Global Silver Investment Demand Maybe Down, But Still Double Pre-2008 Market Crash Level

While physical silver investment demand experienced a pronounced decline this year, the volume is still much larger than the level prior to the 2008 U.S. Housing and Banking Crash.  Investors frustrated by a silver market plagued with lousy sentiment and weak demand, may not realize that silver bar and coin demand is projected to be double what it was in 2007.

Thus, long-term precious metals investors continue to acquire silver on price dips while others may be selling out and placing their bets into the bubble stock market or cryptocurrencies.  It’s not the larger precious metals investor who is worried about the short-term price, rather its the smaller investor.

Regardless, according to the Silver Institute’s 2017 Interim Report, global silver bar and coin demand are projected to fall to 130 million oz (Moz) in 2017 compared to 206 Moz last year.  Even though physical silver investment demand will drop by 37% this year, it will still be more than double the 62 Moz in 2007:

Furthermore, silver bar and coin demand in 2012 was only 29 Moz higher than the estimate for this year, but the price was nearly double at $30 an ounce.  As we can see, precious metals investors continued to purchase record amounts of silver bar and coins in 2013, 2014 and 2015 with the hope that prices would eventually start to head higher.  However, the majority of the market’s funds since 2012 flowed into STOCKS, BONDS, and REAL ESTATE.

Then after the election of President Trump to the Whitehouse, along with falling precious metals sentiment, investors pulled back on gold and silver investment purchases.  From what I have heard through the grapevine, precious metals dealer sales this year are down about 40% across the board.  And of course, the massive price increase in Bitcoin and the cryptocurrencies starting in March of this year funneled money away from the metals.

With the new rush of investors into the Bitcoin market mania, several alternative media analysts have given up on precious metals and are now touting cryptocurrencies as the best place to be.  In fact, some have stated that gold is no longer useful as a monetary instrument because cryptos will take over this role.  Unfortunately, these analysts, just like our mainstream media counterparts, have simply forgotten about the terrible ENERGY PREDICAMENT we are facing.  It’s almost as if the lure of $100,000 Bitcoin has totally destroyed their ability to understand that fundamentals still matter…. especially the Falling EROI – Energy Returned On Investment.

Yes, it’s nice to have been one of the fortunate individuals who purchased Bitcoin back when it was $100 (or even less).  But, as I stated, the world is still facing a severe energy predicament that Bitcoin or the cryptos can’t solve.  When I listen to interviews where analysts say we are moving into a new high-tech world, I wonder where on earth they think we are going to get the energy to run all this stuff.  Even though I enjoy watching Sci-Fi movies, it’s totally unrealistic to build spaceships that can be a mile long.  The very day after the spaceship is built, all its components and parts start to break down.  The more complex the parts, the faster they breakdown.

People need to realize that technology won’t solve our energy predicament, it only makes it worse.  Thus, the more complex the technology, the more energy it consumes.  So, when someone thinks that, “technology will solve our problems,” then they must also believe in the ENERGY TOOTH FAIRY… a term coined by Louis Arnoux.

I bring up these points because precious metals will still be one the best stores of value in the future as global oil production peaks and declines.  We also must remember, the world runs on liquid fuels, not electricity.  Even though we see more electric vehicles on the road, they can’t be manufactured without the burning of COAL, NATURAL GAS or OIL.  Hence, renewable energy sources such as wind, solar and electric cars are nothing more than fossil fuel derivatives.

Okay, getting back to silver.  The GFMS Team at Thomson Reuters, who provide the data for Silver Institute, forecast that global silver production will decline to 870 Moz in 2017:

As we can see in the chart, world silver mine supply peaked in 2015 at 894 Moz and will decrease by 24 Moz in 2017.  However, I believe actual global silver production will be less when all the data comes in.  Regardless, once the U.S. and worldwide markets finally crack, world silver production will fall even faster.  This will be due to the drop in demand for base metals where 58% of global silver production originates (35% byproduct of zinc-lead production and 23% byproduct of copper production).

