The Silver Institute shows that the silver market has been in a deficit for the last 5 years. And during that time, we've seen substantial decreases in global inventories.
Which makes sense, as the metal has to come from somewhere to meet the shortfall.
Yet with no resolution to the gap in sight, as the deficits are widely expected to continue years into the future, a recent Bank of America report suggests that the declining inventories are starting to 'make the deficits count.'
Their report also commented on China's surging silver consumption, which has continued to grow in 2024 as their solar production has again exceeded expectations. And with governments calling for a tripling of 'green energy' by 2030, the demand for silver is going to have to increase if the governments are going to get anywhere even close to meeting their targets.
China has already shifted to being a net importer of silver. And we've personally talked with one of the larger silver producers, who told us about how Chinese smelters have been going directly to Latin American silver producers and offering substantially reduced treatment charges because they're able to take advantage of the increased premiums in China.
Keep in mind that Bank of America's research reaches the institutional market, and they’ve been writing about the deficit for over a year now. And with the gold and silver ETFs finally starting to see inflows in recent weeks, after months of outflows during the rally earlier this year, we could see more money coming into silver. Particularly with the Fed on the verge of interest rate cuts.
Of course, if any of that investment is in physical form, that only further exacerbates the deficit.
Arcadia Economics
Silver Research, Trading, and Financial Show Host
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