Silver Production May Decline More than Analysts Forecast

The comments below are an edited and abridged synopsis of an article SRSRocco Report

The global mine supply from the top silver-producing countries may decline more than the industry forecasts. The leading consultants reported that global silver production would increase moderately by 1-2% in 2018. However, the data from several countries and large mining companies suggests that overall world silver production may decline by 2-3+%.

Silver Production May Decline More than Analysts Forecast | BullionBuzz

The two leading silver-producing countries, Mexico and Peru, reported declines in 2018. Poland and Russia also reported declines. However, the biggest losers were Canada (-12%) and the US (a stunning -16%). The only country that reported an increase was Australia at 8%.

It is difficult to get data for China, the second-largest silver-producing country in the world. According to the World Silver Interim Report, it forecasts global silver production to increase by less than 1% in 2018. It noted that silver production in North America (the US and Canada) would decline by 5.4 million ounces.

Mexico and Peru’s silver production is estimated to fall by more than 12 million ounces in 2018. If we consider the total shutdown of the second-largest primary silver mine in the world, Tahoe’s Escobal Mine in Guatemala, we can slash another 10 million ounces of silver production.

So, even if there are some silver production gains in China or Africa, they are unlikely to offset all of the declines.

The World Silver Survey forecasts an increase of global silver production in 2018 at 865 million ounces, up from 852 million ounces in 2017. However, overall production will be down 2-3%. Total world silver mine supply may be between 827-835 million ounces, down 17-25 million ounces, excluding data for China and many smaller countries.

Nearly 60% of silver mine supply is a by-product of copper, zinc and lead production. Base metal production will likely fall considerably when the world begins to collapse due to the unraveling of the highly leveraged debt-based economy, which will no longer have a growing energy supply to service the debt propping up the financial system.

So, falling base metal production will affect world silver mine supply more than gold, which is why silver will likely outperform gold in the future.

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