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THE BANKERS REAL THREAT: Physical Silver Bar & Coin Demand

by Steve St Angelo, SRS Rocco:

The banking cartel may not realize it, but they woke up a sleeping giant… physical silver investment demand. Before the collapse of the U.S. Housing and Investment Banking Industries, there was very little global demand for physical silver bars and coins.

This all changed in 2008, when the world faced a total collapse of the financial and economic system. Things were really rough in the broader markets as the Dow Jones average fell from a high of 14,164 in 2007 to a low of 6,547 in 2009 — a staggering 54% decline in just a little more than a year and a half.

If we look at the chart below, we can see just how much physical silver bar and coin demand increased in 2008.  According to figures reported by the World Silver Survey and released on the Silver Institute’s website, 2008 physical silver bar and coin demand reached an impressive 188 million ounces, up more than three times the 2007 figure of 51 million oz.

Physical Bar & Coin Demand vs Industrial Applications

(Note:  industrial application figures above omit photography consumption)

Not only did overall physical silver bar and coin demand pick up significantly in 2008, so did its percentage compared to industrial usage.  In 2007, physical silver bullion demand was only 9% of the total usage in industrial applications.  Investors purchased 51 million oz of physical silver bullion while global industrial applications consumed 540 million oz that year.

However in 2008, this physical silver investment to industrial usage ratio increased nearly four times to 34%.  From 2004 to 2007, investors purchased approximately one ounce of physical silver for every 10 ounces consumed by industrial applications.  Then in the following year, investors bought 3.4 ounces of physical silver for every 10 ounces used by the industrial sector.

You will notice that this ratio declined in 2009 (19%), but started to rise again over the next several years.  This ratio fell again in 2012 (26%) as investors became complacent due to the fact that silver prices and global economic conditions remained relatively stable.  While it’s true the price of silver fluctuated in 2012, it ended the year at nearly the same level at where it started.

It wasn’t until the huge take-down in the price of gold and silver in 2013, did demand for physical silver bar and coin pick up in a big way.  Not only did demand for physical bars and coins set a new record in 2013 at 246 million oz, it accounted for 46% of global industrial silver consumption.

Which means, investors purchased nearly 5 ounces of physical silver for every 10 ounces used by industrial applications in 2013.  This put a severe strain on annual supply as the world suffered a 103 million oz physical structural deficit for the year — according to data from the Silver institute found at the link above.

Let’s compare two 4-year periods:

2004-2007 Total Silver Demand

Physical Bar & Coin = 204 million oz

Industrial Applications = 1,950 million oz

Bar & Coin vs Industrial Ratio = 10%

2010-2013 Total Silver Demand

Physical Bar & Coin = 744 million oz

Industrial Applications = 2,208 million oz

Bar & Coin vs Industrial Ratio = 34%

We can clearly see the difference in physical silver demand before and after the 2008 financial and economic collapse.  Investors bought more than three times as much silver in the past four years (744 million oz), compared to the 2004-2007 time period (204 million oz).  Furthermore, the was more physical silver buying in 2013 than the combined total from 2004 to 2007.

Also, investors purchased an average of 3.4 ounces of physical silver bar and coin from 2010 to 2013 for every 10 ounces of industrial applications (34% ratio).  This is also more than three times the ratio shown from 2004 to 2007 (10%).

There continues to be a great deal of analysis from the MSM and alternative sources on how future industrial silver demand will impact price.  To me… it’s PURE BOLLOCKS.  If you look at that chart above one more time, you will see that overall industrial demand has been relatively flat since 2008.  Matter-a-fact, total silver industrial demand in 2013 was 536 million oz, less than the 540 million oz reported in 2007.

So, even after the Fed and Central Banks flooded the world with monetary liquidity over the past five years, industrial silver demand in 2013 was actually lower than 2007 — the year before the collapse of the U.S. housing and investment banking industries.

Which begs the question… who really cares about industrial demand, when the real factor is the huge increase of physical silver bar and coin purchases.  Global physical silver investment demand in 2013 was 246 million oz compared to 51 million oz in 2007 — five times greater.

So what do you think impacted the silver price more over the last five years, industrial demand or physical investment demand?  If you agree that it was the latter, than you probably don’t suffer from brain damage

The Banking Cartel understands the role of silver and gold as money.  It is for that very reason that the price of each are FIXED on a daily basis by a handful of these fine upstanding banking institutions.

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27 comments to THE BANKERS REAL THREAT: Physical Silver Bar & Coin Demand

  • Gnostic

    I wonder how many stackers would sell-out if silver hits $50,$75,$100 or $200?

