THE SILVER MARKET DISCONNECT CONTINUES: 2 Must See Charts

According to the mostly recently released data, the disconnect in the silver market continues.  Now, when I say a disconnect, I am referring to the interesting change in supply demand trends in the silver market.  Currently, we are witnessing an abrupt change in normal silver market dynamics.

For example, industrial silver demand has been the leading indicator for the silver market by a majority of official sources.  There have been many reports published by banks and institutions on the growth and outlook of the silver market based on future industrial demand.  Basically, the health of the silver market was forecasted by the amount of growth in the industrial sector.

However, something changed over the past several years to muck-up all this hard work and analysis by our wonderful counterparts in the financial industry.  For one thing, I don’t think any bank or brokerage analysts could foresee that physical silver investment demand would skyrocket 282% from 2007 to 2014.  The jump in physical silver investment demand makes the growth of industrial silver demand… quite embarrassing.

That being said, new data released by the U.S. Geological Survey (USGS) confirms my forecast that the situation in the silver market continues to detach itself from normal supply demand dynamics.  Thus, normal trends in the silver market are being disrupted by this present surge of physical silver investment demand.

For example, the United States continues to import a record amount of silver even though leading indicators in the financial industry show a drop in economic growth.  I have been publishing articles showing the recent surge of U.S silver bullion imports, and according to the recent data by the USGS, this trend continued in July:

U.S.-Silver-Imports-JAN-JUL-2014-vs-2015

The USGS reported that the U.S. imported another 474 metric tons (mt) of silver in July, up from 457 mt in June for a total of 3,440 mt for the year (109 million oz-Moz).  As we can see from the chart, this is 600 mt more (21%) than the same time last year.  The U.S. imported a total of 4,960 mt (159 Moz) in 2014, but if the current trend continues, silver imports may reach a total of  6,000 mt (193 Moz) this year.

So, why all this extra silver?  What gives?  It’s definitely not due to increased industrial demand, because I have the data to prove it.  The USGS also provides other forms of silver imports besides bullion, Dore’ bars and concentrates.  These other silver imports are more associated with industrial fabrication.  Let’s take a look at some of these figures:

Other Silver Imports JAN-JUL 2015

Other unwrought silver = 138 mt (-5%)

Metal Silver Powder = 389 mt (-17%)

Semi-manufactured forms = 201 mt (-61%)

Silver Scrap = 2,920 mt (-21%)

According to the import data, other U.S. silver imports (associated with industrial fabrication) were down between 5-61% for the first seven months of the 2015 compared to last year.  So, why would the United States need an extra 600 mt of silver bullion and Dore’ bars (Dore’ bars are silver bars poured at the mines needing further refinement) if industrial fabrication was lower?  If not industrial demand, maybe increased silver jewelry demand is the culprit.

I have seen estimates that lower silver prices have sparked increased silver jewelry demand in the U.S. of approximately 10% in the first half of 2015.  But, this isn’t really all that much when total silver jewelry fabrication in the U.S. was only 397 mt in 2014 (GFMS World Silver Survey 2015).  Thus, a 10% increase of half of that amount (199 mt) would only be a growth of 20 mt.  The U.S. imported an extra 600 mt from JAN-JUL compared to last year, so a lousy 20 mt increase in jewelry demand doesn’t account for the recent surge in U.S. silver imports.

As I have stated several times, I believe the increase of U.S. silver imports is tied directly to the jump in physical silver investment demand.  Not only are many small investors adding to their stash of silver bullion, I believe several large entities are also acquiring a great deal of the shiny metal.

My Assumption Was Correct:  U.S. Silver Exports To India Surged Again In July

This past weekend I spoke with Doc and Eric at Silver Doctors.  If you haven’t yet listened to the SRSrocco & Silver Doctors Interview, you might want to check it out as we covered some interesting information and data.

One of the items I mentioned during the interview was that the huge increase in Indian silver imports were starting to put stress on the overall market.  This stress made its way over to the U.S. Silver Market as the U.S. started exporting silver bullion to India… something it hasn’t done for many years.

