Global Silver Demand Growth: Coin & Bar Take First Place By Wide Margin

January 4, 2015

When it comes to global silver demand growth over the past decade, the coin and bar investment category is the big winner.  Unfortunately, the media tends to focus on growth of industrial silver consumption, while investment demand continues to take a back seat.

For example, the Silver Institute hired CRU Consulting to put a report together on the growth of industrial silver demand until 2018.  In the December 2014 Industrial Silver Report, CRU believes global industrial silver demand will increase 27% (from 2013), an additional 142 million ounces (Moz) by 2018.

They show industrial silver consumption (not including photography) increasing in 2014.  However, Thomson Reuters GFMS stated in their November 2014 Silver Interim Report that Industrial silver demand is forecasted to decline from 537.7 Moz in 2013, to 529,7 Moz in 2014.

I do not believe the world will increase its industrial silver consumption 142 Moz by 2018.  We may see a small increase, and possibly a decline if the world peaks in global oil production in the next few years.

Now, if we look at global silver demand figures over the past decade, we can clearly see where the REAL GROWTH has taken place.  In 2004, silver consumption by industrial applications (including photography) was 609 Moz, while coin and bar investment was only 53 Moz.

global silver consumption 2004 vs. 2013

But, just ten years later, silver consumption by industrial applications declined to 588 Moz, while coin and bar investment demand skyrocketed to 242 Moz.  While it’s true that industrial silver consumption declined mainly due to a drop in photography usage, the big winner is still silver bar and coin demand.

If I was to remove photographic silver consumption from industrial applications compared to coin and bar demand, this would be the result:

Global Silver Demand excluding photography consumption

2004 Industrial Applications = 467.5 Moz

2013 Industrial Applications = 537.7 Moz (15% growth)

2004 Coin & Bar Demand = 53 Moz

2013 Coin & Bar Demand = 242 Moz (357% growth)

Furthermore, even though silver jewelry demand increased from 187 Moz in 2004 to 198 Moz in 2013, coin and bar investment at 242 Moz is now greater than global jewelry demand.

I did not use the GFMS forecasted coin and bar silver investment figure for 2014 of 192 Moz, due to the fact that Official Coin and Indian silver investment demand picked up considerably in October and November… and probably including December.  I don’t believe their November 2014 Silver Interim Report included this increased demand.

I would imagine, 2014 global silver coin and bar demand may actually be closer to 230-240 Moz, than the 192 Moz figure GFMS forecasted in the preliminary report.

Regardless, the huge increase in silver coin and bar investment demand over the past decade took place by less than 5% of the population… probably more like 2%.  What would happen to global silver coin and bar investment demand if only say 10-15% of the population became interested??

I believe silver will turn out to be one of the best physical assets to own in the future… especially when 95-98% of the world still has no idea of its excellent STORE OF VALUE properties.

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