Huge Decline In Peru’s Silver Production Suggests Future Supply At Risk

The Peru Ministry of Energy and Mining just released their silver production data for February, and it was a whopper to the downside.  Actually, I was quite surprised to see how much Peru’s silver production declined versus the same month last year.  Also, Peru’s gold February production took a similar big hit.

According to the Peru Ministry of Energy and Mining data, the country’s silver production fell 12% to 323.1 metric tons (mt) this February versus 367.4 mt the same month last year:

This is a 44 mt decline in one month, nearly 1.5 million oz lost.  Here is the table from the Peru Ministry of Energy and Mining showing various metals production data for February:

Silver is shown as “PLATA” and as we see, overall silver production for JAN-FEB has declined 6.7% compared to the same period last year.  Which means, Peru’s silver production took a much larger hit in February than in January.  Furthermore, Peru’s gold production (shown as “ORO”), also declined significantly by falling 11.3% in February.

The Peru Ministry of Energy and Mining put out this brief explanation why their silver and gold production declined in February:

However, in this month precious metals slightly suffered a lower production volume gold decreased by -11.91%, while silver -11.29%. In the accumulated January, national production of these precious metals decreased by 6.81% for gold and 6.3% for silver.

In the national production of silver, the Lima region (127,157 kg fine), Ancash (126,816 kg fine) and Junín (116,473 kg fine) regions are in the top positions, associated with the polymetallic exploitation of the center of the country. Peru is the second largest silver producer in the world and boasts the largest proven and probable reserves of this precious metal in the world.

Antamina (101,824 kg Fine) in the Ancash region, followed by Uchucchacua (84,745 Kg. Finos) in Lima and Inmaculada (30,468 Kg Finos) in Ayacucho, among several others.

In the case of gold, the national production accumulated to February 2017, reached 23.8 tons fine. Its production was concentrated in the regions of La Libertad (6.4 tons) contributing the total production in 26.92%; Cajamarca cooperating with 23.32% (5.5 tons fine) and Arequipa (3.03 tons fine) contributing 12.74%. These regions accumulate 63% of the national gold production.

The decrease is explained by the lower results (-23.53%) of the main producer: Minera Yanacocha S.R.L. Whose operations in Cajamarca have been affected by an exhaustion of the reserves in the current deposits in operation.

I don’t know why the Peru Ministry of Energy and Mining’s data for gold and silver production declines are different in their explanation than what they show in the excel spreadsheets.  However, it is only off by a small percentage.  Regardless, the important part of the text above is highlighted in REDThe reason for the big decline of Peru’s gold production was due to “an exhaustion of reserves in the current deposits of operation.”  This is a KEY FACTOR that will be played-out across the world as other mines lose production due to the same situation of reserve exhaustion.

We must remember, Peru is the second largest silver producer in the world, right behind Mexico.  According to the Silver Institute’s 2016 Interim Report, Mexico’s silver production is estimated to decline to 183 Moz in 2016 (189 Moz in 2015), while Peru’s silver production increased to 141 Moz (136 Moz in 2015).

Global Future Silver Production At Risk

As the global markets finally succumb to the massive amount of debt, economic activity is going to plummet.  This will have a negative impact on most energy, metals and commodity prices.  Thus, production of base metals will decline significantly.  This will impact the production of silver the most as the majority comes as a by-product of zinc, lead and copper production.

According to the World Silver Survey, 34% of silver production came as a by-product of zinc and lead mie supply, while 22% came as a by-product of copper production.  Thus, 56% of global silver production is a result of copper, zinc and lead production:

Which means, more than half of the world’s future silver production is at risk when base metals prices take a big hit during the next economic crash.  People need to realize that using a massive amount of leveraged debt to continue economic activity is not only UNWISE, it is seriously INSANE.

While there is no guarantee what the value of gold and silver will be in the future, LOGIC suggests investors holding onto most STOCKS, BONDS and REAL ESTATE will suffer the financial enema of their life.  Again, this is all due to the disintegrating U.S. and global oil industry in the future.

So, PLACE YA BETS and let’s see who made the better investment decision when the global market finally cracks.

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19 Comments on "Huge Decline In Peru’s Silver Production Suggests Future Supply At Risk"

  1. Steve, You can make all the charts you want when it comes to supply and demand for silver…but as long as the market is manipulated by paper silver they won’t make a difference. The world has already seen an average of 10% more demand than supply for silver on average over the last 10 years. As oar grades continue to diminish and mine output also goes down as you’ve shown here in your article…it doesn’t effect the price of silver. Only when the manipulators are unable to supplement this “lack of yearly global supply” with physical silver from stockpiles will we see a spike in price. PERIOD!
    Show me a chart of how much silver is available from stockpiles to supplement this yearly shortage of supply and I’ll be impressed and educated. Show me another chart based on the current year over year trend of silver supply deficit in relation to the current global stockpile level to project what year we run out of silver stockpiles to fill in this continual yearly shortage and then we will all see the light at the end of the tunnel. As long as the manipulators control the paper silver market AND can supply physical silver to make up for this yearly silver mine supply shortage, the price will be what ever they want it to be. Over the last 10 years the price of silver has fallen…yet there has been a greater demand than supply for silver every year. Silver supply and demand won’t have an impact on price until the stockpiles run dry.
    Thanks for all of your work!
    PS: It is easy to show that silver is the most undervalued asset in the world. How come the silver miners don’t get together and advertise the advantages and facts about the value of silver to promote sales. If 1-2% of the world’s population would own silver the stockpiles would be emptied in a heartbeat. There must be a reason for their lack of common business marketing.

    • “Only when the manipulators are unable to supplement this ‘lack of yearly global supply’ with physical silver from stockpiles will we see …”

      … a ban on private ownership. “national strategic interest”.

