12th Year of Silver Supply Deficits

The Silver Institute released its interim 2015 report recently which we summarised here.  It reported an annual deficit for 2015, which whilst important itself, becomes quite alarming when you consider the chart below illustrating that 2015 is set to see the 12^th consecutive year of demand v supply deficits.

Our summary on Monday reported a 42.7m oz deficit and stated it was the 3^rd consecutive year of deficits.  That report however doesn’t account for the inflows and outflows of ETF’s and derivatives exchanges such as COMEX.  The chart above does so.  This year we saw 21.4m oz leave these holdings (as the USD spot has declined) and hence the net of -21.3m oz.  What is quite amazing is that the total of the last 12 years’ deficits is 1.02 billion oz!   So where does this all come from?  There is an abstract side source called ‘Unreported Above-ground Stocks’.  Respected research house CPM Group have previously estimated that has moved from a peak of 2.2b oz back in 1990 to just 200m oz in 2014.

The big question is of course ‘when will the price respond to such supply v demand pressure?’  Given the apparent near nullifying of the ‘Unreported Above-ground Stocks’, the current demand trends, and low silver and by product hosting commodities prices seeing pressure on production… one could only logically conclude ‘soon’.