The past three years we have seen the price of silver get beat down to new lows. We have also witnessed demand for physical silver continually escalate. During this three year run the U.S. Mint has stopped sales of American Silver Eagles, the most popular silver coin in the world, on three different occasions. The last time sales were shut down, in June 2015 and the U.S. Mint has rationed sales since production resumed in July 2015. As of this writing that would be ten months of rationed sales with no end in sight.

Louis Cammarasno, Smaulgld, and I picked up our bi-monthly silver update to review the latest numbers from both the Perth Mint and U.S. Mint. The interesting part is the Perth Mint. This time last year the Perth Mint was still a very small player and only producing approximately 500,000 silver coins, in total, per month. Since September 2015 that all changed. The Perth Mint is now averaging approximately 1.3 million silver coins per month. They are now a player in the silver market and must be taken into account when reviewing monthly physical silver coin sales. 1.3 million coins per equals 15.6 million coins annually. While that is still a small amount in comparison to the Royal Canadian Mint and U.S. Mint it represents a massive increase in the volume of silver coming to market. Which brings me back to my favorite question for the past three years – where is the silver coming from?

Louis and I take this into consideration when we begin discussing the theory of a sea-change by a small number of investors and investment dollars. Using the labor force, as generated by the U.S. Bureau of Labor of Statistics, Louis arrived 160 million people currently in the labor force as of March 2016. Using 1% of the labor work force would equal 1.6 million people. Is it realistic to believe there are 1.6 million people in the U.S. who either acquire silver on an ongoing basis or who have acquired a small amount of physical silver in recent years? It seems to be a number within the realm of reality to me.

1.6 million is the base number of investors. The current investment dollars this group represents is not important to this exercise. What is important is a small change in their current habits. That change seems to be taking place as The Doc, SDBullion, has confirmed on two different occasions. That change seems to be confirmed as the U.S. Mint has not changed their current sales policy from rationing sales of 200,000 coins per day – 1 million coins per week, which are sold out everyday.

This is what it would look like for a very small change in the 1.6 million investors – using $18 per American Silver Eagle as a baseline.

Chart by Smaulgld

The numbers in the chart above would be in addition to the current sales of physical silver we are already experiencing. Can you imagine the impact this small change would have on the silver market? Even if you distribute the numbers across the “big three” – U.S. Mint, Royal Canadian Mint and now Perth Mint – you still have an enormous amount of strain added to a very strained market to begin with. Where would it come it from? The pie is only so big and we are all demanding a larger slice every day. Each additional “bite” from the pie pushes the market closer to the edge. How many bites are left in the pie? Got physical?