Silver Surges 21% in January - Silver Demand Is “Diminishing A Supply Surplus”

Tyler Durden's picture

From GoldCore

Silver Surges 21% in January - Silver Demand Is “Diminishing A Supply Surplus”

Gold’s London AM fix this morning was USD 1,738.00, GBP 1,102.23, and EUR 1,317.27 per ounce.

Yesterday's AM fix was USD 1,720.50, GBP 1,097.40, and EUR 1,310.06 per ounce.


Cross Currency Table – Bloomberg

Gold edged higher in Asian and again in European trading today. Gold has broken through all major moving averages and Fibonacci levels this week due to a weakening dollar and geopolitical concerns regarding Iran and the European solvency crisis.

Euro gold appears to be breaking above resistance which should lead to new record highs above €1,359/oz.

Gold at €1,315/oz is now just 3% below the record high from September 2011. The correction and consolidation of recent months was necessary and healthy, and the intractable Eurozone debt crisis should result in further falls in the euro and €1,400/oz gold is likely.

Dennis Gartman, economist and newsletter writer, said he is buying more gold priced in euros after he “returned to this trade” last week. It is “time to add to the trade and we are doing so this morning,” he said today in his daily Gartman Letter.

"Mission Accomplished" As Venezuela Welcomes Home Final Shipment Of Repatriated Gold Bars
Venezuela repatriated 160 tonnes of gold that was held abroad with the last shipment, 14 tonnes , arriving from Europe at the Caracas airport today.

Declaring the process a "mission accomplished," government officials and state news crews met the 14-ton load at a Caracas area airport and heralded the televised event as a boost to national sovereignty.

“In two months, we’ve brought 160 tons of gold valued at around $9 billion back to Venezuela,” Central Bank President Merentes said on state television from the Caracas airport. “Today marks the last day of the mission.”

Venezuela has the 15th largest holdings in the world, according to the World Gold Council. Venezuela will leave around 15% of its reserves, (50 tons), outside of Venezuela for financial transactions, said Merentes.

CFTC Data
CFTC data shows speculators are gradually beginning to enter the gold futures market again.

Fund managers increased their bullish bets in Comex gold futures and options in the week ended Jan. 24, according to Friday afternoon data from the Commodity Futures Trading Commission (CFTC). 


Reuters Global Gold Forum

The net non commercial gold position rose for a third week in a row - by 6,194 contracts to 142,223 lots versus an overall decline in total futures OI. This marks the longest stretch of gains in CMX net non-com futures OI since July/Aug last year. Money managers raised their gold holdings by more than 8,000 lots to 117,156 contracts, also the largest weekly increase since mid-November.

This raised their net long position 8.5% to 126,937 contracts, from 116,978 a week earlier.

The managed fund net long position represents around 12.6 million troy ounces of gold.

Importantly, the recent increase in net long positions are from multi month record low levels after the liquidation seen after gold’s sell off from nominal highs over $1,900/oz.

This suggests that gold should see further gains in the coming months as these positions continue to be added to.

Silver Surges 21% in January - Silver Demand Is “Diminishing A Supply Surplus”
There continues to be no coverage of silver in the non specialist financial media and little coverage of silver in the specialist financial media. However, both the Financial Times and Bloomberg cover silver today which might be a harbinger of short term weakness.

The majority of articles on silver are bearish and most bank analysts remain bearish on silver again in 2012 – as they have been in recent years. Prices will average $37.50/ounce in Q4, according to a survey of 13 analysts by Bloomberg.

The lack of coverage of silver and consequent “animal spirits” in the silver market is of course bullish from a contrarian perspective.

Analysts look set to get the silver market wrong again as recent rocketing industrial demand for silver, from solar panels to batteries to medical applications and growing investor demand for coins, and small & large bars is “diminishing a supply surplus” according to Nicholas Larkin of Bloomberg.  This has led to silver’s best January gains in 30 years with silver up over 20% from below $28/oz to nearly $34/oz.

Barclay's estimates that manufacturers will need a 2.5% increase of the metric tons used last year and investment demand continues to grow due to risks posed by both inflation and systemic risks.

Silver like gold – cannot go bankrupt and will always have a value.

Silver supply shortages are something we and other analysts who are bullish on silver have been warning of for some time. This is because the silver market is small versus the gold market and tiny versus equity, bond, currency and derivative markets.  This is why we believe silver should rise to well over its nominal recent and 1980 high of $50/oz in the coming months. 

