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An update on Silver demand

April 30, 2015

While this article is not groundbreaking by any means it is a good summary of where silver demand has been and is heading this year.

Silver set for longest slump in 24 years – CPM

The price hasn’t declined for four straight years since 1991, according to data from CPM.

Silver prices on average will decline for a fourth straight year as supplies grow and investors continue moving their money away from commodities, according to CPM Group.

The metal averaged $16.93 an ounce since the end of December, compared with $19.09 in 2014, CPM said in its “Silver Yearbook 2015.” The price hasn’t declined for four straight years since 1991, according to data from CPM, which didn’t forecast an average price for 2015.

Investors soured on silver and other commodities last year, as production outstripped demand for many raw materials and the dollar rallied amid concern that the Federal Reserve will raise U.S. interest rates. Net investment demand in silver is forecast to drop to 102.9 million ounces this year, after declining 13 percent to 131.6 million ounces in 2014, CPM said in a statement. Mine output will climb 1.1%.

“Silver supplies have been on the rise, driven primarily by mine supply,” CPM said in the statement. For prices to move higher, “it will be critical that much of this additional supply is absorbed by investors,” according to CPM.

Refined-silver supplies advanced 1 percent to 996.9 million ounces in 2014, CPM said.

Fabrication demand rose 3.5 percent to 865.3 million ounces last year as the drop in prices drove jewelry purchases higher and usage of the metal in electronics and solar panels increased, the company said.

The metal finished last year at a lower price than at the end of 2013, marking the first consecutive annual decline since 1992.

Through Tuesday, silver futures on the Comex rose 6.6 percent to $16.63 an ounce this year. In 2014, the metal slumped 19 percent.

©2015 Bloomberg News

Discussion
64 Comments
    Apr 30, 2015 30:32 AM

    So much for the much ballyhoo’d shortages theory. That one is knocked down now too.

      bb
      Apr 30, 2015 30:02 AM

      The “shortage” theory was shown to be hogwash some time ago now.
      Common sense, all demand has been met with available supply.
      Only time a shortage claim had any validity was when the government mints couldn’t keep up with orders, private mints never had issues if I recall.

        Apr 30, 2015 30:15 AM

        Been awhile since I looked at it. The bulls sure were persistent with that claim though and whitewashing all the facts to slap lipstick on a pig. Funny but they were almost convincing for awhile. They just never give up.

        Silver to 10 dollars? Seems about right to me.

          bb
          Apr 30, 2015 30:00 PM

          Ya, you could be right Bird, $10 silver, I will be foolish and buy at that point again, even tho I already have more than is sane to hold.

          This “shortage” talk was always bull, I believed it before I investigated myself.
          I recall Bob Moriarity expressing a few times it was bull.
          But yes, the argument was convincing for anyone not researching themselves.

      Apr 30, 2015 30:18 PM

      There is a really interesting article about how many Silver miners are starting to diversify into Gold mining in a strategic way, and actually grew their gold reserves much more percentage-wise than gold miners even did.

      At the end of the article the remarks from First Majestic’s CEO show his feeling that this may be a bad trend, and when the silver price does turn around these companies are going to wish they didn’t get into gold.

      I can see the advantage of diversifying a little, as a precaution, but many investors want to by silver companies as a multiplier on the spot silver price. If they diversify too much then it dissolves that branding in the marketplace. However, most silver companies also produce a great deal of base metals, so one could argue they are already poly-metallic miners to begin with.

      FOR HARD-HIT SILVER MINERS, GOLD IS THE SILVER LINING

      http://www.reuters.com/article/2015/04/27/us-mining-silver-gold-idUSKBN0NI0AD20150427

    Apr 30, 2015 30:40 AM

    Fabrication demand increase is the key to this article. The great thing about Silver is that because so much supply is contingent driven from biproduct production, the pressure and pending closures of massive scale Copper, gold, lead, zinc, moly mines will put pressure on silver supply. An example is the closure of the Century Mine in Australia in 2015. Primary zinc production, but the closure will also result in a reduction of 1-2 million ozs of silver each year. Not huge but you get the idea.

