GFMS: Investors bought 20% less silver in 2014

The demand for investment silver was 20% lower last year than in 2013, according to the report Thomson Reuters GFMS in its latest Silver Survey 2015. In 2013, demand rose by 27%, as the fall in the price of silver encouraged many investors to get in or buy additional precious metals. However, due to the weak price development in 2014 (down 20% in dollars and down 9% in euros), investors were less keen to take stock of the Buy silver.

Total investment demand is made up of a number of different components, namely silver bars, silver coins, and silver ETFs. In 2014, this demand amounted to 197.4 million troy ounces, a decrease of 20% compared to a year earlier. In dollar terms, total investment demand in silver was $3.8 billion last year, the lowest level since 2009.

Silver ETFs saw net inflows of 1.4 million troy ounces over the past year, meaning the decline can be attributed entirely to declining demand for coins and bars. Demand for these investment products fell from 243.6 million troy ounces in 2013 to 196 million troy ounces in 2014.

Fewer silver coins and bars sold

Sales of silver coins fell by 8%, while demand for silver bars fell by 31%. The decline was smaller for silver coins, which sold well in North America and India last year. Demand for silver bars declined, especially in the Chinese market.

In the first half of 2014, demand for physical silver was rather weak due to relatively flat price developments and tax increases in Germany and Japan. Demand picked up again in the second half of the year, especially towards the end of the year. The Federal Reserve's strategy shifted from tapering to a possible interest rate hike, which strengthened the dollar and pushed down precious metal prices. The Silver Price fell to $15.39 per troy ounce, the lowest level in four years.

Longer delivery times

At the end of last year, the demand was so high that the delivery time for the most common investment coins started to increase. Also at Hollandgold we were confronted with a rush for silver coins during this period.

Global investment demand for silver