While focus has been on silver’s fall from $50/oz last year – there is very little focus on silver’s long term performance and how silver has massively outperformed most asset classes in recent years

For breaking news and commentary on financial markets and gold, follow us on Twitter.

SILVER 
Silver is trading at $33.55/oz, €25.46/oz and £21.26/oz. 

PLATINUM GROUP METALS 
Platinum is trading at $1,614.00/oz, palladium at $683/oz and rhodium at $1,325/oz

NEWS
(Reuters)
Gold edges up; heads for biggest monthly gain since August‎

(MarketWatch)
Gold edges higher as dollar slips

(Financial Times)
Price of silver is given a further shine

(Reuters)
Gold falls on euro but technical outlook encouraging

(Financial Times)
Banks set to double crisis loans from ECB

(Bloomberg)
Silver Powering 20 Million Homes as Supply Surplus Subsides: Commodities

(Bloomberg)
Venezuela Receives Last Shipment of Repatriated Gold Bars

(Wall Street Journal)
Venezuela Welcomes Home Final Shipment Of Repatriated Gold Reserves‎

COMMENTARY
(The MarketOracle)

The Coming Paradigm Shift in Silver

(U.S. News & World Report)
The Financial War Against Iran

(Gonzalo Lira)
Why Democracies Will Always Go Bankrupt

(GoldSeek)
Gold Procrastinators: The Endless Agony

(The Telegraph)
Mario Draghi, the Latin Bloc’s monetarist avenger

(Barron’s)
Murray Coleman: Gold, Silver Demand Seen Picking Up; Barclays Eyes 7% Silver Run

(ZeroHedge)
European Bailout Infographic: Presenting The Truckloads Of Cash Needed To Rescue The Insolvent PIIGS

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PaperBear's picture

The only supply surplus in the silver world is in the paper futures market - get the physical before it is all gone.

Buckaroo Banzai's picture

Ahem.

SILVER, BITCHEZ!

That is all.

trav7777's picture

if "TSHTF" like all the silverbug cretins around here keep saying, silver demand (industrial) will collapse and so will the price.

This is not like oil where 100% of the use is industrial

mrgneiss's picture

If industrial demand collapses, and it could, temporarily, base metal mining will all but shutdown - and then goodbye 70% of mined silver - don't see how that would be bad for the silver price.

Chump's picture

I don't understand why anyone gets caught up in the fiat price of anything if "TSHTF."  The "price" of silver may be 100 .22LR rounds at that point, who knows?  The point is, have some metal (gold, silver, brass, lead, etc.).

sunnydays's picture

David Morgan - Silver Investor guy, interview.  Says Paper is not wealth and that Silver is a monetary metal just ask the latin American countries.  Says industrial too, expects it to go way up and the moves are always at the last 10% of the up swing.  Good interview.

http://youtu.be/nrplT4wH5MI

trav7777's picture

you think all those bugz will still have jobs??  they'll be SELLING silver, not buying

Citxmech's picture

That's precisely the point.

mark mchugh's picture

Bullshit.

When TSHTF people will re-learn how important silver is for survival.  Silver cups for children were just for decoration, right?  Get a clue.  The phrase "born with a silver spoon in his/her mouth" is a reference to health, not wealth. 

Not only should people be buying physical silver, they should be learning how to use it, to purify water, treat wounds, and make colloidal silver (which is the closest thing to an antibiotic one can make at home).  Oh, you can also use it to make simplified batteries.

So when TSHTF, silver owners will survive....morons like you, not so much.

drivenZ's picture

these anecdotes never cease to humor me...your presumption of a much greater depression and full blown world collapse(unlike we’ve ever seen) as if it’s a given is ridiculous. I guess there’s nothing wrong with being prepared but there’s always been times when people have said this stuff and they’ve been wrong almost 100% of the time. If you’re buying some PM’s(5-20% of your $) as a hedge against the dollar, then great, that’s rational, logical and the facts have proved it out. If you’re buying PM's in prep for the end of the world, well, I wouldn’t hold your breath.  

mark mchugh's picture

You seem to think acquiring knowledge (even if you never use it) is ridiculous.  I don't use the pythagorean theorem often either, but I'm glad I know how to use it.  Nothing's a given, but if you crack open a history book or two, you'll find total economic collapses (unlike YOU'VE ever seen) happen a lot, as do pandemics.  Do you have confidence that you will never see such things?