The United States exported virtually no silver to India over the past two years, but this jumped to 39 mt in May and 75 mt in June.  I stated in the interview, even though the USGS data for July, August and September were not yet out, I believed we would see possibly even higher U.S. silver exports to India in the following months.

Well, call it luck on my part… the U.S. did export another 113 mt of silver bullion to India in July:

U.S.-Silver-Bullion-Exports-To-India

What’s even more interesting than the exponential increase of U.S. silver imports to India over the past several months, is the percentage of total exports.  The U.S. imported 227 mt of silver bullion to India JAN-JUL which accounted for 45% of the total 523 mt. 

Get this.  The U.S. only imported about 1.5 mt of silver bullion to India in 2014 of the total 382 mt exported during 2014.  Again, this shows more evidence how much the silver market has disconnected from its normal supply demand dynamics.

What has changed to mess up the silver industry market dynamics?  It was Physical silver investment demand that grew a stunning 282% since 2007:

Growth Segments Of The Silver Market (2007-2014):

Silver Bar & Coin = +282%

Silver Jewelry = +17%

Silverware = +1%

Industrial Fabrication = -10%

(Data from the Silver Institute)

As we can see, the other segments in the silver market have grown or fallen marginally over the past seven years compared to Silver Bar & Coin demand.  Furthermore, the current surge of physical silver investment demand, whether it be from India (silver bar) or North American (Official coin), continues to put stress on the silver market.  This stress is forcing a disconnect in normal supply-demand forces that will likely get worse if the world experiences more financial turmoil or stock market panics in the future.

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If you haven’t checked out THE SILVER CHART REPORT, there’s a great deal of information on the Silver Industry & Market not found in any single publication on the internet.  There is one chart in this report (Chart #19) that I can guarantee that 99.9% of precious metal investors haven’t seen before.

I use this bird’s-eye approach when I create my easy to understand charts.  The Silver Chart Report is a collection of my top silver charts from articles published over the past six years, and includes in-depth, never-before-seen charts and content that indicate that silver is on the rise. There are 48 charts in the report, broken down in five sections.

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22 Comments on "THE SILVER MARKET DISCONNECT CONTINUES: 2 Must See Charts"

  1. Who is the U.S. buying all this silver from and why is it doing this just to turn around and sell it to India? You’d think India would circumvent the U.S. and just go to the source for their imports.

  2. Silvrwillwin | October 5, 2015 at 3:50 pm |

    Speaking of industrial silver usage on a grand scale for pennies on the dollar. The Rockerfeller group made sure that silver prices were firmly pounded down so that the Duponts could receive physical silver at ridiculously low prices in order to capitalize on finished products that used the physical in making their goods.
    Big business once again taking advantage. Follow the money !http://nosilvernationalization.org/127.pdf

  3. I’ve read that India is deploying massive solar farms. For a country that has a population of over one billion people energy availability is crucial. They are building the largest solar farm in the world and it is suppose to come online in 2016. If successful, they will continue to build many more farms reaching 100 gigawatts by 2022. There is an estimated 300 million people in rural parts of India that lack electricity. I suspect many of them will go solar as well. Since the Fukashima disaster, many other countries such as Germany have invested heavily in solar energy. Energy in the form of LNG and Petroleum are relatively inexpensive today, but there are massive wars waged over the stuff. Its availability is fickle and subject to change. Many energy deficient nations will turn to solar and wind as alternative energy sources to augment their energy needs. I suspect a large percentage of India’s Silver demand is being used to feed its solar farms. Silver = energy.

    http://thinkprogress.org/climate/2015/02/17/3623515/india-building-worlds-largest-solar-farm/

    • Yes, solar is great, but… you have electricity only when sun shines. So, that way you can power just daily activities and nothing serious of 24/7/365 technologies industrially developed country needs. May be some internet server farm on immense size batteries or diesel generators.
      Of course, some electricity accumulation technologies exists (for example – electrical cars used as backup batteries as heard in Europe) and other expensive engineering toys.
      I remember one citation from some world ecological event: “Show me a steel mill running on solar batteries and I’ll believe you that solar is the answer to all problems” (kind of that).
      If the country has no industry, that the solar is enough. The question then is – how in the hell they can afford it?

