The silver price appears to have divorced itself the from supply demand fundamentals. In normal circumstances when the price declines so does demand. However, his is not happening in the silver market.
With the price trading close to a five year low retail investors around the globe are scrambling to acquire silver bars and coins. The U.S and Canadian Mint have officially run out of silver coins and many dealers are struggling to keep up with demand.
The surge in silver demand has put considerable pressure on global silver inventories. During August the Comex reported 1 million ounces had been deposited and 1.6 million ounces had been withdrawn.
The recent surge in physical demand started when Europe faced the real risk of a Greek exit and has continued throughout the summer and accelerated in the last few weeks as stock markets faltered. Many of the world’s mints have also reported a significant increase in gold coin purchases.
Many in the precious metal community expect the next financial crisis to be worse than 2008. This is why many are forecasting physical demand for bars and coins to only increase.