Silver supply/demand historical and current

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silverwood
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Silver Demand in Asia...Fact or Fiction?" with Mr. David Morgan

"The real key to these markets is the physical demand"...David Morgan

But David, the physical demand is only half of the key because it has to be viewed in the context of the available supply...Silverwood

zman
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morgan

I'm not really impressed with David Morgan, he really doesn't talk about the fundamentals.

I what I find so funny is that all of these PM experts give 15-30 minute interviews and never say the key world, INFLATION!

How in the world can anyone talk about the gold/silver markets and never acknowledge that there's no inflation today, they just avoid that subject completely!

Hey David Morgan, how about saying "the reason why silver trades at $15 oz today is because the dollar is soaring and all commodity markets are weak, this is because there's no inflation and I was wrong about QE being inflationary"?  

silverwood
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Hi Zman

I don't subscribe to the Morgan report or any report for that matter. I believe that David does do much research on supply/demand fundamentals for silver and reveals them to you for a fee. Thanks to Turd we can gather that type of information for free and post it here on this forum. For anyone seriously interested in placing a portion of ones excess wealth in silver it is a good idea to understand these supply/demand facts and stop listening to all the snake oil salesmen! In regards to inflation as a reason to invest in silver that does play an important role, IMO, but there is not a linear relation to it. Understanding inflation one needs to look at it from a long term prospective. Doing ratio analysis of silver to gold, silver to gasoline, silver to milk, etc. etc. and looking at those charts would be way of seeing when silver is a good value. I do believe that in this moment in time silver is a compelling value. It may fall further in price but I would view that as a buying opportunity. The $US soaring is not a linear relation to the price of silver but more a relation to a basket of currencies mostly composed of the Euro and Yen.

zman
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ratios

If we look at the key ratio, gold/oil trades at 15.7 today, which is basically above the average the last 60 years, as we can see it trades around 10-15 with a few spikes to 20-25 for very short period of time. http://www.macrotrends.net/1380/gold-to-oil-ratio-historical-chart

So why anyone would think that gold (or silver) is undervalued in this scenario is just plain wrong, if the ratio heads to 10, we could see $70 oil and $700 gold next year.

I think looking at silver to gasoline or silver to milk would be a waste of time in trying to find value for either commodity.

silverwood
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Ratio evaluations

Hey Z, I clicked on your link and the ratio is one of barrels of oil/per ounce of gold. It did not contain and moving averages so there is a lot of noise in that chart. If I had to guess it appears that oil/gold is somewhere near equilibrium. Nowhere on that chart does it show what silver's value is in relation to oil. The chart is also not using $us anywhere so assuming the ratio does move to 10 will not give you $ values at that moment in time. So when you say studying ratios of silver to other commodities is a waste of time I have to disagree with that. What the ratio is showing is which commodity you are looking at is doing better, forget what the $ amounts are as you are not measuring in $ terms. 

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I'm just showing that the

I'm just showing that the gold/oil ratio is not showing any extreme undervaluation for gold in relation to other assets (oil/dollars) that many PM investors are suggesting.

If oil was trading at $150 and gold was at $900, then they have a great case for not only undervaluation but also manipulation, but that's not taking place today.

The Dow/Gold ratio trades at 15 today, hell in 1999 it traded at near 44, many stock investors might see value in stocks relative to hard assets today.

silverwood
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Zman and using a ratio

Hey Z, I get what you are saying so let's use your example of $900 gold and $150 oil. Doing the math that would be a 6/1 ratio. The chart you posted is almost 70 years worth of data. 6/1 ratio would indicate gold as being undervalued in relation to oil as that would be the lowest reading in almost 70 years. With your observation of gold vs. the dow you are correct and that may just explain why the dow is doing well now.

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Photovoltaic use of silver

Huge Solar Plant Lags in Early Production

By MICHAEL R. BLOOD
Associated Press

AP Photo
AP Photo/John LocherTechnology Video

LOS ANGELES (AP) -- The largest solar power plant of its type in the world - once promoted as a turning point in green energy - isn't producing as much energy as planned..."

http://hosted.ap.org/dynamic/stories/U/US_WORLDS_LARGEST_SOLAR_PLANT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-11-17-14-33-47

-----------

The failure of this project puts a clear target on the back of the solar photovoltaic industry. The sheet has not been pulled over the corpse yet, but the patient is not looking all that great.

The failure of the solar industry to meet projections in this project  when given every opportunity to shine (so to speak) will lead to lower investment, period.

Any projections of silver use in the solar industry will need to be tempered. Wildly bullish projections of PV silver use made just a few years ago are falling far short in reality.

This new data is not going to breathe new life in the industry. 

erewenguy
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And just for proper balance

China Hunger for Clean Energy to Leave No Rooftop Behind

By Bloomberg News Nov 12, 2014 9:27 PM ET

i9I_DlKfcdIA.jpg

Photographer: Philippe Lopez/AFP/Getty Images

A masked worker sorts silicon wafers at the Trina Solar Ltd. manufacturing plant in Changzhou, China.

