Spot gold has gone up more than 24 percent this year in its best performance since 2010.
Retail sites for silver have been overwhelmed with demand for bars and coins, suggesting the frenzy that roiled commodities markets last week is spilling over into physical assets.
Dealers including Money Metals, SD Bullion, JM Bullion and Apmex said over the weekend they were unable to process orders until Asian markets opened because of unprecedented demand. Buying continued on Monday, and spot silver and futures jumped to breach $30 an ounce.
“Pretty much physical silver is almost all gone in terms of live inventory,” Tyler Wall, president and chief executive officer at SD Bullion, said in a Bloomberg TV interview. “Currently we’re seeing the premium — the price you pay over spot to get actual physical silver in your hands — is skyrocketing. Most stuff on our website’s at least 30% over spot and we can’t source it for much less than that right now from our wholesalers.”
Phones were ringing non-stop at Swiss dealer Gold Avenue, said CEO Alessandro Soldati.
“Demand was 10 times a typical Sunday yesterday, and today I would say six times,” he said on Monday. “Everyone is calling us saying ‘I want to buy gold and silver ASAP.’”
Retail traders, inspired by Reddit posters, stormed into the silver market last week and successfully drove up prices of the physical metal, silver miners and exchange-traded funds. Spot prices, silver futures on the Comex and the largest silver exchange-traded fund, iShares Silver Trust, all climbed more than 5% in the week.
Premiums are expected to rise quickly, according to Apmex, which said it’s seeing significant increases in costs and warned it likely needs an additional day or two to fill orders. On Saturday alone, it added as many new customers as it usually adds in a week.
Premiums on American Eagle silver coins have risen to close to $5 from a normal level of $2 over the past three days, according to Everett Millman at Gainesville Coins in Florida. His company’s website has a notice saying orders are taking longer than normal to fulfill.
“That absolutely motivates more people not only to jump on the bandwagon with the Redditors,” Millman said by phone. It also “reinforces the bias that holding physical silver is a safer investment as opposed to speculating on the stock market.”
What’s unusual this time in the physical silver market is that “everybody has been raising their premiums,” according to Millman. In normal times, some retailers will be able to offer lower premiums.
Silver coin sales last month at the U.S. Mint jumped 24% from a year ago to 4.775 million ounces. That marked the highest for a January since 2017, website data from the mint on American Eagle silver-coin sales showed.
There are also signs that investors are holding onto silver they own, rather than trying to take profits.
“Now we’re seeing nothing, no single offer, which is scary,” Peter Thomas, senior vice president at Zaner Group, said by phone from Chicago. “Whatever we sell, people are holding it. There’s no inflow of metal at all.”
The surge in demand also spread to Asia.
“We have seen unprecedented demand for physical silver,” Gregor Gregersen, founder of Singapore-based dealer Silver Bullion Pte. “The demand is broad-based and deep as we have witnessed both a record number of orders as well as new record size orders over the past 24 hours.”