How is Silver Supply and Demand Calculated?

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Smaulgld on Welcome To Dystopia Podcast

I sat down with Eric Dubin of the News Doctors and Jason Burack of Wall Street For Main Street yesterday to discuss the silver and gold markets.

Please have a listen:

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Questioning the CPM Group’s Silver Surplus Assertions

Bloomberg’s Eddie Van Der Walt of Bloomberg wrote a column on the silver’s prospects. In it contained a quote from Jeffrey Christian of the CPM Group

Silver is in surplus, plain and simple.

We immediately challenged that statement in this twitter exchange:

silver institute to eddie van

Mr. Van Der Walt noted that the CPM and Silver Institute were different entitites. We responded that the CPM group does NOT include silver bar and coin investment demand in its supply/demand surplus/deficit analysis.

eddie smauklglkd re silver cpm

Click on the images above to see the full twitter exchanges.

For more information on silver supply and demand click here

How does the Silver Institute calculate silver demand?

From Silver Coin and Bar Demand 2015

We would estimate that if government mint coin demand demand is up 21% in 2015, privately minted silver rounds and bars would be up by at least that much.

The Silver Institute noted that during 2015 there was a “largely unexpected surge resulted in an unprecedented shortage of current year silver bullion coins among the world’s largest sovereign mints”.

During the great silver coin shortage of 2015, sales privately minted silver bars and rounds were also surging.

Demand for privately minted silver rounds and bars fell in 2015?

Yet, the Silver Institute 2015 projections do not include ANY increase in demand for privately minted silver bars and rounds in 2015 and reflect a stunning 21% drop!

silver demand by sector 2006

Silver coins and bars constituted just 5.2% of overall silver demand in 2006.

silver demand by sector 2015

Silver coins and bars are projected to constitute nearly 20% of overall silver demand in 2015.

If the Silver Institute underestimated 2015 privately minted silver round and bar demand, as we argue they did here, silver coin and bar demand would rise from a projected 206.5 million ounces to 246.7 million ounces and over all demand would rise from a projected 1,057.1 million ounces to 1097.3 million ounces.

Assuming no further adjustments, this would lift the silver coin and bar demand to 22.5% and reduce industrial demand to 52%.

silver demand by sector adjusted by smaulgld 2015

This chart is amended to assume that if silver coin demand grew by 21% in 2015, silver round and bar demand also grew by the same amount vs. the Silver Institute’s projection that silver round and bar demand declined by 21% in 2015.

If annual demand for silver for ETFs and silver added to derivative exchanges like Comex were included in overall silver demand, the percentage of silver earmarked for industrial demand would fall well below 50%.

Chart Showing Surging Gold ETF Inflows

gold etf march 11 2016

Inflows to gold ETFs have surged to their highest levels since 2009

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