BREAKING: Chile Silver Production Down Stunning 26%

According to the most recently released data from Chile’s Ministry of Mining, the country’s silver production declined a stunning 26% in the first quarter of 2017.  This is a big deal as Chile is the fourth largest silver producing country in the world.  The majority of Chile’s silver production comes as a by-product of copper production.

Chile is the largest copper producer in the world, by a long shot.  Last year, Chile produced 5.5 million tons of copper compared to Peru, who took a distant second place at 2.3 million tons.

Regardless, Chile’s silver production declined to 283.4 metric tons (mt) Q1 2017 versus 383.8 mt during the same quarter last year.  Again, this is a huge 26% decline in the first three months of the year:

Chile’s silver production declined 101 mt (3.2 million oz) Q1 2017, due to a strike at the country’s largest copper mine, Escondida, as well as a drop off in copper production from many other producers.

For example, of the 20 copper producing mines (& companies) listed on the Chile’s Ministry of Mining Report, 12 of them stated lower copper production Q1 2017 compared to the same period last year.  Thus, the strike at Escondida only accounted for a portion of the overall decrease in by-product silver production experienced across the entire industry.

The majority of the Chile’s silver production decline took place in March:

According to the COCHILCO’s data, silver production fell 16% in January, 29% in February, and 34% in March.  In just the month of March, Chile’s silver production declined 45 mt.  That is a huge drop off in just one month.

Even though Chile’s Ministry Of Mining forecasts that copper (and by-product silver) production will recover by the second half of the year, the world economy continues to stagnate under a massive amount of debt and derivatives.  I believe we will see falling copper prices as overall demand for the king base metal continues to weaken during the latter part of 2017, and into 2018.

This will put a great deal of stress on many of Chile’s copper mining companies ability to make profits.  So, we may soon experience PEAK GLOBAL COPPER PRODUCTION… once and for all.

For those individuals who want to make sure that I am not pulling these figures off the top of my head, here is the actual table of gold and silver production from Chile’s Ministry of Mining website:

Not only is Chilean silver production (plata) down 26% in the first three months of the year, gold mine supply (oro) is also down 22%.  While a 22% decline in Chile’s gold production is substantial, the country only produced 43.3 mt (1.4 million oz) in 2016, compared to 1,496 mt (48.1 million oz) of silver.

Chile isn’t the only country suffering from falling silver production this year.  As I stated in a previous article, Huge Decline In Peru’s Silver Production Suggests Future Production At Risk, Peru’s silver production declined 12% FEB 2017 versus the same month last year:

So, what were are witnessing here is that world’s top two copper producers are suffering large declines in their by-product silver production.  This to me is a WARNING SIGN that the situation for by-product silver production will likely continue to deteriorate in the future as base metal prices trend lower as economic activity slows.

Clarification On Silver Supply & Demand Forces

There seems to be many precious metals investors (on my site and on other blogs) who believe that all these supply and demand figures are meaningless because the price of silver hasn’t really performed all that well since 2012.  I agree.  However, my focus on silver supply and demand forces is not to determine a SHORT TERM SILVER PRICE, rather I look at what is taking place over an ongoing trend.

For example, I have published articles on the huge increase in physical silver investment demand since the 2008 U.S. Housing and Banking Crisis.  My focus was not to state that the silver price was going to be determined upon a single year’s worth of rising silver investment demand, rather it was to show that the world is waking up the SILVER STORY.

Furthermore, putting out articles on what it taking place as it pertains to world silver supply isn’t to forecast what the change will do to the price of silver in 2017, but rather how the declining trend will impact the price going forward.

So, for those who precious metals investors who continue to BELLY-ACHE that all these supply and demand figures don’t really change the silver current price that much, I KNOW THAT fer pete sakes… LOL.  I am more concerned about the ongoing trend and what it going to happen over the mid to longer term.

Lastly the Silver Institute just released their 2017 World Silver Survey, and I have been looking over it.  I will be publishing a few interesting articles on some of the data from the report as I believe they are a tell-tale sign that owning physical silver will benefit those immensely in the future.

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23 Comments on "BREAKING: Chile Silver Production Down Stunning 26%"

  1. Measuring physical silver and gold in fiat currencies is weird. I could explain this, but most would understand only when they have ro acknowledge fiat currencies are what they are. Too little, too late.

    • i measure my gold and silver in ounces.

    • Yes and no… In a world denominated in fiat I believe we will always (for the foreseeable future, even after new currencies or some sort of “reset”) have some fiat price tag on PMs. But, since debt is already hyper-inflating (along with fiat on the other side) and the price-setting mechanisms of fizz PM are naked paper future contracts, the real value of PMs (the future, much much higher “price”) are hidden in plain sight as by their current “price”. For now, PMs “sell” at their “funny” paper prices and until the CONeX/LBMA complex goes bust, this will likely stay that way.

  2. Peak copper would mean peak civilisation, and all the fantasies of renewable future would peak with it. On that alone, as civilisation is a huge investment and every single person with any power relies on its continuing existence, copper production is unlikely to peak: price spike, at the expense of other things in life, would fix that. Even with declining net available energy, the civilisation has a lot of fat to cut before cutting copper production. The producers would pass the price hike on to consumers, and consumers would not even notice. For example, about half of all copper goes to China, that is about 10 million tons or about 60 billion USD in value. Let’s say copper price doubles — China has to spend 60 billion more for its imports, or 60b USD for about 1.4b people — $42 per year per person. Even if only 20% of Chinese people have to pay for all the increase, it is still about $200 per year. They can afford it, and their customers (for exports) can also afford it. Given the limit of net available energy, this will cost something to someone elsewhere: extra 60 billion annually, even in net available energy terms, is nothing for the world economy. The higher levels of processing, such as certain markets for copper alloys, can and will have substitute or do without. But not such a key the base material production needed for literally everything.

