory has not worked in the real world.  Despite trillions in stimulus spending,  job creation and economic growth have been extremely weak and are likely to remain so according to economists Kenneth Rogoff and Carmen Reinhart who wrote This Time Is Different: Eight Centuries of Financial Folly.  According to Rogoff and Reinhart, economic growth is subpar when public sector debt exceeds 90% of GPD which the U.S. and many other developed nations have already surpassed.  In addition, a recovery of the job and housing markets after a financial crisis take many years due to the burden of excessive levels of debt.  Ultimately, Rogoff and Reinhart predict that austerity measures will need to be imposed along with some type of debt restructuring.

Is the U.S. capable of reducing spending and  instituting austerity measures? Cutting deficits means cutting payments to a long list of incomeless recipients who really don’t care where the entitlement money comes from.  Those still actually paying taxes will object strongly to any proposed tax increase to fund government spending.  Unable to cut spending or raise taxes leaves the Government with one bad option – print more money.

Politicians, who value getting elected above all else, are likely to strong arm the reliably compliant Federal Reserve to “come to the rescue” again with additional printed dollars.   In the minds of politicians and Federal Reserve officials, there will always be very compelling reasons to continue borrowing and money printing.

A nation that has reached the limits on taxation and borrowing has few viable policy options other than a continuing series of quantitative easing programs.  Current government policies, if left unchanged, virtually guarantee a continued increase in the price of precious metals.

 

A Must Buy Silver Miner That Is Adding New Reserves at Just $0.38 Per Ounce

PAAS silverSilver and gold mining stocks have been indiscriminately sold off during the correction in precious metal prices.  While the sell off has been painful for investors in precious metal mining stocks it also presents profitable opportunities.  The price of gold and silver will not remain at bargain levels forever and now is the time to establish positions in selected mining stocks that offer solid long term capital appreciation.

Investing in precious metal mining stocks has recently been a minefield for investors due to a variety of reasons including poor management decisions, overpriced acquisitions, increased production costs, increased government taxation, and falling gold and silver prices.

One silver mining stock that has rock solid finances, pays a dividend, owns substantial silver reserves, and has excellent price appreciation potential when silver prices go back up is Pan American Silver Corp (PAAS).

Although no one can predict when silver prices will head back up, both PAAS and silver appear to be forming bottoms.  Pan American Silver recently made a multi-year double bottom in the $10 per share range and silver stubbornly refuses to break below the $18 per ounce level despite wide ranging bearish commentary on the metal.

paas

Courtesy: Yahoo Finance

Courtesy: Kitco.com

Courtesy: Kitco.com

Moving beyond technical analysis there are also many fundamental factors in place that could easily send the price of PAAS to much higher levels.  Here’s my list of the top 7 reasons why now is a good time to buy the common stock of Pan American Silver.

  1. According to the company website, over the past ten years PAAS has added almost 270 million ounces of new silver reserves at a cost of just $0.38 per ounce.  The new silver reserves more than replaced the 225 million ounces of silver mined since 2004.
  2. During the first quarter of 2014 PAAS increased its silver production by 5% to 6.61 million ounces.
  3. In order to maintain a strong financial position in the face of declining silver prices PAAS implemented cost cutting measures while improving operational efficiency.  The all-in sustaining cost per silver ounce sold dropped by 20% in the first quarter of 2014 to $15.54 per ounce while cash costs dropped to $8.25 per ounce from $11.33 in the comparable prior period.
  4. Pan American Silver was just upgraded by Charles Schwab from “avoid” to “neutral” and added to the firm’s trigger stock list which identifies PAAS as a buy candidate if the price closes above $13.81.  The reasons listed by Schwab for upgrading the stock include a rising 50 and 200 day moving average which is bullish, an up/down pattern that indicates the stock is under accumulation, and a bullish trend as indicated by the moving average convergence/divergence (MACD).
  5. PAAS is in a strong financial position with ample liquidity.  As of March 31, 2014, the company held cash and short term investments of $394 million and working capital was over $680 million.
  6. The Company pays a current quarterly dividend $0.125 per share or $.50 annually which works out to an annual yield of almost 4% which is about 4% higher than what a saver can currently get from a bank due to the Federal Reserve’s zero interest rate policies.
  7. PAAS sells below its book value of $14.33, has only $40 million in long term debt, and generates operating cash flow of over $123 million.  The Company does not engage in price production hedging so any increases in the price of silver flow right to the bottom line.