One segment of the silver market that experienced an uptick was industrial silver fabrication.  Global industrial silver fabrication is projected to increase by 19 Moz this year to a total of 581 Moz.  However, this increase is still far below the record high of 661 Moz set in 2011:

The majority of the rise in world silver fabrication was due to higher usage in solar PV manufacture and electronics.  Even though the global demand for silver by the solar industry will continue to increase over the next few years, it won’t be the driving force in determining the silver price in the future.  Instead, the collapse in the value of STOCKS, BONDS, and REAL ESTATE, due to the disintegrating oil industry, will be the factor that forces investors to protect their wealth in gold and silver.

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34 Comments on "Global Silver Investment Demand Maybe Down, But Still Double Pre-2008 Market Crash Level"

  1. Michael Kohlhaas | November 17, 2017 at 12:04 pm |

    Investment silver will come back and rip off your faces!!!

  2. Michael Kohlhaas | November 17, 2017 at 12:05 pm |

    With the new rush into the Bitcoin mania market, several analysts have given up on precious metals and are now touting cryptocurrencies as the best place to be.

    Are you talking about that asswipe Andy Hoffman? F#@K you, Hoffman!!!

    • Michael,

      While I enjoy your opinions, let’s try to keep the adjectives USER-FRIENDLY.

      thanks

      • Let´s just call him a shill and a Bankster/Government puppet then because any educated person Knows bitcon is an NSA creation, first step in the development of a world currency for total enslavement of humanity.

      • To me, he’s one of the kindest people i’ve met on the interwebs. 😬

        Crypto’s to absorb excess liquidity, just like gold/silver paper derivatives.

        After the crash, NOTHING will be produced below its cost of production.

      • Michael Kohlhaas | November 17, 2017 at 1:38 pm |

        No Problem! Thanks for editing my comment! 😉

  3. Silver investment is up. Production is down. One of the major banks has supposedly hoarded millions of ounces. So why don’t we see shortages?

    • The reason for the cut backs in production by the primary silver miners is that there is too much above ground supply. Most silver mined is a by-product with mines looking for other base metals. They simply cannot cut back on silver production because they must mine other metals and have been flooding the market with the metal as they cannot get rid of the crap. Many of the large miners do not even state production numbers of silver because 1) it is meaningless to their overall operations and 2) they want to promote the concept of scarcity. If they all stated their numbers the price would drop like a rock. That is why those who promote metals cannot figure out if there are deficits for 10 years why are prices not moving up? The simple fact is there are no deficits and there have never been. This is why mines who are the primary silver mines have been cutting back. Remember these organizations that state production numbers are actually funded by who? The large miners. Talk about a vested interest in understating production!
      Now silver has been one of the largest scams on the net with price forecasts that are simply not based on any economic or financial reality. 70 to 89% of demand is industrial, manufacturing and retail jewelry with all three depending on low prices. The metal has simply moved from a monetary based metal to an industrial based commodity. The monetary demand has become too small to effect price and this demand can now never offset the drop in demand in the above 3 sectors. Anther factor is that since silver is rarely used anymore as part of any monetary system this has effected worldwide demand. Another factor is that when price rises to a certain point copper is used more and silver less also effecting worldwide demand with prices then falling back. It gets worse. The constant flow of new technology has reduced the amount used in products every year. Solar panels 10 years straight. If that is not enough people generally in the west have less disposable income which also effects demand. Of course world trade has also been slowing which also effects demand.
      Chinese gold production fell because the PBOC has not bought any gold for over a year. What have they been buying? Billions in treasuries every month.
      All of the above means price cannot rise significantly and won’t. Sorry stackers, you have been played!

      • jj,

        While you are free to provide all the comments to your heart’s desire on this blog, please understand that if you write something COMPLETELY STUPID, realize that your opinion will not be taken seriously.

        What you wrote in your latest comment is utterly ridiculous, and to be honest, I don’t know how anyone can take anything you say in the future seriously.

        steve

  4. Today I sold my btc position. Never ever! The last weekend showed how unpredictable this market can be.

    Silver and gold cannot go down that much the crypto’s can. I even feel better having stocks that any crypto-tulip.

    Anyone with a few brain cells should get the simple fact; crypto exchanges are already under control of HFT algos. Just take a look at bitfinex and/or any other platform for trading these purely speculative financial instruments.

    One should always follow the simple rule – buy unloved instruments no matter they’re metals, stocks or whatever and then wait. Some diversification is OK, of course.

