Silver dealers strive to find supplies for retail buyers

(Reuters) – A social media-driven retail investment frenzy has left U.S. dealers in Singapore looking for bars and coins to meet demand.

Silver prices extended their rally to a maximum of eight years on Monday, as small investors responded to calls on social media last week to buy the metal to raise prices. Retail investors cannot directly access the wholesale silver market, so they bought in bars and coins.

“It simply came to our notice then. We will be completely exhausted if it continues like this – the first time since our company opened in Singapore seven years ago, ”said David Mitchell, CEO of Indigo Precious Metals.

Some customers have sold gold to buy silver, said Gregor Gregersen, founder of Silver Bullion Pte Ltd, another Singapore dealer.

“There is a clear shortage of popular developing silver coins (especially North American coins),” he said. “However, we are still able to get 1,000 good delivery bars at almost the same premiums so far.”

US bullion broker Apmex has warned of delays in processing silver transactions due to rising volumes.

Other US dealers, including JM Bullion and SD Bullion, have warned customers of 5 to 10 day delivery delays. Everett Millman of Gainesville Coins in Florida said he expects shipping delays, perhaps until mid-March, for some products such as Silver Eagles and Silver Maples.

While a rapid growth in demand has tightened supply, there is a lot of metal around and delays should ease once the metal can be transported where it is needed, dealers and industry experts said.

Kevin Rich, global gold market advisor for Perth Mint in Australia, said that while coin and bar dealers may see some supply constraints and therefore charge higher premiums for these products, the Mint does not anticipate such problems.

He says, unlike last year, when the lack of freight capacity disrupted gold markets, there is enough airline traffic to ensure that supply can move.

“In the short term, stocks can be depleted because it takes a long time for shipping, but the overall supply is wide,” said Peter Fung, head of department at Wing Fung Precious Metals in Hong Kong.

About 1 billion ounces of silver are produced and consumed each year, and the supply has been in surplus for most of the past decade, Metals Focus consultants said.

“There are still no signs of a wider physical compression on silver and we would not expect any at this stage,” said Frederic Panizzutti, general manager at the MKS dealer.

In China and India, the largest Asian consumers of physical bullion, there were several purchases disabled.

Chinese investors have piled up on the futures market and the shares of mining companies, but dealers said the rush does not actually translate into physical constraints.

Indian buyers usually prefer gold as an investment.

“Unlike what is happening in other parts of the world, silver is seen as a consumer rather than an investment commodity in India,” said the head of the bullion division of a silver importing bank in Mumbai.

India and China typically account for a quarter to a third of global demand for retail investment products in silver, such as bars and coins, according to Metals Focus.