A strong financial position, long life low cost silver reserves, a 4% annual dividend, and a currently depressed price of silver all form the perfect recipe that should make the purchase of PAAS common stock a rewarding experience.

Gold Advance Stymied by Investor Worries and High Gold Silver Ratio

feature-300x200The price of gold has held its own this year despite a long list of reasons from bearish analysts for not owning gold.  From a closing price of $1,225 at the start of the year gold has managed to eke out a small gain of 1.8% to a price of $1,247.50 at Friday’s close.  In mid March gold had reached a high of $1,385 but quickly surrendered those gains.

In a recent interview with Bloomberg several analysts listed various reasons for the unease in the gold market including:

  • selling by hedge funds
  • a lack of upward price momentum which is discouraging investors from making new purchases
  • anxiety over future gold and silver pricing as major banks drop out of the market for establishing the daily gold and silver fix price
  • the risk of a large drop in the price of gold if it breaks technical support at $1,230
  • an increase in the gold silver ratio to almost 70 from the more normal long term average of around 55 to 60.
Courtesy: stockcharts.com

Courtesy: stockcharts.com

One analyst interviewed by Bloomberg expects the gold silver ratio to converge via a drop in the price of gold, which is one possibility.  Another way in which the gold silver ratio could drop, of course, is if silver outperforms gold.  Since mid 2012 gold has outperformed silver by a relative percentage of about 17%.

gld vs slv

On an absolute basis silver has experienced a major price decline from almost $50 per ounce in March 2011 to $19.94, a price last seen in early September 2010.

slv

Is it time to buy or sell gold and silver?  Based on information from precious metal analysts, which is probably already fully discounted by the markets, the risks of buying gold and silver today are very high.  Kinda reminds me of what stock analysts were saying about buying stocks in early 2009.

American Eagle Silver Bullion Coin Demand Remains Strong – 2014 Should Shatter Previous Sales Record

proof-silver-eagleThe American Eagle silver bullion coins produced by the US Mint remain extremely popular with retail investors.  During 2013 silver bullion coin sales hit a record high of almost 43 million ounces and would have been even higher if the US Mint had been able to keep up with demand.  The US Mint actually ran out of silver bullion coins late in the year and suspended sales for most of December and part of January 2014.

Sales of silver bullion coins exploded in the wake of the financial crisis during 2008 when investors began to seriously question of value of paper money which could be manufacturing at will and in unlimited quantity by a profligate government.

Prior to the financial crisis yearly sales of the silver bullion coin ran between eight and ten million ounces.  Since 2010 yearly sales exploded to over 30 million ounces per year and during 2013 exceeded 40 million ounces.

According to the US Mint May sales of the silver bullion coin totaled 3,988,500 ounces up by almost 12% from the previous month and up by 15% from the comparable prior year month.

Sales of the silver bullion coins are shown below by year with 2014 sales through May 31st.

The American Eagle silver bullion coins cannot be purchased by individuals directly from the U.S Mint.  The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of silver and a markup by the U.S. Mint.  The authorized purchasers sell the silver coins to coin dealers, other bullion dealers and the public.  The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

If the US Mint is able to keep up with demand, 2014 should be another record breaking year for sales of the American Eagle silver bullion coins.  If the pace of silver coin sales continues at the current rate sales for 2014 could easily top 50 million ounces, an increase of about 16% from last year.

Silver Remains in a Tug of War Between Supply and Demand

proof-silver-eagleAfter a fierce correction from the highs of 2011 have  the market forces of supply and demand resulted in a stabilized silver price?

On the demand side the industrial use of silver is at a nine year high with fabrication usage expected to rise to over 890 million ounces.   A wide variety of businesses use huge amounts of silver in the production of such items as jewelry, solar panels, electronics, cars, tableware, and photography.

Although silver is most commonly associated by many people as a precious metal investment the industrial demand for silver far exceeds investment demand.  For example, sales by the U.S. Mint of the ever popular American Eagle silver bullion coins hit a record last year of almost 42 million ounces (see Silver Bullion Coin Sales Soar) but this amount is a fraction of industrial usage. Since 2000 to date the U.S. Mint has sold over 292 million one ounce American Eagle silver bullion coins which amounts to only 32% of  estimated industrial demand for just one year.

Even as industrial demand for silver booms, Bloomberg News reports that investment demand for silver has diminished due to tapering of quantitative easing by the Federal Reserve, reduction of the safe haven appeal of silver, reduced demand by China, and the correlation coefficient between gold and silver.

