Amazing Silver Chart: Investors Overwhelming Prefer Physical Over Paper Silver

February 22, 2015

Precious metals investors know a good deal when they see it.  Even as the price of silver declined over the past several years, investors overwhelming preferred physical silver over paper by a huge margin.  How much?  A great deal more than I realized until I looked at the data.

Since 2005, precious metals investors purchased a staggering 1.36 billion ounces of silver coins and bars.  This is a great deal when we consider annual demand was a paltry 30 million oz (Moz) in 2001.  All that changed when the U.S. financial system died in 2008.  In just one year, silver bar & coin demand skyrocketed from 51 Moz in 2007, to 187 Moz in 2008.

These figures are based on Thomson Reuters GFMS 2014 Interim Silver Market Report.  If we look at the chart below, we can see how much greater physical silver demand is over paper:

From 2005 to 2014 (2014 is forecasted & subject to revision), investors purchased 1.36 billion oz of silver coins and bars, while silver ETF’s saw a net build of 618 Moz.  Basically, physical silver investment was more than double the amount of silver ETF builds.

Of course, we have no idea just how much actual physical silver is backing these ETF’s, but if we take their word for it, the situation becomes even more interesting since 2011, when the price of silver spiked to $50.

Over past three years (2012-2014), precious metal investors purchased an estimated 572 Moz of physical coins and bars.  Compare that to the lousy 73 Moz net ETF build.  Furthermore, the net change of global Silver ETF’s in 2011 was a negative 24 Moz.  Instead of silver ETF inventories rising in 2011, they fell a net 24 Moz.

However, investor purchased a record 211 Moz of silver bars and coins in 2011.  The chart above only shows difference between physical silver demand vs ETF builds from 2012 to 2014, but if I included 2011… this would be the net result:

Silver Investment 2011-2014

Net Silver ETF Build = 49 Moz

Silver Bar & Coin = 783 Moz

Here we can see that since 2011, precious metals investors overwhelming favored physical silver bar and coin 16 times more than paper ETF’s.

Folks, the current Financial & Economic System is not sustainable.  Precious metals investors realize paper is not wise to invest in.  Which is why we have seen such a huge difference in physical silver investment over paper since 2011.

When the Dollar finally goes down in history as another failed FIAT CURRENCY, wealth will come by how many ounces of silver you own… not paper. 

This is the same with gold.  Unfortunately, most of the physical gold is heading from WEST to EAST.  If you have not yet read my article below, I highly recommend it.  To read article click on image below:

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US silver mining began on a large scale with the discovery of the Comstock Lode in Nevada in 1858.