No Silver Shortage?

[balz]

Hi

I've been reading this report: www.virtualmetals.co.uk/pdf/FBNSB0610.pdf

It says that there will be no silver shortage, and even that there will be greater silver residuals in the coming years.

What do you think about this?

[68Camaro]

I haven't checked the numbers but I do believe it is correct that there has been a technical surplus over the past 10 years. But the data in the report is already old (I wonder if there is a 2011 version?) and the bullion/coin market has hit record amounts since it was published, and it doesn't include many new thousands of tons taken into coin and bullion since, so I can't make much of report without including what has happened recently. That said, even the report says things are changing...

We estimate these new end uses, comprising solar, medical, textile, radio frequency identification, water purification, and food hygiene, among others, will more than offset the decline in photographic consumption and lead to the silver market surplus eroding significantly by 2020.

...

keeping supply running well ahead of potential demand could be a very tall order.

...

It is therefore evident that, from current levels, the silver market balance is trending down from a large surplus to either something more manageable or even into a deficit.

[68Camaro]

The July 2011 book

http://www.virtualmetals.co.uk/pdf/ABNSB0711.pdf

[balz]

The 2011 report is much more interesting. I will have to read it carefully.

Just looking at it, something just catched my eyes: there is a DEMAND projection until 2020... but there is NO SUPPLY projection, as was the case in the old report I posted.

Isn't this strange? One year you can predict the supply, and the next one you can't...

[68Camaro]

Take it all with a grain of salt. They projected world-wide coin use in 2010 of only 2700 tons, yet the US Mint alone used nearly half that much by themselves, and for 2011 US Mint use should exceed 1500 tons out of projected global use of 3100. The US Mint is large, but there are clearly so many other significant mints in the world, not counting basic round production. So their coin number doesn't pass the newspaper test for me. Their numbers may not be solid.

[Mossy]

Well, neither reads like a Chamber of Commerce puff piece, nor like an advertising. Worth studying, anyhow.

[balz]

I've read it... it's amazing how the document changed year to year. They now talk about negative interest rates, the debt, the 1980 Ag's value in today's dollar, etc.

Last year it looked like supply would be stronger than demand, and this year it's like demand would rise threefold until 2020 and silver price would fly.

Kind of strange.

[Tourney64]

If paper silver has to be converted to physical silver there will be a major shortage. All the coin dealers have plenty of silver don't they? There is a silver shortage.

[balz]

If paper silver has to be converted to physical silver there will be a major shortage. All the coin dealers have plenty of silver don't they? There is a silver shortage.

I know this is the official group thinking. But the mere fact that I invest in silver means that I like to think outside the box and try to confront ideas. I simply wonder how they can pretend that everything is right. At some point, if there really is a shortage, there would not be enough silver for industrial use and since silver supply is inelastic price would have to go north much more than a mere 50$/oz of 2011 fiat money.

[beauanderos]

If paper silver has to be converted to physical silver there will be a major shortage. All the coin dealers have plenty of silver don't they? There is a silver shortage.

I know this is the official group thinking. But the mere fact that I invest in silver means that I like to think outside the box and try to confront ideas. I simply wonder how they can pretend that everything is right. At some point, if there really is a shortage, there would not be enough silver for industrial use and since silver supply is inelastic price would have to go north much more than a mere 50$/oz of 2011 fiat money.

I have felt this way for years, so my philosophy has been to front run the pack... who will be late to the party.

[SoFa]

Demand will be soft as the recession deepens.

[Kurr]

I used to think if a paper run were to occur that the shortage vs paper would be revealed and price would climb as demand rose when they tried to fill those contracts, but after witnessing this MF Global thing, i havemy doubts as to theywould be forced to deliver any physical and so themarketswould not be disturbed much. I'm just spitballin.

The mines are supposed to open up as prfitability increases to alleviate the price climb, as I understand it. I do not think that mine production or above ground stores will be adequate in comparison as to the exponantial rates industry is growing. Not industry demand, new uses, in water purification, solar, medical, technology, electronics. They're dumping silverin everything from sportswear jerseies to shoe insoles, I think its safe to say all the planes and drones and missiles an bombs have silver in them, cell phones,ithingies, you name it and more uses are opening up everyday.

I think the shortage is well on its way. Global civil disturbances can affect mineproduction as well and we have no shortage of that at the moment.

Again, I'm just talkin, don't consider me informed.

[Robarons]

It should be noted that Most silver mine production is the by-product if base metals, such as copper and nickel. As far as I know there really arent too many direct silver-only mines.

So if copper decreases (or other base metal demand) you can expect silver production to fall with it (?)

[camtender]

Well.....................lets see how long it takes Sprott to get his silver for physical trust................

[knibloe]

I don't know anything, but it seems to me that there will always be a lag between silver production defecits and price increases. The reason for this is the fact that numismatic demand is not true demand for silver. I look at is as more of a storage/stockpile scenario. I believe that until industrial demand alone outpaces production, the price will not rise significantly. Even then, it will rise slower than normal raw materials, because our little stockpiles will fill in demand for a while.

I think that drastic increases in silver prices are more likely to happen due to ecomomic/political reasons than due to supply and demand scenarios.

[Copper Catcher]

Well.....................lets see how long it takes Sprott to get his silver for physical trust................

I am very interested in this as well....