Even though 2015 is estimated to be a record year for Official Silver Coin
sales, total sales in this market is likely to be much higher. Why? It has to
do with a portion of physical silver investment demand that is not included
in the official data.
According to the Silver Institute 2015 Interim Report, total Official
Silver Coin sales will reach an estimated 130 million oz (Moz), due to
massive demand (June-Oct) stemming a Greek Exit contagion and the forecasted
market crash in the fall. As we can see from the chart below, not only are
Official Silver Coin sales for 2015 the highest ever, they are more than
three times greater than they were in 2007… the year before the collapse of
the U.S. Investment and Housing Market:
However, there is one important segment of this market that is not
included in the figures above. Private silver round sales are not
included in the physical silver investment figures due to the lack of
available data. For new investors into the precious metal market,
let me clarify the difference between Official Coins and Private Rounds.
Official Silver Coins = silver coins (mostly 1 oz) that
are produced by Official Mints such as the U.S. & Royal Canadian Mints.
These are labeled “coins” as they are legal tender.
Silver Rounds = silver rounds (mostly 1 oz) that are
produced by several private mints such as the Sunshine and Highland Mint.
These silver rounds have the same quality of silver as most Official Silver
Coins, but cannot be called “coins” because they are not legal tender.
While silver rounds are not Official Coins, they still are highly sought
after by investors and are easily purchased and sold back to most local and
online dealers.
Sales of private rounds have increased significantly over the past several
years, but their data has not been included in the official figures… again,
due to the lack of reliable data. I have called many dealers and asked them
for a general guideline of their private round sales. The private silver
round figure I received from several dealers was approximately 10-15% of
their Official Silver Coin sales.
After the release of the Silver Institute 2105 Silver Interim Report, I
contacted the GFMS team at Thomson Reuters and asked several questions. One
of the questions was in regards to the exclusion of silver round sales from
their data. This was the GFMS team response:
You are correct in your observation that privately minted coins are not
currently included in our silver coin demand statistics. This is something we
have been working on, but it is taking time to develop back data. We have
begun this work and it will be integrated into our statistics as soon as we
feel they meet our reliability and accuracy standards.
I asked the GFMS team if they found that a 10-15% figure versus
Official Coin sales was a good approximation. Thus, my estimate for
private silver rounds was about 10+ Moz in 2015. The GFMS team responded by
stating:
To give you a sense of the numbers we are currently working with, we would
suggest your 10 mln estimate is conservative for 2015. 10% to 15% seems
reasonable in normal years, but given the remarkable shortage of coins in
North American in the third quarter and anecdotal information and data
obtained from market players, we have estimated upwards of 20-40 mln
ounces of privately minted coins sold in the region this year. As
mentioned though, we are still working on these figures and they are by no
means final.
So, according the GFMS team, they estimate that private silver round
demand was 20-40 Moz in 2015. Thus, total Official Silver Coin and
private round sales may actually be upwards of 30% higher than the official
data. Folks, this is a big figure… much higher than I
anticipated.
If we assume that private silver rounds were somewhere in the middle of
their 20-40 Moz estimate, that would be an additional 30 Moz of physical
silver investment demand for 2015. Thus, total Official Silver Coin
and private rounds would equal 160 Moz in 2015, much higher than the 130 Moz
figure. Thus, the forecasted net balance deficit of 21.3 Moz for
2015 will be more like 51.3 Moz… once we add in the additional 30 Moz private
silver round demand.
Furthermore, once the GFMS team adds private silver round data to their
World Silver Surveys, they will have to go back and update all previous
figures for the past decade. This will certainly show that the cumulative net
balance deficit shown below is actually much higher:
Please note, the GFMS Team was nice enough to share their
estimated private silver round data with me, but it is still an estimate as
they have not yet acquired enough reliable and accurate data to produce these
figures officially. I would imagine we will likely see private
silver round sales data included within the next year or so.
For those precious metal investors who think “All Official Data”
is manipulated…. it isn’t. I have looked at a lot of data and can
tell you, the folks at GFMS use information from many Government sources. For
example, the GFMS team utilizes silver production figures from the U.S.
Geological Survey (USGS) and Official Coin sales from the U.S. Mint. I have
checked mining company silver production data for the United States and it
does correspond with the figures put out by the USGS. This is also true for
the U.S. Mint.
Now, I am not saying that all the official data is 100% accurate or that
some may be over or under stated, but it is a good approximation of what is
taking place as it pertains to supply and demand in the silver market.
That being said, physical silver investment demand has only one
way to go in the future… AND THAT IS MUCH HIGHER. I will be putting
out an article next week on Gold & Silver Prices To Surge
Based On Fundamentals, Not Technical Analysis. Precious metals
investors who have become disillusioned or frustrated by the low paper prices
and negative articles by the so-called “Anti Gold-Silver Bugs”, have no idea
just how bad the current economic and financial system have become.
One of the best ways to survive the coming collapse of the Greatest
Financial Ponzi Scheme in history, is to own physical precious metals.
————
If you haven’t checked out THE
SILVER CHART REPORT, there’s a great deal of information on
the Silver Industry & Market not found in any single publication on the
internet. There is one chart in this report (Chart #19) that I
can guarantee that 99.9% of precious metal investors haven’t seen before.
I use this bird’s-eye approach when I create my easy to understand
charts. The Silver Chart Report is a collection of my
top silver charts from articles published over the past six years, and
includes in-depth, never-before-seen charts and content that indicate that
silver is on the rise. There are 48 charts in the report, broken down in five
sections.