What Is Happening To World Silver Demand?

March 5, 2009 | By | 1 Reply More

World silver mine production rose by 4% in 2007 to 670.6  million troy ounces.

Total world demand for silver rose fell to 894 .5 million troy ounce from 913.7 million troy ounces in 2006 continuing the significant excess of demand over supply.

  • Usage in industrial applications in 2007 amounted to 455.3 million troy ounces, an increase of 30.5 mt ounces over 2006.
  • Demand in the silver jewelry and silverware sectors fell in 2007 by 5.3 mt ounces to 222.2 mt ounces.
  • Photographic demand continued to fall in 2007 to a total of 128.3 mt ounces, a drop of 15.7 mt ounces from the previous year.
  • Coins and medals make up the balance of demand with little change year on year at 37.8 mt ounces in 2007.
  • Recycling of old and new scrap accounts for a substantial amount of silver becoming available annually.

About 75% of mined silver production is a by product of copper, lead, zinc and gold mining and, as a consequence,  silver production continues at a similar level irrespective of price changes and demand for the metal.

As industrial demand and prices for base metals increases so the exploration and development of new mines will also gather pace with the consequential increase in silver production in most cases remaining a by product. In the second half of 2008 and to date in the first quarter of 2009, demand and production of base metals has fallen significantly.  As a result silver production is expected to be affected.

It is understood that there are many known silver deposits and reserves that can come on stream when silver prices are considered high enough to make the extraction viable.

Profits from mines that solely produce silver are at more risk than those mines that produce silver as a by-product as they are entirely reliant on silver price and demand.

In modern times silver was not considered as a primary store of value whereas the demand for gold continued to be for financial reasons, whether held as coin, bullion or jewelry with only a relatively small amount being used up and becoming irretrievable. Now that we have entered an era of global recession, silver is regaining its status as a store of value.

Commercial usage of silver, particularly in the fast developing ‘hi tec’ industries, is increasing and much of the metal used becomes irretrievable.

At the same time silver has become more easily tradable by the investing public. One such development in the last 3 1/2 years has been the growth of exchange traded funds (ETFs) backed by holdings of silver bullion. The largest silver ETF, iShares Silver Trust  (SLV) currently holds over 250 million ounces in trust compared with 92 million ounces in 2006.

In 1980 the price of silver hit a high of US$ 48.70, about $120.00 adjusted to todays dollar value, when there was an attempt to corner the market. This is not far off ten times as much as the current price.

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Category: Silver

Comments (1)

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  1. Wow! It was up to $50 in 1980. That’s amazing, and there’s no reason why it couldn’t happen again. I actually prefer investing in silver over gold, albeit gold is more popular silver has proven to be the bigger winner when you look at percentage gains. Even recent times, gold has risen 30% in the last while, while silver has risen more than 60%. But it is important to know the value of silver, per ounce or gram when you go to buy it so you can turn around and sell it at fair market value. Don’t sell to pawn shops or “cash for gold” type places. They just rip you off(trust me, I know from experience:) when I was still learning).

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