The whole world's using monopoly money, and you're not concerned (that's funny!)

The beauty of silver is how useful it is in how many different circumstances.  I mean, gold's pretty, but doesn't have many practical uses.

We'll run out of silver long before we run out of uses for it, and I consider anyone who thinks otherwise a fool.

drivenZ's picture

Well, i would suggest you and anyone else prepping for world collapse learn how to farm prior to learning how to make antibiotics out of silver.  

 

 

I have confidence that there’s a good chance that currencies will keep inflating away and that the rich will probably get richer and the poor will probably get poorer(atleast in the US) and we will have booms and busts that go on for multiple years and there will probably be a few scattered wars here and there. I do not believe nor do I care to prep for world collapse. The world was “going to end” about 50 times just in the last 5 years. No one I know is having to make antibiotics out of silver right now. Besides if everyone spends their time trying to learn that they won't be able to learn real skills that could probably get them back to work.

 

akak's picture

DrivenZ, you actually bring up some valid points about "End of the World" scenarios, and associated fearmongering.  But note that both usually, and in this thread as well, this sort of TEOTWAWKI, total economic and financial collapse fearmongering is almost invariably the province of the anti-precious metals, pro-Establishment, pro-fiat propagandists and trolls, who use it in the (feeble) attempt to discredit ALL those who hold silver and gold as hedges or investments against the ongoing fiat currency depreciation, and as insurance against more drastic and quite possible financial and monetary chaos, as merely "survivalist kooks" and deranged, doom-obsessed crazies.

It is almost always the Jon Nadlers, Jeffrey Christians and Steve Liesmans of the world who love to repeat the "Armageddon", "survivalist", "End of the world" memes in relation to holding precious metals --- precisely because they cannot attack them or their advocates with logic nor with the historical record, which favors the "kooks" and NOT the pro-fiat lackeys of the corrupt and failing status-quo powers.  When you can't attack the message, attack the man --- the classic fallback of the intellectually defeated.

RockyRacoon's picture

Interesting, Mark.  So-called "lost skills" will come back in vogue when times get troubled.   I had a ceramic tile company back in the 1980s and we used the 3-4-5 triangle all the time to set tile square in the room, both on walls and on floors.  It's all in what you need to survive and/or prosper, eh?

chinaguy's picture

"which is the closest thing to an antibiotic one can make at home"

Google "sugardine"....sugar & iodine...under the idea that it's good to know different things.........

RockyRacoon's picture

Iodine can be hard to get in some areas (meth materials doncha know).   I'd suggest getting Lugol's Solution which is readily available on eBay at reasonable prices.  It's an iodine solution that is a disinfectant and can also purify water for drinking.  A good bug-out-bag item as well as the usual household medicine cabinet.

oddjob's picture

Fat people driving SUV's ridiculous mileage to eat at drive thru's is not industrial useage.

Ghordius's picture

Now of course I could make some snide remarks why the price of gold in EUR is becoming more and more important... ;-)

_underscore's picture

Soon gold will have its native price in Yuan in the PAGE - and silver soon as well one would think, since China actually uses the stuff to make things. I wonder how  the fact that PAGE gold will be a purely physical transactional price will alter the dynamic here - it surely makes any manipulation (assuming good behaviour by the PAGE authorities) much more difficult & price discovery a truer reflection of value/demand.

trav7777's picture

it's in CHINA.  Why the hell would you expect legitimacy from anything there?

_underscore's picture

No evidence I can see to suppose otherwise, yet  - if there is I'll change my position accordingly. The interesting aspect is the 'physical' nature of the exchange (as is widely reported) & how

 that will contrast/contradict (or not!)  the NY & LDN exchanges. Should be interesting whatever though.

lolmao500's picture

Since I got $30k in silver, this is good news.

shokdee's picture

Since I've got 130 kg of silver, this is good news for me too.

mick_richfield's picture

Yeah, but I found a 1963 dime in my change!  Yow!

Badabing's picture

I sent my kids out to Frendlys for ice cream the other day. gave them a ten and said, I want the change.

they returned after a short ride on there bikes with my change. it contained two silver quarters and one silver dime.

I thought to myselfe some poor basterd who has kids raiding his coin collection.

