If You Are A Silver Investor, You Have To See These 3 Charts

As the global stock markets continue to crash, demand for precious metals will continue to increase.  Already, the U.S. Mint had to ration Silver Eagles sales due to a shortage of silver blanks.  Sales of Silver Eagles in a little more than a week have reached nearly five million oz.

While Silver Eagle sales in January are normally very high compared to the rest of the year, initial sales this month are starting off with a real bang.  The Authorized Dealers purchased all of the four million oz of Silver Eagles allocated last week and have already taken delivery of 950,000 of the 1 million oz allotment this week.  There are only 50,000 Silver Eagles remaining until next week’s allotment (Source: CoinNews.net).

As I am writing this article, the Hang Seng stock market is down 701 points and the Nikkei is off 518.  I would imagine the U.S. stock indices will be deeply in the red when they open, unless the magicians at the Fed and U.S. Treasury decide to bring out their bag of tricks.

Regardless, investors are becoming quite worried about a market that makes no sense whatsoever.  Even though many investors didn’t understand the fundamental valuations of the market over the past 2-3 years, when the indices were rising, they held their noses and went along for the ride.  However, now that the U.S. and global markets are in free-fall, things could get down right ugly in 2016.

Forget The Paper Price Of Silver… Look At The 20 Year Change

While many precious metal investors belly ache about the falling paper price of gold and silver, demand for the physical metals continues to rise…. especially silver.  To get an idea of how much more physical silver investment is currently taking place, let’s look at the following chart:

Silver-Eagle-Sales-1996-vs-Jan-19-2016

In 1996, total Silver Eagle sales for the year were 3,466,000.  Now compare that to the 4,950,000 Silver Eagles sold in the first half of January.  We must remember, Silver Eagle sales in 2016 started on January 11th.  So, in just six working days (this Monday was a holiday), the U.S. Mint sold 43% more Silver Eagles than all of 1996.

Furthermore, if we compare sales of Silver Eagles in 1996 versus 2015, this was the result:

Silver-Eagle-Sales-1996-vs-2015

Investors purchased a record 47 million Silver Eagles in 2015 compared to 3.5 million in 1996.  Basically, investors bought 13.5 times more Silver Eagles in 2015 than they did in 1996.  Even though precious metals investors are frustrated by the low paper price of silver, they fail to realize the horrible fate coming to most paper assets in the future.

The surge in physical silver investment demand indicates that intelligent minds realize it’s a rising “High-quality store of value” compared to most other paper assets trading by mindless computer algorithms.

The Key To Silver Investment:  It’s A Matter Of Acquiring Ounces

The key to investing in silver is focusing on acquiring ounces and not worrying about its current paper value.  The true value of silver has been masked by the “Massive financialization of Paper Garbage” on the poor slobs in the United States and the rest of the world.  Now, when I say “slob”… I don’t mean to be derogatory.  In many ways, I am also a poor slob when it comes to the Fed’s policies that enrich the 1% while destroying the middle class.

That being said, investors are acquiring a record amount of physical silver to try to hedge against the collapse of the Greatest Financial Ponzi Scheme in history.  This next chart compares the 20-year change of silver investment versus Jewelry and Silverware demand:

Silver-Demand-1996-vs-2015

In 1996, total global Silver Coin and Bar investment was only 23 million oz (Moz) versus 264 Moz of Jewelry & Silverware.  However, 20 years later… we see a much different picture.  While global Jewelry & Silverware demand increased to 280 Moz, Silver Coin & Bar investment surged to 236 Moz.

NOTE:  GFMS who publishes the World Silver Surveys, didn’t provide silver bar demand in early years such as 1996.  The figure of 23 Moz is GFMS Coin & Medal demand.  I would imagine silver bar investment in 1996 was very low due to a lack of interest.  Furthermore, GFMS estimates total Silver Coin & Bar demand for 2015 to be 206 Moz.  I added 30 Moz to the figure due to the fact that private silver rounds and bars are not apart of the official figures.  However, I had an email exchange with the folks at GFMS and they will be soon adding an annual figure for private rounds and bars.  They estimate that 2015 private round and bar to be at least 30 Moz due to the huge shortages of official coins from June-Sept.