      Apr 30, 2015 30:17 AM

      In other words, there is a lot of room for silver to decline until those closures actually happen because right now its a flood of metal into a falling market.

        Apr 30, 2015 30:24 AM

        Bird- Can I buy all your physical silver and have it stored off shore – cash on the barrel head..???

          Apr 30, 2015 30:44 AM

          Marc…….Bird is correct for where he lives in Africa. He will not have the strength to carry enough away with the cart and donkey when the SHTF. So, I agree that he should continue electronic trading……………..THE BOOT……….. 🙂

            Apr 30, 2015 30:01 PM

            Frank – Did I miss something?? – I really apologize for this question – but are you Jerry OOTB….you have the same kind of humor…funny…I knowJerry didnt just fall off the radar..so…sorry..please clarify..either way great, maybe Jerry got the ax from his wife to get to work fixing the house,mowing the lawn;patching the fence;flushing the toilet….etc…etc..:))

            Apr 30, 2015 30:25 PM

            I just rearranged my handle………..OOTB…….BOOT……..AL, got mad and gave me the boot……….he,he…………… 🙂

            Apr 30, 2015 30:11 PM

            You can hardly believe how much of a load Donkeys can take, Jerry. I was SHOCKED when I first saw them put to labour. We are putting in a new lawn and so the loads of soil are all coming by beasts of burden. The owner arrives with a couple dozen of them on his round trip. Some have concrete blocks for the neighbors, others have sand or sacks of wheat. He sent mine running into the yard to drop the payload. In and out in a few minutes and then off to his next stop. They seem to be pretty smart creatures too. And tough for being so small.

            Apr 30, 2015 30:27 PM

            What happened to your lawn,,,did the turtle decide to weed the yard.

            May 01, 2015 01:13 AM

            I should have planted the indigenous grasses Jerry. Instead I put in a lawn from a bag of imported seeds but it could not handle the dry season. The whole thing withered and just never came back. But my neighbor who has local grass saw his sprout back to a beautiful sea green days after the rains…..so the turtle is on his land now!

        Apr 30, 2015 30:36 AM

        Sorry SD….its long gone. I only trade electronically now. The physical stuff is for kids.

          Apr 30, 2015 30:04 PM

          :)..no worries…..the CPM article is another great contrarian indicator!…schills!!

            Apr 30, 2015 30:13 PM

            Guess so. Silvers price pattern looks quite depressed to me though. More so than golds.

            May 01, 2015 01:28 PM

            I tend to agree Birdman and feel Silver will end up bottoming first and lead Gold up. Silver’s bear market started a few months before Gold as well.

    Apr 30, 2015 30:58 AM

    http://srsroccoreport.com/canadian-silver-production-down-signficantly/canadian-silver-production-down-signficantly/

    This article shows the result of base metal mine closures on silver production.

    Birdman, shortage can occur quickly. The real question is how much sits in inventory to buffer the blips in supply. Inventory is the one area I am unclear on with Silver. Supply and demand seem in lock step however in my opinion they are moving in two different directions.

      Apr 30, 2015 30:28 AM

      But that estimated drop in investment demand of 29 million ounces….It’s still quite a bit if its accurate. That itself covers a lot of lost production. Forecasting is a miserable pastime though. Too many variables. Even if the economy shrinks we could still see a large change in investment demand should metals come off the floor. But how does it come out in the wash?

    Apr 30, 2015 30:59 AM

    The closure of base metal mines, of which many are pending closure or have closed in the last couple years wont necessarily be felt immediately (depends on inventory). Some argue inventory is disappearing rapidly but not concrete evidence of that yet. Solar industry will let us know when that occurs.

      Apr 30, 2015 30:07 PM

      The closure of base metal mines that are not due to ore depletion are due to financial blood sucking caused by short selling that limits the price of the metals being mined.
      A business that can’t make a profit that keeps the share holders and workers well paid is either corrupt and inefficient or it is being bled white by entities that manipulate and control the price of the product being produced by the business. The financial blood sucking must end so that business can prosper. In my opinion short sellers and their supporting powers that be ought to be sent to concentration camps and put to work pending a final reckoning in regards to their crimes. A productive enterprise and its workers ought not be victimized by the so called market.

