Statements such as "silver is a good buy as the world is rapidly depleting the known resources hence the price will rise" may or may not be true. If it is true then i think that it is a much longer timeframe than a cyclical investment would warrant. By that time alternative strategies would provide greater returns which may allow you to get back into silver if desired. A recent article from the US Northwest Territorial Mint (Precious Metals Monthly #61) was worth reposting in my view... see below. (Here's hoping the tables come out okay) Straight on Silver by Ross Hansen Silver's volatility has brought lot of new opportunists to the precious metals market. These new faces have jumped from one vogue investment to the next, and are now selling gold and silver with the same vigor as they've shown in the past when they pushed penny stocks, tech stocks, and mortgages. Often, they spew a wide assortment of conspiracy theories and wacky, wildly exaggerated statements to get you to buy precious metals. As a 30-year precious metals professional, I like my clients to be armed with facts. So permit me to debunk one of the main arguments these hucksters make namely, that mine production is plummeting and we're running out of silver. Our friends at GFMS, the world's premier precious metals consultancy, publish independent reports about silver and gold every year. They have allowed me to use the data below from the World Silver Survey 2011, which GFMS prepared for the Silver Institute. Examine and see mine production has been increasing for the past five years (as it has for many prior to that). World Silver Supply & Demand (tons) Supply 2006 2007 2008 2009 2010 Mine Production 19,960 20,697 21,209 22,342 22,889 Net Government Sales 2,441 1,322 898 483 1,393 Old Silver Scrap 6,322 6,191 6,024 5,859 6,687 Producer Hedging 0 0 0 0 1,901 Implied Net Disinvestment 0 0 0 0 0 Total Supply 28,724 28,210 28,132 28,684 32,870 Copyright 2011 GFMS/The Silver Institute. Used with permission. Obtain the World Silver Survey at http://shop.gfms.co.uk/acatalog/Silver.html Check with any of the other leading mining companies and you see the same story again and again. They are all providing increased supplies and have more new product coming online. Silver Growth for Selected Silver Miners 2010 vs. 2009 (Moz.) Miner 2009 2010 Increase BHP Billiton 41.341 45,363 10% Pan American Silver Corp. 23,044 24,286 5% Goldcorp 12,799 22,957 79% First Majestic 3,798 6,529 72% Endeavour 2,600 3,300 26% Source: Annual reports and press releases. There are many reasons to own silver, such as the inflation of the currency due to quantitative easing; unsustainable government debt (grown from $5.6 trillion to $14.3 trillion in just ten years); and increasing industrial applications. But an allegedly dwindling silver supply is not.
Yeah the mining production has been increasing steadily since the year 1900 according to the data from USGS.gov. There really isn't much shortage per se it's just that Silver mines aren't all that common, they are usually mined along with other stuff like Nickel, copper. The people who argue for the shortages are saying that silver is destroyed through industrial and weapons usage so the surface supply is much less than gold which is never destroyed.
I read Silver production hits it's peak in about 2015. A good indicator would be how much life span the mines have & new ones starting up, how much silver comes from minning other metals and the mine life there. End of the day Silver production is not very big and we're running out of world to pillage.
What is it with this stupid 'silver comes from other mines' nonsense, who cares if it only comes when there is hail, it is there!!!!
Nice to know that silver supply could only increased 14% since 2006, despite the price more than tripled. Also the article completely missing the cost of production cost, or does he really think we could have that 14% increase in mining production if silver is still under $10?
If silver is a byproduct of of mine for base metals and the economy tanks and thus base metal prices tank then the mine gets shut down and thus no more silver even if silver does not tank along with the other commodities. therefore it is possible for silver prices to rise and mining supply to fall and the two not be manifestly related to each other...
Yep thats what i was getting at, silver is a by product of a lot of mines like Roxby Downs, if uranium tanks and they shut down no silver.
Does anyone know the statistics for how much supply comes from by-product mining and from pure silver mining? I heard 80% of supply comes from by-product mining but that sounds very high, anyone?
