Record U.S. Silver Imports As Consumption Declines… Where Did The Silver Go?

Something strange took place in the U.S. Silver market last year.  It seems as if the United States imported a record amount of silver in 2016 while its apparent consumption decline considerably.   This does not make sense.  Which means, a lot of silver has been acquired and stored, over and above the quantity needed by the U.S. Market.

According to the most recently released data in the USGS 2017 Silver Mineral Commodity Summary, U.S. silver imports reached an estimated record high of 6,300 metric tons (mt) in 2016:

U.S. silver imports last year were 6% higher than 2015 and are 25% higher than the average for 2012-2014.  This is quite interesting because apparent silver consumption declined considerably last year.  The USGS calculated that apparent U.S. silver consumption decreased from 8,000 mt in 2015 to 7,230 mt in 2016.  This is nearly a 800 mt decline in U.S. silver consumption.  However, U.S. silver imports increased nearly 400 mt last even as consumption declined:

Even though U.S. silver consumption are higher than imports, we must take into account domestic mine supply and recycling.  Also, the USGS calculates “apparent” U.S. silver consumption by the following:

U.S. Apparent Consumption = Mine production + Secondary (new & old scrap) + Imports – Exports – Adjustments for Government and Industrial Stock Changes (including Comex inventories).

So, if overall U.S. silver consumption declined by almost 800 mt, why did silver imports reach a new record high of 6,300 mt??  It seems as if some large entities or institutions are acquiring a lot of silver as overall demand continues to decline.

Furthermore, U.S. silver imports hit another record last year.  Total U.S. silver imports of 6,300 mt accounted for 23% of global mine supply in 2016, up from 21% in 2012:

Thus, U.S. silver imports now account for nearly one-quarter of total global mine supply.  You will also notice that GFMS – Silver Institute forecasts that global silver mine supply declined in 2016.  Their 2017 World Silver Survey should be out within the next month.

I am speculating here, but it makes a lot of sense for large institutions to acquire silver at this low price before the global stock markets collapse.  When the markets finally crash, there won’t be too many high-quality assets to move one’s funds into.

Even though precious metals sentiment and buying is down the first three months of 2017 versus last year… I see this as a very interesting indicator.  While some look at this trend as being negative, I look at it as being… THE CALM BEFORE THE STORM.

Additionally, I continue to see more and more precious metals investors becoming frustrated or negative because the metal prices or values have not performed as many have expected.  While I thought the gold and silver prices would correct back higher sooner… I am not at all concerned about the timing of this event.  However, the revaluation of gold and silver is not decades away as some who believe that the Fed and Central Banks will continue manipulating the market indefinitely.

The Fed and Central Banks will hit a brick wall and that is due to the disintegrating energy sector…. especially the U.S. and global oil industry.  Which is precisely why I focus on the energy industry to get an idea of how close we are to ECONOMIC CLIFF.

Lastly, I will be posting a new interview tomorrow that I had with Kenneth at Crush the Street last week.  I suggested to them that we do another interview due to several of my followers contacting me about Charles Savoie of SilverStealers.net statement that the Pilgrims (Elite) were going to get the U.S. to nationalize silver and only pay $2.00 an ounce.

While I respect Charles Savoie’s in depth research on the Pilgrims (Elite), I disagree with some of his future assumptions on the silver price and market.  I base this on his lack of understanding of the energy sector and the ongoing disintegration of the U.S. and global oil industry.  I explain this in detail in the interview.

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27 Comments on "Record U.S. Silver Imports As Consumption Declines… Where Did The Silver Go?"

  1. Dang Steve, I was hoping you wouldn’t notice my last purchase.

  2. Thanks Steve, regards.

  3. Steve,
    I’m not sure I am understanding your Energy thesis correctly and would appreciate your comments. I had understood that you attributed the value of PM’s being, at least in part, a “Store of Energy”. I understood this so long as the price of energy was rising. However, now that the price of energy is falling, should that not, according to the store of energy thesis, mean that PM prices should also fall along with their stored energy value? Where am I going wrong?

    • Brendan White | April 4, 2017 at 7:18 pm | Reply

      The argument is that energy prices can not stay this low forever due to eroei/extraction costs, thus metal prices will go up again with energy. You are correct.

