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Silver Bullion In Secret Bull Market

by Mark O’Byrne, Gold Core:

Do you think silver is poised to go higher?

I sure do. That’s because I’m watching what is going on in the world’s silver ETFs. I’m also watching the mountain of forces that are piling up to push the metal higher.

Look at this chart. It shows all the metal held by the world’s physical silver ETFs (black line). And all the metal held by the world’s physical gold ETFs (blue line) …

I showed you this same chart last week. Since then, silver ETFs have added another 8 million ounces. At the same time, gold ETFs have added only 56,000 ounces.

In fact, since late April, silver ETFs have added 31 million ounces of the metal. Gold ETF holdings over that time frame have zigged and zagged. But those are basically flat.

Kind makes you go “hmm,” doesn’t it?

Why is someone stocking up on all that silver?

I can think of a few reasons why …

  Silver ore in mines is getting less-rich. That makes sense, because miners dig up the rich stuff first. And silver, like gold, is a depleting asset. That’s why primary silver miners’ average yield has fallen from 13 ounces per ton in 2005 to 7.4 ounces per ton in 2016. This is a 43% decline in just 12 years.

  Silver is an industrial metal. Half of silver demand is for industry. It will be affected by China’s economic and industrial outlook. Both of those are improving. Though silver demand dropped last year, it is zig-zagging higher.

  Global silver production keeps falling. In fact, silver production fell more than demand last year. That is probably why prices went up 9.3% last year.

The Silver Institute reported that global silver production peaked in 2015. It takes years to bring a new silver mine online. And let me tell you, there aren’t a lot of new silver projects around.

Looking at that earlier chart of silver ETFs, the recent demand trend looks clear. (Up!) Now ask yourself, “What happens when silver demand goes higher?”

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