Silver is presently weathering a massive correction, but some recent data from the Silver Institution indicates that the clouds could soon be lifting for the gray metal.
The Silver Institute just published its 2016 Silver Interim Report. This report is published by Thomson Reuters GFMS. According to their forecast for 2016, global silver production will decline to 887 million oz (Moz), down from 893 Moz in 2015:
This year-over-year decline could be an indicator of peak production in the silver mining space:
While forecasted global silver production for 2016 is down only slightly versus last year, GFMS also stated this in their report:
- We estimate that mine supply peaked in 2015 and will trend lower in the foreseeable future.
- Declining total supply is expected to be a key driver of annual deficits in the silver market going forward.
Due to the huge increase in Global Silver ETF demand as well as a large Exchange Inventory build, the silver market will suffer a forecasted 185 Moz annual deficit in 2016.
The combination of declining production and continued deficits is bound to lead to higher silver prices at some point — it’s largely just a matter of when the current “risk on” post-Trump trade wears thin. At that point, silver is likely to see a massive bounce.
The iShares Silver Trust ETF (NYSE:SLV) fell $0.14 (-0.89%) to $15.63 per share in premarket trading Tuesday. Year-to-date, the largest exchange traded fund tied to silver prices has gained 19.56%, but the fund is now 20% off its 52-week high of $19.71.