    • Jan,
      As with all exponential related products and industries you watch the TROUGHS NOT the PEAKS !
      Usually up to 10% of the peak is speculation and will disappear when there is doubt. That is why the PEAKS are deceptive.
      Exponential industries are those that are doubling in a set time frame linked to Moore’s law. Some are doubling every 2 years some every 7 months.
      They are Robotic, 3D Printing, Satellites, Space exploration, cognitive computing (Artificial intelligence), Pervasive Displays, Digital currency (Bitcoin), Cloud Computing, Internet of Things, Augmented Reality, Virtual Reality, Medical Devices/Diagnostics (ISRG), Gene Sequencing, Autonomous Vehicles, Energy storage, Solar power.
      Example of exponential growth is Logarithmic.
      .01 .02 .04 .08 .16 .32 .64 1.28 : 7 iterations to over 100% but it won’t stop there! after 1.28 it goes to 2.56 then 5.12 then 10.24 then 20.48 then 40.96..
      Just to see check videos on Boston Dynamics, Or learn about crispr. As for Computers the technology has changed from Von Newman architecture to the neuromorphic design headed by Nvidia. Computers will shortly use < 10 watts verses 350 watts. Again Watch the rising steps of the troughs NOT the peaks.

      • So far almost everyone made a profit on btc. In business, and speaking generally in nature, it does not work like this. It simply does not make sense that almost everyone is profitable on a certain investment instrument. In nature there is something called equilibrium. I.e. if there is a superb predator, there cannot be predators only and their population depends on prey. Too little prey caused by overpopulation of predators will cause population of predators to decline.

        Someone has to hold the bag, there cannot be predators only! The only question is when will the bubble pop (I don’t know). If people cannot understand this simple fact, then OK. But I will not join the party.

        The things you mentioned, i.e. space, vehicles, solar energy – they have one thing in common, they’re industries and not a specific share, commodity or currency. Speaking of currencies, take a look here: https://bitinfocharts.com/comparison/bitcoin-transactions.html . If btc was widely adopted as we’re told by those who promote it (read those who are on train already), then we’d see exponential growth in that chart. It’s not the case because “investors” simply buy&hold in hope of being profitable on that.

        Almost everyone in crypto’s is buying&holding hoping for “to the moon”. And that’s the real issue.

        • Jan
          Before civilization there was either barter or a registry mental or written showing who owed who.
          A third party is required for longer distances who then received a percentage for the transaction.
          All bitcoin is doing is REMOVING the middle man, the third person. This way there is no loss it’s whole purpose is to be the currency of the Internet, Decentralized, no one controlling it, It is a function of the internet, the encryption protocol.
          It is only designed to move value instantly from one location in the world to another!
          The value of each coin is a consequence of the need to transfer value, that is why the South Koreans have bought so much over the last months as the possibility of evacuation from nuclear war become possible. The confiscation of gold in India forced many to buy bitcoin to purchase gold later. Bitcoin is a function of the internet for value transfer instantly with little to no cost. The more people delay taking their money out the more the price goes up. When China began cracking down on it’s citizens personal bank accounts millions of yuan went into bitcoin awaiting for the passports to clear to go to Canada. Many still have not cleared, their money is still in bitcoin. Which do you prefer to use while traveling or moving great value to another part of the world; Gold? Silver? checking account? credit card? bitcoin?
          So the big question; IS the world getting safer or is it getting more threatening?
          If safer then bitcoin will go down.
          If more threatening then bitcoin will go up.
          Bitcoin is valuable to those who really need it or perceive they will. To others it is only an investment or something to speculate in.

          • I’ll stick with Machiavelli’s “…because that power has been brought about by him either through cunning or by force…”

            If someone is actually assured something in the financial sphere can be left tax-free, anonymous and that central banks are blind not to take a step, then so be it. My opinion is quite simple; The central banks have the power to issue currency and they’re not run by feeble-minded (no matter how they appear) at all.

            There are too many fishy aspects of the entire crypto-mania that I’m glad I took my profit and do no participate any further.

