It was revealed in a report recently that Chinese demand for silver is expected to increase with up to 10% in 2013. This doesn’t really come as a surprise, especially to those of us who have kept an eye on the Chinese for a while now.
The above-mentioned report was done by the Beijing Antaike Information Development Co. which is an information center relating to Chinese metals and industries markets. An analyst at Beijing Antaike, Shi Heqing, has made it clear that Chinese demand for silver could shot up to 7,700 metric tons in 2013. This is after a 6%-8% increase so far this year. It is said that Chinese demand for silver is 67% driven by industrial demand (electrical appliances, photography and solar) and 33% by a demand for silver jewelry and silver coins. It makes sense that Chinese demand for silver is primarily driven by industrial demand, especially considering that China is for one the world’s second largest user of silver. However, it should be added that Chinese investment demand for silver, especially in the form of silver bars and silver coins, remains strong despite the tough economic conditioned experienced in China. In fact, Chinese investors are buying and stacking hard assets such as silver, because not only is silver cheaper than gold at this stage, but is within the reach of many investors in terms of affordability. This is also not to forget the fact that many investors buy and stack hard assets such as silver in order to protect themselves against currency devaluation. Silver is money after all and meet all the criteria for something to be classified as money in the truest sense of the word, especially in bar and coin form. For interest sake, it is said for one that the president of Hunan Yishui Rare & Precious Metals Recycling Co. based in Yongxing County in Hunan province, Yang Guohui, has so far stacked no less than three tons or 87,500 troy ounces of silver at his home. What is also interesting is the fact that silver jewelry sales in China have shot up 19.3% over the first eight months in comparison to silver jewelry sales the previous year. Chinese demand for silver is clearly strong to say the least. This is despite the fact that you can expect to pay $40 per kilogram more in China for physical silver than overseas, because of the import duties and transportation costs that get factored into silver prices in China. This is however still way cheaper than the prices that silver is available at in South Africa and despite the fact that the premium in China has increased substantially in May 2011, when Chinese investors went into a speculation “frenzy” on the Shanghai Gold Exchange. Furthermore, it is said that the solar industry in China seems to be recovering, especially considering that the Chinese government is hoping to rollout 21 gigawatts of solar-powered installations by 2015. This will certainly be an increase compared to the 2.6 gigawatts installed in 2011.
The long and short of the above is that the Chinese are buying and stacking physical silver as if there is no tomorrow. This is why it is important to buy and stack silver, especially at the paper-manipulated discount price levels that we’re currently seeing. This is not to say that investors should chase fiat paper profits, but rather to say that more troy ounces of silver can be bought when silver prices are at discount levels. In fact, investors want to become owners of physical silver or silver stackers, because it will be the quantity of troy ounces held that will count towards real tangible wealth at the end of the day, especially when the global fiat Ponzi scheme utterly and/or completely collapses.