This entry is part 5 of 5 in the series Silver Investing

Silver is really a fascinating investment metal.  It’s very under valued when you start to look at the numbers.  The price has been suppressed by paper contracts to the tune of 100’s of paper ounces to each physical ounce, but that is a discussion for another post.

Today I’d like to show you some charts that I find very telling about the future of silver price and availability  The following charts were courtesy of GoldSilver.com .  

Silver Supply

During the period between 2011 and 2016 the silver price fell over 76%.  This caused the miners to cut costs.  One of the things that was cut was the money going toward exploration and development of new mines.  In this chart you can see the peak of silver production.

When the price dropped it also impacted the secondary and recycling market.  By secondary market I’m talking about the “We Buy Gold and Silver” stores that used to be on every corner.  This also includes the industrial recycling of silver.  

 

Between the low silver price, new mines not being brought on line and the secondary/recycling market decreasing yearly, total global supply is starting to be impacted.  Here you can see total supply has peaked and has been heading down since.

 

What about demand?

This one is very easy to see.  In the following charts I’ll only show the demand from China and Indian Jewelry.  The combined population of India and China is more than 3 Billion people.  Yes you read that correctly.  3,000,000,000 Billion!  Let’s look at the demand charts from them.

You can see even though the Silver supply has been falling, the demand from China has not slowed down at all.  In fact, it has done nothing but increase year over year.  So what about India?

When I think about India I tend to picture all the beautiful Gold jewelry they are known for.  But it seems that Silver Jewelry has seen a huge increase in demand since 2012.  Where is this Silver all going to come from?  One guess would be the secondary market as people turn in more coins and jewelry.  Will governments come to the rescue and use their inventory to keep up with deman???  My guess is more than likely not.

Government Inventories of Silver

Governments used to hold Silver reserves because our money was created out of it.  Since our money no longer uses any precious metals, inventories have steadily dropped.  Over a 20yr span Government inventories have dropped by nearly 75%.

With all this information about supply and demand, I see higher silver prices in the future.  Once demand exceeds supply, the price will take off like cryptos in 2017.  Before this price jump happens I thing we will see prices go lower as the stock market declines.  This is only my personal opinion and what I’ve witnessed happen in the past.

I hope you found this interesting and informative.  As always if you have any questions or comments please leave them below.  Thanks for reading and rating this article!


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Discussions

  1. James Diegel

    Never really thought about silver in that way before… Actually, to be completely fair I prefer it to gold as I find it less flashy – so mostly the things I have made of precious metals are made from silver… mostly in a box somewhere in the back of my house… maybe someday my kids will thank me for not listening to my parents and taking them all to the ‘we buy your old gold & silver corner shops’ 🙂

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    1. VG Post author

      Thanks @waleswood. I’m trying to put out as much info as possible. I did finally go rate your article. It was a great write up. I’ll have to touch on the aboveground supply vs total population. Not as much for each person as you would think.

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  2. Julia Williams

    Dear friend your efforts are making huge impact on our investing behaviour and definitely we will give you huge thanks one day when Silver will shine and prove its mastery.

    Dear friend today I achieved the very first stage of Trybe and it’s not possible without your lovely support so I am thankful to you from the bottom of my heart.

    With love and respect ✊

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      1. Zeus69

        Well then you have tons of material for new posts, keep em coming bud.
        Regards,
        Mark (Zeus69)

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  3. AD

    Y0u really like your silver, brother:) It feels like a good investment from what you’re writing. A friend of mine bought 400$ worth of silver coins a while. Now they’re worth 350$, so he lost a little there. He said he bought at the peak. Now a 50$ loss isn’t that big of a deal, but how important is timing when you buy silver? How do you know it’s the right time?

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    1. VG Post author

      There is a ton of buy signals. I don’t really pay attention to price below $20. If you want to buy at absolute bottom you have to follow price of production and the Gold/Silver ratio. Usually when the G/S ratio gets above 80:1, silver is a great buy. I tried to explain it some of my older articles. I’ll have much more coming up.

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