According to the recently released Silver Institute 2015 Interim Report, the world experienced annual silver net deficits for 12 years running. This is surprising as the Silver Institute actually reported a small net surplus of silver in 2014. However, the small silver surplus turned into a deficit when 2014 mine supply and total demand figures were revised.
If we look at the chart below (using last year’s data), annual silver deficits were reported until 2013 and then turned into a surplus in 2014:
This was Chart #48 from THE SILVER CHART REPORT, released earlier this year. Going by this data, the world suffered a cumulative net deficit of 930 million oz (Moz) for the past decade (2005-2014). The annual net balance figure is calculated using data from Thomson Reuters GFMS provided for the Silver Institute.
The annual net balance figure is comprised by first subtracting total physical demand from total supply. This is their “Physical Surplus or Deficit figure.” They then take this physical surplus or deficit figure and add or subtract net changes in Silver ETFs and Exchange Inventories. The end result is a “Net Balance.” Basically, the annual net silver balance also takes into account the build or decline of Silver ETFs and Exchange inventories.
Even though Thomson Reuters GFMS reported a small silver surplus in 2014, I knew it was going to be revised lower to a deficit. Why? Because my analysis showed that they overestimated mine supply and underestimated physical investment demand.
For example, Thomson Reuters GFMS reported 2014 Mexican silver production of 193 million oz (Moz) at the Silver Institute, whereas my figures (taken directly from Mexico INEGI) shown in Chart #8 in THE SILVER CHART REPORT, list actual production at 184.2 Moz. Mexico INEGI’s just revised their 2014 silver production figure to 185.3 Moz.
World Suffers Consecutive Net Deficits For 12 Years Running
If we take the data from the Silver Institute’s 2015 Interim Report and 2014 World Silver Survey, the world experienced consecutive silver deficits for the past 12 years:
NOTE: The 2015 figure should read 2015 Est. (estimated). Actually, I believe the 2015 net deficit of 21.3 Moz will be even higher when they revise the data next year. I will get into more detail on this in following articles, but I believe estimated 2015 Silver Bar & Coin demand was under reported by a large percentage.
That being said, the 2014 small net surplus of 2.6 Moz turned into a deficit of 21.3 Moz due to global silver mine supply being revised lower by 12 Moz to 865 Moz from 877 Moz reported last year, while total Silver Bar & Coin demand was revised higher to 203.5 Moz versus 196 Moz stated last year. These two revisions accounted for the majority of the net -23.9 Moz change.
Adding up all the annual deficits…