The global silver market could face a deficit of 126 million ounces by 2020 and could send silver prices surging
As the market fixates on the price of oil and other real assets, a dramatic scenario is building in the silver market. More than two billion ounces of silver have disappeared from the market over the last ten years and we could be facing an annual shortage of more than 100 million ounces by 2020.
Not only is demand for silver surging and annual supply growth going nowhere but much of our available silver is being buried in public landfills. As a major component in batteries, CDs, circuit boards and other electronics, people are literally throwing their silver in the trash. That may be something they soon regret as the world runs out of silver and prices skyrocket.
people are literally throwing their silver in the trash.
Believe it or not a lot of above ground silver today is in the trash heap. Silver that is used in electronics and other electrical devices literally get’s tossed out when the device it is in is no longer useful. It is not feasible to harvest this silver and unlike gold it is lost forever. All this put’s supply of silver in jeopardy. Gold is reused over and over and is too valuable to get tossed away. On the other hand silver is less valuable so simply get’s discarded. This is surely a future price positive for silver as supply diminishes.
SILVER DEMAND IS SURGING
AND CANNOT BE STOPPED
Even as our supply of silver disappears from the market, demand is building every year. Demand for silver is mostly from three important categories; investment, jewelry and industrial uses. These three categories make up 95% of silver demand and they are all growing at a strong rate every year.
Demand for all three major uses of silver have increased over the five years since 2009. The real story is in the growth in investment and industrial uses. Investors have rushed to silver as central bankers around the world print money to cover spending, destroying the real value of currencies. Demand for silver coins and bars has jumped at an annual pace of 17.5% over the period.
The surge in investor silver demand as a safe haven asset is nothing new. When the U.S. dollar lost more than half its value from 1971 to 1981, the price of silver rose five-fold. Demand of silver coins jumped 63% to a record 65 million ounces in 2008 as the global financial system collapsed. The market meltdown sent silver prices up more than 37% from 2008 through 2010.
Global Demand for Silver Rising
In recent history, silver has gained around 42%, while gold has only provided a 27% gain. Silver has a level of accessibility that gold just can’t compare to. CoinInvest.com director Daniel Marburger recently said this about silver’s growing demand from investors. 90 percent of the company’s orders in the past three days had been for silver, compared with more typical demand of 70 per cent to 80 per cent for gold.
Silver also has utility demand that gold never will. Silver is not only a precious metal but also an industrial metal. Many leading industries depend on silver to produce their products.The solar power industry this year has accounted for 13% of silver’s industrial demand. As more consumers are shifting towards using solar power, this will significantly increase the demand for silver.
Point blank, silver is the best of both worlds. It has safe-haven characteristics that precious metals hold, while also having lucrative demand from many different industries. There never could be a better time in history to start investing in Silver Coins.
Global Demand for Silver Rising
Silver outlook 2020: Supply/demand fundamentals still key
Production remains a key factor in the silver sector, and as with the gold space high-grade resources are becoming more difficult to access, foreshadowing a potential decline in output in the future. The last few years, silver production has started to taper off and the overall grade on average is decreasing on that basis. That means you are getting less ore per shovelful on average. An increasing reduction in output will be further compounded by increasing demand in the industrial, currency and jewelry sectors.
It looks like we are going to have a small, maybe less than 1 percent, decline in mine production again in 2019. That’s following some consecutive years where we have seen lower mine production. We do think that industrial fabrication (demand) is going to grow. We also think it is going to grow within the automotive sector and in photovoltaics. Two very important end use centers for silver.
Also expect a 3 percent increase in demand from the jewelry sector and a 4 percent boost in calls for the white metal from the silverware space. India coming back to the silver market will create increased demand, as will a steady growth trend in the automotive and solar panel sectors. Web-savvy millennials embracing silver-backed crypto currencies will also influence silver prices going forward. Pickup in physical silver purchase volumes by investors, and modest growth in fabrication demand is also expected in 2020.