Unfortunately, investors are under the trance that deflation will be bad for silver as the paper price could fall further.  While this is true, I believe the downside of silver is much less than the broader stock markets such as the Dow Jones which is only off 12% from its peak last year.  Silver is down 71% from its peak of $49 in 2011.

We have already witnessed the majority of Deflation in the precious metals, however the Bloodbath in the broader stock markets is just beginning.  Hedge Fund and Institutional investors better wake up and realize stock valuations, dividends and yield will only head south going forward.

The DEATH OF YIELD IS COMING.  Unfortunately, there are only a few wise investors who continue to acquire silver while the majority play Russian Roulette in the paper markets.

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37 Comments on "If You Are A Silver Investor, You Have To See These 3 Charts"

  1. There is little doubt , if any at all that physical gold and silver will secede from the phony paper existence .
    It will some day. That’s a given.
    Though it’s a bit aggravating to have to spend so much valuable time going through the charades with the physical being attached to paper and trades just by title alone.
    What it really comes down to is that it’s The Big Use .

    • Silvrwillwin,

      I think you are going to be surprised at the RAPID REVALUATION of the metals. I don’t see this as a 5-10 year outcome, but more likely in the next 1-3 years.

      steve

  2. Steve, 2016 is an entirely different ball game for Phyzz Silver.
    I’m completely convinced that supply problems are going to hamper ASE sales in 2016, that allocations will begin before the end of February and be long in duration— all year long.

    47 million ASE sold in ’15, I expect something around 15 million for a 2016 sales TOTAL.

    Also expect little, to only a slight rise in silver spot price…but watch as premiums will go up to be equal to or exceed spot by late summer….

    • 4 oz,

      If we continue to see a crash in the broader stock markets, then yes… we could see serious trouble in the U.S. silver supply market. I don’t like to give out short term price forecasts for silver, but if we do get a DEVALUATION of the US DOLLAR, then the sky is the limit.

      steve

      • “…but if we do get a DEVALUATION of the US DOLLAR, then the sky is the limit”.

        How would a dollar devaluation be accomplished? Devalued as compared to what? I’m not being flippant I just don’t understand. It is easy to devalue a weaker currency against a stronger one, like the Peso against the world’s reserve currency.

        Now when it takes a lot more dollars to buy an ounce of gold that is a defacto devaluation.

        Comments?

        • David,

          I have heard many scenarios, but the SIMPLE LOGIC is that a 40% devaluation makes everything more expensive and destroys the value of CASH HELD INVESTMENTS. This is just like the Peso devaluation which there have been many. If one owned gold or silver before the Peso devaluation, their precious metals rose in value.

          This is what’s coming. I don’t know the specifics, but it will happen when we least expect it.

          steve

          • The velocity of US dollars continues to crash. Who will be selling their dollars to create this devaluation and what will be their motivation? If not dollars, then what will Europeans be buying as the European debt crisis blows up?

            I am onboard with you regarding frustration with the Federal Resefe creating new dollars and being selective about how they enter people’s pockets. But I don’t see a dollar devaluation anytime soon.

            Mike

          • Retailers are saying that small investors are not buying many eagles. Is it possible that the Banks are buying them to flood the market in the event of a price rise?
            There have been rumors that JP Morgan have millions of ounces of them. I can’t see why they would want them for any other reason.

          • @ Barry, you can’t see that JP Morgan would want a silver hoard for any other reason than to dump them on the open market to suppress the price?

            I believe that Ted Butler and Ed Steer are right about the silver hoard of at least 400 Million ounces of silver. The question is why?

            First you have to remember that some major banks got nearly burned with their enormous silver shorts when silver climbed to nearly $50 in 2011.

            Secondly, you better believe that JPMorgan KNOWs better than anyone that we are facing a liquidity/margin call crisis of epic proportions that is starting to unravel right now. They know this is inevitable and they also know that the only thing that will matter is having physical assets when all the paper assets go up in smoke.

            I think they focused on accumulating silver rather than gold because they did not want to compete with China’s insatiable demand for Gold which would have made it even harder to keep a lid on the gold price. They also know that silver will increase in value much more so than Gold, another word they see silver as the asset with the highest ROI when things start to fall apart.

