Recently, while giving a speech to the National Association of Business Economics, the Chairman of the US Federal Reserve, Ben Bernanke, said that the U.S. economy needs to grow more quickly to bring down unemployment thus defending the central bank's policy of very low interest rates. Within minutes the gold price spiked. It reminded me of a commercial in which the main character who is talking about trading forex says. “It all depends on what Bernanke had for lunch.” But, in this case it must have been what Bernanke had for breakfast because it was early morning when the price of gold surged more than $20 an ounce in less than 30 minutes. The price of spot gold jumped from around $1660 an ounce a few minutes after 0800 am New York to trade above $1680 an ounce in less than 30 minutes. While Bernanke made no specific reference to a third round of bond purchases, in his speech he hinted at the possibility of more quantitative easing but without actually promising any more. He also made clear the Fed is in no rush to reverse course after responding aggressively to a deep recession. Bernanke said the recent decline in the jobless rate, which dropped to 8.3% in February from 9.1% last summer, was "somewhat out of sync" with the rather modest pace of economic growth. "To the extent that this reversal has been complete, further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke told the National Association for Business Economics. A little more than a week later, gold prices slipped back slightly. It seems that the main reason for the softer prices was the lacklustre demand for the physical metal from Asian countries in particular India which has seen a strike in the jewellery sector. India’s jewellers went on their first strike in seven years on March 17, to protest a doubling of taxes on gold imports to 4% and a 1% excise duty on jewellery in the government’s budget plan for the coming year which starts in April.
In his budget speech, Indian finance minister, Pranab Mukherjee, said that that the government will tax gold bars and coins and platinum at 4% beginning on April 1. The excise tax on refined gold also climbs to 3% from 1.5% and the government will also levy a 1% excise duty on non-branded gold jewellery, the minister said. He also said that jewellery purchases in excess of 200,000 rupees will attract a 1% tax from July 1.
India doubled the tax on gold and silver on Jan. 17 by imposing a levy on imports as a percentage of the price, compared with the previous system of tax by weight. The import duty on so-called non-standard gold doubled to 10% and the levy on ore, concentrates and so-called Dore bars doubles to 2%, Mukherjee said in his speech.
Of course this prompted major protests from India's jewellers. All India Gems and Jewellery Trade Federation (AIGFTF) led the protests to complain about the 2% increase on basic customs duty on standard gold bars, gold coins and platinum that is proposed by the Indian government.
Prithviraj Kothari, the president of the Bombay Bullion Association, one of the largest trade groups representing the industry in India was widely quoted in the Indian media as saying that the taxes would lift retail prices by 6% which would have a huge impact on demand. Last Tuesday, the Indian, Finance Minister Pranab Mukherjee said he might reconsider the inclusion of so-called “non-branded” jewellery in the excise tax. Then, finally, on the weekend the government said that it will delay the implementation of an increase in excise duty on non-branded ornaments. “We have appealed to our members to open shops from April 2 after the government assured us that no jeweller will be forced to register to pay excise duty,” said Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation. “The finance ministry has written to us saying that no coercive action will be taken.” Even though gold imports by India plunged by more than 50% to 125 metric tons in the fourth quarter 2011, the country remained the largest buyer of physical gold in 2011. Demand for gold is traditionally very strong during the October-December period due to the Indian festival and wedding season, and usually the demand in the last quarter is more than the demand in the third quarter. According to Prithviraj Kothari, president of the Bombay Bullion Association India’s gold imports will drop as much as 59% to about 125 tons in the three months through March of this year. However, demand is expected to pick up during the second quarter. According to the World Gold Council (WGC) Indian gold demand has grown 25% despite a 400% rise of the rupee in the last decade. The World Gold Council research shows that by 2020 cumulative annual demand for gold in India will increase to excess of 1200 tons. India’s continued rapid growth which will have significant impact on income and savings, will increase gold purchasing by almost 3% per annum over the next decade. Ajay Mitra, Managing Director, India and the Middle East, World Gold Council, said. “The rise of India as an economic power will continue to have gold at its heart. India already occupies a unique position in the world gold market and, as private wealth in India surges over the next ten years, so will Indian demand for gold.” “In parallel to growth, socio and demographic challenges will need to be addressed given its immense diversity. This also applies to the gold market. Nevertheless, gold purchasing will continue, underpinned by India’s long-standing and deep cultural affinity for gold; a love affair which transcends generations and makes India unlike any other gold market.”
