Global Silver Supply

by: Debbie Dragon

Total supply of silver in 2004 was 879.2 million troy ounces (Moz), which is anticipated to increase in 2006. Scrap supply is tending to decline independent of the price of silver due to reduced demand for traditional photography.

There is approximately 700MMoz of silver in identifiable above ground inventories, less than one years demand (900 MMoz). Much of the world’s past silver mine production is consumed.

Key sources of silver are silver mines, old scrap, government sales, and hedging.

Scrap supply is the silver returned to the market when silver is recovered from existing manufactured goods or waste, which includes old jewelery, photographic chemicals and discarded electronics. Scrap silver is a little over one fifth of the global supply of silver. And, in 2004 scrap supply fell to a four year low of 181.1 Million ounces.

While government sales are from disinvestments which returns old coins or bars back to the market supply. However, these sources may not add to the net supply of silver.

Hedging refers to producers encouraged by higher market prices to increase the producers hedge cover, generating an estimated 2 million ounces of accelerated supply.

Direct silver mine supply primarily produces 27% of world silver, while around 73% of silver is produced as a by-product of gold, copper, lead, and zinc mining.

About half of mining supply comes from Mexico, Peru, Australia, and China, with a global scale of approximately 58 countries mine silver annually.