Is The Silver Deficit Real?
What The Silver Institute Reports
Source of data: The Silver Institute commissions Metals Focus to compile its World Silver Survey.
Deficit definition: They look at “physical market balance” – mine production + recycling minus fabrication demand (industrial, jewelry, silverware, and physical investment demand).
When demand exceeds supply, they call it a deficit.
Key point: This deficit is physical metal, not paper contracts, and – it assumes above ground inventories are drawn down to meet the gap.
For recent years (2021-2024), they’ve reported record physical deficits – in the 200-250 million ounce range – the largest in decades.
Example:
If annual mine + recycling = 1.0B oz, but demand = 1.2B oz ? 200M oz deficit.
The shortfall, they say, comes from above-ground stocks (coins, bars, LBMA vaults, COMEX inventories).
What CPM Group Reports
Source of data: CPM runs its own independent supply/demand and stockpile models.
Deficit definition: Christian says there is no structural deficit, because when you include all silver flows – especially movements from extensive above-ground inventories (private, industrial, government, ETFs, and unreported stocks) – the market balances.
His view: silver demand never exceeds total available silver; if stocks are drawn down, it’s not a “deficit,” it’s simply disinvestment from holdings.
CPM includes opaque sources like old silverware melting, industry scrap not in official recycling stats, and non-exchange inventories in its supply side.
Example:
Same 1.0B oz mine + recycling + 200M oz from existing stockpiles = 1.2B oz total supply ? balanced market, no deficit.
Why the Numbers Clash
Accounting for above-ground stockpiles:
o Silver Institute treats drawdowns from inventories as proof of a deficit.
o CPM treats those inventories as part of the total supply, so no deficit exists as long as stocks can be tapped.
Data transparency:
o Metals Focus’ numbers are more public-facing but rely on best estimates for unreported flows.
o CPM’s data is more granular in terms of private & industrial stocks, but a lot is proprietary.
Different time horizons:
o SI focuses on annual flow vs. annual demand.
o CPM looks at the whole system, including long-term above-ground reserves
Who’s “Right”?
Both are correct within their frameworks:
Silver Institute: Right, if you define deficit as current year mine + recycling < current year demand. This is the perspective most investors see – and it makes for more dramatic headlines.
CPM: Right, if you define deficit as only occurring when total demand exceeds total available supply, including above-ground stocks. In this sense, there hasn’t been a “true” shortage – metal still comes from somewhere to fill the gap.
The Investor’s Takeaway
The Silver Institute deficit signals that new mine output is insufficient to meet current demand, which is bullish for long-term prices if stockpiles keep falling.
The CPM no-deficit view signals that price spikes may be delayed until above-ground inventories are exhausted – but once they are, the shortage becomes real and dramatic.
In other words –
SI is warning: “We’re eating into the pantry every year.”
CPM is saying: “Yes, but the pantry is still stocked.”
The real inflection point is when the pantry shelves are bare, and that’s when the market goes parabolic.
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