While precious metals investors are concerned about the short-term price movements in silver, the real focus should be on this amazing silver market trend. When the silver market data finally came out in the new 2016 World Silver Survey (released May 5th), it really surprised me. And, it takes a lot to surprise me.
Not only did physical Silver Bar and Coin demand hit a new record in 2015, it did so in a huge way. Physical Silver Bar and Coin demand jumped 24% in 2015 versus the prior year reaching a record 292.3 million oz (Moz). Part of the reason for the higher record was the addition of “Private Bars & Rounds” to the statistics.
I had mentioned in prior articles that I had an email exchange with the GFMS Team at Thomson Reuters about the Private Bars & Rounds figure. The GFMS Team stated that they were working on including this amount, but I thought it would be in the next few years. However, they updated all their past Silver Bar & Coin demand to include Private Bars & Rounds in the 2016 World Silver Survey.
For example, the GFMS Team revised North American Silver Bar demand in 2014 from 10.8 Moz to 42.2 Moz, due the addition of private bars & rounds. The revision was even higher in 2015 as Official Silver coin sales were in severe shortage from July to October. When the GFMS Team first put out their 2015 Silver Interim Report in November 2015, they had estimated total Silver Bar and Coin demand to be 206 Moz:
Thus, the GFMS Team revised Silver Bar and Coin demand for 2015 by an additional whopping 86 Moz. Of course, not all of the revision was due to private silver bars and rounds, but I would imagine at least half of it was.
If you would like to get your copy of the 2016 World Silver Survey, you can but it isn’t cheap. Just click on the link and you can order a copy for yourself. While I realize all the data in this report may not be accurate or some might say, “manipulated”, I think it’s the best source in the market. I highly recommend it over Jeff Christian’s CPM Group 2016 Silver Yearbook.
So, why is this increase of Silver Bar and Coin demand so interesting?? Let’s look at the following chart:
Here we can see that the other three segments of the silver market either grew only slightly or declined in the industrial sector. While Silver Bar and Coin demand surged by 24% in 2015, Silverware placed a distant second by increasing only 4%, Jewelry came in third at 1% and total industrial demand fell 4%.
These next three charts show the actual change in Silverware, Jewelry and Industrial demand:
As I have stated over and over again, I see a continued decline of industrial silver demand in the future. Even though Solar PV silver demand increased in 2015, overall industrial demand will continue to decline going forward. This is the reason analysts need to focus on Silver Bar and Coin demand rather than industrial demand for forecasting price in the future.
Now, why should investors focus more on the fundamental trend shown in the chart below than short-term silver price movements? Because the trend will only get stronger as the financial system becomes weaker.
This is the amazing trend I was referring to in the title of the article. Prior to the first collapse of the U.S. Housing and Financial System in 2008, Silver Bar and Coin demand was only 8% of global industrial consumption…. ONLY 8%!! As we can see from the chart, it has been trending higher and hit a record 50% in 2015. Investors consumed half of total world industrial silver consumption in 2015 in physical bar and coin. This is astonishing to say the least.
Okay… I can just hear it. Some readers are probably saying, “So, what. The price of silver is still in the toilet.” While this is true, humans have a long lifespan. Thus, many Americans have been investing in their paper retirement plans for 3-4 decades. Those who have retired now are lucky enough to get some benefit. However, this will not be the case for the majority going forward.
THIS IS THE REASON WE ACQUIRE SILVER BAR AND COIN!!
Forget about the short-term price movements. Instead focus on the continued disintegration of the U.S. and global financial system and economies. Also, keep an eye on the silver market fundamentals as shown in the chart above.
I will be putting out several articles about the data from the 2016 World Silver Survey over the next two weeks. I will also be publishing some EYE-OPENING information on the Energy Market that I recommend you reading. Those who fail to educate themselves on the energy situation are making a BIG MISTAKE.
The Death of WALL STREET is coming and the overwhelming reason is the decline of U.S. oil production and Falling EROI – Energy Returned On Invested.
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