2014 WORLD SILVER MINE SUPPLY: May Come In Less Than Official Estimates

Global silver mine supply this year may turn out to be less than the official estimates.  GFMS released their 2014 Interim Report stating world silver mine supply is forecasted to increased 3.5% to 868 million oz (Moz) in 2014.  They included a world map in their report showing the net change in production from various countries.

According to GFMS 2014 Silver Interim Report:

On the supply side, mine production is forecast to reach all-time highs in the silver industry in 2014 as supply from Guatemala, Mexico, Chile and Peru increases. This is forecast to see primary supply increase by 3.5% in 2014 to 868 Moz. Total supply to the market is expected to increase more modestly as scrap supply continues to contract, with an estimated 14% decline in scrap leading to total supply of 1,131 Moz, a 2.9% increase year-on-year.

If we look at the map provided by GFMS, they show an increase in annual production in GREEN, a decrease in RED and no change in shown in TAN:

GFMS Global Silver Production Map 2014

I agree with GFMS on Guatemala, Chile & Peru… but not on Mexico.  GFMS forecasts that Mexico will increase silver production 12+ million oz, shown in the light green color.  However, Mexico’s INEGI just released their September figures year to date and it shows overall production nearly flat compared to the same period last year.

Guatemala will show the largest increase in silver production due to Tahoe Resources Escobal mine becoming commercial in January of this year.  Guatemala’s Escobal mine will produce 20+ million oz a year.

Furthermore, the Chilean Copper Commission also released their most recent World Copper Market Review showing production of copper and various metals.

I put together a chart using data from the following sources:

  1. Mexico’s INEGI
  2. Chilean Copper Commission
  3. KGHM Polska Miedz
  4. Canada’s Dept. of Natural Resources
  5. USGS – United States Geological Society
  6. Peru Ministry of Mines & Energy

Mexico’s 2014 silver production (Jan-Oct) was 151.7 Moz compared to 150.9 Moz the same period last year.  Peru increased its silver production 4 Moz from 96 Moz (Jan-Oct) 2013 to 100 Moz this year.  KGHM Polska Miedz, which accounts for Poland’s silver production (Jan-Sep) was up 1.1 Moz from 27.7 Moz in 2013 compared to 28.8 Moz this year.

Chilean silver production (Jan-Sep) was up 4.7 Moz from 28.4 Moz in 2013 to 33.1 Moz this year.  The United States increased silver production (Jan-Jul) 1.5 Moz from 20 Moz in 2013 to 21.5 Moz this year.  However, the biggest loser was Canada which saw a large 5.9 Moz decline in silver production (Jan-Oct) compared to the same period last year.

Top Countries Silver Production NEW 2013 vs 2014 Ytd

The net annual change in silver production from these six countries is 6.2 Moz, or an increase of 1.8%.   I checked Australia’s data from their Dept of Natural Resources, but they only have figures for the first quarter of 2014.  That being said, one of the largest primary silver mines, BHP’s Cannington located in Australia, has seen its year-over-year production decline 3.6 Moz in the first nine months of 2014.

In the GFMS global map above, they show silver production remaining flat in China and Russia, with large declines in Australia, North America and Kazakhstan.   GFMS shows large increases in Guatemala, Mexico, Peru and Chile.

As I stated before, I know Guatemala will be up significantly due to the Escobal mine bringing online 20 Moz of new production, but I do not believe Mexico or Peru will be as strong as forecasted.  If Australia is down 5-8 Moz, while Kazakhstan down considerably compared to last year, global silver production will come in less than GFMS forecasted.

It all depends on how China and Russia finish for the year.  If they are flat or slightly lower, than total world silver production may be 10-15 Moz less than GFMS 2014 forecast of 868 Moz.

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15 Comments on "2014 WORLD SILVER MINE SUPPLY: May Come In Less Than Official Estimates"

  1. In a normal free market environment, supply should be down considerably. Double digit % for sure. But, not in our ZIRP centrally managed economy.

    Lose money producing something? No problem, we’ll just lend you all the money you need so you can continue losing it.

  2. Thanks Steve for another excellent report. If 2014 mine supply for silver does happen to be larger in 2014 it will most likely be the last year that that happens until we see prices much higher. Just pure momentum dragging silver out of the ground. The longer silver stays in this price range the more likely of a supply squeeze coming in a few years. Steve, I have looking at the gold/silver ratio long term chart and it appears to exhibit a seven or so year cycle. If that cycle is real then somewhere around 2017 to 2018 we could witness another low in that ratio.

