Before the turn of the century, Central Banks sold a record 97 million oz of silver into the market in 1999. This was great deal of silver as it accounted for 17% of total global mine supply that year. Over the next 14 years, Central Banks continued to sell a substantial amount of silver to supplement the market.
However, silver supply from Central Banks has totally dried up over the past three years….. Why? Well, the answer is quite simple when we understand the data. Central Banks silver stock piles have dwindled considerably over the past decade and a half.
According to the data in the recently released 2017 World Silver Survey, Central Bank silver sales were estimated to be a big fat zero for 2014, 2015 and 2016:
As we can see in the chart above, Central Bank silver sales have declined from a peak of 97.2 million oz (Moz) in 1999 to a low of 7 Moz in 2013…. the last year of official government sales. From 1999 to 2013, net government silver sales totaled a staggering 774 Moz. This was more than three-quarters of a billion oz of silver sold into the market during the 15 year period.
Now the majority of that silver, 617 Moz, was sold from 1999-2006, while the remainder of 157 Moz was sold from 2007-2013. Thus, a lot of Central Bank silver sales were used during the first decade of the 21st Century to supplement the market. However, this official supply has totally dried up.
Again… according to the data from the 2017 World Silver Survey, total Government Silver stocks have declined from 207 Moz in 2007 to 89.1 Moz in 2016. Thus, total Government Silver stocks were much higher in 1999. The majority of the Central Bank silver sales over the past 15 years came from three sources, China, Russia and India.
GFMS -Gold Fields Mineral Services (organization owned by Thomson Reuters, collects the data and publishes the World Silver Survey) states that there is little public data on Central Bank silver stocks and sales, however they arrive at their figures from private information sources. While it is impossible to know everything that is going on as it pertains to “official silver sales”, I believe the data put out by GFMS is likely a good gauge of what is taking place in Central Bank sales.
That being said, I would imagine some readers believe there is a Grand Conspiracy by Central Banks who are secretly holding a massive amount of silver. While anything is possible, I highly doubt Central Banks hold that much silver. And why should they? There is no reason for Central Banks to hold onto a lot of silver when most of their assets are in Bond and now Stock portfolios.
We must remember, China and India held onto a great deal of silver inventories after they dropped the silver standard early last century. The U.S. Treasury also had a lot of silver stockpiled, but dumped most of that inventory onto the open market between 1960 (1.9 billion oz) to 1970 (165 million oz). Thus, the U.S. Treasury sold 1.7 billion oz of silver during the 1960’s decade.
Regardless, Central Banks will likely hold onto the remainder of the 89.1 Moz of silver inventory as the policy to reduce their elevated silver inventories has already taken place.
It is not too surprising that the Central Banks have discontinued silver sales since the price of silver continued lower in 2014, 2015 and 2016. Even if the price of silver did surge over the next few years, I don’t believe the Central Banks will sell much of their silver into the market.
Actually, silver can turn out to be a very critical asset for Central Banks to hold onto, EVEN MORE THAN GOLD, as a great deal of silver is consumed by industrial applications.
I will be writing an article on Global Above-Ground Silver Stocks shortly.
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