    • Suppose something else, say carbon fiber, were found that conducted electricity as well as copper, but much cheaper? Civilization wouldn’t end but the bottom might fall out of copper prices.

      • dslarsen,

        While anything is possible, it’s not probable. The Ancient Roman Empire collapsed even though it was one of the most advanced civilizations in the world. It is much easier to believe in another ENERGY SOURCE or that TECHNOLOGY will save us, then face up to the realization.

        steve

      • The next best thing that is cheaper and “not great but OK conductor” is aluminium. There is work going on tweaking its properties to increase conductivity by nanostructuring, but that will make it more expensive, perhaps more than copper. Any carbon conductor that can substitute for copper will likely be more expensive.

        Civilisation is many things, but there are fundamentals, electricity is the first among them. Without electricity we go back to late 19th century and about 1.5 billion people, but to stay there we need high quality, abundant and cheap coal, which now can have only one or two of the three qualities at once. Also we need horses, millions of them, and the agro infrastructure to power them, none of which exists. So we go further back, to sub-billion people world, which does not deserve to be called civilisation. It is an unconstrained collapse. But actually the world is not uniform, not united, and not even cooperative: some parts (China with all its satellites) have other plans and will not be attending the collapse. They will buy that copper — now China buys half of it, and with 5% growth they will need twice as much in 14 years.

    • Reader,

      I agree totally. Peak Copper means Peak Civilization. So, once Global Copper production peaks, so will the peak of our world economy.

      steve

  3. Steve,

    I love reading your articles and all make a whole lot of sense. If we are at peak Copper then could the 1 ounce rounds I purchase from precious metals companies someday be worth a decent amount. I primarily get them sometimes in my gold/silver orders just because I think they are more beautiful and interesting to look at then the other precious metals. I also have gallons of wheat pennies, which someday might be worth something. What’s your opinion?

    Jared

    • Davy the tinman | May 17, 2017 at 6:49 pm | Reply

      Buying copper rounds is about the worst way to collect metal. You would be better off going to Lowe’s or Depot and buying bare conductor or copper pipe. I am getting about $2.00 per pound for the scrap I collect. You pay over $20. at SD Bullion (lowest prices on silver FWIW). How long is it going to take you to break even if prices go up 10% annually? And prices are falling. I was getting almost $3.00 for scrap a few years ago. If you want to collect copper I suggest you find a plumber or an electrician in your neighborhood and offer him a premium over the junkyard price.

  4. Kind of an off the wall comment here:
    I remember visitng Zambia back in 1997 or so before conditions there improved and was in stark contrast to Zimbabwe, then very prosperous but has since switched places with Zambia as Mugagbe destroys Zimbabwe. I digress, but the one thing the guide always lamented was that in Zambia they could not keep the wires from being stripped for their copper.

    When I start seeing copper being outright stripped/stolen here in the US, then that will be the final sign of not just a copper shortage, but probably a PM byproduct shortage as a result which will be the clarion call of fiat collapse.

    • “When I start seeing copper being outright stripped/stolen here in the US” – this is already happening here in central europe. heavy rolls of copper wire being stolen at night from construction sites. not all the time, but I do read about such incidences every now and then.

  5. I realize you detest my posts Steve but what does 99.9% of the USA population do if the
    currency collapses? I read about Bitcoin but today they accept dollars to buy into Bitcoin?
    Are we going the way of Venezuela? The Bolivar has declined many fold and inflation is over 800% yet the country is still using the Bolivar. However the silver holders there are in very good shape.

  6. A couple interesting snippets from the comments above, first there is a lot of fat and second the world is uneven. My take, there is a lot of lifestyle chages ahead of us that range from substitutions, making do, doing with less and finally doing without. The lower your rank the more sever the adaptation. America has been sliding down hill for the better part of 40 years. My guess is that it will continue its journey in fits and start until it finds some sort of equilibrium. Predictions of collapse are greatly overdone.

    • DisappearingCulture | May 13, 2017 at 9:39 am | Reply

      “My take, there is a lot of lifestyle chages ahead of us that range from substitutions, making do, doing with less and finally doing without.”

      When the energy starts to run out, the predictions will not seem so overdone.

  7. looks like the low hanging fruit is drying up. it’s only a matter of time folks.

  8. For jared your wheat pennies are worth over spot check with a coin dealer you may be surprised certain dates higher value.

  9. I think its important to note that all of the major silver producing nations appear to be declining year over year. Over the last year we have seen production declines in Mexico, Peru, Chile, Australia, and Canada. This is on top of year over year production declines from 2014 thru 2015. Declining production on top of 14 years of continued silver deficits. The fundamentals of silver are crazy good. I also revisited the Pemex article. If Mexican oil stops flowing…then you can kiss silver production goodbye from the largest silver producing nation on the planet. Slowing Pemex oil production would also be devastating to our food supply…Hilarious.

  10. Interesting Steve, thanks

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