  3. It would help to juxtapose the worldwide demand data alongside the production number or the Demand/Supply ratio so that the extent of mismatch can be gauged.

    • Geographical supply and demand have a gross mismatch but a data set like you suggest would be misleading. Largest silver producer is Mexico. Largest demand is China. Silver is mined in Mexico and sent off to China. Where it’s fabricated into all the electronic devices, solar panels, etc. Which are exported back primarily to the US but also Mexico and everywhere else. A lot of the metal makes a 15,000 mile trip to end up back where it came from. To be useful, your chart would have to compare source to final resting place cutting out the middlemen. On the other hand, gold is a one way trip. Off to China never to return. That’s why all the historical correlations don’t match up. Gold and silver supply/demand no longer have any relationship to each other.

      • There are no markets anymore, there’s only interventions and manipulations and a huge derrivative bubble, so nowadays the Gold/Silver ratio is just as pointless as chart analysis in general. No algorithm works in such an environment, not even the most sophisticated. However the Gold/Silver ratio was determined by the ratio in which silver exists in the earth crust compared to Gold. That ratio didn’t change all that much and if so, more likely in favor of Silver.

        Today’s prices do not reflect the rarity of a given commodity as it would be the case in a free market environment. That is annoying but manipulation can’t go on for ever because Gov. interventions always desrupt the natural balance of supply/demand. That is as sure as the “amen” in the church, allthough the disruption doesn’t become visible overnight. At the current time we still have an increase in the Silver supply because primary silver miners are in a liquidity trap. Most primary Silver miners just simply can’t afford to halt or even reduce their Silver output because they need cash in order to cover their operational costs. However, if the price of Silver continues to be at- or below mining cost, it is well possible to see some mining companies going out of business in the near future. The non primary Silver Miners make their bucks with mining base metals, such as copper lead and zinc, so silver is only a byproduct for them.

        Only if the world would see heavy recession/deflation, industrial demand for those base metals would likely decrease and miners would have to adjust their production. So in that case there would be also less Silver coming off the ground. Allthough investor demand for Silver was very strong this year and last year, it is questionable if investment demand could replace falling industrial demand in a deflationary environment. Last year there was a Silver supply deficit according to the annual Silver supply/demand report published by the Silver Institute but anyhow somebody seemed to supply the gap. We don’t know who was the supplier and we don’t know how much hidden Silver is around today, so that’s why it is very hard to make any reliable forecasts on price development.

  4. Hi Steve, I am looking at the 2014 precious metals production screen on your web site at the moment. At 689.3 million ounces, it has a long way to go to reach the above article’s number. Also, the ratio of gold to silver is about 9.5:1 and has been that way for some time. Interesting that the market values the gold to silver ratio at 73:1. Am I not seeing something. Any answers?

    Brian

    • What you are seeing Brian is that the financiers of the world over have taken over like a shitstorm. There is nothing that is real, there is no price quoted anywhere in the world that even remotely reflects reality, and we are all in this shit hole together.

      Right now, many plebs have no idea and are feeling great. While anyone looking at the math of anything KNOWs this whole apeshit world that the Fed and central banks have created is going to be blown up at some point.

      ALl of a sudden, massive money is going into USO. That is because THEY have realized low oil prices isn’t just going to blow up Russia, it will blow up HALF the world’s GDP, and it will blow up 10s of thousands of jobs in oil here in the states too, plus blow up the daisy chain of derivatives and interlinked bank debt, all because oil is “too low” now.

      So, the CB’s are now manipulating the oil price higher. You watch, anyone thinking the price of oil is going to keep imploding is going to be sorely mistaken even while all producers are pumping like no tomorrow into softer demand.

      Every single piece of our economy and financial markets are centrally planned. Including silver. Anyone with half a brain can see silver’s price is set to whatever the hell the central banks want to set it at…….every single day.

      Yeah, I know, the physical market will override the paper market blah blah blah. Trust me, even IF THIS EVER happens, THEY WILL CHANGE THE RULES.

      This repression and complete takeover of everything is surreal. Meanwhile, almost no one is aware of it—even places like here at srocco is barely scratching the surface to what a shitshow this has become.

      I hate to say this but there is no where to hide—-I mean nowhere.

