The Silver Anomaly – Physical Deficits As Price Goes Down
Can we trust the mainstream media to report the truth or should we trust our own lying eyes? I will never claim to be anything but a simple man that uses simple logic – pretty big fan of Occam’s Razor (the simplest answer is usually the correct answer) I have been told, for years, that retail precious metals demand is of no consequence and plays no role in the exchange rate of silver. The industrial demand, like solar, biocides, technology and the like is what determines if silver will move higher or lower. It’s hard to deny when 70% of physical silver demand goes directly to industry. Is 70% industrial demand for silver a true reflection of the demand for physical silver? I have questioned this number for all of 2016 and now I know why – let’s take a look.
Question – how can I account for 129 MILLION OUNCES of a physical item when it supposedly doesn’t exist? How would someone know there is more or less that amount? If we are to believe the information, that is accepted around the world, there is a physical silver “deficit” for the past TEN YEARS it begs the question – how do you produce a physical item from a material that doesn’t exist? As I said I am simple person and this does not add up. If we believe there is a “physical deficit” in physical silver how does that work?
We are going to use 1 billion ounces – as this is a widely accepted number (true or not it is the number most analyst use) of total physical silver that comes to market – from all sources, e.g. mining, recycle or otherwise, all sources. What we know is the following as reported by the mainstream media, Silver Institute who receives this information from GFMS which is owned by Thomson Reuters – known liars.
The chart above shows how silver is used across the board. The chart is far from complete. It does not reflect 100% of the picture if it did there would be a footnote to explain where the “deficit” occurred and which industry suffered from a lack of physical silver. The footnote would read something like this “The solar industry planned to produce 1.1 million solar panels in 2015 but only produced 900k because of a silver deficit.”
Silver Institutes annual report is one of the few sources that we have to review the global silver production and a lot of the top analyst around the world use this information for their forecast and other aspects of their silver reporting. I would have to imagine most of the large industrial silver users also reference this document for their needs as well. Since most of the world does not understand, or accept, market manipulation, market rigging and propaganda we have to use something as a base for inventories and the chart above is, as stated, one that is accepted world wide by a wide variety of analyst.
That being said we can see the amount of investment (non-industrial) physical silver in 2015 totaled 581.7 million ounces of physical silver – jewelry, bars/coins, silverware. The total amount of industrial physical silver was 588.7 million ounces used for the various reasons listed.
We can already see a problem with the accepted narrative that industry uses 70% of the global physical silver. Nothing could be further from the truth. What we see is demand for investment silver, in 2015, moving to equal ground with demand for industrial silver. There is a very clear shift in demand from industrial to investment silver going back 3 years. It appears that most of the so-called “deficit” created year after year is due to the increase in investment grade physical silver.
If we use the globally accepted inventories, as reported in the chart above, we see a different picture that is not being reported. Investment demand for physical silver was through the roof in 2015 and should be reflected in a massive upswing in the exchange rate for physical silver. If there was in fact a 129 MILLION OUNCE deficit in physical silver why hasn’t silver done a “moonshot”? Why hasn’t silver, at the very least, quadrupled in acquisition cost? Why is silver still trying to get to $20 an ounce instead of trying to get to $100 or more an ounce? Is the information reported by Silver Institute meaningless? Is it just another tool of propaganda used to keep the masses ignorant and analyst around the world scratching their head? What is the point of this information if it does nothing to support what is happening in the physical market?
Why wouldn’t a primary silver mining company simply raise the rate on their physical silver sold into the market to $100 – $150 per ounce? Why wouldn’t ALL primary silver mining companies do the exact same thing? Why would anyone sign a contract to send physical silver into the market at $18 an ounce when, according to the information above, silver should be multiple times higher than it is currently? If I am a primary silver mining company would it make sense to set the contract price much higher and cite the above information to justify the increase?
This is what is so frustrating about these so-called “markets” and attempting to review information in a realistic manner. It is getting to the point of just being a complete waste of time to try to understand what reality looks and acts like any longer. The landscape has become so distorted that lies are truth and truth has become meaningless and unacceptable. Welcome to the new normal. Get physical before the “deficit” cited above actually manifests and shows up at the market instead of appearing only in documented form.