The Silver Price Surges Higher As Mine Supply Falls In Top Producing Countries

As the silver price rally continues, mine supply from three of the top producing countries fell significantly this year.  Peru, Chile, and Mexico all reported declines in silver mine supply in the first half of the year, with Peru suffering the largest dropoff.  With these three countries accounting for 45% of total global silver production, a reduction in mine supply can impact the overall market.

According to the mine supply data reported by each country, Peru’s silver production is down 10% in the first half of the year, while Chile fell 7% and Mexico was lower by 4% (Jan-May). The total decline in silver production from these three countries in just the first half of the year is 12 million oz (Moz):

As we can see from the chart, Peru’s silver mine supply for the first half of 2019 fell 216 metric tons, Mexico declined 113 metric tons and Chile lost 44 metric tons versus the same period last year.  As I stated, Peru and Chile’s silver production data was for the first six months while Mexico’s figures were for Jan-May.  Mexico will likely update their data for June within the next week.

I also wanted to provide the actual data reports released by these three countries so that you can see for yourself the silver production declines in each:

Here we can see that silver production reported by Peru’s Ministry of Energy and Mines shows a 10.46% decline in silver (plata) mine supply from Jan-Jun.  Next, Chile shows a 7.2% decline in its domestic silver mine supply in the first half of the year while gold production increased 13%:

And lastly, according to Mexico’s INEGI, the country’s silver production fell 113 metric tons, or 4.4% in the first five months of 2019:

Here are the rankings of the top 10 silver producing countries in the world in 2019, according to the World Silver Survey (figures are rounded):

  1. Mexico = 197 Moz
  2. Peru = 145 Moz
  3. China = 115 Moz
  4. Russia = 43 Moz
  5. Chile = 42 Moz
  6. Bolivia = 40 Moz
  7. Poland = 40 Moz
  8. Australia = 35 Moz
  9. USA = 28 Moz
  10. Argentina = 26 Moz

I could not get the total mine supply data for Russia, but its largest primary silver mining company, Polymetal, reported a 15% decline in silver production for 1H 2019 vs. the same period last year. So, it seems that many countries are showing declines in silver mine supply this year, right when the silver price has broken above a 6-year resistance level.

Polymetal’s silver production in 2018 accounted for nearly 60% of Russia’s total silver production that year.  So, it will be interesting to see how the rest of the year plays out with these top silver producing countries.

Lastly, I will be putting out a new video this weekend on the SILVER MARKET PRICE action. It looks like silver has broken above that important $17.25 level with the markets selling off big time along with the race for Government Bonds to go further into negative interest rates.

If you have not seen my recent Silver Price Video, please check it out below:

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OutLookingIn
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OutLookingIn

The market turmoil this AM is caused by China announcing further tariffs on US products. Adding pressure to the agricultural sector with higher tariffs on soy beans. A surprise inclusion in the tariffs is US crude oil! This entire fiasco has shaken up the foreign currency (FX) market. Looks like the POTUS is about to announce retaliatory measures using the US dollar, turning up the heat in the currency war. Silver & gold have both shot upwards. Your article Steve, on silver shortages from mines is very apropos. Considering the out sized demand for physical SILVER from the investment sector… Read more »

OutLookingIn
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OutLookingIn

Silver latest month report.

The UK has exported 673 tonnes of silver to India.
This is the 6th largest shipment in 20 years.

Rade
Guest
Rade

In my humble opinion, it has nothing to do with “tarde war”,,, “just an apropriate excuse” it has more to do with inverted yield curve and negative bond yields… Billionars are looking for a place to put their money in… And silver market being so small compared to other finacial instrumetns might maket it skyrocket like never before seen….

petedivine
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petedivine

I knew this day was coming. I don’t think mining supply will increase anytime soon. More money isn’t going to easily fix this problem. I believe Mining jurisdictions in places like Mexico are getting very dicey and of course the financial system looks like it’s on the precipice of a serious correction. Not to mention Mexico’s available energy is getting more expensive and valuable. This is what happens when an asset like silver is mispriced for too long. Production is lost and supporting infrastructure declines until the supply falls away. Expect this trend to continue.

Thanks for the great report!!

Billy Lone Bear
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Billy Lone Bear

Great info, thanks Steve.

Mexico’s the one to really watch. Interesting that despite Gold Production increasing 13% that Silver decrease as majority of Silver mining is byproduct of Gold along with Lead, Copper, Zinc.

Paco
Guest
Paco

It is only natural exhaustion of the mines. By 2040 there will not be any more silver available unless the price goes up by 30x at least.

