GLOBAL SILVER DEMAND GROWTH: Coin & Bar Take First Place By Wide Margin

When it comes to global silver demand growth over the past decade, the coin and bar investment category is the big winner.  Unfortunately, the media tends to focus on growth of industrial silver consumption, while investment demand continues to take a back seat.

For example, the Silver Institute hired CRU Consulting to put a report together on the growth of industrial silver demand until 2018.  In the December 2014 Industrial Silver Report, CRU believes global industrial silver demand will increase 27% (from 2013), an additional 142 million ounces (Moz) by 2018.

They show industrial silver consumption (not including photography) increasing in 2014.  However, Thomson Reuters GFMS stated in their November 2014 Silver Interim Report that Industrial silver demand is forecasted to decline from 537.7 Moz in 2013, to 529,7 Moz in 2014.

I do not believe the world will increase its industrial silver consumption 142 Moz by 2018.  We may see a small increase, and possibly a decline if the world peaks in global oil production in the next few years.

Now, if we look at global silver demand figures over the past decade, we can clearly see where the REAL GROWTH has taken place.  In 2004, silver consumption by industrial applications (including photography) was 609 Moz, while coin and bar investment was only 53 Moz.

Global Silver Consumption 2004 & 2013

But, just ten years later, silver consumption by industrial applications declined to 588 Moz, while coin and bar investment demand skyrocketed to 242 Moz.  While it’s true that industrial silver consumption declined mainly due to a drop in photography usage, the big winner is still silver bar and coin demand.

If I was to remove photographic silver consumption from industrial applications compared to coin and bar demand, this would be the result:

Global Silver Demand excluding photography consumption

2004 Industrial Applications = 467.5 Moz

2013 Industrial Applications = 537.7 Moz (15% growth)

2004 Coin & Bar Demand = 53 Moz

2013 Coin & Bar Demand = 242 Moz (357% growth)

Furthermore, even though silver jewelry demand increased from 187 Moz in 2004 to 198 Moz in 2013, coin and bar investment at 242 Moz is now greater than global jewelry demand.

I did not use the GFMS forecasted coin and bar silver investment figure for 2014 of 192 Moz, due to the fact that Official Coin and Indian silver investment demand picked up considerably in October and November… and probably including December.  I don’t believe their November 2014 Silver Interim Report included this increased demand.

I would imagine, 2014 global silver coin and bar demand may actually be closer to 230-240 Moz, than the 192 Moz figure GFMS forecasted in the preliminary report.

Regardless, the huge increase in silver coin and bar investment demand over the past decade took place by less than 5% of the population… probably more like 2%.  What would happen to global silver coin and bar investment demand if only say 10-15% of the population became interested??

I believe silver will turn out to be one of the best physical assets to own in the future… especially when 95-98% of the world still has no idea of its excellent STORE OF VALUE properties.

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31 Comments on "GLOBAL SILVER DEMAND GROWTH: Coin & Bar Take First Place By Wide Margin"

  1. Could you possibly keep this a secret just a little longer, my stack is not yet quiet as big as it should be?

  2. Those who are patient and keep accumulating will be well rewarded in couples of years

  3. And those who don’t start soon could be in for a world of hurt.

  4. I have stack envy.

  5. What is a realistic amount of silver to stack.

    • I can’t see any limits on what someone should save in silver, unless the accumulation gets so bulky [because they have massive amounts of fiat currency to buy with] there are storage issues.

      It should be in a fireproof safe or buried.

    • lastmanstanding | January 3, 2015 at 4:55 pm |

      A realistic amount depends on how much money you make Ned.

      If you have your preps in place, a simple goal of 1 oz. a day is 365 in one year. Less than a $20 bill a day. Traditional wages for thousands of years was 1/10th oz. per day for 12 hours of hard physical labor. Even a silver dime each day is going to benefit you.

      If I was you and wanted to build a stack, I WOULD GET MY ASS MOVING BROTHER!!!

      Frankly, I believe that by the end of 2015, you won’t be able to buy it at “realistic” price.

      Everyone has been overwhelmed with the fact that it is necessary to have mountains of paper dollars. For now it works…and then it doesn’t. A cycle that has come and gone many times before.

      Choose wisely…think about how the earth works and you will be fine. She always wins.

    • Not based how much money you make. Base it on what your out of pocket expenses are. Exclude expenses that can be easily eliminated like drinking, gambling, cable TV, etc. I keep 10 years equivalent expense – 90% in gold coin, 10% silver coin. I like gold better because silver is very bulky and more difficult to to hide and history has shown gold is always preferred as real money. Silver is the poor man’s gold, but in a crisis most will be poor so you need some lower denomination money so to speak. As far as 10 years, if things are so bad for that long, you’ll probably be killed over a loaf of bread before the metals run out.

  6. The signs are out there! If you want a serious quantity of silver Maples or Eagles or the best selling silver round, you will have to wait till the end of January to receive them. Stack them while you can, because at $50-100 per oz, it will take longer to reach your goal or if you can!!