      • India doesn’t have enough energy to supply all of its citizens with electricity. In India the sun shines roughly 300 days a year. The average Indian household uses 1/15th the amount of electricity that Americans do. Let me also mention that Germany has a huge solar investment and the sun doesn’t shine too brightly in Germany. I think these countries are embracing alternative energy sources because petrol based fuels are not long-term sustainable. Once petro based fuels fail to return an ROI and the price rises silver will be more expensive to mine as well. Now is the time to diversify a nations energy portfolio as Germany and India plainly want to do. Those nations are not energy producers and live and die by the leverage of nations like Russia, Saudi Arabia, and Iran. By investing in nuclear energy they risk destroying the very nation they are trying to power like Japan has done. I doubt Japan will be habitable in 100 years.

      • solar is great, but… you have electricity only when sun shines

        That’s true. The only viable choice for clean reliable non polluting energy is Thorium Reactors.

        “Natural thorium, which is fairly cheap and abundant (more so than uranium), doesn’t contain enough fissile material (thorium-231) to sustain a nuclear chain reaction. By mixing thorium oxide with 10% plutonium oxide, however, criticality is achieved. This fuel, which is called thorium-MOX (mixed-oxide), can then be formed into rods and used in conventional nuclear reactors. Not only does this mean that we can do away with uranium, which is expensive to enrich, dangerous, and leads to nuclear proliferation, but it also means that we finally have an easy way of recycling plutonium. Furthermore, the thorium-MOX fuel cycle produces no new plutonium; it actually reduces the world’s stock of plutonium. Oh, thorium-MOX makes for safer nuclear reactors, too, due to a higher melting point and thermal conductivity.”

        http://www.extremetech.com/extreme/160131-thorium-nuclear-reactor-trial-begins-could-provide-cleaner-safer-almost-waste-free-energy

  4. Wizard of oz. | October 5, 2015 at 7:05 pm |

    I truly hope this means that at least a few more Americans are waking up to take advantage of real wealth at ridiculously cheap prices. I would also like to see these chart numbers for India in another 6 months, as per a new GATA article, silver is no longer needed in manufacturing solar panels. Super laser etched alum. will replace the silver. If that was the reason for the increase or not remains to be seen. Sorry, to all you early solar power folks.

    • Silvrwillwin | October 6, 2015 at 4:53 am |

      Not to worry – India of all countries will need water filtration systems followed by many others come the not too distant future. Silver plays a big part in that area. Not to mention colloidal silver needs.

    • Silver was never “needed” for solar panels. I think you are referring to the recently filed patent by Natcore. They have created a technique for building solar panels with no silver, using aluminum instead. They are just now starting to build the cells for trials and they have not yet confirmed they will go into production. There is also no indication of exactly which solar projects might benefit from this, or how using aluminum impacts the life expectancy of the solar cells.

      Companies announce stuff like this all the time. When the press releases contain few technical details the odds of it being hype are higher. We’ll have to see what happens but honestly I don’t think this is news. There is no technical reason you must use silver, it’s just that for the lifetime of that solar panel the cheapest technologies require silver.

      Mike

  5. So The US is importing Silver from Mexico just to turn it arounf and re-export it to India? Does that make any economic sense? Why doesn’t Mexico export its Silver directly to India or this this simply because of the influence of US MNC’s?

  6. Hey Guys,

    If you don’t know it by now. Back up the truck and buy, buy, buy!

    It may be your last chance at steal them prices. I bought at $14.60 for $16.00/oz.

    It looks like the train is leaving the station. We may have another run to $13.?? but no one will be able to supply.

    Last Chance.

    Buy for cash and stash!!!!

    SteveW

  7. Silvrwillwin | October 6, 2015 at 6:09 am |

    You wrote : ” According to the import data, other U.S. silver imports (associated with industrial fabrication) were down between 5-61% for the first seven months of the 2015 compared to last year. So, why would the United States need an extra 600 mt of silver bullion and Dore’ bars (Dore’ bars are silver bars poured at the mines needing further refinement) if industrial fabrication was lower? ”
    Tin foil hat or not , what if the organizers of the NWO want as much physical S. out of the U.S. or collectively held ( JPMrgn) as is possible , so that when their plans go into action and the economy caves there will not be ample amounts to get in their way. The masses will then be forced to grab onto the new finance system that they enact.
    /// Coming to a theater near you !