      Good luck man, we’re all going to need a shitload of it. Because at some point central banking will find its limits–and we may be approaching it now. Because there is no way in hell the U.S. wants the dollar to continue to lift off. This willl continue to kill off the Emerging Markets, continue to set-off contagion, that will affect us here big time too. Yet what can the Fed do? There is no cover to start QEing right now…..and on top of it they are supposedly talking about RAISING interest rates……….which will only make the dollar that much stronger, EM’s that much weaker, and this whole global shit show on the verge of imploding.

      Anyhow, who the FUCK knows what is going to happen. But one thing I know: Silver and Gold I don’t believe is going to help anyone when this all comes tumbling down.

      • Silverwillwin | December 20, 2014 at 3:30 pm |

        Barney , I feel your pain ! We’re all in this sea of shit together and it’s no picnic. That may be just the reason to have the shiny white metal though.

        I know, I know ….the ugly uber elitists and their flanks of shitheads have positioned everything worthless.

        Although I question the actual physical silver as being in this category…

        Reasons :

        It still is a finite element and there are over 10,000 uses for it and growing .

        Just some of the got to have needs ;
        – used in water filtration systems which will become a very necessary need as time goes on.
        – an important part of the making of solar panels.
        – what will be involved in the air filtration systems helping out with the air pollution throughout China.

        Quite simply physical silver can’t be ignored by mankind and it’s advancement .
        ” ” ” ” ” due to utmost survival reasons.
        If physical gold was to cease to exist tomorrow civilization would go on thriving.
        If physical silver was to cease to exist tomorrow civilization would cease to exist.
        Physical silver will be one of the first elements on the periodic table (Ag) to be extinct in less then 15 years from now.

        If our financial system goes down for a while you can use 90% dimes , quarters , 1/2 dollars and dollars to conduct trade with barter like performance…it will become a stream-like opportunity for those holding it.
        There will be a guaranteed black market which will not argue accumulating physical silver and gold should that time arrive.
        Physical gold and silver are REAL money …make no mistake about it.
        If you are looking at the physical as an investment you may be looking at it the wrong way.
        A better way to appreciate it should we have a crash of record proportions will be a darn good insurance policy.

        • Damn, SilverIwillwin. You’ve damn straight got me. Your the first person ever for some reason to make me want to go get some physical silver–right now. And I think I will. Where is the best place to buy silver?

          No shittin. This makes sense. The financiers will certainly change the rules, but there are way too many people that know something as rudiment that silver has real value, real properties……and will always have massive barter value.

          So you are right: fuck them. Fuck the banks. Fuck the central banks. Fuck the primary dealers. Fuck wall street. When their massive and destructive ponzi system comes crashing down……silver, you are right, WILL be worth something even when these cocksucking dickbags try to change the rules.

          So, all great points. I’m going to heed them. No kidding. They can manipulate silver to freakin’ 2 an ounce for all I care……I’m going to go get the real stuff. And hold it. And ignore all the fraudulent pricing controls the dickheads have. Fuck them. I’m going long. They can suck it.

          • Silverwillwin | December 20, 2014 at 8:51 pm |

            Barney ,

            First off I would recommend to check out local coin shops close to you.

            It’s worth having a connection should things start to go crazy with buyers for the physical silver. It’s a matter of when not if in that department.

            There are some worthwhile sites and sources on the internet as well.

            Best in your quest for a self sufficient proactive solution which allot more Americans should start waking up and getting involved in.

    • Rhodium is much less produced but why it shoudl be Worth much more than gold ?

      Gold has a premium since the 20th century where governments deliberatly sabotaged the bimetallism which could not perform because parity was fixed which was really stupid…

      Quantity theory of money does not perform well for fiat, for gold AND for bimetallism.

      There is no mathematical relation between amount of gold and silver produced and their respective values, same thing for existing above ground inventories.

      • How true this is.This relation is a construct of the silverbulls.
        When silver is physical available they can do with the Price what they want.

  5. That’s good news Steve! Scrap recovery has fallen from 252 million oz. in 2012 to 192 million oz. in
    2013. If it falls another 15% in 2014 and your data a reality, then supply will be almost 250,000,000 ounces short for 2014 demand. I used the Silver Institute data for the last 10 years wherein silver demand has exceeded supply. The fundamentals may finally override the manipulation?

  6. ANV’s stock went from $40/share to below $1/share. a 4 billion dollar company is going bankcrupt.

    so a lot of future productions will be hugely postponed.

  7. Silver and Gold are real money. That’s all I need to know.

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