World Silver Survey 2016 – Summary and View on gold and silver prices

World Silver Survey 2016 – Summary and View on gold and silver prices


Welcome to illuminati silver, we tell you
the truth about silver. Today is Sunday 8th May 2016 and we are reporting
on the World Silver Survey 2016 produced for the Silver Institute by the GFMS Team at Thomson
Reuters. The Key facts are as follows:
• Mine production increased by 2% or 18 million oz. to 886.7 m oz.
• Scrap supply fell 22 million oz. • Industrial Fabrication demand fell 4%
or 22.5 million oz. to 588.7 m oz. • Over all physical demand rose by 39 million
oz. or by 3% to 1,170.5 million oz. • Demand for coins and bars rose by 24%
to a total of 292.3 million oz. – mainly due to heavy buying from North America and
India. • Jewellery demand rose to a record high
of 226.5 million oz. up 2.5 million oz. on 2014
• There was an annual physical deficit of 129.8 million oz. compared with a deficit
of 78.6 million oz. the year before and is the 3rd consecutive year of deficits.
• Silver prices averaged $15.68 in 2015 down 17.8% compared to 2014.
So what do these figures tell us: Well firstly, we are not running out of silver,
and all of these silver mines which the scare mongers said were closing and that silver
would become scarce as supply would slump, has proven to be rubbish. Mine supply actually
rose yet again for the 13th consecutive year albeit at only 2% compared with an average
4% in previous years. Secondly, as we predicted last year, Industrial
demand has fallen – in fact instead of it representing 54% of total demand, it now represents
just 50%. Thirdly, investor demand has increased and
silver bars and coin demand now represents a total of 25% of supply, it is important
to note though that most of this demand came from India and North America.
Interestingly the weak scrap supply which fell by 13% and represents a decline of 22
million ounces, which is approximately 43% of the increase in the overall physical deficit
increase – has been blamed on low silver prices. With prices now rising, this may indeed
change for 2016 So what do we make of all this?
Well without doubt silver demand by investors has increased. Last year the Industrial demand
fall helped to minimise price increases, and the fear of interest rate rises certainly
kept silver prices down. We believing that the FED were hawkish and would adopt a typically
monetarist approach to the economy expected the rate rise in December, though we felt
it should have risen earlier. We also expected 2 rises in 2016, though the dovish comments
from Yellen may suggest that once again only 1 rise may be likely and certainly not the
4 they originally proposed. From a fundamental point of view, with silver
running at a deficit supply of 129.8 million ounces with average prices standing at $15.68,
we can see no reason why supply could not increase again should prices remain close
to their current $17.50 – $18 level as many of the major companies have all in sustaining
costs below these levels. Naturally a different picture may ensue should prices fall back
again. Which now brings us on to our view of how
we see prices moving for the rest of this year. If this was a non-election year, we
would, quite frankly, expect prices to move down quite considerably in the latter half,
as it did in previous years. However, the US Government wishes to stabilise markets
before its Presidential election in November and frankly will provide dovish statements
to ensure this is achieved. They are content for the dollar to fall a little but not too
much, so a dollar index moving between 90 – 97 is acceptable to the FED. This will
prove bullish for both gold and silver, especially if the majority of that time it moves between
90 -94 as we suspect it will. We have seen, in the early part of 2016 quite
considerable buying of silver by China, and this can point to two possibilities – either
they anticipate increasing growth in their economy beyond the sub 7% GDP predicted, or
as we suspect, they believe their currency may indeed fall further thereby stockpiling
their needs now in anticipation of that fall, as prices will then become more expensive.
We will of course monitor such purchases very closely over the coming months and assess
the trend. We see for 2016 no fundamental demand reason
for higher prices much beyond the $15 – $16 level, however we fully accept that worldwide
negative interest rates, the uncertainty over the US Presidential election, the maintenance
of a low US interest rate policy will edge both investors and speculators into gold and
silver thereby maintaining a relatively high support level. How high can prices go is anyone’s
guess, as much of its movement will now be based on fear and currency jitters.
We believe that $20 silver is unlikely, but possible and if it is reached, it will be
momentary and it will eventually fall back to the $15-$16 range. $1350 gold again is
possible with a $1400 ceiling, though again we envisage prices moving back towards the
$1150 – $1250 level. We are now more neutral between gold and silver especially as silver
has now caused the GSR or gold to silver ratio to fall to levels around 73:1
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worlds we are not qualified to give investment advice. Therefore, this and other productions
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its owners.

22 Comments

  1. Interesting report. Keep the US Mint working overtime cranking out silver eagles and flood the world with them! If the price of silver falls again below $16, their machines will catch fire trying to keep up! HAH

  2. Good vid, is China not desperate to buy anything they can with their dollar reserves, silver is as good as anything to swap out dollars for as physical assets go.

  3. Hello. You said there was a physical deficit for thre years and that investors have bought more. How do you come to the conclusion that this is sustainable? How do you suppose the price will not go up regardless of the law of supply and demand?

  4. Jim Willie is reporting that the US Navy is having to pay for fuel in silver because of dollar rejection.

    your fundamentals analysis has value, but geopolitical moves away from dollars may factor in sooner than later, pushing the price higher.

  5. Thank you for your comments on this independently sourced report. It appears the demand for silver within industrial applications is more important in determining its price than its use in the manufacture of coins and bars. In which case (all things being equal), the demand for silver and hence its price would be greatly influenced during periods of increased industrial demand/economic expansion and/or general inflationary pressures. If this observation is correct, why have we witnessed a strong rally in the current price of silver when neither economic expansion nor inflationary conditions are reported to exist? Indeed, I have listened to broadcasts on this channel and others declaring deflationary conditions exist in many countries and this factor being the reason why central bankers continually reduce local interest rates to record levels, zero and beyond. I can only conclude we are witnessing intense speculation in the current price of silver (i.e..:- forces impacting on the current price which cannot be reconciled with the supply/demand facts reported from the Silver Institute). In such an environment, who knows whether the price of this commodity will go up or down in the short term – just expect more volatility until the current "storm" sufficiently subsides to allow the underlying fundamentals to present themselves enabling an investor an opportunity to arrive at a intelligent decision on whether (or not) to invest.

  6. I think that as long as there are precious metals in the ground people will keep mining for it. No matter what the pumpers do.

  7. Whatever the reason for the low prices, and there are many, i see it as on sale. As i have a 15 year time horizon in which i do not for see having to sell it works for me. Also while prices might be low in USD they are a bit painfull when purchased in CAD. None of what was mentioned will shake me from my slow and methodical dollar cost averaging. The only change i can see is maybe pivoting a little more to gold in order to keep a healthy balance.

  8. how is production increasing, when they were shutting down mines left and right.  Also mining  companies were taking a beating.  It just doesn't make sense to me

  9. this fity cent drop was sooner than i expected,but we will see what friday brings.roller coaster was predicted.and there's bigger fish to fry this spring,ie lingcod,salmon,steelhead and cash money,see you all in fall,thanks IS for your time and effort.

  10. once again not looking for a rate rise this year IMO… but interesting numbers… we have a dip so far…. will it turn into a drop… who knows. great vid.

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