  8. This is skewered toward paper silver futures by big bucks to drive the price of physical silver down so “THEY” can buy huge amounts of physical silver for stash on demand…When the price quadruples then its back to sell off and quadrupling profits…The big boys are driving the price down with paper futures to buy prolific amounts of silver is the short answer…It is still below mining and refining limits…So they have not rampt up mining and refining until it makes it profitable to do so….Mexico is a exception…Labor is super cheap and regulations doesn’t stop them at all…I would dearly love to know the answer to gentleman’s question above…Why doesn’t India go to the source for Silver?

  9. US silver production is a trivial 35mt / yr. The rise in imports and exports reflects the US trading markets being the middle man. Some readers have caught on to the insanity of the US “importing” silver produced in Mexico then “exporting” to Asia only to be “imported” back to the US (double counting) as refined metal or fabricated products . This leads to erroneous conclusions drawn off numbers like in these charts. Draw a straight line from mine to end user, you get a different perspective.

    • CSX903BH,

      Yes, U.S. silver production in trivial at 35 Moz (not the 35 mt you stated). However, I don’t agree with you that the rise in silver imports-exports reflects the U.S. as being a middle man.

      First, U.S. imports were elevated from JAN-APR 2015 by 28% while virtually zero exports were sent to India…. or to any other country for that matter.

      Second, U.S. silver imports were elevated 28% during the first four months even though industrial consumption was lower.

      Third, U.S. silver imports of course are high because the United States has one of the largest industrial silver fabrication outputs in the world. However, U.S. silver imports were only 4,960 mt in 2014 and are on track to be 6,000 mt in 2015.

      Furthermore, U.S. silver exports to India have occurred at the same time Registered Silver Inventories at the COMEX (especially the CNT depository) have declined considerably. This was not due to the U.S. being a middleman, rather this was a draw-down of existing wholesale stock. A much different situation than what you referenced in your comment.

      Lastly, the important takeaway concerning the data in my charts is the large increase of Silver Imports this year while the normal market demand doesn’t dictate it. So, it makes sense to me that investment demand is the leading driver for the increased silver imports.

      Also, the U.S. hasn’t exported silver (less than 1.5 mt a year) to India for years. As the chart shows, it was at most 0.2 metric tons a month. So, for U.S. silver exports to India to jump to 38 mt (May), 75 mt (June) and 113 metric tons in July leads me to believe India is trying to acquire silver where ever it can. The U.S. is not a standard source of silver for India, which is why we are seeing a draw-down of CNT Registered Silver Inventories.

      Basically, its silver investment demand that is causing a change, the Disconnect in the global silver market.

      steve

  10. What is meant by the term “collapse” as is used in reference to the dollar. If it fails,
    we have a Ferguson riot in every town/ city in the USA. If you have silver, you’ll need
    to go outside the USA to soend it. There will be no stores unburned.

    • Silvrwillwin | October 6, 2015 at 7:27 pm |

      Joe , If things get to the extent as you are saying ” If you have silver, you’ll need
      to go outside the USA to soend it. There will be no stores unburned. ”

      Even in the U.S.
      If you have silver the black market , under ground plus other venues such as these , cross examined before revealing that you want to exchange silver for another good or service will be in good measure.

      The only stores that might be operating will be out of cities and large towns , out in rural and protected by an owners gun. Don’t worry you will be sought after BUT it’s up to you to verify and or confirm reliable transactions before letting them know what you might have in your shoe .
      Some perhaps for even returning to again for future needs.
      These may also be opportune times to practice some good disappearing techniques after transacting.
      Best of luck.

  11. APMEX dropped silver eagle premiums to $3.99. So here is the recent premium history: 5.49, 5.19, 4.99, 4.59, 3.99. Prior to each price drop I have been able to announce it. How? Because they’ve done it this way for years!

    You better own physical silver, but you better be smart about how you acquire it.

    Mike

    • Yes I saw $3.79 on as few as one today. Looking for drops in 90% now. Premiums have been very high.

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