Silver Bullion Demand High; Price Falls and Premiums Surge [SPDR Gold Trust (ETF), iShares Silver Trust (ETF)]

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July 13, 2015 4:03pm NYSE:GLD NYSE:SLV

silver demandGoldCore: Demand for silver has been surging this year as seen in U.S. silver imports, while silver eagles coin sales and silver ETF holdings remain robust. Despite this, silver has again under performed other assets and has seen price falls again


this year to multi year lows at $15 per ounce.

Pic 1 - Chart
Silver in USD – YTD 2015

Silver imports into the U.S. have been substantially higher in every month so far this year compared to the same months last year according to the USGS data. So far, 2,035 metric tonnes have been imported into the U.S.  this year – 33% more than the same period last year.

In the same period, industrial usage of silver has been fairly flat, the build-up in Comex inventories has been negligible and sales of U.S. Silver Eagles has been flat – partly because the U.S. Mint lacked the stock to meet demand.

Given that the three sources of demand listed above – which are typically the main sources of demand in the U.S. – have not contributed to the rise in silver imports it would appear that there may be new sources of demand in the silver market with large buyers – private or institutional – buying significant volumes of large silver bars

Pic 2 - Chart2
SRSRoccoreport.com

There is also significant demand for silver in India and indeed in Turkey:

Pic 3 - Chart3

Pic 4 - Chart4

There is a clearly a major disconnect between the price of silver as traded on exchanges and the supply and demand fundamentals. Since the end of January silver prices have declined by nearly 20% – from $18.28 to $15.40 even as demand rises.

Demand for Silver Eagles spiked in the first week of this month leading the U.S. Mint to run out of its entire August inventory of coins. This coincided with a counter-intuitive 3.8% plunge in price last Monday.

It would appear that prices are being forced down. This is likely being done to scare investors away in order to protect some large banks who are net short silver – and for whom a surge in price would be damaging – and possibly to facilitate large unknown entities to accumulate large volumes of silver at a knockdown prices.

Pic 5 - Chart5

Total Silver ETF Holdings – 2006 to July 13, 2015

Whoever these large buyers of physical silver  may be it seems likely that they are well connected and well informed. It is speculated that JP Morgan may be among them or at least is acting on behalf of their clients.

It would appear that something significant is again happening under the surface of the silver market. Indeed, premiums for silver eagles and maples have surged 25% in recent days and there are increasing delays in getting delivery of silver bullion coins.

Silver is down 1.5% in 2015 (year to date) and by 35% over a one year period (July 13, 2014). It remains great value vis a vis most risk assets today. Equities, bonds and indeed many property markets look increasingly overvalued and ripe for serious corrections and potential severe bear markets and even crashes.

An allocation to physical silver will again provide essential insurance against financial instability and systemic risk.

This article is brought to you courtesy of Goldcore which appeared on ZeroHedge.


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