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Copper Catcher
Administrator
USA
2092 Posts |
 Posted - 06/10/2010 : 07:56:17
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First, visit The Silver Institute's website: You must be logged in to see this link.
You will notice a nice chart that basically adds up the world supply and demand of silver by category. Everything is nicely balanced and according to them the supply and demand are equal and have been over the last few years.
Yet they also make these statements as well:
"Implied net silver investment increased by a staggering 184 percent to 136.9 Moz last year, recording its highest level in the past 20 years."
"Government stocks of silver are estimated to have fallen by 13.7 Moz over the course of last year, to reach their lowest levels in more than a decade."
So, my question is this. If you read a little you will come across lots of articles on the web with pundits who say the supply of silver is dwindling.
So which is it? Are their truly adequate supplies of silver to meet the current demand or not?
If so, will prices go higher anyway? If not, will prices remain constant? What say you...
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Copper Catcher
Administrator
USA
2092 Posts |
Posted - 06/10/2010 : 08:01:12
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This is one answer......
Silver market fundamentals DISTORTED by bullion-ETF's
Jeff Nielson
June 3, 2009
Global statistics were recently released by the “precious metals research and consultancy” firm GFMS Limited, based in London. These results, in turn, have been made public by the Silver Institute, an excellent source for data on the silver market, which I have referred to in previous commentaries.
The Silver Institute presented 2008 supply/demand data side-by-side with the 2007 numbers, and the data can only be described as “incredible” (or should I say “un-credible”?).
World Silver Supply and Demand (million ounces)
(totals may not add due to rounding)
** Note - See chart at:
You must be logged in to see this link.
It is understandable how the supply and demand numbers can perfectly balance out, once government and “scrap” sales are factored into the equation. However, how could anyone possibly believe that supply/demand from 2007 was absolutely identical to supply/demand for 2008?
With 2008 being the most volatile year for global markets since at least the Great Depression, it would have been surprising to see numbers for 2008 being even close to 2007 totals – especially given that 2008 saw a new, multi-decade high in the price of silver.
Moreover, there have been big changes in many components of the silver market. Photography demand dropped (apparently) by 16% in 2008. “Coins and medals” demand was supposed to have jumped by 60%, year-over-year, while “implied net investment” (which is primarily bullion-ETF demand) more than doubled.
Given these huge changes in the sub-components of this market, the chances of supply/demand numbers being identical year-over-year is essentially zero. Thus, we start from a position that data for this market is being “doctored” - on both sides of the equation.
Empirically and anecdotally, we have reports of bullion dealers paying record premiums for silver, while retail dealers all over the world were reporting shortages and huge delays filling orders. Meanwhile, patents and new industrial applications for silver continue to soar. Thus, the “conclusion” of this data: that silver demand was totally unchanged from 2007 to 2008 lacks any credibility. The difficulty is in trying to ascertain where these numbers are being fictionalized – and by how much.
In doing further “digging”, I came across something much more remarkable (and much less ambiguous) when I looked at silver inventory levels. The recent peak was in 1990, at approximately 2.2 billion ounces. At that point, silver inventories began a dramatic plunge. Supposedly, these inventories “bottomed” at the beginning of 2005 – and have been rising ever since.
Does this seem even remotely credible, given the obviously “tight market” which we saw last year? The answer to this conundrum is found when we add in the fact that bullion-ETF “holdings” have been added to silver inventories. As everyone familiar with the precious metals sector knows, demand for bullion-ETF's has exploded since 2005.
Regular readers will be familiar with my stance on (so-called) “bullion-ETF”s. With the exception of a few, reputable funds which explicitly guarantee that they hold actual bullion, the business model of these ETF's is openly fraudulent (see “Bullion-ETF's a multi-purpose scam”).
Previously, I have accused the Manipulators of using these scam-investments to divert a huge component of silver investment demand from buying real silver, into purchasing phony, “paper promises” to deliver silver. What is more, these “paper promises” are being made by the same bullion-banks who have been able to criminally manipulate Comex futures trading (thanks to the non-existent oversight of the corrupt, CFTC).