Here is a starting point: http://www.dpi.nsw.gov.au/minerals/resources/mineral/map-major-mineral http://www.infomine.com/commodities/Silver.asp - See "Ghanzi Project - Models for the Origin of Mineralization - 2011" at the bottom for a report on silver vs copper found. http://en.wikipedia.org/wiki/Silver_mining#Areas_of_silver_mining Looks like most.
Thats only looking at one side of the coin tho really , When supply is barley keeping up with demand and then you add stackers like us to the market all over the world it only takes a small incremental shift to the demand side and all sorts of things could happen. World Silver Supply and Demand To document these and other market fundamentals, each year the Silver Institute works with GFMS Limited, of London, a leading research company, to prepare and publish an annual report of worldwide silver supply and demand trends, with special emphasis on key markets and regions. This annual survey also includes current information on prices and leasing rates, mine production, investment and fabrication. To learn more about the general production and uses of silver, please see our Production and Uses pages. For articles related to supply and demand, see the Silver News archives. World Silver Supply and Demand (in millions of ounces) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 mine Production 606.2 593.9 596.6 613.0 637.3 641.7 665.4 681.9 718.3 735.9 Net Government Sales 63.0 59.2 88.7 61.9 65.9 78.5 42.5 28.9 15.5 44.8 Old Silver Scrap 189.0 196.3 194.0 195.2 198.6 203.3 199.0 193.7 188.4 215.0 Producer Hedging 18.9 -- -- 9.6 27.6 -- -- -- -- 61.1 Implied Net Disinvestment -- 18.9 1.6 -- -- -- -- -- -- -- Total Supply 877.1 868.3 881.0 879.7 929.5 923.5 907.0 904.5 922.2 1,056.8 Demand Fabrication Industrial Applications 349.7 355.3 368.4 387.4 431.8 454.2 491.1 492.7 403.8 487.4 Photography 213.1 204.3 192.9 178.8 160.3 142.2 117.6 101.3 79.3 72.7 Jewelry 174.3 168.9 179.2 174.8 173.8 166.3 163.5 158.3 158.9 167.0 Silverware 106.1 83.5 83.9 67.2 67.6 61.0 58.5 57.1 58.2 50.3 Coins & Medals 30.5 31.6 35.7 42.4 40.0 39.8 39.7 65.4 79.0 101.3 Total Fabrication 873.6 843.5 860.1 850.6 873.6 863.5 870.3 874.7 779.2 878.8 Producer De-Hedging -- 24.8 20.9 -- -- 6.8 24.2 11.6 22.3 -- Implied Net Investment 3.6 -- -- 29.1 55.9 53.2 12.5 18.2 120.7 178.0 Total Demand 877.1 868.3 881.0 879.7 929.5 923.5 907.0 904.5 922.2 1,056.8 Silver Price (London US$/oz) 4.370 4.599 4.879 6.658 7.312 11.549 13.384 14.989 14.674 20.193 SOURCE: World Silver Survey 2011 Looks like supply is barely keeping up at the moment. Even with increased mining supply. Edited to fix charts
The supply always equals demand for Silver which is weird but makes sense. You can't buy what isn't there for Silver, regardless of what the paper pushers preach.
I guess it doesnt make sense, isnt there an above ground stockpile? So demand could be more than supply? It would just eat into the stockpile?
Thought that since the end of a 'silver standard' has come about, governments no longer stockpile Silver that's why there is no 'stockpile'. No idea, probably need some Googling
I meant stockpile as in the amount of above ground silver that already exists at the start of the year prior to any new silver being mined. As in bullion bars, coins, jewellery etc
Won't the increasing pace of production work to speed up the dwindling supply of below ground reserves?
Probably less than Gold, I have read that the U.S Gov't vaults are empty of Silver tho. If adding the available above ground stock all up you also need to consider the Amount gone forever each year as well, well until it becomes profitable to reclaim from land fills and the like.
Meant to add that according to the above the increase is about 18,700 Mill Oz while industrial and other use has increased in pace or above that level. Dont know what happened there ?