            I guarantee you that they view silver as an insurance policy to keep them afloat when their massive book of derivatives is starting to implode. They could single handedly drive the price of silver to hundreds of dollars an ounce without even breaking a sweat. With nearly a half billion ounces of silver that would be a sizable profit even for JP Morgan and I seriously doubt they would be willing to walk away from that profit potential by just dumping the silver to suppress the price right when it matters the most to own physical assets.

        • The dollar will be devalued against consumable and (perhaps) durable industrial goods. I doubt the latter at this stage of the bank credit collapse. This is also known as price inflation…typical during economic downturns!

          • The world suffers fro tremendous industrial overcapities. The downturn will exacerbate the situation. Without demand prices will fall instead of go up. Silver is correlated to oil and oil will probably fall to $20.

          • If that were the case, the deflationary death spiral would end abruptly. Me thinks devaluation will be against the only real money that the CBs hold (gold) and silver will follow suit. If the CBs want to back the paper system without contr+P-ing more debt, all they have to do is say we will buy fizzical gold at the price of N times current price. Why else would they hold (and buy) any gold, if it was worthless. The hoarders of PMs (stackers and CBs alike) will force a price reset that will happen overnight, and it will be jaw-dropping. The elites, big banks and CBs are positioning themselves right now, by shaking the tree hard. The currently manufactured price slump IS the confiscation me thinks. It will happen against all fiat currencies and likely at roughly similar exchange rates so that the effect on consumables will not be that drastic. The fiat currencies of the world are NOW measured mostly against the dollar, ALL fiat currencies will be measured again in PMs (and first of all gold, but silver will do very well too). So Steve is right… once the hammer falls it is only the number of ounces that matters… Till then, lower “prices” are “frustratingly welcomed” by me. Good luck to all.

  3. Don’t forget all the silver coins that were taken out of the market in the 1960’s. The mint finally gave up trying to supply the market and gave us the fiat coins.

  4. The 1996 to 2006 comparison is absolutely amazing. Today’s PM buyers are a small % of the investing public. As this downturn accelerates and deepens imagine the torrential demand for silver and gold as more investors look to protect their wealth. Instead of 1% think 10-40% of investors trying to buy Gold and Silver. The demand increase could come at anytime as Americans and Europeans realize the ponzi is unwinding. We could very well be on the precipice right now.

    According to Reuters, China plans to start their Gold fix this April. That could be the catalyst for a significant shift in Gold and Silver sentiment and pricing.
    http://goldstockbull.com/articles/gold-price-discovery-moving-to-china-in-april/

    • I think the movie, The Big Short, will really help people understand why they need gold and silver which could result in a huge percentage of investors trying to all get into the metals at the same time. We all know what “The Big Long” is about, eh?

  5. I see a dollar devaluation happening just as soon as millions of working Americans with 401k plans
    have their retirement savings ravaged by a stock market rout precipitated by two or three more fed torpedoes fired into the uss economy. Janet Yellen will then have the political cover to print dollars at will.

    No, I do not believe they will abandon the hike regime prematurely, so they’ve got at least two more in the tubes ready to launch. That ought to be enough to devalue everyone’s home by 20% as well.

    So yeah, Americans should be using the reign of King dollar to stack higher, and it looks as though they’re doing just that.

    • Look at Russia, their currency is dropping as a result of their diminished oil exports, Saudis same, Chinese same as their cheap cr@ppy TVs are in low demand. When the economy gets spanked, currency (not real money …gold/silver) ist kaput!

  6. Looking forward to the mining companies quarterly results & profitability.

  7. Hi,
    JP Morgan has acquired Silver all this time for the “Motherload” , since April 2011, JP Morgan has been one of physical silver stacker,
    JPM isn’t a silver addict, he know that silver’s price explosion is an eventual inevitability.
    True Wealth Can’t Be Printed.

    • S.S. Agreed ! You think that these guys are stupid !? – NOT ! They know how the game is played ! Why , hell , they wrote some of the script. If you follow J.P. Morgan and Co. through history it’s pretty revealing what “they” have been guilty of along the way.
      Just Google them and go back to WW II and beyond…they’re the devil’s sister.