        Apr 30, 2015 30:24 PM

        The whole manipulation-conspiracy is bull pucky invented by guys who get you to send money to them for telling you what you want to hear. At $50 I said silver was expensive and got a lot of flack for it. At $15 I said it was cheap and got a lot of flack for it.

        Investing in metals is simple. Buy when everyone is claiming it’s going to go down and sell when everyone is claiming it’s going to keep going up. Buy cheap and sell dear, it’s no more complex than that. And ignore all those who claim to have some crystal ball telling them what prices are going to do. They always get it wrong.

          May 01, 2015 01:14 AM

          I agree with you Bob. These prices near 15 bucks are just fine even though it looks to me they could still fall lower.

          May 01, 2015 01:08 AM

          I don’t spend money on conspiracy theories and market manipulation of gold and silver is absolutely not a conspiracy theory. It is a law or to be more precise a crime in progress protected by people who deny the conspiracy. You don’t know any conspiracy deniers do you Bob? I am sick and tired of people who live in a lunatic fantasy world and who believe in the criminal system of the government, media and finance. Frankly I am fed up with the world as I know it and the world you accept as legitimate.
          Consider yourself fortunate that I am not in charge as I would annihilate the world as you know it in the name of justice and upholding and defending morality. Those that spout the term conspiracy theory or theorist deserve to have their heads chopped off for defending crime.

            May 01, 2015 01:53 AM

            Then it’s a good thing you are not in charge of the world.

            Silver is a commodity, it goes up and down. The brokers make a lot of money both buying and selling it because they know that the “silver bugs” are the most irrational investors in the world and have no idea of how markets work and don’t believe in supply and demand so can be sheared on a real regular basis.

            If you will buy silver when it is cheap and sell when it is dear, you will make money on a regular basis. All else is nonsense.

            May 01, 2015 01:52 AM

            Great Comment Bob!

            May 01, 2015 01:18 PM

            Well said and good responses Bob.

      bb
      Apr 30, 2015 30:22 PM

      I don’t think the solar industry will show anything much about silver, we have enough silver for solar, its another rare metal that will restrict solar production.
      Sorry, I always forget the name of it,but I remember they get it from the inside of chimneys and only 1 mine. Last time I mentioned it I think it was Mathew that mentioned its name.

        May 01, 2015 01:22 PM

        Originally Selenium was found to be light-sensitive and was used in early models.

        To make solar cells currently, the raw materials—silicon dioxide of either quartzite gravel or crushed quartz—are first placed into an electric arc furnace, where a carbon arc is applied to release the oxygen. The products are carbon dioxide and molten silicon. At this point, the silicon is still not pure enough to be used for solar cells and requires further purification.

        Pure silicon is derived from such silicon dioxides as quartzite gravel (the purest silica) or crushed quartz. The resulting pure silicon is then doped (treated with) with phosphorous and boron to produce an excess of electrons and a deficiency of electrons respectively to make a semiconductor capable of conducting electricity. The silicon disks are shiny and require an anti-reflective coating, usually titanium dioxide.

        Read more: http://www.madehow.com/Volume-1/Solar-Cell.html#ixzz3Yvblu9MQ

    Apr 30, 2015 30:08 AM

    http://www.campbellrivermirror.com/news/301611031.html

    Another mine closing. Produce close to a million ozs silver produced last year (biproduct).

      Apr 30, 2015 30:35 AM

      They never mentioned metals prices or demand once in that article. Odd.

      May 01, 2015 01:26 PM

      It seems like their problem was poor mine planning, not enough room for expansion at the mine site, a lack of available power, and many other inefficiencies.

      Hopefully they can retool, and come back with a better plan, but they’ll need to raise money and that will dilute the snot out of shareholders. Wait for all that to pass and then maybe have another look.

