Posted by Francis Koh on 21 Feb 2015

AMAZING SILVER CHART: Investors Overwhelming Prefer Physical Over Paper Silver

Since 2005, precious metals investors purchased a staggering 1.36 billion ounces of silver coins and bars.  This is a great deal when we consider annual demand was a paltry 30 million oz (Moz) in 2001.  All that changed when the U.S. financial system died in 2008.  In just one year, silver bar & coin demand skyrocketed from 51 Moz in 2007, to 187 Moz in 2008.

These figures are based on Thomson Reuters GFMS 2014 Interim Silver Market Report.  If we look at the chart below, we can see how much greater physical silver demand is over paper:

Silver Coin & Bar Demand vs Net ETF Build 

From 2005 to 2014 (2014 is forecasted & subject to revision), investors purchased 1.36 billion oz of silver coins and bars, while silver ETF’s saw a net build of 618 Moz.  Basically, physical silver investment was more than double the amount of silver ETF builds.

Of course, we have no idea just how much actual physical silver is backing these ETF’s, but if we take their word for it, the situation becomes even more interesting since 2011, when the price of silver spiked to $50.

Over past three years (2012-2014), precious metal investors purchased an estimated 572 Moz of physical coins and bars.  Compare that to the lousy 73 Moz net ETF build.

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