      • lastmanstanding | April 4, 2017 at 8:49 pm | Reply

        Fuel/gas/diesel is one of the biggest deals on earth right now…right next to silver. Energy prices will not stay this low forever. It takes an assload of fuel/energy to get fuel/energy. Only a few of us realize this.

        If the price of gas was $4 a gallon there would be riots all over the country. The pricks at the top are keeping fuel prices low to keep the sheep calm. Nothing more. Giving them mobility keeps them pacified.

        Add another buck or more and all bets are off.

        • Record U.S. Silver Imports As Consumption Declines… Where Did The Silver Go?

          Just go over to Jamie Dimons house and knock on his door. He has a way of working the books. Been an expert at it for years !

      • So on that basis, PM;s should have fallen the equivalent of from $125/bbl to the equivalent of $30/bbl, now back to the $40-50 range?

        • Cheap energy surplus took care of growth until about 1970. After that, it was the overleveraged paper fiat currency system that took over. Since debt is a promise on future growth, it will crash because growth is over. We ran out of affordable energy. All of these paper billions sloshing around, looking for yield, or even looking for return OF investment, will try to survive by hiding into gold and silver when the time comes. Exeters pyramid.

          • Yes I agree but given the timing it will NOT be because of expensive energy that Gold skyrockets. Hence my original question.

    • Great question – this may help:
      It shows the relationship between embedded energy and price (fig.6), ore concentration (fig.3), carbon footprint (fig.2), and production/consumption (fig.7) of various materials, including gold and silver.

      Note for instance the excellent correlation observed between price and embedded energy of gold and silver. While silver has roughly 1,000 megajoules (MJ) and gold has 100,000 MJ of embedded energy per kilogram, if I’m reading this right, the price of both clocks in around 50 cents per MJ.

      The energy embedded in each kilo of Au / Ag should increase over time, due to thermodynamics. The price of each kilo though, when in the context of a financial system that can create currency out of nothing, who knows!

      http://rsta.royalsocietypublishing.org/content/371/1986/20120003

      • Thanks Kevin,

        Great article! It is very comforting to see such a clear and concise demonstration of the store of energy value for silver and gold.

    • My take on Steve’s thesis goes like this. Due to the ever-decreasing EROEI production of fossil fuels will eventually tank; as the global economy that is run on fuels collapses (fuel prices are too high for the real economy and too low for the producers) this will cause demand for oil to crater leading to a permanent decline in oil price and oil produced, as oil producer after oil producer goes bust. At that point it will be obvious that the unsustainable debt (on the other side of it is our fiat money, $, €, Swiss Francs, Yuan, Rubel, Yen, you name it) cannot ever be repaid. Then its either a deflationary busts or hyperinflation and the currencies will become worthless. Either way precious metals will win the day as money with no counterparts risk.

      This is roughly how I understand Steve’s argument (I may still have it wrong though ?). Now I am still of the opinion that TPTB will try to inflate this system to infinity and as such I also think that oil prices will not revisit the sub-30 lows (unless there is a sudden economic crisis / wave of defaults which I think they will prevent with more money printing) as they clearly saw that sub 30$ oil will lead to a wave of defaults in the oil sector and consequently in the banking sector to entities that dished out (bad) loans to such companies. Either way, the declining ERORI cannot be stopped (that’s the thermodynamics part) and this seals the fate of oil and the status quo in the long run. In the mean time I expect a lot of (not so) funny things to happen as things get even bubblier (debt and stocks) as the housing/pension/social security/student and auto loan bubbles seem to ripe to pop.

    • PMs are a store energy but there are other forms of energy besides petroleum.
      When a man pans for gold he invests his energy. When a man builds shoes or grows wheat then trades for PM, he has stored his energy.

  4. Steve- I look forward to your interview with Kenneth. Getting a broad, in-depth variety of analysis and opinion helps sort the truth from the flotsam and jetsam. What do you think about Bix Wier’s opinion about US Treasury Ag supply having been loaned to the WWII Manhattan Project and slowly returned to said Treasury, only to be subsequently sold off to create excess supply thus helping keeping Ag prices capped and down?

  5. Interestingly, when our economy collapses all the manufactured units which have silver in their electronic systems which the consumers purchase with abandon will collapse as well. IE: The need for Silver after the crash will only be what a government wants to pay because there will be such an overabundance the price will drop precipitously.
    So, I believe the guy.