    Apr 30, 2015 30:40 AM

    CPM and GFMS couldn’t agree on the color of silver let alone the statistics for a given year. In my view they have proven themselves to be irrelevant. Just suppliers of statistics to justify price manipulation to the downside to the detriment of owners and producers. Be gone ye who work and support iniquity!

    Apr 30, 2015 30:07 PM

    Steven-
    Thank you for your input…dang, I almost sold my silver to but in soveign bonds and wait to get 10% of my currency back and Negative interest rates…what a deal!!!

    Apr 30, 2015 30:08 PM

    I said currency- as in paper as in burn or wipe your arse with…:)

      Apr 30, 2015 30:36 PM

      SD…You dont want to go wiping your arse with those fed notes..that little owl up in the corner might decide to to give you a nip….& remember your pecker is nearby …OUCH.

        Apr 30, 2015 30:14 PM

        What are you so miffed about Tony?

          Apr 30, 2015 30:03 PM

          HELLO BIRD…The absence of Jerry…ANDREW…& your best pal MATTHEW…
          BTW Just read the above & found out that silly sod Jerry ootb has gone & changed his name again……Jerry stop playing silly buggers.

            May 01, 2015 01:17 AM

            Don’t worry Irish, they will all be back as soon as the mood in metals picks up again. This is just a stage in the process near the end of the bear that is normal and predictable. When the day comes that metals break out again this place will be buzzing with a lot of names of people you have not heard from in ages.

        Apr 30, 2015 30:26 PM

        HAAAAAAA! I knew that might “BRING YOU OUT” Yes, everybody1 I am a gentleman and a scholar….well…kinda..:0…but you got of love Irish’s sense of humor,timing and just good ol boy fun!!…LOL!!!…U R funny Irish…and NO I am Not easily amused…you just seem like damn frickin fun!!

          Apr 30, 2015 30:06 PM

          Marc…Remember the old days , you me , jerry…winding the big fella up…Yeah we had a laugh….Best of health to you Mate.

            Apr 30, 2015 30:08 PM

            BTW…If you MATTHEW..ANDREW..are reading this , pop in & say hello.

            Apr 30, 2015 30:47 PM

            Hello.

            May 01, 2015 01:31 AM

            Andy will be coming back as…..FRIAR TUCK

            May 01, 2015 01:32 AM

            miffed………..glad to see ya……………THE BOOT

            May 01, 2015 01:34 AM

            wmk…….. Great handle 🙂

            May 01, 2015 01:04 PM

            WMK – I knew that was you Matthew….Hello sir.

      May 01, 2015 01:07 AM

      Energizer bunny-like … and up again this morning with gold down.

      May 01, 2015 01:16 AM

      As always, thanks for the Claude tip. I bought most of my shares in mid-Oct14. Almost a 3-bagger for those shares !

        May 01, 2015 01:37 AM

        In Canadian dollars, it has already put the 233 week ema behind it and is up 500% from its bear market low. It’s very overbought now, but the long term implications of its relentless move higher are very good. Even when gold gets hit hard, Claude doesn’t care.

        I trimmed some more today but still have a more than meaningful position. I mentioned months ago that it could go much higher despite already having good moves. Juniors are good at ridding themselves even of bulls by doubling AFTER they become overbought.

        http://stockcharts.com/h-sc/ui?s=CRJ.TO&p=W&yr=3&mn=3&dy=0&id=p91724320873

          May 01, 2015 01:47 AM

          At this rate, Claude could eventually reach a reasonable P/E with gold @ $US1200

          May 01, 2015 01:47 AM

          Also, this could be a run-up to earnings on 07Apr

          May 01, 2015 01:09 PM

          The first question is……If this is a run-up to earnings reported next week, don’t many investors buy the rumor and sell the fact?

          Couldn’t people hit sell on the 7th before the jobs report numbers are out on the 8th?

          Do you think Claude may even pop higher once earnings are reported on the 7th?

    May 01, 2015 01:49 AM

    Cmon miners stop resisting and fall like a rock.