Investor Demand Catapults Silver Price in 2008
Last Year’s Average Silver Price Eclipsed Only by 1980 Figure
NEW YORK (May 13, 2009) – Robust investor demand and solid industrial offtake drove silver’s price 12 percent over the prior year’s average to US$14.99 oz in 2008, leading to the seventh consecutive annual rise in value for the white metal. The 2008 average silver price, bested only once before in the metal’s history, once again showcased silver’s dual role as both an investment and industrial metal, according to World Silver Survey 2009, released here today by the Silver Institute and GFMS Limited, the authors of the report.
Silver Price and Investment
During the first half of 2008, investors drove the silver price up above the US$20/oz mark (a high of US$20.92 oz was recorded in March) against a backdrop of generally firm fabrication demand. The second half of 2008 was a different story as the economic outlook deteriorated rapidly, and silver, as well as other metal prices, slumped. However, silver’s price in the first third of 2009 recovered a good part of the lost ground.
In 2008, a record inflow of over 93.1 Moz into the three main silver ETFs was instrumental in the high price average, as investors propelled silver to multi-decade highs, in not only daily price terms but also in the annual average.
Last year, coins and medals fabrication jumped by an astonishing 63 percent to a record of 64.9 Moz. The main reason for this was a surge in investment-related purchases of bullion coins, both in the United States and Europe. Notably, fabrication of the U.S. Silver Eagle bullion coin achieved a record 19.6 Moz last year, approximately double the 2007 figure, and would have been higher if the U.S. Mint had sufficient blanks to produce coins to meet demand. In 2009, physical silver investment demand has continued to increase, as the U.S. Mint has already achieved a nearly 70 percent year-on-year rise in the first quarter.
Silver Demand
Total global silver fabrication slipped a modest 0.9 percent in 2008 to 832.6 Moz. Even though industrial demand dipped slightly by 1.4 percent to 447.2 Moz, the 2008 performance was the second only to 2007, with most of the loss occurring in the 4th quarter of 2008. Jewelry fabrication dropped by 3.2 percent to 158.3 Moz in 2008, the product of weaker off-take in Italy and Thailand. Growth in this sector was most pronounced in India, China and Russia. Silverware demand fell by 2 percent in 2008 to 57.3 Moz, as losses in western markets were partially offset by gains in India, which witnessed a 7 percent rise, as well as Russia, which also enjoyed growth in consumption last year.
World Silver Supply and Demand (million ounces)
(totals may not add due to rounding)
Supply
| 2007 | 2008 | |
| Mine Production | 664.2 | 680.9 |
| Net Government Sales | 42.3 | 30.9 |
| Old Silver Scrap | 181.9 | 176.6 |
| Producer Hedging | – | – |
| Implied Net Disinvestment | – | – |
| Total Supply | 888.4 | 888.4 |
Demand
| 2007 | 2008 | |
| Fabrication | ||
| Industrial Applications | 453.5 | 447.2 |
| Photography | 124.8 | 104.8 |
| Jewelry | 163.5 | 158.3 |
| Silverware | 58.8 | 57.3 |
| Coins & Medals | 39.7 | 64.9 |
| Total Fabrication | 840.3 | 832.6 |
| Producer De-hedging | 23.5 | 5.6 |
| Implied Net Investment | 24.7 | 50.2 |
| Total Demand | 888.4 | 888.4 |
Photographic demand continued its decline, falling by 16 percent in 2008 to 104.8 Moz, a fall chiefly attributed to the continued growth in digital products.
Implied net investment more than doubled to 50.2 Moz, largely due to record inflows into the ETFs and a surge in Indian investment.
Mine Supply and Costs, Above-Ground Stocks, Scrap Supply and Government Sales
Global silver mine production grew by 2.5 percent in 2008, driven by strength in the gold and lead/zinc by-product sectors to 680.9 Moz, representing the sixth year of consecutive growth and 77 percent of total supply last year (see the Summary Table above). Of note, Bolivia’s output more than doubled over 2007’s performance, and Russia experienced a 24 percent gain in mine supply last year. Peru was again the world’s biggest silver mining country in 2008, followed in the rankings by Mexico, China, Australia and Chile. Last year, silver generated at primary mines posted a 1 percent decline to account for 28 percent of total mine production. Cash costs at primary silver mines rose to US$4.53 per ounce in 2008, due to inflationary input cost pressures and diminishing base metal by-product credits.
The net supply of silver from aboveground stocks dropped by a robust 14 percent in 2008 to 151.7 Moz. The decline was mainly due to lower net government sales and a drop in scrap supply. Scrap volumes fell to an 11 year low of 176.6 Moz. De-hedging reduced the overall producer hedge position by 5.6 Moz last year.
A further decline in Russian disposals, as well as the absence of any sales from China and India, resulted in a 27 percent fall in government sales in 2008 to 30.9 Moz.
About the World Silver Survey, the Silver Institute and Ordering Information
The 2009 edition of the World Silver Survey was independently researched and compiled by London-based GFMS Limited, the leading metals research company. The Silver Institute has published this annual report on the global silver market since 1990, to bring reliable supply and demand statistics to market participants and the public at large.
The World Silver Survey 2009 was sponsored by 18 companies and organizations from North and South America, Europe, Australia and Asia. These firms are involved in most aspects of the global silver industry, from mining and refining to trading and manufacturing.
Founded in 1971, the Silver Institute is an international industry association. Its members include the leading silver producers, refiners, manufacturers and dealers.
Copies of World Silver Survey 2009 are available to the media upon request and can be purchased for US$225 from the Silver Institute, 888 16th Street, Suite 303, Washington, DC 20006, tel +1 202/835-0185; fax +1 202/835-0155, or from the Institute’s web site www.silverinstitute.org. For copies outside North America, please contact GFMS by tel +44 (0) 20 7478-1750; fax +44 (0) 20 7478-1779, or via the web at www.gfms.co.uk. You can also email your request to the Silver Institute at
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
and GFMS at
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
.
World Silver Survey 2009 Sponsors
Major Sponsors
- Coeur d’Alene Mines Corporation
- Fresnillo Plc
- Industrias Peñoles, S.A.B. de C.V.
- Silver Wheaton Corp.
General Sponsors
- Barrick Gold Corporation
- Cia. de Minas Buenaventura, S.A.A.
- Endeavour Silver Corp.
- Hecla Mining Company
- KGHM Polska Miedz S.A.
- Pan American Silver Corp.
- Silver Standard Resources Inc.
Contributors
- CME Group
- Goldcorp Inc.
- Johnson Matthey Inc.
- MAG Silver Corp.
- Mitsui Global Precious Metals
- Nyrstar Metals Pty Ltd.
- Tanaka Kikinzoku Kogyo K.K.
For Further Information Contact:
Mike DiRienzo
The Silver Institute
888 16th Street, N.W., Suite 303
Washington, D.C. 20006
Tel: (202) 835-0185
Fax: (202) 835-0155
Andy Edson
Tel: (516) 850-3195