Evidently, Indian households hold more than 18,000 tons, the largest stock of gold in the world, and there is no doubt in my mind that we will soon see a resurgence of demand from India which will underpin prices. While traders may wonder what Bernanke had for lunch, investors remain focused on the bigger picture. Whether or not, the US Fed embarks on another round of quantitative easing, the price of gold is headed higher. While the price of gold is off its recent high recorded earlier this year prices are still up on the year. However, as the media attention focuses on global equities and bonds, and gold is ignored, investor sentiment has waned slightly. This is not unusual and a phenomena that persists in all types of investments. While prices consolidate, and trend sideways, individuals lose interest. What they want to see is upward momentum. Like sheep, they prefer to follow a trend. But, usually, by the time they have convinced themselves that the trend is upward, it is due for a correction. Prudent investors have the uncanny ability to see the longer-term picture and never get side tracked by short-term fluctuations. They also use these dips to accumulate more. When it comes to investing in physical gold, these smart investors know that the bull market for gold remains firmly intact and that the fundamentals driving the gold price have not changed in the least. If anything, they appear more bullish now than they did a few years ago. The macroeconomic picture has not improved. The problems in the global monetary system are no further from being resolved than they were a few years ago. In fact, they have gotten worse as the level of debt has soared in the last three years or so. And, the usual geopolitical factors have not improved in the least, and suddenly Iran has taken over from Iraq. As the flow of money goes into gold and silver and not back into the regular banking systems, governments will try anything to curtail this. They will impose, taxes, duties, exchange controls etc. And, whenever governments try to restrict the flow of money going into gold and silver you can be sure that their countries have a failing currency. It is important therefore to add gold to your portfolio before governments do something stupid and drastic such as prohibit or restrict the purchase of gold by individuals.
The price of gold remains stuck between $1625 an ounce and $1675 an ounce while it goes through another period of consolidation.
When it comes to silver, I still maintain that it offers one of the best investment opportunities we have seen in decades. Silver, like gold is often seen as a safe haven and hedge against inflation and currency devaluation. But, what most people do not know, silver is used in more industrial applications than any other commodity apart from oil. Silver is an incredible precious metal.
Even though the price has been trapped between US$ 31 an ounce and US$33 an ounce during March, once this period of consolidation comes to an end, prices will rise once again. Just as in the case of gold, silver has reacted to US monetary policy, and macroeconomic news, with a particular focus on the EU, China, and the US.
According to Michelle Smith of Silver Investing News, the debt situation in the Euro bloc has the ability to promptly reignite fear among silver investors. The metal has shown a positive correlation to the euro: it appears that when crisis is on the brink of escalation – such as during Greek bailout negotiations – silver suffers, but when such worries subside and the euro strengthens, silver prices improve. While I find this correlation strange, as one would expect investors to buy gold and silver in a crisis, as the debt crisis in the Eurozone worsens we will see more printing of money. This will ultimately be favourable for silver. Smith also suggests that China, with its supersized silver appetite and manufacturing muscle, is also of great concern to silver investors. Suggestions that its economy is in for a hard landing are a source of pressure for silver, and with people less inclined to dismiss this possibility, the outlook for silver is growing gloomier. Once again, I do not agree that China is in for a hard landing. While we cannot expect to see China grow at the rates we have seen over the last few years, it will continue to grow. And, one thing Smith does not mention is that there are new uses for silver that will increase demand for the precious metal. Standard Bank identifies China as the most important consumer of metals, but notes that data flows continue to point to a slowing down of the most important components of commodity demand, including manufacturing. Standard Bank said it is cautious on China’s economic growth and doesn’t expect real strong commodity demand. While silver investors appear to be growing increasingly sceptical, let me remind these individuals that it does not take much for silver to jump 20%. It can happen in two sessions. So, while prices consolidate, remain patient and you will be rewarded in the long run.
Mexico remains the silver capital of the world. Mexico is the single most important producer of silver in the world. The region has historically yielded over 10 billion ounces of silver, and currently accounts for about 20% of the world's total silver mine production.
In 2011, nearly 160 million ounces of silver were mined in Mexico.
The country is also home to one of the world's oldest silver mints and investors and manufactures around the world are confident about the quality and the good prospects of the country's silver producers.
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Recently, Eric Sprott spoke to an audience of financial professionals at the kick-off of his company's annual national road show. In a presentation titled "Mania. Manipulation. Meltdown." Mr. Sprott predicted the collapse of almost everything.
