Years back I posted some silver production and demand articles. One of the articles noted that since the 1980's, demand had increased an average of 12 to 16 million ounces per year. Another article noted that production could only keep up until 2010 to 2012. Since those articles were published, demand took a big hit due to the recession and new silver properties have been added to the pipeline, some that I knew about and some that I did not know about. One is Goldcorps Penesquita which will put out about 30 million ounces next year. Another is Escobal which may rival Fresnillo. Barrick is moving forward on Pascua Lama, another 30 million oz per year. Pan American bought Navidad which will be another big one. On the negative supply side, government sales have dropped from something like 80 million ounces per year a couple of years ago, to about 15 million last year.
On the demand side we now have investor purchases in large amounts. I think the negative effect of digital cameras is about over and most of photographic silver gets recycled anyhow. Something I do not read much about, but think will be huge is silver used in solar applications. This market is about to take off and if we get higher oil, solar will use greatly increasing amounts of silver.
So what am I saying? I am saying I do not know that a silver shortage is upon us even though there is so much talk about it based on COMEX and the LMBA. Eventially it will come, because it will be impossible to add a 30 million ounce per year project every 2 years and some old projects continue to go offline. The silver price may yet soar due to investment and paper silver being changed into real metal. I think that a physical shortage due to industrial use is 8 to 10 years away. I would like to buy land on the water or acreage with a stream in the next couple of years, so I hope I am proven wrong on this.
