Indian Silver Demand Explodes to Silver Owners’ Delight

- India may absorb as much as one third of total global silver production this year
- Strong demand for silver steadily increasing year by year
- Indian citizens and solar industry take advantage of current low prices in silver
- U.S. silver imports still enormous despite ostensible decline in demand

The first four months of 2015 saw India import possibly as much as 3,000 tonnes of silver bullion. If the momentum is maintained India is on track to import a staggering 9,000 tonnes over the course of 2015.

This would represent almost one third of total annual mine supply globally. Worldwide mine supply was 877 million troy ounces (27,277 metric tonnes).

It would represent a 27% increase in India’s 2014 silver imports of 7063 tonnes which itself was a 13%  increase on the 2013 figure showing a steadily growing demand for physical silver in India with each passing year.

According to srsroccoreport.com, who compiled the data, it is Indian citizens who are the driving force behind the record demand for silver in India. We would speculate that India’s commitment to solar power may also be a factor.

Back in 2009, the Indian government set a target of 20GW of solar power generation by 2020. However, in January of this year the government dramatically reaffirmed its commitment to solar power by setting a new target of generating 100GW by 2022.

Solar power is generated by photovoltaic cells which rely upon silver for their manufacture. While PV cells used in India are predominantly manufactured in China it may be that Indian investors may be accumulating silver in anticipation of growing demand for PV cells – China also has a highly ambitious solar power program – or it may be that the government itself is stockpiling supplies to protect against supply disruptions.

GoldCore Gold Silver Ratio

Srsroccoreport.com also point out that silver imports into the U.S. continue to be enormous. They speculate that this is due to a handful of institutions and high net worth individuals buying silver while sentiment among the wider public remains pessimistic – a good contrarian indicator.

Silver is a useful component in any portfolio. While like all markets today, it is quite volatile, an allocation to physical silver compliments gold as a diversification and is a leveraged form of gold due to its tendency to outperform gold and provide higher returns in bull markets.

Many investors store silver in secure safe haven storage vaults, many more store silver with the Perth Mint Certificate Program, which allows investors to store silver at low cost and in the comfort of a government guarantee. At GoldCore, we have long believed that silver is an integral part of a portfolio of precious metals. The percentage of silver, depending on your attitude to risk and advice from your financial planner, should not make up more than 25% of your precious metal allocation.

A Word of Caution When Buying Silver: As a long term investor it is critical that you do not buy from a closed market digital metal provider who may entice you with ultra cheap premiums. For starters you may be limited in how you can sell your silver, should the time come, as the only market available to you will be the one made by the provider and the fees they charge may be subject to change at a moments notice. Short term investors may well be safe in such programs but for those with longer time horizons – safety and flexibility should trump all other considerations.

How euro correlates with crude and why analysts predict euro-dollar parity looking back at oil prices

     

When oil started falling in the mid-2014, it was one more reason for Europe to step up monetary stimulus to boost price growth, because the European Central Bank gives more weight to the influence of energy prices on inflation than the Federal Reserve.
The correlation has become “very strong” and is “linked to the difference in the way the Federal Reserve and the European Central Bank approach inflation,” said Stephen Jen, managing partner and founder of hedge fund SLJ Macro Partners LLP in London.
As a result, the euro dropped almost 25 percent against the dollar through mid-March, before rallying in line with oil.
As correlation is mounting, analyst predictions that crude prices will not recover in the next several months are backing the view that the single currency will fall toward parity with the dollar.
“Having seen how the bounce in oil prices coincided with the bounce in the euro against the dollar, I’m starting to take this relationship more seriously,” Jen said.
Forecasts that oil isn’t about to hit its peak of $107.73 almost a year ago are giving confidence to euro bears such as Credit Agricole SA, which predicts a decline to parity with the dollar by December, from $1.1030 as of 7:58 a.m. in New York.

ECB vs Fed policy

The ECB aims to keep price stability, which it defines as CPI (consumer-price inflation) - a measure that includes energy prices - of just under 2 percent.
Meanwhile, the Fed’s preferred inflation estimate also includes an energy component, but historically, U.S. central bankers have paid more attention to a measure that excludes food and energy prices. When this core index climbed more than economists predicted on May 22, the dollar rallied against its rivals.
The links between oil and expectations for consumer prices have strengthened in Europe but weakened in the U.S., bolstering the link with euro-dollar.
As Bloomberg says, crude’s correlation with the euro’s so-called five-year, five-year forward inflation rate has risen to 0.2, the most since October 2012, while the equivalent figure for the U.S. is virtually zero.
This witnesses that the Fed officials are free to keep preparing to lift borrowing costs later in 2015. Meanwhile, ECB officials will keep their benchmark rate unchanged at a record-low 0.05 percent when they meet on Wednesday, Bloomberg says.