Silver Fundamentals
Some two thirds of the world's demand for silver is provided by mine production, with the balance being supplied primarily by net government sales, reduction in silver stocks and old silver scrap.
Over the past decade, the supply of newly-refined silver has been less than that required to satisfy demand, with this deficit being largely met through reducing silver stocks which were mostly built up during the 1980s, when silver supplies exceeded demand.
The graph below shows that excess silver stocks have now been eliminated and silver stocks now represent just a few months of use.
In 2003 the demand in excess of silver supply from mines and scrap sources was some 85 million ounces, up from the 67 million ounce silver deficit in 2002 and commentators estimate the accumulated silver supply deficit since 1992 is now more than 1.35 billion ounces.
Whilst the use of silver in conventional photographic use is believed to be declining in developed countries due to the use of digital cameras, there is an increased demand from photographic paper for prints and in X-ray films and an increase in conventional photographic use in developing countries. In addition there are new applications of silver in industrial products ranging from new uses of silver as a biocide in medical and environmental products to use as a catalyst in fuel cells and other technologies, to use in flat-screen televisions and superconductors. Silver has possibly the broadest application of any metal, and demand for it will continue to be buoyant.