Latest Report from USGS Debunks Silver Shortage Myth
The latest data from the U.S. Geological Survey (USGS) has debunked the myth of a looming silver shortage, revealing that silver reserves have reached all-time highs. The annual report on world mine production and reserves provides crucial insights for precious metals investors, shedding light on the supply side of the silver market.
According to the report, the silver price has remained stable in 2023, with weak investment demand balancing out strong industrial demand. Despite a decrease in silver demand to 1.167 billion ounces for the year, silver production rebounded in 2022, with primary silver miners managing to increase production despite falling silver grades.
It is worth noting that a significant portion of global silver supply comes as a by-product of base metal mining. Silver supply from base metal by-product production is expected to increase in the coming years, with zinc, lead, and copper mines contributing 56% of global silver production. However, supply growth from these mines may be limited due to challenges in bringing large projects into production and decreasing ore grades.
GlobalData reports that global zinc production is set to rise, which will in turn increase silver by-product supply. On the other hand, gold supply (and silver by-product supply) is expected to remain relatively flat.
The 2023 USGS report highlights an increase in silver production and reserves globally, with Mexico, China, and Peru remaining the largest silver producers. Notably, Poland has surpassed Peru to become the country with the largest silver reserves, while Russia’s silver reserves have doubled. Total silver reserves have seen a 30% increase to 717,500 tonnes, with total silver production rising from 25,600 tonnes in 2022 to 26,000 tonnes in 2023. Extrapolating from the data, it is estimated that silver reserves could last for another 27 years, dispelling concerns of a silver shortage.
Taking a closer look at the three largest silver producers, Peru, Mexico, and China, the report reveals stable production levels and reserves in Peru, a slight increase in production and unchanged reserves in Mexico, and a marginal decrease in production and slight increase in reserves in China.
Overall, the data points towards an abundance of silver reserves and increasing production, suggesting that the silver price may remain steady unless demand outstrips supply. Investors are advised to focus on companies that can mine silver profitably at current prices, with expectations of a modest increase in the silver price within a range of $20-$25, moving in tandem with a rising gold price. The myth of a silver shortage has been debunked, paving the way for a more informed approach to investing in the precious metal.
The report indicates that silver reserves have hit all-time highs, debunking the myth of a looming deficit in the silver market. The data shows that silver production and reserves have been increasing, with a significant portion of the supply coming from by-product production of base metals like zinc, lead, and copper. The report also highlights that global silver production rebounded in 2022, despite falling silver grades.
The analysis suggests that there is no imminent silver shortage, as silver reserves have increased significantly. The three largest silver producers, Peru, Mexico, and China, have shown stable or slightly increased silver production and reserves. The overall trend points to abundant silver reserves and increasing production, which could potentially limit the rise in silver prices unless demand outpaces supply. Therefore, investors are advised to focus on companies that mine silver profitably at the current price levels, with expectations of the silver price staying within a range of $20-$25 and moving alongside the rising gold price.