China, the world’s biggest solar market for two years running, is pushing to install more panels at factories, schools and even greenhouses as it seeks to meet its goals under a historic climate agreement with the U.S.

China expects to install as much as 8 gigawatts of small solar systems this year, more than 10 times what was built last year. The country had almost 20 gigawatts of solar capacity at the end of 2013, a figure comparable to about 20 nuclear reactors. Most of that came from massive solar farms in remote locations and policy makers are now promoting smaller systems closer to where they’re needed. ...

http://www.bloomberg.com/news/2014-11-12/china-hunger-for-clean-energy-to-leave-no-rooftop-behind.html?utm_content=bufferc3ff2&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

silverwood
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3rd Quarter Gold Supply and Demand

3rd Quarter Gold Supply and Demand
In this video, we will look at the World Gold Council's 3rd Quarter Gold Demand Trends Report.
The report:
http://www.gold.org/supply-and-demand...

silverwood
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Another great SRSrocco on silver eagle sales

U.S. MINT REPORTS ON SILVER EAGLES: Huge Demand & Weekly Rationing

Filed in Precious Metals by SRSrocco on November 19, 2014 • 0 Comments

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After the huge take-down in the price of silver on October 31st, demand for Silver Eagles skyrocketed.  Then on Nov. 5th after silver was knocked down another 5%, the U.S. Mint suspended sales of Silver Eagles.

It was reported that the U.S. Mint sold 2 million Silver Eagles on Nov. 5th before they suspended sales.  However, we didn’t see a huge increase in sales on their website for that day.  So, I decided to contact Michael White, Public Affairs person for the U.S Mint and ask him about this issue as well as some other questions.

Mr. White provided me that actual sales figures from Oct 31st to Nov. 18th.  These sales figures can be seen in the chart below:

Silver Eagle Sales Oct 31 - Nov 18

On Halloween, Oct. 31st when Zombies knocked the price of silver down 4%, the U.S Mint sold 1,425,000 Silver Eagles that day.  After the weekend, Silver Eagle sales on Monday, Nov 3rd were a hefty 625,000.  As the price of silver trended lower on Tuesday, the U.S. Mint sold another 430,000 on Nov. 4th.

And then on Nov 5th, with the paper price of silver down 5%, demand for Silver Eagles increased to a level that totally wiped out all remaining Silver Eagle inventories at the U.S. Mint.  We must remember, there are Authorized Dealers who purchase Silver Eagles directly from the U.S. Mint to sell as retail or to wholesale dealers.

Even though reports on the internet stated that the U.S. Mint sold 2 million on Nov 5th, it was only 205,000 before sales were suspended.  Possibly the U.S. Mint had orders for 2 million, but there wasn’t any inventory remaining after the 205,000 was sold that day.

The U.S. Mint put out a press release to their Authorized Dealers that Silver Eagle sales would resume on Nov. 17th.  On Monday this week, the U.S. Mint sold 1,012,000 Silver Eagles and another 298,500 on Tuesday.  The total for November is 2,570,500.

Mr White also told me that the Silver Eagles were now on a “Weekly Allocation.”  He stated that the allocation to the Authorized Dealers this week was 1,525,000.  So far this week, the U.S. Mint sold 1,310,500 Silver Eagles with only 214,500 left for the remainder of the week.

I asked him if they would continue allocating Silver Eagles for the rest of the year, and he told that he only knew what they were going to do on a week-to-week basis.  I also asked him when they were going to shut down production in December of the 2014 Silver Eagles and start the 2015’s.  He also stated that he did not have that information but told me he would add me to their email list and send me updates.

If the U.S. Mint continues allocating Silver Eagles, I would imagine they will provide about 1.5 million a week to their Authorized Dealers.  Which means, we could easily see approximately 4 million sold for November.  This would put the total Silver Eagles sold for the year at over 42 million.

If the U.S. Mint continues to produce and sell Silver Eagles in December (for at least a week or two), 2014 will be another RECORD YEAR of sales at over 43 million, surpassing the 42.7 million sold last year.

I will continue to provide updates and articles on sales of Silver Eagles as well as the Q3 2014 sales of Canadian Silver Maples when the data is released at the end of this month.

Please check for new articles and updates at the SRSrocco Report.  You can also follow us at Twitter below:

SRSroccoReport Twitter Button

zman
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silver demand down

http://www.kitco.com/news/2014-11-19/Silver-Demand-To-Drop-In-2014-GFMS.html

"Total physical silver demand is seen down 6.7% in 2014"

"Industrial demand was forecast down 1.8%, with jewelry seen down 4.4% and silverware down 6.3%"

These are the core reasons why silver trades at $16 oz today, yet nobody around here wants to talk about these aspects of the silver market.

silverwood
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Hey Z I agree

I agree that the board members who are interested in owning silver must understand the dynamics of this silver market, hence that is what I am trying to accomplish in this thread. All the conjecture and opinions of what manipulation here or there is just a waste of time. What is important is understanding the supply and demand fundamentals. When demand outstrips supply, prices should rise and when supply is greater than demand price will likely weaken. It is really that simple. Those mining reports I have posted from Moments In Trading are key to understanding future supply. The picture I am getting is miners trying to survive. When they can't make a profit mining that should give you an idea of when to buy silver. Buying and owning silver for a long term value store is not a get rich quick scheme! Lower oil prices globally if they persist for some time will help restart the global economy, IMO, but it should take some time for this to play out. All we can do is look at the supply/demand and go from there.

ancientmoney
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silverwood, I agree re: physical supply and demand...

being the major factor in determining price--or at least it should be.

