Silver Demand Will Drop in 2018 Due to Solar Panels?

Silver Demand Will Drop in 2018 Due to Solar Panels? by Rory - The Daily Coin

A few weeks ago Jeffrey Christian, CPM Group, stated that silver investment demand was not part of the calculations used in his analysis to determine future forecast for silver pricing or silver demand. According to Christian if you include investment demand then your analysis is simply promoting the idea that there is a deficit in whatever commodity your analyzing. We're not sure the evidence supports this concept.

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Jeffrey Christian recently stated

Silver investment demand will rise to 128 million next year from 108 million ounces in 2017, Christian said.

Fabrication demand for silver, largely led by an uptick in solar panels, will drop because there is likely inventory sitting from purchases over the last few years.

“As a result, you’ll see less silver being sold in 2018 than in 2017, but it’s still an uptrend long-term because solar panels are still gaining in popularity,” Christian said. Source

We have documented time and again how China, India and Morocco are all building millions and millions of solar panels to install on more than 300,000,000 homes in China alone. My guess is there is not a single solar panel sitting idly by in some warehouse waiting to fill an order. India has vowed to meet China's challenge and has stated they, too, will power 300,000,000 homes with solar energy, while Morocco has is going to power a much more modest 1.1 million homes.

At the time of the interview – listen here – Jeff explained China was not only using every ounce of silver they mined but had begun importing millions of ounces of dore’ silver bars as well as silver concentrates!! Silver concentrates are basically silver ore that comes right out of the ground!! That’s a lot of silver and an enormous amount of silver production. Just this morning we learn how this impacting silver and the solar industry on a global scale. When you are the size of China, every thing you do impacts someone or something else.

China alone installed 7.1 gigawatts of new PV capacity in the first quarter of 2016 according to the country’s National Energy Association. Matching 40% of last year’s record solar installations in China, and with energy capacity equivalent to 8 of the country’s 30 nuclear power stations currently in operation, that equals 12% of 2015’s record PV addition around the globe.

At this pace, the world’s second-largest economy would account for half of 2016’s total projected solar-panel installations. [Source]

By eliminating "investment demand" from silver analysis one has to shift that demand for bullion to fabrication. Simply stating that investment demand for precious metals is not part of your analysis doesn't change the fact that investment demand is real and has an impact on the overall supply of the product. How does that silver get accounted for if it is not counted as investment demand?

With a complete lack of accounting for the 18 million ounces of American Silver Eagles, not to mention the almost 10 million ounces the Perth Mint has sold along with the more than 12 million ounces of Silver Maples sold by the Royal Canadian Mint year-to-date in 2017 that equals approximately 40 mm ounces. Using a very conservative 40 million ounces of silver bullion just for 3 of the government minted coins we can see there is a significant amount of silver that Jeffrey Christian is not including in his analysis. Will it move the needle for silver demand? Yes, it would not be much of a move but if someone completely ignores an entire segment of demand for any product how can their analysis have any meaning? Oh, that's right, his analysis doesn't matter as the company he works for sets the price of silver so the demand/supply fundamentals are completely mute.

This talk of investment demand doesn't take into account what happened with investment demand for the worlds two largest mints, the US Mint and Royal Canadian Mint, from July 2015 to March 2016 (USMint) April 2016 (Royal Canadian Mint).

This brings me to the next step in this situation - China is already importing silver ore and refining in China to supplement their silver mining operations. India has no mining operations to speak of, and Africa produces very little silver. Which all leads to the next point: global demand for investment silver bullion. Global demand has increased to the point the two largest government mints in the world have moved to rationing sales beginning in July 2015 and continuing through the first quarter of 2016. Source

We just find it interesting that Jeffrey Christian uses the one item within the silver world that is in absolute demand around the globe and say that demand must be in decline and therefore supply/demand fundamentals will be out of balance in 2018. Until China, India and Morocco complete their massive solar programs, sometime in 2020 or beyond, the solar panel demand, and by default silver demand for fabrication, is going to be steady or increasing. If there is a decrease in silver demand in 2018 it will be directly tied to investment demand, not solar panel demand.