Silver physical demand hits all-time high in 2013: World Silver Survey
Tags: Silver Institute
UNITED STATES May 15 2014 4:25 PM
NEW YORK (Scrap Register): Global physical demand for silver rose by 13% in 2013 to an all-time high of 1.081 billion ounces, according to the World Silver Survey 2014 released Wednesday by the Silver Institute.
The rise was driven by a 76% increase in retail investment in bars and coins coupled with a recovery in jewelry and silverware fabrication, the report said.
Data for the World Silver Survey was compiled independently by Thomson Reuters GFMS. The Silver Institute has published the annual report since 1990.
Andrew Leyland, manager for precious-metals demand for the GFMS team at Thomson Reuters, identified three major trends in the silver market during 2013 that were attributed largely to a 24% decline in the average price.
“The first was the reaction from the price-elastic markets, in particularly jewelry and silverware,” he said, pointing out that jewelry fabrication was up nearly 10% and silverware was up 12%. “They were very much price-sensitive moves, with people feeling they could put more silver content into silverware and move away from plated (silver) products into more sterling silverware products.”
These were trend changes, he said, pointing out that previously jewelry demand for silver had declined three straight years and silverware for eight in a row.
These were trend changes, he said, pointing out that previously jewelry demand for silver had declined three straight years and silverware for eight in a row.
“The second major trend was a big increase in investment in silver,” Leyland said. And, he later added, “the third major trend impact (of lower prices) was the scrap market. There was a 24% decline in the amount of silver scrap entering the market in 2013.”
The report listed total silver supplies in 2013 of 978.1 million ounces that was down from a year ago due to the reduced scrap. When factoring in an exchange-traded-fund inventory build of 1.6 million ounces and an exchange inventory build of 8.8 million, the net supply balance in the silver market was a 113.3 million-ounce deficit, according to the Silver Institute.
The report said the physical deficit in the silver market was the largest since 2008.
The report said the physical deficit in the silver market was the largest since 2008.
Silver prices fell with gold in 2013 largely due to investor liquidation of silver futures and options positions and sales from large investors’ physical inventories, said the report. Still, silver averaged $23.79 an ounce, which the Silver Institute pointed out is the third-highest nominal average on record.
“Lower silver prices stimulated increased buying among bargain hunters and boosted growth from the more price-sensitive sources of demand,” the report said.
The report said 2014 “looks likely to be a year of consolidation” for silver, with prices settling into a “less volatile trading range” and many jewelry and silverware producers looking to take advantage of this in order to boost production and move away from plated silver products.
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