Regardless what zman says, the physical prices are not being determined by physical supply/demand, but rather paper supply/demand.

When JPM can "sell" 150,000,000 ounces of silver via a computer entry, and silver is then priced based on that faux "supply," the result is that we get prices as if silver was simply flowing out of the ground, in .999 pure form, with no mining needed.  Just the cost of labor to scoop it up and reform it to needs.

zman and the bankers see that 150,000,000 ounces JPM conjures out of their keyboard as just as real as 150,000 comex bars on the vault floor.

You see, the comex futures pit IS the silver (and gold) manipulation.

True supply and demand will not be the price-making mechanism so long as there exists one ounce of physical that can be rerererererererehypothecated into 100 or more cyber-ounces.

zman
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@ancient

If you want to continue to believe that buying paper silver should change the supply and demand of the physical market, you're going to get very frustrated.

For every short sold into the market, there's a buyer.  If that buyer never takes physical delivery of that silver, they are NOT silver investors, they are a paper speculator.

Have you ever wondered why there are NO shortages of physical silver for industry or investment the past 3 years?   Because there's plenty of silver even at $16 oz today!

If investors truly thought that price suppression was taking place and that silver offered great value at $16 oz today, they would be buying it until there was none left, that's NOT happening.

Why can't Sprott get investors to buy into his PSLV fund?   They're not interested.

Nick Elway
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Silver demand to fall 7 percent(sic)in 2014-Thomson Reuters GFMS

Did they use a calculator?

http://www.reuters.com/article/2014/11/19/silver-gfms-demand-idUSL2N0T821620141119

Numbers from the bottom of the article

  Demand (in mln oz )        2013           2014 (forecast)

Jewelry                                189.2            197.9

Coins & Bars                         191.6             241.6

Silverware                              46.2               49.5

Industrial Fabrication         588.0             577.5

Physical Demand                 1,077             1,004.5 frown

Doing the math on my calculator I get

Physical Demand                  1,015             1066.5   smiley

I get Physical Demand Projected to INCREASE by 5 per cent 2014 versus 2013

Did the writer have a calculator?

and here is from Reuters in May of 2014 (You'd think the 2013 numbers would be complete?)

http://in.reuters.com/article/2014/05/14/silver-gfms-idINL1N0NZ26320140514

2012 2013 Demand (in mln oz )

Jewelry 181.4 198.8

Coins & Bars 139.3 245.6

Silverware 44.6 50

Industrial Fabrication 589.1 586.6

Physical Demand 954.4 1,081.1

ancientmoney
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zman, you explained my reasoning perfectly...

"For every short sold into the market, there's a buyer.  If that buyer never takes physical delivery of that silver, they are NOT silver investors, they are a paper speculator."

The corollary, of course, is if the short seller does not (or cannot) deliver physical silver, they are NOT silver sellers, they are a paper speculator.

And hence, comex IS the manipulation.

sierra skier
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The paper PM markets are the

The paper PM markets are the fiat of metals. These futures/paper markets should be required to possess 1 ounce of PMs sor every ounce of paper they sell. If that was the case then a supply/demand PM market would respond like it should. When the comex sells 100 ounces of PMs with only 1 ounce of product that is a very poor representation of a supply/demand market.

Just think, If I could spend $100 for every $1 I have I would be rich, gosh what a deal.

Zman, you can spin it and justify it as much as you want but the paper futures markets are no better than our currency and the federal reserve printing away as much QE, Twist, currency swaps,,,,, etc. as they want. There is no true representation of value, just speculation on huge margin.

zman
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@sierra

The paper markets don't control the price discovery, it's the physical markets that dictate price, paper trades off of physical.

I'm not spinning anything, do you notice no one answers my basis questions about shortages?

Has the Comex ever failed to deliver metal?   No,  it functions just fine.

Did you have a problem with the markets when gold went from $250 to $1900 and silver from $4 to $50?    I didn't think so!

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Paper pricing. If the paper

Paper pricing.

If the paper price is $16 and I head to the local coin store and buy an ounce of silver for $16 then $16 is the phys price.  I put up the fiat and I take delivery.

If this theory about how paper price is not the right price were true then my local coin store (or anybody else with physical) would not sell me an ounce of silver for $16.   The mines would not sell silver to make the coins.   And everything would grind to a halt.

Plenty of physical silver is changing hands every day and it is all changing hands based on the spot price of the major exchanges. 

__________________

Swing trade indexed ETFs. Long physical gold, silver, and 1 miner.

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