The U.S. Silver Market Experienced Two Signficant Developments

SRSrocco's picture

SRSrocco Report

By the SRSrocco Report,

According to the USGS most recent report, the U.S. silver market experienced two significant developments in August.  From the data published in the USGS August Silver Mineral Industry Survey, U.S. silver production declined significantly while silver imports surged to near record highs.

First, U.S. silver production in August is down a stunning 14% compared to the same month last year and down 10% versus the previous month:

USGS U.S. Silver Production

This is certainly a big decline compared to the trend earlier in the year where the average U.S. silver mine supply was approximately 95 metric tons a month.  What makes this quite surprising is that the price of silver hit a high of $20.7 in August, nearly $5 higher than during January-March.  So, why is U.S. silver production declining so much as the price continued higher??

I called up the USGS Silver Specialist and left a message on their answering service as to the details why silver production in the U.S. declined so much in August.  However, no reply was forthcoming in the following days.

Secondly, the U.S. silver imports hit a near record high of 581 metric tons (mt) in August versus 502 mt in July and 464 mt in June:

U.S. Silver Imports

This large jump in U.S. silver imports is interesting as demand for the iShares Silver ETF was basically flat in August.  Even though the SLV ETF silver inventories surged during the first half of the year, it was relatively flat in July and August.

What I found also quite interesting is that the U.S. imported 55 mt of silver from Poland in August which was half of their total monthly mine supply.  Poland produces about 105 mt of silver a month.  Normally, Poland exports no more than 10-20 mt of silver a month to the United States.

For whatever reason, U.S. silver imports surged as the price hit a record high of $20.7 in August.  As I mentioned, this silver did not make its way into the iShares Silver SLV ETF as their inventories remained flat.  So, where did it go?

Well, according to the information from the COMEX, total inventories on the exchange increased from 153 million oz (Moz) at the beginning of August to 163 Moz by the end of the month.  Thus, the COMEX silver inventories increased 10 Moz or 311 metric tons in August.  Thus, some of the nearly 80 metric tons imported by the United States in August made its way into the COMEX silver inventories.

Of course, that is if the COMEX holds all the silver it states in its inventories or if each silver bar doesn't have several owners.

Regardless, to see such a large decline in U.S. silver production in August was quite surprising.  Furthermore, the Silver Institute just put out their 2016 Interim Silver Report which they state that world silver production is forecasted to decline in 2016.

Unfortunately, once U.S. and global oil production starts to head south in a big way, world silver production will most certainly follow suit.  More about this in future articles.

Lastly, I will begin posting articles by The Hills Group on the oil and energy market this weekend.  Bedford Hill of The Hills Group, has a wealth of knowledge on the oil industry, their ETP Oil Model as well as other aspects of the energy industry.  I posted The Hills Group short response to the USGS announcement of a new 20 billion barrel oil resource in the Wolfcamp Shale formation in Texas.

Lastly, if you haven't checked out our new PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page, I highly recommend you do.

Check back for new articles and updates at the SRSrocco Report.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Snaffew's picture

can anyone see the big picture?  Supply down...demand up...price---declining?  The price should be rocketing higher.  Silver will be $25/oz no problem by Jan 2018

alexcojones's picture

Steve: Always appreciate your work. Longtime follower. Living in copper mine area of AZ now and all these copper mines have a lifespan. Many out of business already like the big pit at Bisbee or Ajo.  Google Earth for some cool views.

   Yes, the GSR should be @ 30-1 or less so sensibly AG is better buy than AU but ALL commodities are manipulated. Why? Cuz you cannot spell Manipulated without Man. 

  Yars Revenge: Yes, you are correct. Never ever "Fucking happens" . Until one day it does. Then what? Ponds get drained and pond owners become crazed "Bullionaires." 

Yars Revenge's picture

Been reading these same articles for years.

Supply down, COMEX about to default, etc.

It never fucking happens.

HenryHall's picture

Copper was recently priced at $5,844 per tonne.

That us about $0.165 per avoirdupois ounce. Or 18 USCents/troy ounce. Allow a couple of cents for cost of manufacture and one ounce copper rounds should cost roughly 20 USCents to manufacture.

But you can't buy them for less than 90cents or so! Someone is up to no good.

It's time we went back to using unadulterated copper and silver coins as day to day money. They don't need to represent currency, they can just represent what they are - an ounce of copper, silver, or (for the big transaction) gold.

bluskyes's picture

If the countriy's currency didn't have people's faces on them, the people might forget who rules over them.

Bossman1967's picture

Really dont care that silver prices are low mine arnt for sale at any price currently the elite have started implementing thier plans of a cashless worly look at India and the people are going along now greece next the rest of us. So I look at the silver price being on sale. 53 days for the elites to do thier businesss then we shall see if Trump is a ruse?

werker's picture

Soon we will look proudly upon our monsterboxes.   Truth is all it takes for fortune to visit the stacker.  PM manipulaters must be prosecuted and the eagle set free. Fly Fly Fly.   Gold is my hedge against silver losses. 

lakecity55's picture

IMHO, in the long run, Ag will be harder to manipulate vs. Au.

Ag has too many uses: industrial, medical, and renewable energy, just to name the big three.

We were issued socks in the Guard which had silver threads in them, for anti-microbial purposes. They work. That's just one small use. They have bandages at the pharmacy with embedded silver. My solar panels all contain silver.

Although bulkier, Ag may be the thing to stack right now. It's on sale, too!

Arnold's picture

Silver is a mining by product, as you well know.

If major copper mines scale back, their silver production does as well.

Still a lot of non precious metal stockpiled here and there.

anarchitect's picture

Another factor could be low-grading by miners.  When prices are low, a deposit's higher grade sections are mined to reduce cost.  When the price of silver goes up, lower grade sections come back into play, possibly reducing production.

SubjectivObject's picture

Dead link (page not found) to Hill Group piece.