Welcome to illuminati silver, we tell you the truth about silver.
Today is Friday 4th May and we are discussing the Thomson Reuters World Silver Survey 2018
published last month.
Just as a brief background, the World Silver Survey has been published annually by the
Silver Institute since 1990.
The survey is sponsored by a number of silver and precious metal mining companies such as
Fresnillo Plc, Pan American Silver, Wheaton Precious Metals, Barrick Gold Corporation
and many other well-known brands in this area.
It is seen as one of the more authoritative sources of what is actually going on in the
world of silver demand and supply.
In summary; last year saw the 5th recorded silver market deficit in a row.
A deficit of some 26 million ounces was recorded with mine supply falling by 4%.
To put this mine supply fall in context though, it follows 13 consecutive years of annual
increases – up to 2016.
Physical demand contracted by 2% in 2017 due to a fall of some 27% in coin and bar demand
– falling from 207.8 million ounces to 151.1 million ounces.
This is now the second consecutive annual decline in coin and bar demand falling from
292.1 million ounces in 2015 to 151.1 million ounces in 2017.
Now this may surprise many listeners who hear the gurus constantly claiming that physical
silver demand is rising and off the charts, with record sales in silver eagles etc etc.
this simply is not the case and perhaps to use a now well-known expression – they are
peddling FAKE NEWS.
Many reasons have been given for this fall in demand including increased revenues moving
into equities and a transfer to bitcoin and other cryptocurrencies.
Also, to some extent the fear that higher interest rates may also reflect badly on both
gold and silver prices.
On a positive note, jewellery demand rose by 2%, silverware by 12% and industrial fabrication
by 4%.
In fact, the interesting factor here is the ever-increasing use of silver for industrial
purposes.
In 2017 demand for Industrial fabrication represented some 70% of mine supply and 60%
of total silver supply.
This compares with 2016 of 65% and 56% respectively.
One of the main reasons for this is that photovoltaic demand rose by 19% driven particularly by
solar panel usage, mainly by Chinese households.
So Mine supply is down 4%, with total supply down 3.7%, coin and bar demand is down 27%
with total physical demand down by 2.3% resulting in a physical deficit of 26 million ounces,
and once factoring in ETP and Exchange Inventory build, a total deficit of 35.2 million ounces.
The average price of silver fell from $17.14 in 2016 to $17.05 in 2017.
So what are we to make of these figures and what do they tell us about the future?
Well first of all, we should not be surprised to have seen little change in the average
silver price.
Now for years people have been screaming manipulation, and whilst we have some sympathy here, basic
economics tells us that if supply = demand then price is likely to remains constant.
A deficit of 35.2 million ounces is tiny, if one considers that even the most conservative
assessor values above ground stocks of silver with almost immediate access at around 1 billion
ounces, with a fair number quoting closer to 2 billion ounces.
So, a continuous 35 million oz deficit can be arguably catered for over the next 30 years
before supply becomes imperilled.
Now we are not advocating that because of course any continuous deficit will of course
cause prices to gradually increase but with Industrial usage now accounting for 60% of
total supply and frankly little on the immediate horizon for this to increase significantly
further (unless of course you believe that the world economies are going to grow well
above its current 2% -3%) then the only factor likely to affect supply in any great numbers
is a rise in demand for investment purposes, and we have seen these figures actually falling
recently.
Now what we are revealing is nothing revolutionary and the ‘pumpers’ who buy and sell precious
metals know this.
Therefore, they are constantly pushing the doomsday scenario of imminent economic collapse
as a reason to purchase silver, as frankly without such an event occurring silver prices
are likely to remain range bound for a number of years.
Yes, prices may creep up slowly but only the long-term investor or accumulator is going
to place their hard earned dollars, pounds and euros into silver if they believe that
it will hold value and provide a positive return in years to come.
Those who are relying on economic collapse in the very near future may be disappointed
as the pumpers have been pushing this message since 2010 and we have all seen what has happened
to precious metal prices since then.
Before we finish this video, its worth briefly mentioning the gold to silver ratio.
Since 2010 it has increased steadily.
Even in 2016 when it retreated slightly mid-year to 71.4:1 it still averaged 73.4:1 for the
full year.
The average for 2017 was 73.9:1 with the end of 2017 standing at 77:1.
Today it stands at 79.78:1 and has exceeded 80:1 a number of times already this year.
Now the Silver Institute actually suggests in its commentary that perhaps an economic
crisis may be on the cards or is looming, but seems to suggest that based on historical
behaviour, gold would be the first to rise in such a situation, as people hedge their
investments towards gold first and we quite frankly would tend to agree with them.
That said, on an historical basis silver represents excellent value for money especially when
compared to gold.
However in the event of a crisis gold is likely to be the initial beneficiary and silver following
thereafter.
Our take on this situation is simple, long term silver is very attractive.
Short term it has many obstacles to overcome but we should see slightly appreciating prices.
Only a major political or economic storm, or a war, or our proverbial black swan event
have to occur before we may see silver back to its historical highs of $50 an ounce.
In the meantime, for physical collectors, look upon your hobby and collection as a 10
– 20 year investment programme and only save in the knowledge that you are not likely
to need those funds in the very near future.
That’s our take on the situation and since we started our channel we have not been far
out with our predictions so far.
A few percentage points out yes – but since the beginning have stated that the worlds
banks and governments will stave off a global financial meltdown for many years to come.
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Disclaimer: Illuminati Silver owners come from a background
of Banking, International Wealth Management and Economics.
Having now retired from these worlds we are not qualified to give investment advice.
Therefore, this and other productions must not be deemed to be giving such advice and
merely represent the personal views of its owners.