Silver Demand Is Up 40.4% Here

Interesting numbers on precious metals demand coming out of the U.K. this week.

The figures were released by the U.K. Assay Offices. Showing how consumption from one particular sector has been soaring of late: jewellery-making.

The numbers show that total hallmarking of gold items across the country was up 32.4% in February–as compared to the same month in 2013. With a total of 327,056 gold jewellery items created.

Even more eye-catching were the numbers for silver. Where hallmarking jumped 40.4% for February, to 351,791 items.

These figures confirm a trend that’s being reported anecdotally across many parts of the world. Namely, that gold and silver demand is rising–driven by better affordability on recently-lower prices.

The attractiveness of both these metals to price-sensitive buyers in the jewellery sector is even more apparent when compared to other precious metals. Such as platinum, which saw its U.K. jewellery usage drop by 1.6% in February. A consequence of its notably higher price, driven recently by South African mine strikes.

Such “bargain hunting” should be somewhat of a corrective factor for today’s lower prices in the silver and gold markets. It’s always a good thing when prices reach a level where buyers start increasing their purchases.

One headwind to the metals on this front has been recent rule changes in big consuming nations like India. Where the government has restricted imports of gold and silver in order to control its current account deficit, and protect the value of its currency.

Even there however, the drive for the metals is apparent. The Indian news has been rife with stories of smuggling schemes designed to get gold and silver into the country. With demand reportedly running high, even on the black market.

This rising demand should also be viewed in tandem with global production costs. Which are not far below current trading levels. The world’s largest gold miner, Barrick Gold, said last month that its all-in costs for 2013 came in at $1,282 per ounce. Not far below the current price of $1,350.

Simply put, when prices hit a level where demand rises and production struggles, it’s a positive for the market.

Here’s to sparking a comeback,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

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