  6. It seems that the Useless Snakes Government will steal PMs from a very reputable refiner and retailer. That is a news that should be covered by all PMs analysts. Should we stacker hide our assets underground?

  7. Steve,

    I totally agree that “it makes a lot of sense for large institutions to acquire silver at this low price before the global stock markets collapse” and they must be doing it on a regular basis in not too excessive amounts. How are they doing this in absolute secrecy without the word getting out and the market reacting. If the market knew that one or more large institutions were buying huge amounts of silver it could be the very trigger of a paper market collapse. Is there any chance that it could be our own government?

    It’s a great plan. Acquire boatloads of silver at virtual cost without causing even the tiniest ripple in the paper markets and being able to repeat it every month as the supply allows rather than in one super large transaction that would be impossible to hide.

    Does this mean that the “time” is possibly rapidly approaching? Why would anyone make such a move before absolutely necessary what with reporting and accounting issues occurring at least annually?

    As for the Pilgrims, they can take my little bit of silver 124 grains at a time just before they pry the weapon from my cold dead hands.

    Thanks,

    SteveW

  8. I’m sure there is a lot of silver accumulation and hoarding by some of the large industrial consumers. It makes sense. The same way China and the U.S. take advantage of low oil prices to refill their oil reserves

    If the U.S. nationalized silver at $2 then any mined bullion would find its way to another country or entity willing to pay more for it. Alternatively, silver would be hidden away as a hedge against future uncertainty. The Silver of the world would bypass the U.S., and any U.S. based miners would probably go out of business. Even the base metals miners where silver is a significant byproduct would probably go out of buisness. $2 silver would be beyond stupid…such an action would starve the U.S. of the metal. I’m surprised that such a supposition would come from Charles Savoy.

  9. Thanks for sharing the article, but please note that if the stock market declines massively as many of us have predicted, silver and all precious metals will fall into the abyss as well. That is what exactly happened in 2008 after a brief pop. It is good to have some precious metal, but I would short the market heavily when that time arrives.

    • Sorry but I would do the exact opposite of what you recommend. When the Financial system collapses, as it will, the only safe have will be PM’s which, after an initial dip, will skyrocket, incidentally as in all previous occasions.

    • Buying gold and silver is the only valid short to the current fiat/debt bubble IMHO. If you short stocks and it works, ok you will have a ton of digital fiat in a bank that will likely go bankrupt or be bailed in and you will see nothing of your “riches”.

  10. Steve,
    I am confused about your last graph on US imports vs Global mine supply. First, 6300 tonnes is not a third of 27,600 tonnes ( 3 times 6300 is 18,900) and the blue 30% portion of the bar chart doesn’t reflect 30% of the area within the bar – not even close… Am I missing something???

    • JerseyJoe,

      Good catch. Yeah, the way I had to set up the Excel chart is to subtract the total global supply from U.S. Silver imports. It was the only way I can get the U.S. imports and global silver mine supply to equal the exact total for global mine supply when I stack them on top of each other in the same column. So, when I used Excel to figure the percentage of U.S. silver imports to global mine supply, I wasn’t using to total figure. I did for 2012, but I was using the incorrect figure for the following years.

      I should have noticed that myself, but when you go through as many figures and statistics as I do, your brain starts to get a bit numb… LOL.

      Anyhow… thanks for the heads up. I corrected the figures and replaced the chart.

      steve

  11. Steve, I have asked you in the past and will ask you again, could you come up with an abstract / 1 paragraph summary of your core arguments regarding energy, the economy, PMs and their stored “economic energy” as well as the respective price/purchsing power forecast ? I get the feeling that many readers here (myself included) are still not clear especially on your concept of “stored economic energy”.

    Regarding the US silver imports it looks to me that some big players do indeed have some affection towards them shiny, despised und useless “pet rocks”… LOL. Good catch.

    Thanks for sharing all your work and insights and running a superb blog !

    • PS. Steve, do you know whether Louis Arnoux’s and the Hill’s group paper has finally been accepted for publication? If so it would be great to have (finally) access their full model with all the information. Thanks again for all you do.

    • CHX13,

      I will come up with that in a new article shortly. Thanks for the input.

      steve

  12. Where did all the silver go?
    I checked my pockets. Nope, not there.
    Seriously, there are a lot of people staying below the radar who are no doubt adding to their stash.

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