Silver: Little Brother, Big Potential

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As readers may already know, the US Mint suspended the sale of its 2013 Silver Eagles after selling out of the 2012 vintage a few months ago. Some are attributing the early 2013 surge to the suspension and the resulting pent-up demand. However, the real question remains: How did the US Mint run out of silver coins? With 2011 being the best year for the Mint in history, why was it unable to plan for the appropriate volume in the following year?
Some are claiming that there is a shortage in silver, and that the Mint was unable to acquire enough raw silver to service all the demand. Speculations aside, the suspension highlights a potentially alarming scenario: What if the suspension had been for longer than only a few weeks? With 2013's hot start, can we count on the Mint to produce enough coins to satisfy the growing demand?
Keep that in the back of your mind for now and consider another point. CPM Group's reported total mine production in 2011 was about 775 million ounces. The report for total demand, including both coins and industrial applications, was 950 million ounces. Luckily, secondary supply (or scrap) provided 282 million ounces in the same year. However, as demand for coins increases, more and more silver will go into the storage vaults of investors and out of the hands of industry. Thus, the market could become more dependent on the scrap supply for its industrial needs, as more and more mine production goes toward minting coins. As the inevitable tug of war ensues between the industrial and investment markets, can we expect supply to be readily available for all of our investment needs? It's tough to say.
The shortage at the US Mint may have only been a short-term blip on the radar. However, it gave us a small taste of what may lie in our future if silver demand begins to take off. The question you will need to answer for yourself is: Was the suspension a one-time planning hiccup or the result of a real shortage?

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Putting It All Together
Silver's potential for upside is huge, and the metal is only getting scarcer as coin demand increases worldwide. As living standards rise in the developing world, the industrial demand for silver will rise to meet the needs of the people. Currency debasement is showing no signs of slowing, and this only serves to fuel silver's upward trajectory. These factors have provided an interesting potential win-win situation for silver investors. If fiat currencies collapse, silver - - " along with gold - - " will serve as a secure way to preserve wealth. If the economy picks up, industrial demand for silver will increase, pushing prices higher. Either way, silver is going higher. We can't think of a better way to preserve your savings.