Why a bubble in silver is virtually impossible

The world is using far more silver than worldwide mining produces. This has been the case for some years.

The numbers will soon be out for 2011, which just wrapped up. But in 2010, while Industry used 878.8 million ounces, worldwide mining production was 735.9. That is a shortfall of some 142.9 million ounces.

This trend has been pretty constant. 2009 saw a 60.9 million ounce shortfall; 2008 a 192.8 million ounce shortfall; 2007 a 204.9 million ounce shortfall. This is a combined 601.5 million ounce deficit in silver in the last 5 years without counting 2011’s shortfalls.

The shortfalls have been being filled by old scrap metals, government sales of stockpiles, not to mention producer stockpiles.

But the combined shortfalls over the last several years have all but exhausted these ‘reserves’ and there has been no slowdown in applications for silver; quite the opposite. We have never been using silver at such a rate or speed in human history.

If you’re thinking of a physical investment into any commodity… silver is definitely worth a very close look. Common sense tells us that this is a formula for tremendous gains.

It is virtually impossible to have a bubble when demand outstrips supply.

Statistics from The Silver Institute. All opinions are of the blogger alone and do not necessarily reflect the opinion of Birch Gold Group.