However, what is now finally apparent to me is that these phony, “bullion-ETF's” have a second, equally-important use (as a tool of the Manipulators).
At the beginning of 2005, total silver inventories had dwindled to a tiny amount of less than 200 million ounces – less than 10% of the recent high from 1990. Yet, today, despite the steady tightening of this market, inventories have supposedly tripled to about 600 million ounces.
The difference between these two numbers corresponds almost identically with the total holdings of “bullion-ETF”s. The reason why this “coincidence” is of such tremendous significance is because bullion-ETF's are considered part of global silver inventories.
Theoretically, the inclusion of these funds makes sense, since supposedly they are holding silver bullion. However, these bullion “holders” are never subjected to any kind of audit, nor are the Manipulators – the bullion-banks who supposedly hold all of this bullion for the ETF's.
As of today, the total amount of this “inventory” is now over 430 MILLION ounces, equal to roughly ½ of total, annual “supply” (if we take the GFMS numbers seriously). The larger this mountain of “phony” silver gets, the more that silver “inventories” supposedly grow.
It is just another outrage to the precious metals market, the most-heavily manipulated commodities market in history, that the Manipulators can grossly distort supply/demand fundamentals – simply by writing-in their own supply, demand, and inventory numbers.
Obviously, there are similar games being played in the gold market. However, the “game” being played by the Manipulators in the silver market is much different, and more dangerous (for them), due to one, overriding consideration: it is a widely-known fact that the vast majority of above-ground silver inventories has been literally “consumed” in various industrial applications.
Conversely, with gold, virtually all the gold ever mined is still available, somewhere, in some form. Thus, for gold, there are still (dwindling) supply sources which the Manipulators can use to shore-up supply. No similar stockpiles for silver exist.
In a follow-up to this commentary, I will speculate on what lies ahead for a market with fictionalized supply, demand, and inventories – in a world where the (real) above-ground stockpiles of silver have not been this low in centuries.
The original commentary has many reference links not included in this version. To view these links, please go to...
You must be logged in to see this link.
Jeff Nielson
You must be logged in to see this link.
Source: You must be logged in to see this link. |
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Copper Catcher
Administrator
USA
2092 Posts |
Posted - 06/10/2010 : 08:52:06
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This is an interesting report from the USGS i.e. The 2010 Annual Publications - Mineral Commodity Summaries
The silver report is on pages 146 and 147: You must be logged in to see this link.
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Copper Catcher
Administrator
USA
2092 Posts |
Posted - 06/13/2010 : 18:31:07
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I contacted the USGS in reference to a story I read talking about how silver would be runnning out by the year 2020... Here are the email exchanges....
Dear Mr. Brooks,
In the 2010 Annual Publications - Mineral Commodity Summaries on page 146 and 147 You must be logged in to see this link.
The figures show silver world reserves of 400,000 tons? Is this correct? However, there is a footnote that says reserve base estimates were discontinued in 2009. Can you tell me why these estimates were discontinued and what this means exactly?
When reading on the internet you see all sorts of wild predictions saying the silver supply is all used up etc. I am curious to know what your projection is for the amount of time before all silver supplies are used up?
In advance, thank you for taking your time to reply.
Dear Sir:
The first attachment will answer question number 1 and the second attachment addresses question number 2. I hope that this information is useful.
Regards,
William E. Brooks, Ph.D.
Arsenic, Mercury, and Silver
Mineral Commodity Specialist
National Minerals Information Center
U.S. Geological Survey
989 National Center
Reston, VA 20192
voice: 703 648-7791
fax: 703 648-7757
email: wbrooks@usgs.gov
Web: You must be logged in to see this link.