Frank N. Beans's picture

i gave you a greenie because you fooled me with that avatar.  very good.

gdogus erectus's picture

Since my canoe flipped over and I lost my 130 ASEs in the lake, this is sad news for me.

cowdiddly's picture

I was on a cruise ship off the Italian coast and all of the sudden.............

Cast Iron Skillet's picture

wow, a couple of rich banksters ... time to break out the ACME Internet True Identity Discovery Tools .... when did you say you were going on vacation?

BurningFuld's picture

FYI: Teck Resourses is starting a silver refinery upgrade to go from 20 million oz/yr to 30 million. Two years before it is online. I guess they see a market.........

mick_richfield's picture

One question I haven't been able to answer yet -- maybe you can help? -- is, how fast can new silver production be brought online?  If you had to start from scratch, including geology, creating the mine, and refining -- and assuming you had arbitrarily strong motivation -- how many years is that to start a new mine?

 

Ghordius's picture

perhaps a very strange opinion I can offer you: it does not matter at all

markets move faster than mines and "consumption" in PMs is anyway a strange application of the term

mrgneiss's picture

Seven years had been the rule of thumb average for many years, but with greater environmental hurdles, local communities having greater influence (both with which I agree), the properties usually in more remote locations, the better grade stuff being deeper down - if higher grades can be found at all; it is more like ten years now from geophysical discovery to concentrate being sent to the refiner.

akak's picture

Ten years in Canada, maybe, but probably verging now on 15 years on average in the United States --- and that's for relatively non-controversial mines, not those such as Pebble in Alaska or the proposed copper/nickel sulfide mines in Michigan's UP.

mick_richfield's picture

Thanks, BB, and you too Ghordius.

The reason for my question is that I expect Ag to eventually return to its historical ratio wrt Au, and then to significantly overshoot that ratio by a factor of between 1.5 and 3.  ( ie all the way up to 10::1 or 5::1 ) 

When that happens, the ratio will eventually correct back to 15::1.  But how long that correction will take depends on how long it takes to create new mining capacity under maximum motivation.  It also depends on the emotional overhang that people would have at that point.

If I ever see such high Ag::Au ratios, I will trade Argentum for Aurum.  Not because what I really want is Aurum, but because I would expect a gradual correction.

 

trav7777's picture

typical silverbug, trying to profit from a bubble.

you guys bleat about all the paper ponzis out there but you're just jealous that you missed out on them.

tmosley's picture

lol, now Trav is saying profit is bad.  Christ, you will say ANYTHING won't you?

Is there any strawman the mighty Trav can't erect and then tear down?

trav7777's picture

sayeth the KING of strawmen?  LOL.

Dude, stop repeating shit that I say and trying to sound smart.

I didn't SAY profit was bad; THAT is the strawman.  I said that you silverbugz are ponzi-chasing SPECULATORS.  That is NOT a strawman, that is a statement of fact.

You don't hate bubbles, you WANT ONE, just in the shit that YOU own.  That is why nobody should listen to what you people say.

You condemn ponzis and bubbles but then cheer for and actively hope for one.  And talk about how wildly rich you'll all be when one happens.

mick_richfield's picture

No, trying to recognize it when it happens, so I can get out when the value becomes inappropriately high.

I do look forward to a world where we are not controlled by human-shaped beasts that make 'money' from nothing, and who profit without taking risks or creating wealth. 

But all I want to profit from is my own effort.

 

trav7777's picture

so in ONE breath, you say you look forward to a world where we don't have money from nothing and in the PREVIOUS breath you talk about profiting from nothing more than a PRICE BUBBLE, and in the subsequent breath say you just want to profit from your own effort.

JFC, is it possible to hold MORE contradictory thoughts at one time???!?

Badabing's picture

Trav! This is mom, I want you to come up out of the basement and explain why your not in school today YOUNG MAN!!

mick_richfield's picture

You're not very smart, are you Trav?

akak's picture

Actually, he is quite smart, it's just that his dishonesty and rage all too often tend to suppress his reason.

 

PS: It helps to recognize who this "Trav7777" actually is in real life: Bob Moriarty of 321gold.com.  Just go do a Google search of "Bob Moriarty" + "silver", and everything will fall into place.  But in brief, suffice it to say that Bob Moriarty is the Jon Nadler of silver, and just as hate-filled and irrational towards the advocates of silver as Nadler is toward the advocates of gold.

RockyRacoon's picture

I don't care if he's Jon Corzine, outing him is un-cool.