"There is nothing positive in Europe," he intoned, noting that the continent's banking system is only being kept afloat by massive 1% loans from the European Central Bank.
China has shown negative manufacturing growth for five months in a row, which has not happened in recent memory. A hard landing could be in the cards.
The U.S. is weighed down by an impossible debt burden of $100 trillion in present value terms when Social Security, Medicare, and public sector pensions are factored in. He quoted a recent report that predicts a U.S. recession by mid-year.
As for the stock market, he points out it went up in the first quarter on decreasing volume. "It's a BS rally," he tells the audience, who would like to believe it's anything but.
"We have a system that is breaking down," he concludes.
What's the answer for the investor who, after listening to all this, is in a state of near-panic? Surprisingly, not gold. "It was the investment of the last decade," he says dismissively.
The answer is silver. Eric Sprott has become Canada's Silver Bull. And he says his conviction has nothing to do with a new fund his company is launching, the Sprott Silver Equities Class. He's a true believer. "It's the investment of the decade," he proclaims.
Why? Let us count the reasons.
1. Demand exceeds supply. Annual production is about 900 million ounces per year, including recycling. Industrial usage alone will rise to 660 million ounces by 2015. That leaves only 240 million ounces for coinage, central bank purchases, and investment. The latter category is huge; as of 2010 holdings of physical silver to back up exchange-traded funds was 577 million ounces.
2. Silver is undervalued compared to gold. The historic silver to gold ratio is 16 to one. The geological silver-gold in situ reserve ratio is 17.5 to one. The current silver-gold ratio is 51 to one. The implied price if silver reverts to its historic ratio with gold at US$1,600 an ounce is US$100 an ounce. The actual closing price on Thursday was US$31.73.
3. The silver price is artificially low. There has been speculation for some time that the price of silver has been kept deliberately low by market manipulation.
Historically, silver has a bad reputation in this regard. In the late 1970s and early 1980s, the Hunt Brothers (Nelson and William) borrowed heavily to buy silver futures and at one point held the rights to more than one-third the world's non-governmental supply. During that time, the price of the metal rose from US$6 an ounce to almost US$50 an ounce in January 1980. The bold move prompted drastic changes in margin rules. When the Hunts were unable to meet a margin call for $1.7 billion, panic set in and the price of silver fell 50% in four days. When it was all over, the Hunts lost more than $1 billion and several years later were found guilty of conspiracy in a civil case and slapped with a $134 million penalty. They declared bankruptcy.
We haven't seen anything that dramatic in the current market but Mr. Sprott pointed out that a huge short position of 250 million ounces in early 2011 exposed some powerful institutional investors to big losses if the price of silver rose. Those positions are being unwound and recently stood at 75 million ounces. However, he believes the manipulation is still going on, pointing to the sale of 137,000 ounces of silver in a one-hour period on Feb. 29, which resulted in a drop of 5.2% in the price. A further unwinding of short positions is needed to free the metal to rise in value.
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Even though we are in the midst of the biggest debt crisis in history central bankers and financial leaders as well as politicians continue to beguile us into thinking that everything is fine and things will eventually return to normal just like it always has before. They may even claim that they see signs of an economic recovery. But, sadly as these central banks around the world, in particular the US Fed, the ECB, BoJ and BoE persist with their policies of monetary expansion in order to revitalise economies we can expect to see their currencies devalue and this Ponzi scheme of ever increasing debt grow larger. What we can see is that to date, the policies disguised in a series of new terms such as “Quantitative Easing” commonly referred to as QE, Long Term Refinancing Operation (LITRO), US dollar swaps, asset purchasing programmes etc., have not had any impact on reviving the shrinking economies of several Western countries, nor have they done anything to reduce the high levels of unemployment. Yet, their policies have benefited many banks and financial institutions that got us into this mess in the first place. And, as they come up with new schemes of monetary expansion, now referred to as “accommodative monetary policies,” these central banks also attempt to manipulate the currency and gold markets. Although the mandate of the US Federal Reserve is to maintain price stability, low level of unemployment and satisfactory economic growth, all we have seen is a false increase in the values of equities, a rise in the price of certain commodities, a stagnant economy and elevated levels of unemployment. Not to mention a never ending expansion of debt. As numerous holders of government debt slowly trim their holdings of US Treasuries, the US Fed has stepped in and now holds around 61% of the government debt issued by the Treasury Department, a trend that cannot last. The U.S. government is growing increasingly more dependent on borrowing to finance itself, and as the Fed intervenes in the government debt market making demand for Treasury bonds appear higher than it really is, foreign creditors are reducing their holdings of U.S. government debt. So, without foreign buyers and a shrinking base of U.S. corporate and bank buyers, the Treasury has had to resort to the Federal Reserve itself to make the purchases. The Fed purchasing not only makes up the shortfall, but can keep long term interest rates artificially low. And, as this debt continues to explode, and as the US Fed continues to hold more of this toxic debt, the value of the dollar is set to decline. But, then things are not much better in the Eurozone. The LTRO is another failed programme. On December 21, 2011, the European Central Bank (ECB) started a program called long-term refinancing operation (LTRO). In the first round of LTRO, 523 financial institutions borrowed a total of 489.19 billion euros. But, soon afterwards on February 29, the ECB announced another round. This time, 800 financial institutions received 529.53 billion euros. In total, the ECB has loaned 1 trillion euros since December. But this money is not flowing into the economy and in what I deem as total financial madness the banks are using their LTRO money to purchase more sovereign bonds!