Silver is being undermined by its association with gold.

gold-bullion

While makers of everything from jewelry to solar panels are buying the most silver in nine years, prices are languishing. Investors are dismissing industrial demand and instead focusing on the waning appeal of precious metals as a haven, with the Federal Reserve paring economic stimulus measures, inflation muted and equities rallying.

Silver has been dragged down by a yearlong slump in gold, the commodity most widely held by investors in exchange-traded funds, following a decade-long rally that saw prices for both surge more than sixfold. The five most-accurate precious-metals analysts tracked by Bloomberg over the past two years predict silver will average $18.80 an ounce in the third quarter, the lowest since 2010, and gold will drop 7.3 percent.

“The industrial driver can help, but I don’t think it’s as influential as the investor,” said Robin Bhar, head of metals research at Societe Generale SA in London and the most-accurate forecaster tracked by Bloomberg. “Investors were bullish silver because gold was in a bull market. Now that we have gold in a bear market, there’s less enthusiasm coming from investors.”

The correlation has been strong. From December 2008 to June 2011, silver tripled and gold surged 70 percent, with both touching all-time highs, as the Fed pumped more than $2 trillion into the financial system and cut interest rates to a record in a bid to boost the economy. Last year, when signs of economic growth sent gold down 28 percent, silver plunged 36 percent. The declines were the most for both metals since 1981.

Goldman said in an April 13 report that in the long term, silver tends to track gold, and its forecast reflects the historical ratio to gold. An ounce of gold bought 67.21 ounces of silver in London on April 30, the highest since July. The average over the past 30 years is 64.8.

The link with gold is stronger than that with industrial metals. The mean of silver’s 30-week correlation coefficient to gold was 0.86 over the past five years, compared with 0.51 with the London Metal Exchange Index of industrial metals, data compiled by Bloomberg show. A figure of 1 means two assets always move in the same direction.

“The precious-metal characteristic is likely to dominate,” said Barnabas Gan, an analyst at Oversea-Chinese Banking Corp. in Singapore, and the second-most accurate precious metals forecaster over the past two years. “The risk of higher real interest rates may likely magnify in the middle-long run, and thus raises the opportunity cost for holding silver. The improving global economic picture is also likely to pale safe-haven demand.”

Concern over the value of haven assets is trumping signs that industrial demand is improving. Half of silver supply is used to make things, more than the 10 percent for gold, and demand is picking up as economic growth fuels sales of electronics and cars from China to the U.S.

Since precious metals generally earn returns only through price gains, silver investors were “disillusioned” by the slump over the past year and put their money elsewhere, New York-based researcher CPM said in an April 29 report. Investment demand tumbled 42 percent last year to 105.3 million ounces, the lowest since 2008, according to CPM, which forecast average prices in 2014 will be lower for a third straight year.

SILVER DOLLARS

At the same time, fabrication usage including by makers of cars, jewelry and tableware will rise 2.9 percent this year to 890.7 million ounces, the most since 2005, CPM said. Silver content is increasing in vehicles with more electronics, according to Metals Focus Ltd., a London-based research company. After dropping last year, demand from electronics and battery makers will rebound in 2014, CPM forecasts.

Most industrial metals will get a boost from growth. The world economy expanded 2.1 percent in 2013 and will increase 2.8 percent this year and 3.1 percent in 2015, according to economists surveyed by Bloomberg. While that will help spur a 2.1 percent gain in industrial and photographic demand for silver, investors will sell 250 metric tons from funds backed by the metal, Barclays Plc estimates.

“Silver is not benefiting even though it has so much industrial use as people still call it a precious metal,” James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $357 billion in assets, said. “Its a tug of war between its safe-haven appeal and its use as industrial metal.”

Hedge funds have cut their bets on higher silver prices by 90 percent in the past two months on the Comex in New York, holding a net-long position of 2,620 futures and options in the week to April 22, U.S. Commodity Futures Trading Commission data show. The five-year average is about 20,510 contracts.

Despite a huge appetite for silver by industrial users, the reduction of investment demand and a production oversupply may continue to pressure silver prices. During 2014 HSBC is projecting an increase in silver supply to 1.09 billion ounces with demand remaining flat at 938 million ounces.

Until the financial system blows up again, the tug of war between supply and demand in the silver market is likely to restrain silver prices for the immediate future.