• 3 hours Three Stocks To Watch Ahead Of Earnings Season
  • 7 hours Markets Flat As Bulls And Bears Battle It Out
  • 9 hours The Mining Industry Still Has a Human Rights Problem
  • 1 day 5 Billionaires Booted From Their Own Companies
  • 1 day Can Toyota's Hydrogen Car Take On Tesla?
  • 2 days Why Universal Basic Income Won't Work
  • 3 days Is This The Real Golden State?
  • 3 days Blockchain Firm Pushes For Ethical Mining
  • 4 days America’s Working Class Are Footing All The Bills
  • 4 days Market Volatility Sends Investors Scrambling Into This Asset Class
  • 4 days How Much Energy Would It Take To Power The Death Star?
  • 5 days A Tweet About Hong Kong Could Cost The NBA $4 Billion
  • 5 days World's Largest Miner Doubles Down On Renewables
  • 5 days Nasdaq Cracks Down On Small Chinese IPOs
  • 6 days Is There Any Reason To Be Bullish About Netflix?
  • 6 days Precious Metals See Record Inflows As Investors Hedge Against Teetering Economy
  • 6 days NYU Professor: Tesla Could Lose 80% Of Its Value
  • 7 days Uber To Offer On Demand Employment
  • 7 days SoftBank Reeling After Questionable WeWork Investment
  • 7 days Opportunity Arises In The Democratic Republic Of Congo
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

Whither Peak Silver?

The United States Geological Survey recently published its silver summary and it turned out to be yet another record year of global mine production for silver. The 2015 estimate will be revised, but in the last twenty years, only four years (2000, 2003, 2005, and 2011) have been revised downwards in the subsequent summary.

If it does happen that 2015 output comes in below 2014, that does not mean that Peak Silver has arrived as 35 years out of 115 years of global data have been dips from the previous year only to see silver production resume its upwards march.

But, one day, global silver production will dip and it will never return to the heights it had previously hit. A look at the chart below shows the global output of silver since 1900. If this was the share price of a company, you may decide that now is not a good time to invest in it since a correction would be on the cards. But this is not a chart of a company's performance, but rather an interplay of geological formations and market forces.

As you can see, the story of silver mining can be broken down into three phases. The first is flat but erratic as the new century dawned and progressed to the beginning of World War II. After this, came the post-war boom and silver reacted by climbing up a new gradient. By the time the interruption of the 1992 recession and a silver bear bottom came and went, the stage was set for an even steeper rise as China and its one billion citizens entered the market and silver production entered its third and current phase.

Silver Production 1899-2016

The question is how long this elevated gradient of global silver production can be sustained? That silver would enter an even steeper gradient of production looks highly unlikely. Maintaining the current levels depends not just on global demand, but a complex mixture of energy prices, inflationary expectations, falling ore grades, estimated geological reserves and improving extraction technology. Anyone that tells you Peak Silver has arrived based on one down year is wrong.

Peak Silver (and Peak Gold) will be an event viewed through the rear view mirror. The most likely indicator of this will be rising prices allied with falling production over a certain number of years. After that comes confiscation and rationing, subjects covered in my latest newsletter.

 


Further analysis of silver can be had by going to our silver blog at http://silveranalyst.blogspot.com where readers can obtain subscription details for the Silver Analyst newsletter. Comments and questions are also invited via email to silveranalysis@yahoo.co.uk.

 

Back to homepage

Leave a comment

Leave a comment