Silver Bullion “Momentum Building” As “Supply Trouble Brewing”

April 27, 2016

Silver bullion prices are likely to rise further as there is “supply trouble brewing” as strong industrial and investment demand are confronted by declining supply.

“There are signs that this year could be a pivotal year for the silver market,” New York-based CPM Group said in its “Silver Yearbook 2016.”

“Silver mine supply is forecast to decline for the first time in 2016, since 2011,” CPM said, noting scheduled closures and planned production cutbacks.

More good news for silver bulls: there’s supply trouble brewing.

Output from mines will fall for the first time since 2011, while demand for the metal in uses including industrial products and jewelry is heading for a fourth straight gain, supporting prices, according to CPM Group. The market is entering what is “likely to be a pivotal year,” the New York-based researcher said in its “Silver Yearbook 2016” reported Bloomberg.

Bloomberg said that “momentum is building” as silver mine output is “seen falling for first time since 2011” at the same time that “investor holdings in silver ETFs rise at triple gold’s pace”.

CPM forecast global silver mine production will fall 2.4 percent to 784.8 million ounces in 2016, with output declining in Mexico and Australia but rising in Peru and China. Fabrication demand was seen rising 1.6 percent from 2015 to 889.7 million ounces, with increases in jewelry, silverware, electronic, battery and solar panel manufacturing.

CPM forecast a global deficit of 44.7 million ounces in 2016, much larger than the 11.9-million-ounce deficit in 2015 and the biggest deficit since 2005.

CPM expect demand for silver coins to fall to 142.8 million ounces this year, down from record levels of 145.7 million ounces in 2015. Silver coin demand in China, however, was forecast to rise to 24.5 million ounces from 22.3 million ounces in 2015.

Silver had its biggest quarterly rise in nearly 30 years in the first three months of 2016 as ETF investors, buying of silver coins and bars and speculators in the futures market pushed prices higher.

Silver prices fell to $13.60 an ounce in December, the lowest in more than six years. Silver has since rallied nearly 20 percent in the first three weeks of April to an 11-month high at $17.70 an ounce and has entered a new bull market. 

Mark O'Byrne is executive and research director of which he founded in 2003. GoldCore have become one of the leading gold brokers in the world and have over 4,000 clients in over 40 countries and with over $200 million in assets under management and storage.We offer mass affluent, HNW, UHNW and institutional investors including family offices, gold, silver, platinum and palladium bullion in London, Zurich, Singapore, Hong Kong, Dubai and Perth. 

The melting point for silver is 961.93 °C - 1235.08 °K