Total silver supply is expected to rise by roughly 1.5% this year, while mine production is projected to increase by about 1% to 820 million ounces.
At first glance, that doesn’t look bad. More metal is coming to market.
But even that is still not enough to bring the market back into balance under current estimates.
Silver doesn’t need supply to fall every year for the market to stay tight. It only needs supply growth to lag behind the amount of metal being absorbed by industry, investors, and other sources of demand.
If the deficit continues even as mine production and total supply increase, then the issue isn’t simply weak production. Demand remains strong enough to absorb the additional metal coming to market.
That matters much more than any single strong or weak year for mine output.
With silver, I wouldn’t just watch how much gets mined. I’d watch whether supply can actually catch up with demand. So far, it still hasn’t.
Leave a Reply