            You asked “…moving great value to another part of the world;…” – this statement is very contradictory when btc is taken into consideration according to the chart that provides information on transactions which I mentioned in my earlier comment. There is no evidence that btc is being adopted much more than ever before, moreover most people never issue bank wires from one continent to another, nor from one country to another and thus have no worries about fees. In Europe SEPA payments are processed free of charge so no-one needs any cryptocurrency to send some funds from Czech Republic to Sweden, for instance.

            I’m sorry, but none of your arguments addressed the main concerns:

            1) Most people buy and hold in hope to make a killing. “To the moon” didn’t come from stocks, metals, or bonds.
            2) Number of transactions do not grow exponentially like the price does. Thus, this supports my previous claim.
            3) Central banks do sit and watch. Several different conclusions come to my mind, but as I have no evidence yet I’ll rather wait for the correct answer.

            By the way, a hint: I have some (very close) experience with AML and KYC. Most people do not. Unfortunately.

            War on cash is soon to be won (if it hasn’t been already).

          • Jan
            I totally see your point!
            How could anything be of value or allowed to operate without government authority or permission!
            Well, many countries have tried to stop the internet!
            Why have they all failed?
            Because it is decentralized! No one controls it!
            Bitcoin is part of the Internet’s encryption protocol IT IS the INTERNET!
            So is the internet making money? Who owns it? why can it not be stopped?
            Why didn’t AT&T kill it?
            These are the same reasons that Bitcoin can not be stopped or controlled.
            Like email which uses the SMTP protocol layer of the Internet
            Bitcoin is using the cryptographic protocol layer.

          • Definitely, you’re right on the internet.

            I’ve not been writing about blockchain, but I’m writing about btc and alt’s-mania. In the end we’ll end up with crypto’s, unfortunately.

            Technology is here to stay. Particular financial instruments may be subject to seizure, manipulation, control. Governments actually control the most important things.

            Nuclear weapons, army, firearms, laws, taxes, duties. Whatever important is under control of governments, let’s face it.

            Governments can and will stop anything that is against their objective. See https://btc-e.com/index.html . See https://www.ice.gov/doclib/news/releases/2010/domain_names.pdf . See https://www.mtgox.com .

  5. I thought the following article in “SilverDoctors” the other day was interesting and I would be interested in the “FORUMS” knowledgeable comment.

    Tech Questions Bitcoin Fans Can’t Answer (But WE DO And In Plain English)

    What happens when the ledger becomes so bloated that it can’t process the transactions fast enough?

    There is a reason why Gmail automatically deletes trashed emails after so many days. All that data requires hard drive space and processing power to retrieve it.
    https://www.silverdoctors.com/headlines/world-news/tech-problems-bitcoin-fans-dont-like-to-hear-that-we-explain-in-plain-english/

    • That depends on who you’re asking. 6 billion people never read the word ‘ledger’, and the other billion people are into greed. So what the f@#k is your problem?

    • GrahamB
      To answer your question
      The registry in the blockchain is set to exactly 20999999.9769 BTC it doesn’t grow any longer. The assigned segments address is what changes when a transaction is made. It is based upon the same technology as when people used bit torrent to download movies and files.
      How did you know, when you used bit torrent, where the file segments came from and how many where left and if any segments were missing?
      The design expansions were to add extra functionality to make it more than just internet currency but the design limitation are very strict.
      If you wish to own Gold or silver in Singapore and store it there you may make the purchase in less than 10 minutes with bitcoin and have your gold/silver in Singapore with out having to pay ridiculous costs and wait 10 days using the banks or wiring money and filling out ridiculous forms explaining why you are doing it.

      • lastmanstanding | November 18, 2017 at 8:02 am |

        “I you wish to own Gold and silver in Singapore…

        For now. I just love it when people but all of their faith in a hand held device…all sanctioned and approved by the gub and corpco.

        Don’t feel bad…there are billions of you out there just loving your “advantage” over a few of us. 😉

        • GrahmB
          There is NO government that approves of Bitcoin,
          No one knows who anyone is on the registry unless you tell them. Bitcoin uses the highest form of encryption!
          the sources of your information are greatly inaccurate.
          Smash my cellphone and I still can have access to my bitcoin. I can use a Ham radio to access Bitcoin!
          Governments want it destroyed!
          There are people in prison all over the world for using bitcoin! IF the government can’t control it then it must be destroyed. It’s been over 10 years of persecution and attempted destruction by the best hackers and government!
          Bitcoin is still here!

