Silver
Silver Prices
The silver market is well-known for its volatility; the ups-and-downs experienced in the price of silver over the last few years have lent further support to that reputation. Nonetheless, many investors the world over view silver as a practical investment. In fact, as the World Silver Survey 2012 points out, investment demand for silver was the "principal driver" for silver prices in 2011.
As a precious metal, silver's price performance often mirrors that of gold and tends to outperform the gold price in major market rallies. Fear of impending financial collapse in Western Europe, stalled economic recovery in the U.S., and rising inflation in Asia, including India and China, has fueled heavy demand for physical gold. As prices for the yellow metal push higher, bullion buyers often turn to silver as a cheaper alternative, earning it the moniker "poor man's gold."
In 2011, while the price of gold climbed 28 percent, the price of silver soared 74 percent year-on-year, according to GFMS' most recent report for the Silver Institute.
Production by Country/Trends
The majority of silver is produced as a byproduct of mining other metals such as copper and gold. In 2011, according to research performed by GFMS for the Silver Institute, global silver mine production rose for the ninth straight year to a new record high of 761.6 Moz; while production from primary silver mines suffered slight losses, production of silver as a byproduct experienced gains, notes the study.
The historically silver-rich country of Mexico, home to the Avino Mine, ranks as the world's largest silver producing nation with output climbing 8 percent in 2011 to reach 152.8 Moz. Mexico also boasts four of the world's top 15 primary silver producing mines.
Industrial Uses and Demand
Silver has widespread uses throughout the global economy, from jewelry to cell phones to surgical tools.
Strong and malleable, the white metal can take various forms; it is one of the best thermal conduits and has the highest electrical conductivity of all other metals including copper. These characteristics make silver a perfect component for many of today's modern electronics. In 2011 more patent applications included the use of silver than any other metal demonstrating its increasing demand in applications. No wonder electrical and electronics industries accounted for 244.6 Moz in fabrication demand in 2011.
Silver's fluidity, strength and thermal conduction powers make it a perfect soldering agent and brazing alloy. In 2011, brazening alloys and solders accounted for 63.4 Moz of fabrication demand.
Silver is also used in batteries, conductive inks, as a coating material for optical data storage media, as a catalyst in chemical reactions, as a component in thick-film photovoltaic modules, in water purification systems, in wound treatments and even in medical implantation devices.
Global fabrication demand has remained healthy even in the face of a global recession and threats of a double-dip. In 2011, silver demand for industrial purposes reached 486.5 Moz, down 2.5 percent from the previous year, which posted a new record high in silver industrial demand.
Investment Demand
Strong silver investment demand has pushed silver prices to near record highs. In 2011, global investment in silver totaled nearly $10 billion or 282.2 Moz, according to the World Silver Survey 2012, led by physical investment in silver bars and silver coins. Demand for silver bullion in North America is extremely hot with silver bullion imports to both the United States and Canada posting record levels in 2011.
Bargain-hunting during price drops, investors have shown enough confidence in the silver market to overlook its volatility. The demand for physical silver has pushed silver coins and medals purchases up nearly 19 percent to an all time high of 118.2 Moz in 2011 while silver bar investment grew by 75 percent to 95.7 Moz. Total investor demand for physical silver bullion products accounted for more than 75 percent of global silver investment last year.
| World Silver Supply and Demand (Moz) | ||
|---|---|---|
| 2010 | 2011 | |
| Supply | ||
| Mine Production | 751.4 | 761.6 |
| Net Government Sales | 44.2 | 11.5 |
| Old Silver Scrap | 228.7 | 256.7 |
| Producer Hedging | 50.4 | 10.7 |
| Implied Net Disinvestment | - | - |
| Total Supply | 1,074.7 | 1,040.6 |
| Demand | ||
| Fabrication | ||
| Industrial Applications | 500.0 | 486.5 |
| Photography | 72.1 | 66.1 |
| Jewelry | 167.4 | 159.8 |
| Silverware | 51.2 | 46.0 |
| Coins & Medals | 99.4 | 118.2 |
| Total Fabrication | 890.1 | 876.6 |
| Net Government Purchases | - | - |
| Producer De-Hedging | - | - |
| Implied Net Investment | 184.6 | 164.0 |
| Total Demand | 1,074.7 | 1,040.6 |
| Silver Price (London US$/oz) | 20.193 | 35.119 |
For more information on silver please visit: The Silver Institute (http://www.silverinstitute.org)
To download a copy of the World Silver Survey 2012 by the silver institute please click here.