By Frank Tang
NEW YORK, May 14 Unprecedented coin buying and
strong silver jewelry purchases, fueled by a 24 percent drop in
prices, sent physical silver demand to a record high in 2013, a
top analyst at metals consultant Thomson Reuters GFMS said on
Resilient demand so far this year should keep 2014 silver
prices from falling sharply year-over-year, said Andrew Leyland,
manager of precious metal demand at Thomson Reuters GFMS.
In April 2013, a dramatic two-day $5 slide and a similar
$225 drop in gold unleashed years of pent-up physical demand for
coins and bars among retail investors who had been waiting for a
bargain entry price point, particularly in the lower-priced
Even as institutional investors exited their positions in
gold exchange-traded funds last year, silver ETF holdings have
still held relatively steady.
"Silver has been holding up a lot better than gold. There's
been a view in the market that sub-$20 silver is actually quite
good value as a lot of retail investors have this
psychologically important $20 level in mind," Leyland told
Reuters ahead of the release of World Silver Survey on behalf of
industry group Silver Institute.
For 2013, total silver physical demand rose 13 percent to an
all-time high of 1,081.1 million ounces.
Price-sensitive silver jewelry and silverware demand both
rose more than 10 percent last year, supported by an increase in
silver imports by India, Leyland said.
India, traditionally the world's largest bullion consumer,
has hiked its gold import taxes and unveiled a flurry of
regulations earlier this year in an attempt to reduce its
current account deficit and to lift the rupee from record lows.
Silver's industrial demand, which is largely insensitive to
prices and represents about half of its annual global demand,
remained largely flat in 2013.
Looking forward, Leyland said he expects silver jewelry
demand to have risen in the first three months of 2014.
In terms of silver investment coin buying, he said that
demand fell slightly due to higher sales tax in European
countries such as Germany and Estonia so far this year.
U.S. Mint data showed silver coin sales have outperformed
that of gold in the first four months of the year.
GFMS' Leyland said he still expects full-year silver prices
to average $19 in 2014, lower than the $23.79 in 2013.
Expected U.S. dollar strengthening this year and improving
equities market prices should pressure assets such as gold and
silver which are often seen as safe havens, he said.
"It's more likely a change in investor sentiment will impact
silver on the downside rather than fundamentals, which is
looking pretty strong," Leyland said.
Demand (in mln oz except price avg)
Jewelry 181.4 198.8
Coins & Bars 139.3 245.6
Silverware 44.6 50
Industrial Fabrication 589.1 586.6
Physical Demand 954.4 1,081.1
Silver price average $31.15 $23.79
(Reporting by Frank Tang; Editing by Cynthia Osterman)