Silver spot price at 5-month low on tapering angst and slump in US coin sales

San Francisco (Dec 3)  The spot price of silver has today declined to a five-month low at 19.05 on worries that the US Federal Reserve will trim its bond-buying programme as early as this month.

In addition, the US Mint reported yesterday that sales of American Eagle silver coins fell 27 percent y/y in November. Sales of the 2013 minting were only 2.3 million ounces in November, the lowest monthly total since last December. Continuing uncertainty over QE tapering has seemingly discouraged buying of the precious metal this year. November of last year saw 3.16 million ounces shipped.

“The biggest factor weighing down on gold and silver prices is whether the Fed will taper in December,” observes David Beahm of New Orleans coin dealer Blanchard & Co.

The US Mint will soon cease production of the 2013 American Eagle and will start on the 2014 edition. Bullion coin sales tend to be highly seasonal, peaking at the start of the year with the unveiling of the new coins and slowing towards the last quarter of the year. In January, the US Mint moved an intra-month record of 7.5 million ounces, meaning that the latest month’s data may not be that bad a sign for the price of silver. 

India's silver imports increased to a three-month high in October and are on track to reach a record calendar year volume this year, according to data from Thomson Reuters GFMS. Imports rose 40 percent to 338 tonnes in October from 241 tonnes in September. The world's biggest bullion consumer was down 80 percent m/m in September in combined silver and gold imports.

Sudheesh Nambiath, an analyst at Thomson Reuters GFMS, projects that silver imports will be at 5,200-5,400 tonnes by the end of the year, exceeding the standing record high of 5,048 tonnes in 2008. Silver has been a beneficiary since India’s government hiked gold duties tenfold at the start of 2012, from one to the current 10 percent.