|
pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 06/04/2007 : 17:53:57
|
You must be logged in to see this link.
ABCs of silver
What are the different sources of silver supply and what impact do they have on prices?
Like other metals, silver cannot be created by man. It is a natural metal element found in the earth’s crust. The primary sources of silver supply include newly mined metal from the ores, while silver obtained as a byproduct or co-product of gold, lead, copper, zinc, and other mines. Recycling and government sales constitute the secondary sources. Any kind of delay, interruption or reduction in the above mentioned supply source(s) often results in big market price hikes, as the daily silver demand begins to surpass supply.
Who are the major producers?
Peru is the world’s largest producer of silver at 111 million ounces in 2006, followed by Mexico, China, Australia, and Chile.
What proportion of silver is obtained from silver-specific mines?
Only 20 to 30% of newly mined silver is obtained from silver-specific mines. The balance comes as a byproduct or co-product of other mining operations. Silver ore is mostly found in combination with gold, copper, lead, zinc, and other metallic elements. For instance, the world’s largest silver mine is the BHP Cannington lead and zinc mine in Australia.
Is the mine supply of silver elastic or inelastic?
Nearly 70% of mine production of silver is a byproduct of mining other metals and only 30% is mined from primary silver mines. Therefore mine supply is largely inelastic and hence it is not easy to economically increase production by a substantial amount. New silver mines take at least three to four years to become completely operational. For example, though the silver price peaked during 1979, it was only by 1983 that the new mines became completely operational.
What impact do the co-products have on silver supply?
As discussed, silver-specific mines contribute only 30% of the total primary supply; therefore, before determining the primary supply of silver it is quintessential to analyse the fundamentals of its co-product.
A strong correlation exists between the prices of silver and the core metals. Thus, with such a high degree of correlation, the prices of source products will have a major impact on the amount of silver mined. For example, if the price of zinc is touching a new high, enhanced production is encouraged and an increase in the zinc production is bound to lead to an increase in the production of silver as no producer can part away from such a valuable byproduct. Therefore prices of source products play a vital role in predicting the supply and consequently the price of silver itself.
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly.
|
|
ABCs of silver
Forum Locked
