Forbes has estimated that President Ramophosa’s wealth is almost R7 billion. This means that he could purchase South Africa’s yearly silver production seven times over, or buy every ounce of silver mined over the next seven years.
This demonstrates, first of all, how ludicrously rich the president is and how little silver South Africa produces each year. Whichever way we look at this, it seems that even if investing in silver becomes more mainstream in South Africa, the availability of locally mined silver for investment purposes will be relatively low. Given how little silver South Africa produces, my clients have become very aware of the importance of owning silver, in particular. It seems to be a prudent investment strategy within the context of scarcity.
It may come as a surprise that South Africa silver bullion Krugerrand (which was launched in 2018) is not minted locally. But in light of the scarcity of silver, this should be obvious. My conservative estimate is that the number of silver Kruggerands sold year to year in 2018 and 2019 totalled around 5 to 10 million ounces.
The yearly amount of silver mined in South Africa lies at around 2 million ounces. This is yearly not enough to meet the global demand for our bullion coin. Moreover, I suspect that about 2% (at most) of the world’s demand for silver Krugerrands is local. It makes no financial sense to import the silver required to mint the volumes needed in international markets, and then export 98% of the minted coins. Rather, it makes more sense to buy the necessary silver volumes from the manufacturing nation, outsource the minting, and import the required volume into the local market.
Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
