The Silver Institute's "World
Silver Survey 2012" report hasn’t surprised investors and market participants.
Silver mining output hit record highs last year, while silver demand from end
users and investors remained robust – despite silver's correction phase
which started close to a year ago. The Silver Institute is one of the most
important organisations in the silver sector,
comprising producers, dealers and numerous companies that use silver. Thus,
this study is of significance.
Although global investment
demand dropped slightly to 282.2 million ounces (8,766 tonnes)
this marginal decline isn’t too consequential, since in 2011 silver
registered a higher average price than in the previous year. As a
consequence, the financial value of global silver demand reached a new record
high of almost $10 billion – a 73% increase on the previous year.
Demand for silver coins and medals climbed by 129% to a new record high of
118.2 million ounces (3,677 tonnes). In comparison
with 2010 demand for silver bars increased 67% to 95.7 million ounces (2,975 tonnes).
Currently the silver price is moving in a fairly narrow trading
range, oscillating around the $31.50 per ounce mark, which is an important
resistance level. As the study shows, high investment demand last year was
largely triggered by investors' increasing fears of a continuing devaluation
of the US dollar and the euro. Many investors are keeping a close eye on the
central banks and their moves – especially the US Federal Reserve (Fed)
and the European Central Bank (ECB). Fears of continuous global debt monetisation are driving more and more investors to buy gold and silver.
Demand from industrial end users
also recorded impressive gains last year. Although towards the end of 2011
demand from industrial clients – which include the jewellery,
electronics and medical industries – dropped slightly owing to economic
problems in the eurozone, the study by the Silver
Institute forecasts a continuation of silver's upward trend for 2012. In the
face of growing silver demand at the global markets and a rapid price
appreciation it comes as no surprise that global mining companies
significantly increased silver production for the reported period.
Exploration activities by junior
mining companies and the recovery of mines which had been in disuse
contributed to this increase in global silver supply – 2011 being the
ninth year of mine supply increases. In comparison with the previous year
mine production climbed 1.4% to a new record high of 761.6 million ounces, or