Attachment #1
This information is from the Introduction in the Mineral Commodity Summaries 2010:
"Throughout the history of Mineral Commodity Summaries and its predecessor prior to 1978, Commodity Data Summaries, the presentation of resource data has evolved. Although world resources have been discussed each year, presentation of reserves and reserve base data varied. From 1957 through 1979, only reserves information was published in the reports, but from 1980 through 1987, only estimates of reserve base, a concept introduced by the U.S. Bureau of Mines (USBM) and the USGS in 1980, were published. Beginning in 1988, both reserves and reserve base information were listed for each mineral commodity where applicable and available. Prior to 1996, the minerals availability studies conducted by the USBM and work with international collaborators were the basis for reserve base data reported in Mineral Commodity Summaries. When the USBM was closed in 1996, this function was discontinued. Since that time, reserve base estimates have been updated to be consistent with changes in reserves, but the nonreserves component of the information upon which the reserve base data were estimated is not current enough to support defensible reserve base estimates. For that reason, publication of reserve base estimates was discontinued for Mineral Commodity Summaries 2010.
Attachment #2
Mr. …….
This is in response to your request for information about a quote found in a May 29, 2009 internet article entitled “Silver-Long Term” by David Morgan. In the article, the author reportedly indicates that U.S. Geological Survey forecasted that “we’ll run out of silver around 2020.”
It is important to indicate that the USGS does not forecast or make such forward-looking statements. Our responsibility is to compile commodity-specific information that includes state and mine production data, prices, legislation, uses, international production, recycling, and similar topics. Please feel free to examine our reports at: You must be logged in to see this link. click Minerals Information, then click commodity, and then on the alphabet listing, click “s” for silver. Our most extensive silver publication is the Yearbook and we also provide mid-to-late year data in the Mineral Commodity Summaries. Special reports are also listed on the USGS website.
This information, from the Introduction to the Mineral Commodity Summaries publication, will help you better understand our role and responsibilities:
"National reserves and reserve base information for most mineral commodities found in this report, including those for the United States, are derived from a variety of sources. The ideal source of such information would be comprehensive evaluations that apply the same criteria to deposits in different geographic areas and report the results by country. In the absence of such evaluations, national reserves and reserve base estimates compiled by countries for selected mineral commodities are a primary source of national reserves and reserve base information. Lacking national assessment information by governments, sources such as academic articles, company reports, common business practice, presentations by company representatives, and trade journal articles, or a combination of these, serve as the basis for national reserves and reserve base information reported in the mineral commodity sections of this publication.
A national estimate may be assembled from the following: historically reported reserves and reserve base information carried for years without alteration because no new information is available; historically reported reserves and reserve base reduced by the amount of historical production; and company reported reserves. International minerals availability studies conducted by the U.S. Bureau of Mines, before 1996, and estimates of identified resources by an international collaborative effort (the International Strategic Minerals Inventory) are the basis for some reserves and reserve base estimates.
The USGS collects information about the quantity and quality of mineral resources but does not directly measure reserves, and companies or governments do not directly report reserves or reserve base to the USGS.
Reassessment of reserves and reserve base is a continuing process, and the intensity of this process differs for mineral commodities, countries, and time period."
Also, silver is a byproduct for most production, and reserves may not accurately reflect silver content. There are rarely mines that only produce silver. For example, one of the more important domestic Pb-Zn-Ag mines that voluntarily reports to us does not even list silver, an important byproduct at this mine, on its website. And at other domestic mines, gold, copper, or molybdenum occupy the reporting spotlight and silver, a byproduct, receives less attention. At least in the U.S., many companies only look 3 to 5 years out when evaluating reserves, so even though silver is extracted, more is being "found" in (gold, copper, lead-zinc, and molybdenum) exploration that may or may not offset the quantity that is extracted.
Additionally, the U.S. Mint keeps custodial assets of silver. These are referred to as “deep storage” and “working stock.” Deep storage inventories for 2008 and 2007 were 7,075,171 FTO (or 220 t) as indicated in the 2009 Mineral Commodity Summaries publication. Deep storage data are available in the U.S. Mint 2008 Annual Report (p. 54) which is available online.
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World Silver Supply and Demand
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