      • A ban on private ownership….Such as ban would only chase the existing silver out of the country. Since only 1-2% of the population even owns any silver it would be a self defeating effort creating a hoarding and black market mentality. I would welcome a black market. Then I’d be sure to get 10X the price that a government controlled market would pay.

        • “I would welcome a black market.”

          if you can find one. all currency will be digital, all transportation will be wi-fi-ed, and all “citizens” will be scanned and biometricked and tracked across their daily lives. the algorithms will scope your daily routines, the lights in your house, your daily calorie intake, your daily mileage, the weight your car is carrying, everywhere you go, and everyone you come into proximity with. if any data collates as suspicious then you will be flagged for review by a human, who will decide whether or not to take action.

          • DisappearingCulture | April 19, 2017 at 1:48 pm |

            And the deep state will welcome those who choose to end their lives rather than live inside such a paradigm.

          • “And the deep state will welcome those who choose to end their lives”

            yes they will. their goal is 1) own and control everything and 2) destroy everything they can’t own and control.

    • James Erb,

      You bring up an excellent topic to discuss…. HOW MUCH SILVER IS OUT THERE? While the market has suffered 16 years of annual deficits, the silver came from previous surpluses from decades past. I received a long term Silver Supply-Demand spreadsheet from the folks at GFMS.

      According to their data, the Silver Market experienced a net surplus of nearly 1.5 billion oz from 1975-1987. This was due to a lot of silver being dumped on the market as Official silver coins were melted and recycled as bars for market consumption. The silver market experienced a brief three years (1988-1990) worth of deficitsd totaling 120 million oz (Moz). However, surpluses started again from 1991 to 1999 as Central banks and investors dumped silver in the market… totaling 775 Moz during this period.

      Then we had 16 years worth of net deficits totaling 1.6 billion. According to their data, there is still about 475 Moz of excess silver in the market. So, as you can see… we have been working down the silver surpluses for the past 16 years.

      I believe this will start to pick up speed over the next 2-5 years as the ENERGY SYSTEM BEGINS TO DISINTEGRATE.


  2. The cartel will never lose control. Prices will remain subdued. Instead an informal price mechanism will develop. People will start price things in gold and silver irrespective of the official price of PMs but first there have to be shortages of PMs.

    • “The cartel will never lose control.”

      more specifically, the “cartel” will ensure that anything they don’t control is destroyed.

  3. Steve,
    Thanks for posting such a down and dirty in the trenches analysis. If anything, these data certainly put us on alert for a downward trend in at least one major source for the world’s silver. I would certainly like to hear from any source that can dispute your investigation / numbers of the amount of silver being mined and its decline. While I don’t dispute those who claim that silver prices will remain subdued until an actual physical shortage manifests, those are still theoretical opinions only.

  4. Thanks Steve!
    So with an average silver deficit per year of 125.7 Moz ( from 2006 to 2015 and your date above stating there is about 475 Moz of excess silver left…then there is about 3.7 years of silver stockpile/excess before we run out stockpiles covering the annual silver shortage. This data does not include 2016’s deficit yet.(Which hasn’t been reported by the Silver Institute). Which means we should be out of surplus silver by July of 2018.

    Where does China silver fit into this mix?
    They are very secretive about there silver production and surplus. Does this global silver surplus take China’s silver into account?

    The other question is about JP Morgans rumored stockpile of about 500 Moz. Is this really true? Is its purpose to manipulate the silver paper market for an “additional” 4 years…or are they hoarding it to have a big payday if/when the silver price explodes?
    If the elites can drag this out long enough to get to a cashless society where does this leave silver as an investment? Isn’t this why India has been selected as the cashless society guinea pig…because their society is so entrenched in PM accumulation?

    With the onslaught of continual pressure of increased industrial need with decreasing yearly silver supplies, maybe we will see a time when the stockpiles can’t keep up. Let’s hope!

    Thanks for your response Steve!
    You put out great information on a regular basis.

  5. When silver gets high enough then the mines will reopen. It will no longer be a secondary metal. Silver would have to be much higher before that could happen.

    • Yes, and the copper, nickel, lead and zinc will be a side kicker for the miners; but even in such a scenario there will not be much more new silver mined than currently is the case; probably quite a bit less due to ever lower EROEI and declining silver/gold contents of the mined ore.

      What I find scary in the numbers presented here by Steve is that this decline in production happened during a time in which the prices of silver and base metals were recovering from the lows at the beginning of 2016.

  6. Sorry,
    3.7 years of stockpiles with a yearly average of silver deficit of 125 Moz would run out around July of 2019…not July of 2018. It’s funny… that that date is very close to the USGA’s prediction in 2013 that the global silver reserves (in ground silver supply) would be depleted around 2020…maybe they meant silver stockpiles. Lol. Of course now the debt clock states we still have almost 20Boz of mineable silver left…at today’s prices. The debt clock has been adding billions of ounces of silver reserves lately every few months without a lot of mining companies spending money on silver exploration. Hmmm…

  7. Confiscate PM’s? April 15 just past and govt confiscated a large portion of paper!
    I would rather be holding something scarce than something plentiful.

  8. silverfreaky | April 19, 2017 at 8:54 pm |

    The right way would be that the silver miner make a cartel and reinvest her revenue in silver or gold.
    Especially the basis miner would make a big impact at the supply.The problem is that basis miner in total had much problems because of the low prices.
    So many of them can’t do that.There is no common ground at doing so.

    • “There is no common ground at doing so.”

      ? isn’t increasing prices the basis for every cartel?

    • the reason you don’t see silver producers forming a cartel is because they’ve already been co-opted into the “global elite” “international financier” “deep state” cartel.

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