Silver dealers struggle to find supplies for retail buyers

(Reuters) – A frenzy of retail investment in silver driven by social media has left US traders in Singapore struggling for bars and coins to meet demand.

Silver prices extended their high on Monday to an eight-year high, with small investors taking calls on social media last week to buy the metal and raise prices. Retail investors cannot directly access the wholesale silver market, so instead, they bought in bars and coins.

“There is a massive shortage. We will be completely exhausted if it continues like this – the first time since our company opened in Singapore seven years ago, ”said David Mitchell, managing director of Indigo Precious Metals.

Some customers sold gold to buy silver, said Gregor Gregersen, founder of Silver Bullion Pte Ltd, another dealership in Singapore.

“There is definitely a shortage of popular silver coins in development (especially US coins),” he said. “However, we can still get good 1,000-ounce delivery bars with almost the same premiums for now.”

American precious metals broker Apmex warned of delays in processing silver transactions due to increased volumes.

Other US resellers, including JM Bullion and SD Bullion, have warned customers of shipping delays of five to 10 days. Everett Millman of Gainesville Coins, Fla., Said he expected shipment delays, perhaps until mid-March, for some products like Silver Eagles and Silver Maples.

While a rapid increase in demand has reduced supply, there is a lot of metal and delays are expected to decrease when the metal can be shipped where needed, said retailers and industry experts.

Kevin Rich, global gold market consultant for Australia’s Perth Mint, said that although coin and bar traders may see some supply restrictions and therefore charge higher premiums on these products, the Mint does not provide for such problems.

There is enough air traffic to ensure that supplies can circulate, he said, unlike last year, when the lack of cargo capacity disrupted gold markets.

“In the short term, inventories may run out as shipping takes a long time, but the overall supply is wide,” said Peter Fung, head of business at Wing Fung Precious Metals, based in Hong Kong.

About 1 billion ounces of silver are produced and consumed each year, and supplies have been in surplus for most of the past decade, consultants Metals Focus said.

“There are still no signs of a broader physical grip on silver and we do not expect any at this stage,” said Frederic Panizzutti, managing director of the MKS dealership.

There were more discreet purchases in China and India, the main Asian consumers of physical gold.

Chinese investors huddled in the futures market and in the shares of mining companies, but traders said the rush has not yet translated into physical restrictions.

Indian buyers generally prefer gold as an investment.

“In contrast to what is happening in other parts of the world, silver is seen more as a consumer commodity than an investment commodity in India,” said the head of the gold division at a Mumbai-based silver importing bank.

India and China typically account for a quarter to a third of global demand for retail silver investment products, such as bars and coins, according to Metals Focus data.