  7. A realistic amount depends on your goals. For me, 10,000 oz or somebody else, maybe 2,000.

  8. Right on Steve! China is opening its doors and so is India. If we get a few more % of
    the USA to invest a portion of their savings into silver, demand surely will out pace
    supply very quickly. The above ground stockpile must be close to being depleted. The
    Silver Institute shows a deficit of supply these past 10 years. The investors are coming
    around as shown in 2014 coin purchases in the USA Eagles, Canada Maples and the
    Philharmonics of Australia. You have the right concept for rising prices. I noted that
    US Eagles have a 22% premium on average. It seems the spot price only affects the
    paper market. The physical market indicates a different value for silver.

    • Be careful of connecting your “premium” to demand. Coins have a fixed cost associated with production and distribution plus wholesaler and retail dealer mark-up. As the price of silver goes down, the premium goes up on a percentage basis. Silver at $5/oz would produce coin premiums 50+%. That’s simple math, not supply and demand.

  9. Get some,while the gettin is good, and you still can.

  10. Mexico supplies a large percentage of the global silver supply. So what happens in a financial crisis if Mexico or another major supplier stops exports ? I don’t see a situation like that written much about.

    • If Mexico did that the U.S. would invent a reason to use the military or “sanctions” to force them to sell. The U.S. has a long history of strong arming, hegemony, or whatever one wants to call it.

  11. I’m thinking maybe a good amount of silver and gold should cover 1to 2 times your gross annual salary

  12. Chris at *don’ttreadonme* spoke about 1000 ozs being a good cushion to aim for.We will now sing hymn number 47,”Thy lining shall be silver,thine heart shall be told”.

  13. The numbers for 2014 should be interesting. Not only have we had increases over 2013 in coin demand (which would have been much higher if supplies had been available) we have also had a further increase in Indian demand which from memory has risen from 5.5KT to 7.4KT which must be mostly investment demand.

    Steve’s current estimate for 2014 seems too low to me. I am pencilling in 270Moz to 280Moz as my estimate. If they were to be as low as 240Moz then other parts of the world must have seen sharp drops in investment demand. OK they may exist but I have not heard of them.

    How about a virtual competition? One virtual ASE for the closest guess to the correct 2014 investment demand (as decided by Steve in due course).

    My guess? 272.34 Moz.

    The competition is now open!

  14. One thing to keep in mind regarding photography demand. While use of silver in the photography industry has dropped significantly, so too has the amount of silver recycled from photography. The important number is the NET silver used in photography, not the demand. With less silver used in the process, less silver is reclaimed as scrap.

  15. Concerning the size of a stack don’t let all the talk of silver for thousands of dollars cloud the issue.
    If silver goes to $1,000 per ounce, it is quiet possible the avg. cost of living will increase 50 times over as well.
    I would suggest something like at least 6 months of living expenses at today’s costs in PMs at their present cost.
    In other words if one spends $5,000 a month today on living costs, then one should have at least $30,000 in PMs at today’s prices.

    • You will allow yourself to be in a situation where you blow through your silver stack in just six months? 🙂 Think of metals more like a retirement plan.

      • I’m talking minimum “survival” in a major crash when living standards will need be lowered.
        Think of metals as a store of value, they pay no interest.

        If today an oz of silver will buy 20 rolls of toilet paper, when an oz of silver is $1,000, quiet possibly it will only buy 20 rolls of toilet paper.

        If you want a real inflationary proof “investment” buy raw farmland and go to work making that land produce.

        • lastmanstanding | January 3, 2015 at 5:11 pm |

          Having shelter, land, water to grow your own food is far more important than having a stack.

      • lastmanstanding | January 3, 2015 at 5:08 pm |

        Retirement…If this paradigm continues, in 10 years there will be no such thing for most. A better plan might be to start a business that you can work until the day you die.

        Taking matters into your own hands and having a back up plan or 2 will be far smarter.

        A stack can then take the pressure off having to work so hard at an older age. Those that I know who are vibrant, healthy and “older” have something to do. Every damn day.

  16. Steve,

    Have you done an analysis of a silver price today that might compare to the 2008/2009 low? This could get fairly complex and messy, but my guess is that you arrive at $12 to $14. I just do not see silver going lower than that in the post Lehman era. Too many people have woken up since then. That was certainly when my own wake up call arrived.

  17. The problem with silver is that is nearly all the world, there is VAT on it whether it is coins or bars, especially with the new ones and none with gold.

    However the results are still quite impressing for silver and we could hope even more for example if china would remover VAT on silver ingots.

    • The VAT you guys have on silver is a mystery. Capital controls, like a VAT on precious metals, causes capital flight. It has worked quite well, unfortunately, and driven silver out of that part of the world. It ultimately makes the country poorer. Anyone under a VAT will be buying and storing their silver overseas.

      In societies where it is easy to own property and trade the capital flows to those areas and business booms.

      • Same of course with taxes, lease rates, etc.

        My son live in Austin, Texas. Many individuals and businesses are moving there from California where almost everything costs more. And in Texas there is no individual state income tax. Same with Florida.

        Business and money goes where it is treated well. When it stops being treated well, or is treated as a cash cow to support an increasing welfare state [e.g. California], it goes elsewhere or hides.

      • Nobody will buy silver overseas for small amounts like 1000’s or 10000’s dollars.

        The only solution is ETFs…

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