      • Not the devils sister.His father!

      • They OWN the game and make the rules. But they know that “escape velocity” cannot be reached, so gravity will take over soon… and gravity will pull everything towards the bottom of the exter (inverted) pyramid…

  8. With the SDR as a new reserve currency, the $ will devalue against the rest of worthless fiat in the SDR. Maybe 30%, maybe more, depends on the % of dollars in the SDR. When trust in fiat currencies blows up, they’ll have to devalue against gold. Of course; Batman takes Robin with him, upstairs. There are a lot of unknown unknowns though, aka black swans. Anything can happen in this central planned shitshow.

    • SDRs as a reserve currency are relevant to central banks and governments only. Should the USD be devalued in regards to the SDR, that will only mean that a two tier dollar system will have been created. Meaning that there will be an international dollar with a certain price as valued against the SDR. This will be important for central bank reserve valuations and government debts issued in dollars. And then there will be the domestic dollar which won’t budge in value at all. Meaning that your mortgages, student loans, and other debts won’t be diminished at all. And the paper price of silver and gold, probably, won’t budge either. Just my two cents…

  9. Whoa, there… Jackie.. You may be 100% accurate with your ideas… right up until the statement about paper prices of silver and gold. Precious metals transcend political boundaries. That is, physical metals can be moved, ownership can be changed, and the prices for REAL physical metals are the very factor that will be used to relate “dollar value” to other currencies’ value. Prices of silver and gold will go up in dollar terms. What is true now is that the prices of metals fluctuate in all currencies but because the US dollar is so controlled that the more correct value of the US dollar is not accurately represented. When entities in non-US countries bid up the prices of metals, the US grip on prices will be broken. The physical prices will then be the determiners and paper prices will have to toe the line, as there will be no reason to any longer play “pretend.” Paper prices in the Futures markets that do not relate to values of REAL metals, and to be settled in REAL metals, would not exist. Else it would be obvious that true Monopoly Game money could be used. (I am chuckling at the thought of trying to use ACTUAL Monopoly Game money in a real-world transaction. Yes it is worth what I say, because I say that it is.)

    I can envision your idea about a bifurcated US dollar coming to fruition. Jim Willie has been suggesting that concept for a long time, and I see no strong argument against that as being a likely outcome.

    We might be looking at import prices (into the US) at astounding levels similar to those in Canada, of course in Canadian dollars, right now. And those prices might look very similar to post-import duty (+40% to 50%) prices currently being espoused by Trump. Catastrophic. But the theory will be that domestic prices will stay the same. You could buy my house or sell me your car, and we would each carry on with our lives.

    But then, thinking it through, if I had to buy imported food and shoes and most everything else, I probably could not afford to buy your car. You would want to keep your car because replacing it with a new imported car would cost so much more than at present. The values we US citizens put on things would change. And if the government instituted price controls, our supermarket shelves would soon look like those in Venezuela. “Need” would immediately replace “want.”

    Scary, worrisome times lie ahead.

    I suggest not only buying gold and silver but also to invest in assets that produce goods and services that people will continue to need. Although your gold and silver will provide you a cushion, each time you sell a coin, for instance, you’ll have a smaller cushion for tomorrow. If you have a means of production, then you have better chance of covering the expenses of your ongoing necessities. If I were a lot younger, I’d be looking to hone my skills in the direction of buying old, large houses that could be either converted into small apartments, or that could be rented out by the room. Don’t laugh at that idea, folks. I know a couple of guys who began building their real estate fortunes by buying large old houses near a college campus. They circumvented the zoning rules by renting out rooms to their “friends.” One guy had three different addresses where he “lived” and rented out rooms. One house had eight bedrooms after he remodeled, and he had seven of them rented to other people.

    The main thing to do right now is to be stacking silver, and perhaps gold. That, to me, appears to be the absolute most sure tactic you can employ. And I think the timing is very good, right now.

    Charley Z

    • Hey Charley,

      Thanks for your reply.

      As per the import duties that would come with a two tier dollar system on the domestic dollar level. Yes, that’s true. But, consider this. With such high import duties (and Trump as President), US companies currently producing stuff outside of the country would migrate their production capacities back home. That would leave high import duties mainly for luxury items. It would also help bring down the unemployment rate and probably restart the US economy.