DisappearingCulture
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DisappearingCulture

Posts so far from veterans who know more than I do, but I will mention (because it hasn’t been recently & is conveniently ignored by mainstream financial & even a lot of alt media), that industry uses well over 50% of all silver, and they have to get it.

james r
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james r

Can’t wait until Apple, Samsung, Dell et al will start hoarding the metal knowing higher prices will follow !

John M
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John M

Hey James, I’ve been waiting for that for some years, and since EVs supposedly take about 3 kilos of silver per electric vehicle, I’m going to wait for the price to get high enough and then trade Elon for a Tesla!

Doc Rich
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Doc Rich

Mexico is rapidly becoming a failed country IMHO. We need to remember that its government up until recently received at least 50% of its revenues from net oil exports which is now zero, This makes mining even more problematic along with many other economic activities. They are way over populated with 70 million people. Great stuff as always Steve

Brant Lee
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Brant Lee

Not to say the drug cartels will probably jump on the precious metals bandwagon.

Reckoning day
Guest
Reckoning day

Mexico´s population is over 118 million people Doc. Agreed on anything else, now that they have become an oil importer, things are going to become even worse than they are. Mining in mexico is on it´s death throes, for sure.

Paco
Guest
Paco

3 Kilos of silver for that shity car? I would exchange it for a real car though

Hubbs
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Hubbs

I heard somewhere last year that some big companies are bypassing the “markets” altogether and buying directly from the miners. could actual purchase of the miners be the next in line strategy by some big companies, or is the amount of silver in their products such a small subset of the total that even 200 or 300% rises in price will not have much effect

DisappearingCulture
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DisappearingCulture

I’ve read that too; mines produce dore bars (roughly 95% pure) and these are often bypassing the tradtional refineries and going directly to places like Switzerland (gold), where they are refined & minted into metric weights the East wants. China and India import dore bars of gold and silver; their refineries have low labor costs & environmental standards to mess with. As for large companies buying dore bars & dealing with the refiners…I’m sure it is at least starting to happen.

Paco
Guest
Paco

I am sure Samsung can refine the Dore themselves (probably are doing it)

John
Guest
John

That situation is one that Ted Butler has been expecting to happen for a long time. Maybe now it may finally occur, partially due to the decreasing mine supply. The recent year’s precious metal price weaknesses were partially due in my opinion to temporary increases in mine production, which appear to have come to an end. This would definitely make the Comex shorts nervous and try to get out of their risky bets.

Brant Lee
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Brant Lee

We all knew this was coming, long time coming. Guess gold and silver won’t fall back to $300/$6 like so many said, any time soon. You know the world is Koo-Koo when trillions are held in negative rate bonds, who’s the idiots?

Paco
Guest
Paco

Gold at 300, Silver at 6? Never again, not only not soon

Hmmm
Guest
Hmmm

So does this mean we have just reached “Peak silver”?

DisappearingCulture
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DisappearingCulture

I think we passed peak silver some time ago; maybe a year or more.

Graffiti
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Graffiti

Silver is a 3-5% better conductor than copper…to squeeze battery duration from electric cars, phones etc silver is the preferred metal. Tracks on circuit boards in a phone require small amounts (<1g) of either metal, but if silver is used, less of the battery’s stored energy is wasted as heat. In electric cars kilograms are required to achieve this extra efficiency. If electric cars become as ubiquitous as gasoline cars, the entire world output silver will not be sufficient.

OutLookingIn
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OutLookingIn

Monday Morning Fun & Games

Well, the plunge protection team (PPT) came in overnight, throwing their fiat weight around the markets. You may see this most clearly by the amount of shorts added to silver, just to control the price.
Overall open interest was 235,591 contracts, but is now this morning at 239,750 proving 4,159 short contracts were added during the PPT overnight price attack. There was NO BANG for their buck! As silver was down only 15 cents and is now well north of there. Panic sets in.

OutLookingIn
Guest
OutLookingIn

There are 15,000+ silver call options due tomorrow in the September contract month. These are options that are “in the money” and must be cleared today, or will be excercised into futures contracts at tomorrows comex close.

DisappearingCulture
Guest
DisappearingCulture

OutLookingIn,
Please further explain [expound] for people like me with less understanding than you have, what this means.
Thanks,

OutLookingIn
Guest
OutLookingIn

DC Options have a “strike price” that is fixed by the spot price on the day an option is taken out. This option is void if the spot price comes in below the strike price. If above, then the option is said to be “in the money” and requires delivery at the strike price, regardless of the market price at the time of clearing. Hope this simple explanation helps. There are many, many variables and would take a book to explain it all. Suggest self education by research. What the above means is, that many of these options were taken… Read more »

James Randolph
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James Randolph

Excellent explanation! Thanks!

JR