Precious metals investors may not be aware, but silver investment has
seriously outperformed gold in this major market sector. Even though precious
metals sentiment and sales are currently lower than they were over the past
several years, this is only temporary pause before the market surges as the
highly inflated stock market finally cracks and plunges lower.
When we start to witness a huge correction or crash in the broader stock
markets, there only be a few physical assets worth owning to protect
wealth. Investors moving into the precious metals at this time, will
see their asset values increase significantly. However, silver
will likely out perform gold as investors and speculators move into the more
undervalued precious metal.
Actually, we have already witnessed this as physical silver investment
versus jewelry demand has outperformed gold in the same market. Let me
explain. While industrial demand is the largest consumer of silver in
the market, silver jewelry demand has ranked second for quite some
time. But, this all changed after the 2008 U.S. Banking Industry and
Housing Market collapse.
For example, global silver jewelry demand in 2007 was 182 million oz (Moz)
versus 62 Moz in silver bar and coin demand. Thus, physical silver bar
and coin demand was only 34% of world silver jewelry demand:
However, during the U.S. market meltdown in 2008, physical silver bar and
coin investment surged more than three times to 197 Moz, while silver jewelry
demand stayed flat at 178 Moz. In just one year (2007 to 2008),
physical silver investment accounted for 110% of global silver jewelry
demand.
While silver investment demand fluctuated over the next seven years, it
hit a record high of 291 Moz in 2015 as investors took advantage of low
prices not seen since 2009. As physical silver bar and coin
demand reached a new record in 2015, accounting for 128% of global jewelry
demand that year.
Even though physical silver demand declined in 2016, it was still neck and
neck with jewelry demand of 207 Moz each. Now, if we compare physical
silver investment to jewelry demand versus gold, we can plainly see how
silver has outperformed gold in this market.
Before the 2008 market meltdown, global gold physical investment of 14.4
Moz accounted for 18% of world gold jewelry demand of 79.5 Moz:
Even though physical gold bar and coin demand more than doubled in
2008 to 30.1 Moz, it still only represented 40% of global gold jewelry demand
of 75.7 Moz. If we go back to the silver chart above, physical
silver demand increased more than three times in 2008 (versus 2007) and
accounted for 110% of global silver jewelry demand.
Yes, it’s true that in “Dollar terms”, investors bought more physical gold
than silver, but as I have stated before…. it’s a matter of focusing on “how
many ounces” you own, not “how much in Dollars.”
Regardless, physical gold investment reached a record 37.3 Moz in 2015
versus 77 Moz in gold jewelry demand. However, gold bar and coin demand
in 2015 only accounted for 48% of gold jewelry demand compared to physical
silver investment which represented 128% of silver jewelry demand during the
same year.
What does this mean? It shows us that investors are buying a
larger percentage of the silver supply than gold in relation to jewelry
demand. Furthermore, physical silver bar and coin demand (291
Moz) in 2015 increased nearly five times the amount (62 Moz) in 2007, versus
physical gold investment that only increased 2 1/2 times, from 14.4 Moz to
37.3 Moz during the same time period.
While many precious metals investors have become disillusioned by market
fundamentals because they don’t believe they matter in a manipulated market,
patience will reward those who remain committed. The reason I believe
this has to do with my understanding of the Energy Market. Without
my in-depth knowledge of the disintegrating global oil industry, I would also
believe that the Fed and Central Banks can continue manipulating the markets
for decades. However, time is not on their side.
This is why I try to educate precious metals investors about energy.
If you understand the dire energy predicament we are facing, you would
realize there are few assets to own in the future to protect wealth. I
will be publishing an article shortly on the BIG 3 U.S. OIL COMPANIES latest
financial results…. which continue to disappoint.
