Now the numbers for 2009 have been released: the year of the "U.S. economic recovery" and the global economic recovery -- and another dramatic reversal in the global economy. And what happened to silver demand? It increased from 888.3 tons to 889.0 tons -- a difference of 0.7 tons, which translates into an increase of 0.08%. In the magical world of silver, even the 2% of supply contributed by governments is enough to meet any supply-deficit, because demand (supposedly) never changes.

Because there are large numbers of readers out there who simply refuse to believe in "manipulation" or "conspiracies" or simply lying, I'm sure that there are still some people out there who do believe that in the magical world of silver, demand never changes, and supply always perfectly equals demand. So let's move on.

If supply always precisely equals demand every year, this dictates another conclusion: inventories can never change. Remember how markets operate: if demand exceeds supply, that excess is drawn out of inventories, while if supply exceeds demand the excess is added to inventories. If supply precisely equals demand every year, there can never possibly be any change in inventories.

Now have a look at the chart below. Regular readers are already familiar with how silver inventories made a complete U-turn in 2005, and after plummeting straight down for 15 years, they are now moving nearly straight up -- supposedly inventories have nearly quadrupled in that span. Inventories have quadrupled, even though supply equaled demand every year.

To be more precise, silver inventories supposedly increased by over 30% last year alone, from roughly 600 million ounces to nearly 800 million ounces. Given that supply supposedly precisely equalled demand last year, the obvious question is where did this phantom 200 million ounces come from?

Part of the answer to that question I have answered previously: through the fraud of adding ETF-units to silver inventories. However, as the graph below shows, during 2009 holdings of the seven largest silver bullion-ETF's increased by roughly 110 million ounces -- from 350 million ounces to 460 million. But that still leaves 90 million ounces which are totally unaccounted.

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