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Silver Demand

By: Bryant Blake

-- Posted 8 February, 2007 | |

I have compiled a silver demand vs. world population graph for the years 1985 thru 2005.  Data for this graph was obtained from the 1993, 2002, and 2005 World Silver Survey’s and from the 2006 World Silver Survey Summary.  Fabrication demand for the years 1985 thru 1991 was adjusted because these years did not include some 3rd world and communist countries.  The adjustment rate was 1.1902 for fabrication demand and 1.0754 for photographic demand obtained from the ratio for these categories in the 1992 values.  Total silver demand is the sum of fabrication demand (which includes coinage) plus investment demand including dehedging.  An estimated value for 2006 total demand was plotted calculated from 2005 total demand plus 115 million ounces for the silver ETF.  Total demand in 2006 may be greater than this value. 


There are some very interesting revelations from this graph.  In 1985, silver fabrication demand was 477.8 million ounces and world population was 4,830,979,000.  The silver demand per capita in 1985 thus was 0.0989 ounces.  In 2005, fabrication demand was 864.4 million ounces while population was 6,453,682,000.  Thus in 2005 silver demand per capita was 0.1339 ounce, a 35.4% increase. 


A 2nd observation is that silver demand was in a pronounced uptrend from 1985 thru 2000.  After 2000, a combination of a world slowdown and the reversal of photographic demand into a severe decline managed to take demand out of its uptrend.  An additional plot line was added to this graph which represents net fabrication demand.  The values for net fabrication demand were calculated from fabrication demand minus 70% of the photographic demand values to compensate for the fact that approximately 70% of photographic silver is returned to the market as scrap.  A table is given below which details the exact numbers for the chart.  As seen in the table, net fabrication demand in 2005 was within a wisker of an all time high.  An additional column is shown in the table which gives Total net demand (includes investment).  The total net demand reached an all time high in 2005 by a significant 18 million ounces.



A third observation is that thanks to the silver ETF, my estimated 2006 figures put total demand back in the 1985 thru 2000 uptrend channel.


In summary, silver demand is in a long term growth mode.  Demand could even be said to be parabolic (a slight parabola) since population growth is parabolic and long term silver demand has increased at a greater rate than population.  Fabrication demand has flattened since 2000 largely due to reduced photographic demand, but this is a misleading set of values since most of photographic silver use is recycled.  Regards,


Bryant Blake

-- Posted 8 February, 2007 | |

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