Overwhelming Public Demand For Silver Eagles…. Not JP Morgan

December 31, 2014

According to global market data from the top Official Mints, sales of Silver Eagles originate overwhelmingly from public retail investment demand rather than by one large bank… such as JP Morgan.  I say this in response to the allegation put forth by silver analyst, Ted Butler who believes JP Morgan purchased half of all Silver Eagles since April, 2011.

Ted Butler, who has made this claim over the past several months, does so again in his recent article, The Perfect Crime.  Butler states the following:

For starters, there is the matter of extraordinary sales of Silver Eagles from the US Mint. Since April 2011, the US Mint has produced and sold 140 million Silver Eagles, more than in any similar period of time, in a price environment that can only be termed putrid and in which sales of Gold Eagles were notably lower. I would estimate that JPMorgan purchased close to half of the 140 million Silver Eagles sold since April 2011. According to very reliable sources on the retail front, general investment demand has been lower over this time, as retail buyers do not buy strongly into a declining price environment in any investment asset. Yet we know for a fact that there has been extraordinary buying of Silver Eagles, even while Gold Eagle sales cooled off notably, so someone had to be buying Silver Eagles.

Butler believes JP Morgan purchased half of the 140 million Silver Eagles produced since 2011… and he believes this to be true because “According to very reliable sources, general investment demand has been lower over this time.”

This is where I disagree with Butler.  Now, let me start off by saying it was Ted Butler’s writing back in the early 2000’s that motivated me to start buying silver.  So, I have a lot of respect for Ted as he was one of the leading silver analysts writing about the shiny metal well before it became on the public’s radar.

While I believe there is significant manipulation in the precious metals markets (including most other markets) by member banks, I do not agree with Butler that JP Morgan purchased nearly half of all Silver Eagles since 2011… and I believe I have the market evidence to support my claim.

Top 3 Official Coin Sales Support Broad Based Public Demand

If we look at the top 3 Official Coin sales since 2008, we can see a similar overall trend.  Let’s first take a look at the U.S. Mint sales in the chart below:

U.S. mint silver eagle sales

As the price of silver skyrocketed, U.S. Mint Silver Eagle sales increased from 19.5 million in 2008 to 39.8 million in 2011.  However, as the price of silver declined and remained flat in 2012, demand for Silver Eagles fell 15% to 33.7 million.  Then in 2013, U.S. Mint sales hit a new record of 42.6 million as investors took advantage of sub $20 silver.

Butler alleges that as JP Morgan drove down the price, it purchased half of all Silver Eagles at a steal.  Well, if this was the case, then who was buying record sales of Silver Philharmonics and Silver Maples??   If we take a look at the next two charts, we can clearly see a similar trend in these two 0fficial silver coin sales:

canadian silver maple leaf sales

austrian silver philharmonic sales

Sales of Silver Canadian Maples and Austrian Philharmonics increased steadily from 2008 to 2011, declined in 2012 and then shot back up in 2013.  So, if JP Morgan allegedly bought half of all Silver Eagles since 2011, who was propping up sales of Silver Maples and Silver Philharmonics?

Furthermore, Canadian Silver Maple Leaf sales in the first three-quarters of 2014 hit a new record of 20.8 million compared to 20.7 million during the same period last year.  However, Silver Eagle sales declined from 36.1 million Q1-Q3 2013 to 32.2 million Q1-Q3 2014.

If JP Morgan was buying half of the 32.2 million Silver Eagles from Jan-Sept of 2014, then who was buying the record 20.8 million Canadian Maples??  While Silver Eagle sales were weaker than Maples in the first nine months of the year, they have picked up significantly in the fourth quarter reaching a new annual record of 44 million.

Now, by combining the sales of the top three Official Coin Mints, we can see how the annual changes in the top three, were quite similar:

offical silver coin sales

All three official coin sales moved in the same fashion…. up from 2008-2011, a decline in 2012 and then up again in 2013.  While 2013 Silver Philharmonic sales did not surpass the record set in 2011, this was probably due to investors choosing Canadian Silver Maples with one of the lowest premiums of all official coins.

As we can see, the market sales data proves that all the top three Official Silver coin sales moved in tandem since 2011.  I believe the public was the overwhelming factor in purchasing Silver Eagles… not JP Morgan.

In addition, India’s silver imports increased from 2009-2011, declined significantly in 2012 and then picked up again in 2013.  Furthermore India’s silver imports, along with record Silver Eagle and Maple sales, will reach an estimated record of 7,500 metric tons in 2014.  Was JP Morgan also buying Indian Silver???

Top Internet Coin Dealers Confirm Higher Silver Eagle Sales

Ted Butler states that he has reliable sources stating that overall retail investment demand is lower, proving that JP Morgan is the large Silver Eagle buyer.  I decided to contact some of the large Online Precious Metal Dealers to see if their Silver Eagle sales have in fact declined since 2011.

I contacted APMEX, JM Bullion, Gainesville Coin and SilverDoctors.  Three got back with me (APMEX failed to return my call in time of publication) and supported the market data that public demand for Silver Eagles increased over the past three years along with the rise of sales at the U.S. Mint.

JM Bullion and SilverDoctors let me know that they deal with some of the Authorized Dealers (who purchase Silver Eagles directly from the U.S. Mint), and they would have mentioned that JP Morgan was buying half of their Silver Eagle allotments since 2011.

JM Bullion, Gainesville Coin and Silver Doctors all agreed that the public has been buying increasing numbers of Silver Eagles, especially on the dips, since 2011.  While demand for standard silver bullion may not be as robust as it was in 2011, it seems as if investors are purchasing more LEGAL TENDER COINS, especially Silver Eagles and Silver Maples.

If JP Morgan was buying half of all Silver Eagles since 2011, as Butler suggests, then we would have seen a decline in sales of Silver Philharmonics and Silver Maples.  Not only have sales of Silver Maples hit new record of 20.8 million Q1-Q3 2014, they will likely be quite strong in last three months of 2014… including rationing due to huge take-down of silver on Halloween and into the first week of November.

I wanted to provide a rebuttal to Butler’s allegation that JP Morgan was the large buyer of Silver Eagles because his opinion takes CREDIT AWAY FROM THE PUBLIC, and puts it in the hands of the BANKERS.  While Ted Butler provides excellent information on the silver market, I believe his opinion on this matter is incorrect.

One last thing… Butler states the “putrid sales of Gold Eagles compared to Silver Eagles” as another factor proving that JP Morgan was the big buyer.  While it’s true that Gold Eagle sales have declined significantly since 2011, so have Gold Maple Leaf sales.  Matter-a-fact, Gold Maple Leaf sales are down 46% in the first nine months of 2014 compared to the same period last year… even though sales of Silver Maples continued into record territory.

As these three Official Coin Retail Dealers agreed, its the public taking advantage of lower silver prices by adding metal to their investment holdings.  This also includes the WEALTHIER PRIVATE BUYERS who purchase silver in large lots.

We must remember, the buying of Official Silver Coins is still from a very small motivated percentage of the public.  Can you imagine what will happen when 98% of the public realizes they have invested in FINANCIAL PAPER ASSETS that have no future?

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Spanish Conquistadores invaded the Inca Empire in 1528 to steal their silver and gold.