Buying Remains Strong, but Silver Prices Stand 66.8% Below 2011 Highs
Mark my words: silver prices are way too low to ignore. Silver currently trades at $16.50, which is 66.8% below the highs in April 2011.
You see, there’s a sort of “gold rush” happening in the silver market. We have been seeing strong buying globally.
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Mints around the world have been selling massive amounts of the gray precious metal. It doesn’t look like the buyers care about where silver prices are; they just want more of it.
Consider Australia’s Perth Mint, for example.
In the first four months of 2018, the Perth Mint sold 3.5 million ounces of silver. In the same period in 2017, the mint only sold 2.9 million ounces. This represents an increase of almost 20% year-over-year. (Source: “Perth Mint Gold and Silver Bullion Sales Retreat in April,” CoinNews.net, May 21, 2018.)
At the United States Mint, 6.4 million ounces of silver has been sold year-to-date in American Eagle coins alone. (Source: “Bullion Sales,” United States Mint, last accessed May 29, 2018.)
China and India Importing a Lot of Silver
It’s important that silver bulls also pay attention to what’s happening with silver in India and China, two of the world’s biggest gold consumers.
It looks like the countries known for their appetite for gold are building a strong appetite for silver as well.
Look at China first. According to Commerzbank AG, in January, 493 tonnes of silver were imported to the country. This was the highest amount of silver imported to China in seven-and-a-half years! (Source: “Commerzbank: Monthly Chinese Silver Imports Highest In 7 ½ Years,” Kitco, February 27, 2018.)
If we extrapolate the January figure (assume that the January figure remains consistent throughout 2018), China could consume close to 6,000 tonnes of silver this year.
Even if we halve that amount to 3,000 tonnes, it adds up to roughly 105.8 million ounces. Total global silver mine production is around 852 million ounces. So, China could import 12% of the global silver mine production in 2018.
Mind you, China is already a major silver producer, so the massive amount being imported says that demand is extremely high in the country.
Look at India. Its silver import figures look great.
In April, $481.7 million worth of silver was imported into the country. In the same month a year ago, silver imports were worth only $352.9 million. This was an increase of 36.5% year-over-year. (Source: “Quick Estimates For Selected Major Commodities For April 2018,” India Department of Commerce and Industry, last accessed May 29, 2018.)
A Perfect Storm Brewing for Silver Bulls
Dear reader, in a nutshell, there are a lot of buyers in the silver market; the prices don’t matter to them.
Here’s the problem: the supply side is struggling. Between 2015 and 2017, global silver mine production declined by close to five percent. (Source: “Silver Supply & Demand,” The Silver Institute, last accessed May 29, 2018.)
This year, if silver prices remain flat, don’t be shocked to see production decline further. Silver mining companies are having a lot of problems producing at the current price.
As I see all this, I can’t help but say that there’s a perfect storm brewing for silver bulls. Buying remains strong but the supply is struggling. This disparity could send silver prices much higher.
