More and more silver from Swiss vaults to the US

By: Frank Knopers

Since the beginning of the corona crisis, the demand for physical silver has increased sharply, especially in the United States. Figures from Swiss customs show that the country has now become by far the most important market for silver. This is despite the fact that the US hardly imported any silver from Switzerland until 2019. A lot of physical silver also ends up in the United States through other channels, for example via Turkey and Australia. That's what it writes Silver Institute This week in a new update on the silver market.

Corona crisis

Switzerland played an important role during the corona crisis by supporting the US market of extra gold to be provided. The country exported hundreds of tons of physical gold to the U.S. in a matter of months to meet the huge demand for investment gold and replenish the Comex's gold reserves. At one point, the price of gold in the US was almost $70 higher than the price of gold in London, making it lucrative to export more gold from Europe to the US.

We have written about these gold shipments before, but the fact that large quantities of silver have also been sent to the United States since then has been underexposed for a long time. The graph below from the Silver Institute shows that Switzerland has mainly exported silver to the United States in the past two years. In just two years, the U.S. became the most important market for silver. Initially, this silver was needed to replenish the stocks of the Comex, but later the demand for investment silver also increased. Think of the Silversqueeze from the beginning of 2021, when investors bought silver on a large scale and all investment silver was sold out for some time. In that year, demand for investment silver in the U.S. rose to 118 million troy ounces, the highest level in six years.

Switzerland is exporting more and more silver to the US (Source: Silver Institute, S&P Global)

Turkey

Not only Switzerland exports more silver to the US, but Turkey and Australia have also been producing much more investment silver for the US market in recent years. The Silver Institute writes that Turkey exported a record 394 tons of silver bars last year, an increase of 160% compared to a year earlier. A large part of this was destined for the American market. Turkey had to import some of that silver from Switzerland, because its domestic silver mine production last year was 170 tons. That was not enough to meet the total demand. Part of Switzerland's silver exports to Turkey is therefore also attributable to increased demand for investment silver in the United States.

More demand for silver

The demand for silver is not only increasing in the United States. The European market is also showing strong growth. Low interest rates, high inflation and geopolitical turmoil are causing investors and savers to seek refuge in precious metals. And while gold is generally more attractive due to the exemption from VAT, investors also often buy Silver Coins under the favourable VAT margin scheme. This is also reflected in the figures, because the export of silver from Switzerland to Austria largely reflects the production of Silver Philharmoniker coins. The Austrian mint produces these coins in large numbers to meet the demand for physical silver. Last year, the mint saw its production increase by 71% to 12 million troy ounces. That was the highest level in eight years.

In Germany, demand for silver rose 6% last year to a record 45.4 million troy ounces. This figure also confirms the trend that more and more savers and investors are seeking refuge in precious metals. Not only gold, but also silver. The chart below shows that the demand for investment silver is picking up in both Europe and the US.

Demand for investment silver is on the rise again, both in the US and Europe (Source: Silver Institute, S&P Global)

This contribution comes from Geotrendlines