Welcome to illuminati silver, we tell you the truth about silver.
Today is Sunday 8th May 2016 and we are reporting on the World Silver Survey 2016 produced for
the Silver Institute by the GFMS Team at Thomson Reuters.
The Key facts are as follows: • Mine production increased by 2% or 18
million oz. to 886.7 m oz.
• Scrap supply fell 22 million oz.
• Industrial Fabrication demand fell 4% or 22.5 million oz. to 588.7 m oz.
• Over all physical demand rose by 39 million oz. or by 3% to 1,170.5 million oz.
• Demand for coins and bars rose by 24% to a total of 292.3 million oz.
– mainly due to heavy buying from North America and India.
• Jewellery demand rose to a record high of 226.5 million oz.
up 2.5 million oz.
on 2014 • There was an annual physical deficit of
129.8 million oz.
compared with a deficit of 78.6 million oz.
the year before and is the 3rd consecutive year of deficits.
• Silver prices averaged $15.68 in 2015 down 17.8% compared to 2014.
So what do these figures tell us: Well firstly, we are not running out of silver,
and all of these silver mines which the scare mongers said were closing and that silver
would become scarce as supply would slump, has proven to be rubbish.
Mine supply actually rose yet again for the 13th consecutive year albeit at only 2% compared
with an average 4% in previous years.
Secondly, as we predicted last year, Industrial demand has fallen – in fact instead of it
representing 54% of total demand, it now represents just 50%.
Thirdly, investor demand has increased and silver bars and coin demand now represents
a total of 25% of supply, it is important to note though that most of this demand came
from India and North America.
Interestingly the weak scrap supply which fell by 13% and represents a decline of 22
million ounces, which is approximately 43% of the increase in the overall physical deficit
increase – has been blamed on low silver prices.
With prices now rising, this may indeed change for 2016
So what do we make of all this?
Well without doubt silver demand by investors has increased.
Last year the Industrial demand fall helped to minimise price increases, and the fear
of interest rate rises certainly kept silver prices down.
We believing that the FED were hawkish and would adopt a typically monetarist approach
to the economy expected the rate rise in December, though we felt it should have risen earlier.
We also expected 2 rises in 2016, though the dovish comments from Yellen may suggest that
once again only 1 rise may be likely and certainly not the 4 they originally proposed.
From a fundamental point of view, with silver running at a deficit supply of 129.8 million
ounces with average prices standing at $15.68, we can see no reason why supply could not
increase again should prices remain close to their current $17.50 - $18 level as many
of the major companies have all in sustaining costs below these levels.
Naturally a different picture may ensue should prices fall back again.
Which now brings us on to our view of how we see prices moving for the rest of this
year.
If this was a non-election year, we would, quite frankly, expect prices to move down
quite considerably in the latter half, as it did in previous years.
However, the US Government wishes to stabilise markets before its Presidential election in
November and frankly will provide dovish statements to ensure this is achieved.
They are content for the dollar to fall a little but not too much, so a dollar index
moving between 90 – 97 is acceptable to the FED.
This will prove bullish for both gold and silver, especially if the majority of that
time it moves between 90 -94 as we suspect it will.
We have seen, in the early part of 2016 quite considerable buying of silver by China, and
this can point to two possibilities – either they anticipate increasing growth in their
economy beyond the sub 7% GDP predicted, or as we suspect, they believe their currency
may indeed fall further thereby stockpiling their needs now in anticipation of that fall,
as prices will then become more expensive.
We will of course monitor such purchases very closely over the coming months and assess
the trend.
We see for 2016 no fundamental demand reason for higher prices much beyond the $15 - $16
level, however we fully accept that worldwide negative interest rates, the uncertainty over
the US Presidential election, the maintenance of a low US interest rate policy will edge
both investors and speculators into gold and silver thereby maintaining a relatively high
support level.
How high can prices go is anyone’s guess, as much of its movement will now be based
on fear and currency jitters.
We believe that $20 silver is unlikely, but possible and if it is reached, it will be
momentary and it will eventually fall back to the $15-$16 range.
$1350 gold again is possible with a $1400 ceiling, though again we envisage prices moving
back towards the $1150 - $1250 level.
We are now more neutral between gold and silver especially as silver has now caused the GSR
or gold to silver ratio to fall to levels around 73:1
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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.