Silver Coin and Bar Demand – 2015.
The Silver Institute reports silver coins sales projected to rise 21% in 2015 to 129 million ounces; silver coin and bar demand to rise 1.4%.
Silver coin and bar demand is probably much higher as is the physical silver annual deficit.
According to the Silver Institute, silver coin demand (products produced by government mints) is forecast to increase 21% in 2015 to a record high of 129.9 million ounces.
This would constute 12% of overall silver demand, up from 4% in 2005.
The Silver Institute projects silver coin and bar demand will rise to 206.5 million ounces in 2015 up just 1.4% from 2014’s 203.5 million ounces. Silver rounds and bars are produced by private mints and not considered “coins”.
While the Silver Institute’s 2015 projection of silver coin demand of 129.9 million ounces squares generally with our projection of 125.2 million ounces, their overall coin and bar demand does not.
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!
According to the Silver Institute, silver coin demand in 2014 was approximately 107 million ounces of a total 203.5 million ounce demand for silver coins and bars. This means that in 2014, demand for silver products not produced by government mints was about 96.5 million ounces.
In 2015, the Silver Institute estimates that silver coin demand will increase to 129.9 million ounces up from 107.5 million ounces in 2015, but overall silver coin and bar demand will increase just 1.4% from 203.5 million ouces to 206.5 million ounces.
This means that, according to the Silver Institute, demand for silver bars and rounds is projected to fall 21% from 96.5 million ounces in 2014 to 76.6 million ounces in 2015.
We believe that if silver coin demand rose 21% in 2015, silver bar and round demand grew by at least the same amount.
In 2014, silver bars and rounds accounted 96.5 million ounces. A 21% increase in 2015 from 2014 would mean demand for silver bars and rounds would increase to 116.8 million ounces or a 40.2 million ounce difference from the 76.6 million ounces the Silver Institute projects.
Impact on Silver Deficit
The Silver Institute noted that physical silver was in deficit for the third year in a row. They projected a deficit for 2015 of 42.7 million ounces which was offset by “net outflows from ETF holdings and derivatives exchange inventories” to 21.3 million ounces.
If however, we add the 40.2 million ounces from silver bar and round demand unaccounted for by the Silver Institute, the silver supply demand deficit rises to 82.9 million ounces or 61.5 million ounces when factoring in outflows from ETFs and exchange inventories.
Appendix I: Silver and Industrial Metal Revisited
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%.
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.
Next week we will be releasing the Smaulgld 2015 Silver Supply and Demand report that will include further analysis and charts. To receive it as soon as it is published, subscribe for free below.