EDITOR NOTE: The Perth Mint saw record sales of silver coins in January, virtually unloading all of the inventory--1.1 million troy ounces of silver--it was able to produce. The Reddit-fueled short squeeze frenzy may have given silver a sharp short-term boost, but the strong underlying current driving silver is its use as a key component in green energy, specifically solar panel production. What makes silver an ideal investment is that it’s both a safe haven and industrial metal, making it an ideal hedge and growth asset, a beneficiary of booms and busts. But institutional price suppression had played a key role in obfuscating investors’ perspectives on silver’s true supply and demand. The Reddit swarm took issue with the firms suppressing the metal through heavy short positions, forcing a gap through the price roof, allowing the metal to rise according to the natural flow of supply and demand. Silver production remains slow and silver inventories low while demand is expected to build up over the coming years. Now’s the time to purchase the physical metal before supply and production constraints propel silver prices beyond its current discounted levels.
Australia’s Perth Mint said on Thursday its January silver coin sales jumped 23.5% from the previous month, boosted by a robust demand for the white metal spurred by a social media-led buying spree that commenced towards the end of the month.
The refiner sold more than 1.1 million troy ounces of silver last month, its highest since October, it said in a blog post.
Silver’s demand peaked during the last days of January after small investors responded to calls on Reddit and other social media platforms to pile into the market and push up prices.
The retail boost powered prices to a near eight-year peak of $30.03 an ounce on Monday.
“The short squeeze story that has been unwinding for the past couple of days definitely boosted demand for physical silver,” said IG Markets analyst Kyle Rodda.
But an underlying demand for silver was already existing, not just because precious metals are considered a hedge against inflation and currency debasement, but also helped by rising industrial demand and looming supply deficit, Rodda said.
Originally posted on Reuters