The banking cartel may not realize it, but they woke up a sleeping giant… physical silver investment demand. Before the collapse of the U.S. Housing and Investment Banking Industries, there was very little global demand for physical silver bars and coins.
This all changed in 2008, when the world faced a total collapse of the financial and economic system. Things were really rough in the broader markets as the Dow Jones average fell from a high of 14,164 in 2007 to a low of 6,547 in 2009 — a staggering 54% decline in just a little more than a year and a half.
If we look at the chart below, we can see just how much physical silver bar and coin demand increased in 2008. According to figures reported by the World Silver Survey and released on the Silver Institute’s website, 2008 physical silver bar and coin demand reached an impressive 188 million ounces, up more than three times the 2007 figure of 51 million oz.
(Note: industrial application figures above omit photography consumption)
Not only did overall physical silver bar and coin demand pick up significantly in 2008, so did its percentage compared to industrial usage. In 2007, physical silver bullion demand was only 9% of the total usage in industrial applications. Investors purchased 51 million oz of physical silver bullion while global industrial applications consumed 540 million oz that year.
However in 2008, this physical silver investment to industrial usage ratio increased nearly four times to 34%. From 2004 to 2007, investors purchased approximately one ounce of physical silver for every 10 ounces consumed by industrial applications. Then in the following year, investors bought 3.4 ounces of physical silver for every 10 ounces used by the industrial sector.
You will notice that this ratio declined in 2009 (19%), but started to rise again over the next several years. This ratio fell again in 2012 (26%) as investors became complacent due to the fact that silver prices and global economic conditions remained relatively stable. While it’s true the price of silver fluctuated in 2012, it ended the year at nearly the same level at where it started.
It wasn’t until the huge take-down in the price of gold and silver in 2013, did demand for physical silver bar and coin pick up in a big way. Not only did demand for physical bars and coins set a new record in 2013 at 246 million oz, it accounted for 46% of global industrial silver consumption.
Which means, investors purchased nearly 5 ounces of physical silver for every 10 ounces used by industrial applications in 2013. This put a severe strain on annual supply as the world suffered a 103 million oz physical structural deficit for the year — according to data from the Silver institute found at the link above.
Let’s compare two 4-year periods:
2004-2007 Total Silver Demand
Physical Bar & Coin = 204 million oz
Industrial Applications = 1,950 million oz
Bar & Coin vs Industrial Ratio = 10%
2010-2013 Total Silver Demand
Physical Bar & Coin = 744 million oz
Industrial Applications = 2,208 million oz
Bar & Coin vs Industrial Ratio = 34%
We can clearly see the difference in physical silver demand before and after the 2008 financial and economic collapse. Investors bought more than three times as much silver in the past four years (744 million oz), compared to the 2004-2007 time period (204 million oz). Furthermore, the was more physical silver buying in 2013 than the combined total from 2004 to 2007.
Also, investors purchased an average of 3.4 ounces of physical silver bar and coin from 2010 to 2013 for every 10 ounces of industrial applications (34% ratio). This is also more than three times the ratio shown from 2004 to 2007 (10%).
There continues to be a great deal of analysis from the MSM and alternative sources on how future industrial silver demand will impact price. To me… it’s PURE BOLLOCKS. If you look at that chart above one more time, you will see that overall industrial demand has been relatively flat since 2008. Matter-a-fact, total silver industrial demand in 2013 was 536 million oz, less than the 540 million oz reported in 2007.
So, even after the Fed and Central Banks flooded the world with monetary liquidity over the past five years, industrial silver demand in 2013 was actually lower than 2007 — the year before the collapse of the U.S. housing and investment banking industries.
Which begs the question… who really cares about industrial demand, when the real factor is the huge increase of physical silver bar and coin purchases. Global physical silver investment demand in 2013 was 246 million oz compared to 51 million oz in 2007 — five times greater.
So what do you think impacted the silver price more over the last five years, industrial demand or physical investment demand? If you agree that it was the latter, than you probably don’t suffer from brain damage.
The Banking Cartel understands the role of silver and gold as money. It is for that very reason that the price of each are FIXED on a daily basis by a handful of these fine upstanding banking institutions.
Investors who are currently becoming bearish on their silver holdings may have good reason as the price is down considerably over the past few years. However, the global economic and financial system went into the emergency room in 2008, and have never come out (line stole from Roger Boyd’s presentation).
If you thought times were rough in 2008 & 2009, just wait until things really fall apart this time. I can just see it. Sentiment will change from, “Gosh investing in silver has been a real bummer”, to “Crap… I have all this fiat money, but there’s no physical silver available whatsoever.”
This is the IRONY OF LIFE and the FICKLE NATURE of the investing public.
You have been warned.
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