      Combine these ideas with a collapsing Europe, a hyper-indebted Japan, highly indebted emerging markets, and what you get is this. The only place to invest really large monies (I means trillions) is the dollar. BUT, there’s actually not enough federal debt being created. That’s the reason the SDR is being pushed forward. Since Trump won’t be happy creating even more debt, those with large amounts off capital need to think ahead. So having the possibility to create and invest in SDRs is a neat way of solving the problem of US debt scarcity (I know, it sounds funny but that’s the reality).

      Now turning back to physical gold and silver. What entities do you have in mind, exactly? ALL central banks in the world need the US dollar (or the SDR) to park their reserves. Sure, they have long-term stacks of gold, but as you can see things are not going the way of central banks buying. Actually, central banks were buying into the top in 2010 and 2011 mostly. And they have lost big time. They won’t be returning to gold unless the price turns dramatically. So, again, where do you see the extra demand coming from to gold? Commodity prices including gold and silver will surely turn, as nothing falls in price forever, but gold will not become the main reserve for central banks again.

      Instead, what we see happening is that central banks are floating the idea of electronic currencies. Meaning that private transactions will be done electronically. First as an option, later as the only way. And once you get to a point where most people are happy using their phones as their only IDs and payment devices, then it’s just an executive order away to ban the buying and selling of physical gold. You will be able to buy or sell paper gold, though…

      I am not so sure about silver either. The current trend is still more government, more taxes, people are still looking to big brother to solve all their problems. With higher taxes, people have less disposable income, so they can buy less (or no) new stuff, therefore production of stuff slows down (or halts completely), needing less input materials (like silver). Unless there’s a change in the way governments work, there’s little hope for anything else but a slow, grinding, mind-numbing deflation. Well, deflation that will take place in the labor force (i.e. higher unemployment) and production. And those forces will be balanced by the creation of more government debt, bought up by banks and pension funds via QE monies, as well as higher retail prices thanks to higher taxes. You catch my drift, right?

      Yes, having coins for barter, as well as employable neighbourhood skills are good things. But neither ensure higher “prices” of silver. Don’t expect to have a set market price for your silver in a purely barter economy. The whole idea of a market economy with its futures and “paper crap” is to ensure a stable pricing mechanism, instead of crazy day-to-day price swings. At least it used to be. Anyway, I don’t think we need to look forward to doomsday scenarios here. None of us would like the way that really works, I’m sure about that.

      The idea with old houses, though, seems like a viable one.

      • Jackie.. Wow. Very good. I don’t have time to think through a cogent response right now, but I do want to mention that I’m impressed with your thinking and writing skills.

        I do think that owning some silver coins will give a person his own “central bank” with a bit of stable value, with which to deal with whatever comes next.

        I am concerned that our transportation / distribution systems may collapse in some sort of doomsday scenario, and it seems prudent to me to take at least some small steps to be self-sufficient for at least a short time. However, I’m not able to convince my family to make a priority of obtaining a few extra weeks of prescription medicines, never mind socking away cases of tuna or gallons of water. JSMineset has articles with lists of things to think about if you are concerned. Bill Holter, one of the folks at that site, comes across as sophisticated and logical and his writing is worthy of a good read. His video interviews at various sites are great.

  10. I’ve heard it speculated by several sources that the majority of physical silver being bought is not by the small investor. 47 mil ozs last year compared to less than 4 mil in ’96 would seem to confirm that bigger sources are buying. We know that JP Morgan had huge short positions. My guess, they’re driving the price down through the paper markets, then backing the truck up to buy tons of the physical. Once they’re done they’ll release their paper shorts and the price will skyrocket giving them huge profits and protection against any dollar devaluation. This will probably coincide with other market collapses to further disguise their actions.

  11. @Barry, Jan. 16, 1:45am—I think you are spot on with the big banks loading up on the ASE’s so they can suppress the price when the time comes. And I bet that they get them at much better prices than the general public, who for the most part are tapped out of disposable cash to buy bullion with.