    I suspect more than we think.

    • Johny Comelately

      You are very short sighted. Less than 1% are invested in silver. Meanwhile India and China are buying like it’s an all you can eat buffet. Sure people will sell out at $50, $75, $100, and $200, but if the percentage of buyers increase from say 1% to just 5% the sell outs won’t make a dent in price. In fact, price will go up higher. Those that sell out will miss the top!

    • Mike

      I know I will if it ever hits 34 again. We are talking thousand’s of OZ’s. I have no doubt it will get hyped up I hope to at least 34 again. I like having silver but 34 Im out and will just buy it back again for 4 bucks an OZ. The bankers are firmly in control, sad but true. They were easily able to kill it in the 80s and they will just do the same thing again. Its dying now with just a hint of rising interest rates. All this all in price for silver is garbage. Silver is basically free to mine always has been that’s why it has always been super cheap at least in the modern era of mining. Silver long ago might have been hard to find but now they can just get a load of dirt dump chemical’s on it and BAM..Silver lots and lots of SILVER!

      • AgShaman

        It takes a bit more work to get it than you think….and deep underground is not the safest line of work to be involved in.

      • Johan

        Your a perfect example of people who dont get it

        You bought at 34 which means you didn’t buy it because of fundamentals but when the price started climbing higher and higher, out of fear. You wanted to make some bucks so you bought thinking it would go to ‘the moon’

        Grades are getting lower and lower which means silver gets harder to find. Also if you haven’t been paying attention there are no higher intrest rates.

        In the 80’s you didn’t have a shortage of physical which is what will ultimately break the Crimex

        • Mike

          Nope, heard all the arguments and they simply do not add up. China 4000 tons of buying gold last year in a 2500 ton market? Record sales of both gold and silver and not one shortage. The way I understand the futures market it, I sell my silver contract to you, price goes up a little so you sell it to someone else and so on. That one contract has been bought and sold over and over before expiry. Nothing abnormal about that? 1 OZ can be sold a thousand times without adding new paper silver to the market. Anyway I there is no shortage coming Mines have already been heading with physical there is in my mind no doubt about that…Really even if we used 8000 tons of American gold just with china buying last few years that would have been all gone a while ago..So where is all this gold coming from? It’s coming from mines, has to be…Just always ask the question “Who Benefits”?

          • johns

            “The way I understand the futures market it, I sell my silver contract to you, price goes up a little so you sell it to someone else and so on. That one contract has been bought and sold over and over before expiry. Nothing abnormal about that? 1 OZ can be sold a thousand times without adding new paper silver to the market.”

            “So where is all this gold coming from?”

            PAPER….PAPER….PAPER.

            Paper CONTRACTS, as you so eloquently observe.

            PAPER.

          • johns

            ” 1 OZ can be sold a thousand times without adding new paper silver to the market.”

            NO, 1 CONTRACT OZ. of PAPER, can be sold a thousand times, without 1 OUNCE of PHYSICAL METAL being added to the market.

            Nice try. 🙂

            • Mike

              Look and think about it. You know mines produce metal. You don’t need that metal until a certain date. You buy a futures contract with a delivery date. Then the price of silver goes way up while your still holding the contract. You know it will fall back down again because its silver so you sell it. Take some cash and buy it back when its cheaper. That one contract can be sold a million times and then counted by Chris Duane as a billion paper ozs changing hands and that is not exactly correct. Yes it is paper until you want the silver. Its a future contract on silver that hasn’t been mined yet or refined. Has there been a default? NEVER! Why because there is tons of the stuff out there. Mines are hedging with physical the only way to explain what is happening. How can so much be sold on the physical market without any supply disruption? The only explanation is the Mines are doing exactly what Eric Sprott suggested, holding inventory back. Is it not out of the realm of possibility that metals are much more common than reported? That the numbers that report mine output are bogus? That mines and the whole retail sector are the ones manipulating the price up? I think that is exactly what is happening and as proof I offer this very article…Make sense? That’s why I do believe in a SHTF Scenario the metals will be good to have but as long as there is civilization the paper will reign supreme…So the nect time this goes up im not missing the boat.

              • johns

                Well it’s a shame they don’t operate the beef industry the same way they operate the gold and silver industry.

                I sure would like to buy steak at $1.00 a pound versus the current $8-10.00. 🙂

                Interesting isn’t it ?

