Photo: Nicky Loh/ Bloomberg
By James Poole
Silver Bullion Pte, a Singapore supplier of coins and bars to retail investors, opens a 600 metric ton vault tomorrow as investor demand increases.
The storage could hold silver worth $390 million at prices on March 21. The company doubled sales to 1.04 million ounces in 2013 from 517,000 ounces a year earlier, said Gregor Gregersen, who founded the company in 2009. Almost all the sales were silver, he said in an interview in Singapore on March 18.
Investors are adding to holdings as silver becomes cheaper relative to gold. Silver plunged 36 percent in 2013, the most in three decades, exceeding a 28 percent decline in gold as equities climbed, the U.S. economy improved and inflation remained muted. Assets in exchange-traded products backed by silver rose 1.9 percent in 2014, climbing for a third year, as gold holdings were little changed. American citizens are his largest group of customers, said Gregersen.
“While prices dropped last year, we saw physical demand went through the roof,” said Gregersen. “Our American customers seem to be concerned about rising government debt in their country and see silver as a form of insurance.” Marketable U.S. government debt outstanding has soared to a record $12 trillion from $4.5 trillion in 2007, according to U.S. Treasury data compiled by Bloomberg.
Silver increased 3.5 percent this year to reach $20.1608 an ounce by 3:35 p.m. Singapore time today as gold climbed 9.8 percent to $1,323.83 ounce, taking the ratio to 65.7, about the highest since August.
Malca-AmitMalca-Amit Global Ltd., a Hong Kong-based company handling logistics in diamonds and precious metals, started a 200-ton silver vault in Singapore in July. The storage is full, said Joshua Rotbart, precious-metals general manager at the firm.
American Precious Metals Exchange Inc., one of the dealers authorized globally to buy directly from the U.S. Mint, saw record sales of silver in 2013 and is on the same pace this year, said Michael Haynes, chief executive officer of the Oklahoma City-based company.
“People feel good that they can buy 20-30 ounces of silver with much less money than they would have spent on one ounce of gold,” said Haynes. “Physical silver is in very high demand.” Sales of silver American Eagles rose to a record 42.675 million ounces in 2013, U.S. Mint data show.
Prices are rising even as the market is in surplus. Supply including from mines, official sales and scrap will exceed demand by 6,482 tons in 2014, at least the sixth consecutive year of glut, Barclays Plc estimates. Prices will average $19 this year, 20 percent less than a year earlier, it said.
Gregersen’s new facility, known as The Safe House west of Changi Airport, now keeps 37 tons of silver mostly for clients in a vault behind a 2.5 ton stainless steel door with separate storage for 25 tons of gold, he said. The company may expand services to financial institutions, he said.
Source: Bloomberg BusinessWeek
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