    • The mint charges for ASE’s $2 over spot, and there are about 12 dealers that get them for that. This is well documented and tracked [how much is produced and what goes to whom]. That does not include any banks. Bars are obtained at less than 50 cents over spot. I doubt any banks are big holders of also very bulky ASE’s. And any silver they have…they will consider their own profit rather than dumping on the market for price suppression just for the paradigm to continue.

  12. Political Crook | January 21, 2016 at 10:33 pm | Reply

    Did you happen to notice as you said when you were writing this that the markets were down so much that around 2-2:30 the same day when the DOW was down 500 points plus how the did do someting ( My guess is more QE infinitum) and all of a sudden,Big flip on metals prices down and the DOW was only down 270.

    They manipulate so much right now it is blantanly obvious when they do so with their paper games. It will catch up to them! Sadly in the last debt ceiling bill WALL ST and the banking cartel had a little addition in the bill that stated the crooks could gamble 330 trillion in derivatives LEGALLY with OUR Taxpayers DOLLAR! They are now losing the bets( at least some of the banking cartel’s are) which is good for the people who like to have physical in their hands versus some promise backed by nothing on a piece of paper. The sad part is our corrupt politician puppets propped up by the 1 percent does not care about the people in the U.S.and they are about to bankrupt our Country!

  13. As the HOT KEY WORD these days is “LIFTOFF”, yes, APRIL 2016 mark your calendars, with CHINA opening it’s GOLD EXCHANGE. ENDING SHORTS via COMEX. Death of a Salesman scenario. GREAT NEWS for stackers…forget the swings from now until APRIL..hold, and hang on..our day is coming.
    “An acute shortage of readily marketable physical gold is developing that we believe will deepen in years to come. This possibility seems to be unrecognized by those who are short the gold market through paper contracts. The relentless dumping of synthetic or paper gold contracts since 2011 by speculators in Western financial markets has caused the shortage. The steady selling has driven down the price of physical gold, hobbled the gold-mining industry, and drained the stores of gold held in the vaults of Western financial centers. We believe that the shortage will worsen because (1) the precursors of production (exploration, discovery, reserve life) are very negative, (2) the mining industry has little financial credibility and seems unlikely to attract capital even with a big rise in gold prices, and (3) refining capacity limitations tend to create supply bottlenecks when physical demand spikes.
    ==============
    http://tocqueville.com/insights/paper-gold-utopia-alchemists

    • Will not happen anytime soon after the april launch. All rising volumes and exchanges in china has not changed anything in the way gold is priced : in comex. Period.
      BRICS will not rule anything in the financial world before decades, they have simply not the balls as they must fight and not just conceal with the west.

  14. Many look at the huge “paper” wealth vested in “paper” assets and assume at some point this huge buying power will turn to the PM’s driving them sky high.

    IMO when the tide turns from paper to PM’s, there will not be as large a buying force because most of the “paper” wealth will be wiped out previous to the physiological change in vestment direction.

    I feel the question is how much true wealth is presently vested in paper, and fear not much is there.

    • Political Crook | January 22, 2016 at 10:27 am | Reply

      I would say,not much! A lot of it is simply paper shorting (But No!,Thats not legal!) and as much as I love what is about t happen in April as I have also been following what a commenter from above wrote, I am sure they will find a way to still involve paper with China’s New Gold Echange taking place!

      Right now with all of the Fiat paper printing they are forcing Currency wars and deflating the price of everything. Once we finally have inflation starting again minus manipulation plus fears around the world progressing Gold and Silver if you ask me will act like a brand new 2 liter Pepsi bottle being shook for 2 minutes! If you put GOLD and SILVER in the place of the Pepsi with the same reaction is what the prices should act like!

      In the meantime, I am just adding and adding and adding to the pile. I could only hope that people who never used to stack will start to figure out to stack for themselves before it is too late for them. I tell my family all of the time to buy even a roll a month of silver(the being teacher’s can afford that) but they look at me like I am crazy.

      • Moi aussi je suis en france et beaucoup ne savent pas tout cela,certains vont nous prendrent pour des fous aussi ,mais rira bien qui rira le dernier

        • Mora… Good point. I totally agree. (Any English-only speakers can google “French to English” and simply copy and paste the entire sentence.)

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