Production Down Significantly: Massive Silver Shortage Coming in The Near Future?

The comments below are an edited and abridged synopsis of an article by Nathan McDonald

The silver sector’s market cap is small, and it is susceptible to wild swings, manipulation and disruptions. This has always been the case; however, the remainder of 2020 may highlight these problems.

Production Down Significantly: Massive Silver Shortage Coming in The Near Future? | BullionBuzz
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Disruptions in silver supply have been severe over the last few months as Covid-19 spread, with some of the largest miners suffering huge production setbacks.

Mexico (the world’s largest producer) saw mine production decline by a staggering 40% this April. Peru (the world’s 2nd largest producer) suffered heavier losses than Mexico with a stunning 74% loss in April 2020 vs 2019.

The third-largest producer is China, followed by Poland, Chile and Russia. All of these countries have suffered because of the pandemic. There is a massive global decline in silver production that will continue throughout the remainder of this year, and likely into 2021.

This comes at a time when there is strong demand for physical silver from ETFs, which have had a record-breaking increase of 65 million ounces this year.

Additionally, demand for physical bullion among investors seeking the metal as a safe-haven asset is estimated to increase by 16% year over year, resulting in a five-year high in demand.

It is only a matter of time before reduced silver supply is felt by those who require it to produce their products, especially since much of the world’s silver is a by-product of base metal mining.

Silver will likely spike in the latter part of the year as safe-haven demand increases, given the uncertainty surrounding the presidential election and the disruption that will result, regardless of who ultimately prevails.

The second wave of Covid-19 will result in more money printing, more shutdowns and increased uncertainty about what the future holds, meaning an even greater reduction in silver supply. Significant gains lie ahead for those who had the foresight to accumulate while gold and silver were ‘on sale.’

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