  6. Like The Silver Doctors article states – cryptos are nothing special. Yes, some people made alot of money because they got in the PONZI scheme early & the supply / demand equation is fairly tight & could not easily be manipulated. But that may all change as banks have the deepest pockets.Besides – BitCoin is NOT a COIN . . . its just a BIT. And it bothers me that were using terrawatts of power mining something that will one day be worthless.

    • I’m bothered by all the power being used to find away to move our population to Mars as if that would be easier than just adjusting to the environment we have here and now.

    • If you don’t like or understand something, just call it a Ponzi. All you are revealing is your own ignorance. Ponzi paid out old investors with new investor money – kinda like Social Security. Bitcoin is a currency. It does not have dividends or company profits or earnings. It’s price moves in USD based on people adopting it or selling it. It is limited in nature so it has dramatic price moves when a large number of people (or money) move into it and choose bitcoin over their ever declining fiat. Anybody who has been in crypto more than 20 minutes knows bitcoin isn’t a physical coin either. It is just a name. Don’t get so triggered.

      • About 3 years ago FIVE Fortune 500 companies accepted Bitcoin. This was before the Bitcoin hysteria. Today with the Bitcoin hysteria only THREE Fortune 500 companies accept it as payment. So the growth of Bitcoin has been exponential in the past 3 years yet two fewer Fortune 500 companies accept for payment.

        Bitcoin is not a currency, it is a digital (risky) asset.

        • Interesting metric of success. Bitcoin was invented as a peer to peer decentralized currency. I don’t care how many fortune 500 companies adopt it or not. It allows me an additional way to transact freely without using a third party (bank, credit card company, etc) for a voluntary value exchange. Secondly, disruptive technology is usually not first adopted by the big companies with large market share. They don’t need to adopt because they already have customers and no need to change. The disruption happens by the smaller players who are looking to disrupt the fortune 500 companies. You might want to find a different metric to conclude bitcoin is a failure. Surely you won’t want to use market cap, daily trading volume, USD price, number of new entrants creating wallets, bitcoin google searches, and on and on – because those things are all on the (exponential) rise.

  7. Cryptos are here to stay, but not as they are now, thet are just a running test for the future currency controlled by the central banks. When all tests (cme, blockchain, forks, exchange, etc) are satisfied, it will be banned outright or undermined by the new currency backed and controlled by the governments.

    Gold and silver will remain a store of value, with a few highs during the transition between currencies, the ratio will still oscillate for those willing to wait but lets not forget that silver is an industrial need and it cannot be afforded at very high prices so it will always be controled.

    • DisappearingCulture | November 18, 2017 at 7:25 am |

      Nagube,

      I largely agree with you post with one exception.
      “…but lets not forget that silver is an industrial need and it cannot be afforded at very high prices so it will always be controled”

      Ultimately supply/demand will be the control. If silver is kept down in price [more manipulated than gold’s] because of the need for industry, then in time gold demand [increasing fiat price] will pull silver up.

      • lastmanstanding | November 18, 2017 at 8:15 am |

        Thank you. It’s just that simple.

        In my AO, we have a coin shop. Demand for gold has been brisk. A few people selling but mostly buying. Silver on the other hand is mostly being sold and little buying. The reason for selling is that regular folks who are retired are cashing out for fiat to pay bills, etc. These are/were strong hands that just have nowhere else to go. These are also folks (most of which) who bought it at $1.50 -4.00 and are still far ahead of the game.

        Strong hands are where it is at. Frankly, most have absolutely no idea wtf bitcoin is or can even expend enough brain cells to figure it out.

  8. robert sinclair | November 18, 2017 at 2:30 am |

    Central banks allow cheap credit to drive the stock markets, and at the same time allow cheap credit to maintain the opposite with precious metals.
    Value, is a meaningless concept at this stage.
    Central Bank commands and intervention control the markets.

    • robert sinclair | November 18, 2017 at 2:33 am |

      Bitcoin is a punt and china do as they are told and if you believe otherwise, you’re just a dreamer

  9. Well Steve, so far November has been kind to Silvers Spot price…..

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