Silver is mined both directly and as a byproduct of other metals such as gold, copper, lead, and zinc. Overall, mine production accounts for 75% of supply with the majority of the rest of the supply coming from recycled scrap and government sales. Future silver prices depend directly on this supply. In 2008, 20,900 metric tons of silver were mined in the world. The overwhelming leader in mine production by region was Central and South America. Peru, Mexico, and Chile alone combined to produce 8,600 metric tons of silver, or 41% of global silver production. Individually, the global leaders in silver mine production as a percent of global production are as follows: Peru (17%), Mexico (14%), China (12%) and Chile (9.5%). Production is only one of the factors affecting the future silver price. The second factor is the demand. There are many uses for silver other than jewelry.
Until 2005, the single largest demand for industrial or commercial use came from the photography industry. Currently, 15% of fabricated silver is used for photography. Demand from this sector has been an interesting trend. In the past 10 years, demand from the photography industry has been almost cut in half resulting in the decline of silver’s percentage of overall demand from 27% to its current level of 15%. The jewelry market surpassed photography as the leading consumer of silver in 2005. The reason for this decline has been the increasing use of digital cameras. This has been, and will most likely continue to be a growing trend affecting the future silver market. The declining demand for silver is discussed further in this exclusive market report by Futures Press – available for free by clicking FREE SILVER DEMAND REPORT.
Even with the decline in photography demand for fabricated silver, overall demand has held relatively steady. Making up the slack has been the growth in fabricated demand from industrial applications other than photography. These industrial applications include: batteries, bearings, soldering, catalysts, medical, solar energy, and other electronics. Demand for these industrial applications has grown by 45% and now makes up almost 55% of fabricated silver demand. That compares to the 38% figure of 1998.
Other uses for silver include coins, medals, and silverware. These three sectors round out demand and make up 11% of total fabricated demand. Many people are surprised to hear how much of the silver demand goes towards uses other than implied investments by private and government interests. Silver is classified as a precious metal, but that doesn’t mean it can’t be used for industrial and commercial purposes. As you can see, that really couldn’t be less true. Understanding silver’s uses and leading suppliers is an important part of trading future silver markets.
(USGS: Mineral Commodity Summaries: Silver)
(Silver Institute: Supple & Demand)
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