                • mike

                  Lol the CME has Live cattle futures! Might not be able to buy just a steak but a nice heard wouldn’t be too bad! I think the big issue is that everything would be exceptionally expensive if you could only bring to market what you have in hand not accounting for future production. Prices for everything on earth would be extremely volatile and there would be a crazy amount of manipulation on the part of producers. I understand the need for the futures market, not rocket science. I am sure there is manipulation in everything but it is what it is. I am sure the manipulation of the paper Silver is balanced well with the manipulation from the producers.

          • Eric

            I hope you kept your silver in mint condition Mike, because I will be buying up as much of it as I can.

            What “chemicals” can you just dump on dirt and BAM..Silver lots and lots of SILVER!??? Last time I checked, it took a bit more energy and time than just that. If you have a special secret that miraculously turns dirt into silver, wouldn’t it be good karma to share it with the world?

            A paper contract isn’t REAL silver in your pocket.

          • Mike

            Anyway I there is no shortage coming Mines have already been heading with physical

            What I meant to say was:

            Anyway there is no shortage coming Mines have already been hedging with physical

            I Do think there is manipulation to be clear,however I think it’s full circle manipulation by both producers and retailers like the commex down to your local coin shop.Producers have the most interest in a higher price and even with Silver under “Break Even Cost” they still have the lights on..Hmmm

  • Stacker Time

    Gnostic** If they did sell their stack what would they sell it for? Inflating US Dollars, I think not, that is why they stack in the first place as an insurance against the inflating Dollar and stability of the stackers
    purchasing power.

    • Gnostic

      Stacker Time, I agree with you, “from my cold dead hands” applies to silver as well,

      However, I suspect some maybe conceding to the mind games of the evil ones, I base that on comments I have read lately.

      I proposed a hypothetical question to remind anyone on the fence to hang on & remember why they stacked in the 1st place.

      • Eric

        Why would anyone with half a brain sell their “money” for “legal tender” or “fiat currency” which has no value?

        That doesn’t make any sense!

  • kdtroxel

    I buy silver not to resell it for FRN’s, but to hold for what comes after. I might have to sell for FRN’s in a bad financial situation emergency, but only if. I consider silver and gold as being the only constitutionally recognized form of money.

  • Troy

    The only reason for selling silver..if it ever goes to its true value…which is hundreds per ounce…would be to sell it to buy land in the country. Freedom is owning land. You sure would not feel free living in an apartment, with a pile of silver. Land to grow food, raise chickens, owning silver, guns, ammo, large stock of food, wood, materials, shoes, clothes, etc….basically you want to have the items that you use and consume. You need these things PAID for, and in your position IF things went bad. Think of the items that you might need if you were not able to purchase them from stores due to economic collapse, zombie apocalypse, outbreak, or natural disaster. Make a list, and get these items. Having lots of silver, and 3 days of food is not a good thing. Balance it out.

  • J

    Time for a Jackass fix to keep the faithful in line…

  • AgShaman

    Private sales should happen eventually. You want to get silver in the hands of other people (at least I do). They will probably have to trade more than they want to for the transaction to take place….but that is to be expected. Late to the party always gets stuck with the highest premium.

    Guns, bikes, 4-wheelers, bullets, land….there is really quite a long list you could come up with that would be a better trade than for fiat clown-bux

  • andrew james

    47 billion or bust

  • andrew james

    The market capitalization of the 1955 D quarter is around 30 million bucks. The block chain can’t grow out of proportion with the inventory either. Do you have any 1955-D quarters yet? Don’t let met stack them all. Just a fair warning.

  • Anon

    Folks, you will probably like this interview

    Caravan To Midnight – Episode 110 Capital Kinetics with Greg Morse

  • NaySayer

    I expect silver to be hundreds of dollars a GRAM, not ounce in the future. But I also don’t see silver being able to continue as a monetary metal, it will be far too valuable industrially. If we had free markets then silver, being more scarce above ground and far more useful than gold would cost more than gold.

    Just because we are failing in the west doesn’t mean all technology will fail everywhere. There will be greater demand for tech and especially solar panels in the future elsewhere, most probably in the emerging east and South (Brazil, south Africa etc).

    I saw an appalling anti silver national commercial the other night. It had an elderly man about to pass down to his grandson a real 90% silver dollar. He talked about how it had been passed down through the decades and had even saved his life once (not because he got out of Nazi Germany with it or could buy food in a famine with it, but because of “riots” in the 1960s, it stopped a projectile of some kind).

    The old man is about to pass it to the kid when he sees a sign for $1 tacos or something and he goes in and spends it on the fast food.

    Now what does that tell us about what propaganda wants us all to think is the value of an old real 90% silver coin? It is worth one fiat dollar only. It was just about enough to make me want to puke with how obviously it was a ploy of manipulation psychologically.

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