Welcome to illuminati silver we tell you the truth about silver.
Today is Friday 18th November 2016 and we are briefly covering the issue that silver
demand in 2016 is likely to exceed supply.
Two days ago, Thomson Reuters GFMS published its Interim Silver Market Review for the Silver
Institute.
In summary it concludes: • The silver market is expected to be in
an annual physical deficit of 52.2 Moz in 2016, marking the fourth consecutive year
in which the market has realized an annual physical shortfall.
• Silver prices this year through 11th November averaged $17.23/oz, which was 9.9% higher
than in the same period in 2015 and forecasts silver prices are likely to average $17.15/oz
for the full calendar year, a 9.4% increase over the 2015 average.
This means they expect silver prices to fall a little further between now and the end of
the year.
• Total silver supply is forecast to fall 3% to 1,012.4 Moz in 2016.
The decline is expected to be driven by a 1% drop in mine production, a 0.3% fall in
scrap supply and net de-hedging of 20.0 Moz.
Mine production is forecast to reach 887.4 Moz this year, which is almost 6 Moz lower
than 2015 but is still the second highest year of production on record.
• Silver bullion coin and bar sales are expected to contract 24% to 222.0 Moz this
year, its lowest level since 2012.
Bullion silver coins are forecast to reach 122.7 Moz, which is 7.9% below last year’s
record of 133.2 Moz • Physical bar demand is expected to contract
by 38% this year to 99.3 Moz.
driven by a lacklustre Chinese economy and weak consumer sentiment in North America.
Demand in Europe, on the other hand, should improve by 14% reaching 14.5 Moz this year
on the back of Brexit fears and a rising silver price.
• Physical bar and coin demand should account for 21% of physical demand in 2016, down from
25% in 2015 • Total industrial demand for silver is
forecast to decline by 1% to 585.1 Moz, accounting for 55% of physical demand.
• Jewellery fabrication is forecast to drop 8% to 208.5 Moz.
A decline in discretionary spending, thrifting, lower economic growth and a higher silver
price have all contributed to the overall decline.
Senior GFMS analyst Johann Wiebe, presenting the new report at Wednesday night's Silver
Institute dinner in New York.
He said: "While such deficits do not necessarily influence
prices in the near term…. multiple years of annual deficits can begin to apply upward
pressure to prices in subsequent periods."
We tend to agree.
Even though the gold and silver pumpers would have you believe there is no silver left,
above ground stocks, including ETP’s and exchange inventories, are estimated to reach
2,640.1 Moz in 2016; a 15% increase from the previous year - more than enough to make up
any shortfall.
Having said that of course a continuation in deficits will erode this buffer and can
only truly be offset by additional mine supply enabled via higher prices.
What this report reveals to us, quite frankly is that despite there being an overall physical
supply/demand deficit of some 52 million oz, actual physical demand fell in 2016 unless
something dramatic happens within the next 7 weeks.
So when you hear the pumpers shout silver coins and bars are in record demand – well
not according to these figures.
When they say the supply deficit will cause silver prices to rise to the moon – well
not with a deficit of just 52 million oz it won’t.
In fairness though there is an expected 71.4 Moz net inflow into ETP holdings (which are
securities, which trade on stock exchanges and are backed by physical metal, making it
easier to invest with confidence.) and a 61.9 Moz derivatives exchange inventory build which
together have increased the impact of the physical deficit, bringing the net balance
to -185.5 Moz, equivalent to approximately nine weeks of global demand.
Whilst these figures suggest to us that the silver market over the long term of some 10
– 30 years is likely to produce significant gains for those who are clever or wise enough
to save and store it away now, it will take either; a black swan event or paper investor
speculation or a currency crash to occur in order to provide those fantastic gains the
pumpers dream of before that long term haven is reached.
In other words, if you buy silver do so for the long term in mind or to act as a currency
or portfolio hedge, do not do so in the belief that you are going to become rich over night;
and should such an event occur in the interim we simply quote that well renown 1970’s
TV series starring the Fonz – Happy Days.
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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.