Silver Bullion Buying Outstripping Supply As JP Morgan Buys [SPDR Gold Trust (ETF), iShares Silver Trust (ETF)]

silver 600X300Tyler Durden: Silver bullion remains one of the most undervalued commodities and store of value assets in the world today and therefore one of the greatest opportunities.

Indeed, we view the opportunity in silver bullion today as very much like that seen in the period from 2003 to 2006. Then, silver traded below $10 per ounce prior to sharp gains during and after the financial crisis which saw silver surge to $20 prior to a sharp correction and then surge to nearly $50 per ounce in April 2011.

Silver in USD - 12 Years - Thomson Reuters

Gold remains under covered in the mainstream media rather than specialist financial media such as Bloomberg, CNBC and the FT. It is very rarely covered in mainstream media and when it is covered it is frequently covered in a very unbalanced way – see ‘The Economist’ Anti-Gold Article – Case Study in Disinformation.

Poor man’s gold, silver is covered even more rarely and is therefore not on the radar of the majority of investors internationally and remains a hugely under owned asset. Therefore, it is encouraging to see the UK’s Telegraph publish an interesting piece this week making a strong case for owning silver.

The main thrust of the article by the commodities editor Andrew Critchlow, is that demand for solar power is increasing globally and this will impact positively on the price of silver as it is a crucial component of photo-voltaic cells.

Indeed, the fundamentals in the silver market remain strong due to its role as an industrial commodity as well as a precious metal used in jewelry and for investment or rather store of value purposes.

New industrial applications for silver are constantly being discovered. It is an excellent electrical conductor, withstands corrosion and has anti-microbial properties making it very useful to a wide array of technologies.

These factors, coupled with its function as a store of value, would suggest that the strong demand currently seen for the precious metal will continue.

Demand has indeed, been strong – outstripping supply by almost 22% last year. Total global demand amounted to 1.07 billion ounces while total mine production worldwide came to 877.5 million ounces, according to the Telegraph.

The shortfall was made up from existing stocks of silver. How long this trend can continue is unknown.

Silver demand outstripping supply   Photo: BLOOMBERG

Moreover, demand for silver is set to grow substantially in the coming years, according to the Telegraph, due to increasing demand for solar energy, and indeed other electronic, industrial and medical applications.

Renaissance alchemists like Isaac Newton associated silver with the moon. Its light – the energy which it transmitted to the earth – was harnessed from the sun.

Interestingly, in our modern endeavors to harness the sun’s energy, the moon’s metal plays a crucial role. As the Telegraph reports “Silver is a key component in crystalline silicon photo-voltaic (PV) cells.”

The Telegraph continues:

“According to IHS, demand for solar power is set to increase by 30pc to 57 gigawatts of electricity in 2015. China alone is expected to install something in the region of 17 gigawatts of solar capacity by the end of the year, creating huge potential demand for silver.”

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