Only last week, according to data, Italian banks borrowed a record 270 billion euros from the ECB in March. And, Spanish banks also borrowed an extra 75 billion euros in March than they did in February, for a total of 227.6 billion euros. As a result Spanish credit default swaps (CDS) jumped to 491 basis points, just two points short of the all-time high reached last November. And Spanish 10-year bond yields jumped 10 basis points to 5.92%.
On many occasions I have mentioned that the debt crisis in the Eurozone is far from being resolved and that Spain represents a major problem. Today, Spain has an economy shrinking at an annualized rate of at around –1.75%, high unemployment (24% unemployment), and an insolvent banking sector. The Spanish government needs €190 billion this year alone to fund itself. Earlier today Spain sold 3.18 billion euros in 12-month and 18-month Treasury bills, higher than the planned 3 billion euros but yields rose compared with previous auctions. The yield for the 12-month T-bill was 2.62% compared with 1.42%, while the yield for the 18-month paper was 3.11%, up from 1.715% in a previous auction. On Thursday Spain will sell its 2-year and 10-year bonds and France will have four auctions of bonds with maturities between 18 months and six years. Unless the ECB intervenes in the markets, the debt crisis will worsen again. However, this means more money printing. And, this will cause the euro to devalue more. But, as this debt spiral deteriorates and the major currencies race one another to the bottom the on-going currency war is only going to heat up. Currency wars are extremely destructive and historically all paper currencies have collapsed. Why should this time around be any different? The only difference will be the magnitude of the devastation for some. So, while central bankers persist with more money printing and the size of debt in the world increases many smart investors will ignore the political rhetoric and accumulate more gold to protect the purchasing power of their wealth. The next debt crisis in the Eurozone may well be the catalyst that will propel gold prices to a new high. In the meantime, do not become despondent with gold’s lack-lustre performance. It will soon resume its uptrend.
Since March, the price of gold has been stuck in a trading range between $1625/oz and $1700/oz. It may continue to trade sideways for a few more weeks, but I maintain that it will soon break to the upside.
Last year the CME Group drastically raised the margin requirements for silver contracts in a series of hikes that have been unprecedented. They increased the margin requirements eight times. Five of those increases were implemented between April 26 and May 9. On one occasion the margin hike was so rapid that CME announced two price changes at once, with one going into effect on a Thursday and the other on the following Monday. The CME claimed that they needed to do this in order to prevent any additional volatility in the market. Needless to say that these aggressive changes that raised the cost of COMEX silver positions by over 80% were probably the cause of the subsequent volatility in the silver market as well as the subsequent decline of silver prices, which fell by over 30%. Of course there was never any mention about JP Morgan that held the largest net short position in the market that was losing billions. Now that prices of silver have dropped back to the $31 an ounce level JP Morgan have managed to recoup a large portion of their losses and trim their short positions. Recently, the margin requirements have been reduced. On April 16, the initial margin for COMEX 5,000 silver futures for speculators was lowered from $21,600 to $18,900 and the maintenance margin will be reduced from $16,000 to $14,000. Initial and maintenance margins for hedgers and members will be reduced from $16,000 to $14,000. These changes follow the reductions implemented on February 13, when initial margins for speculators were cut from $24,975 to $21,600, and maintenance margins were lowered from $18,500 to $16,000. The rate for hedgers and members was reduced from $18,500 to $16,000. 2011 margin increases. Interestingly, JP Morgan has substantially reduced their net short position. According to Ted Butler their current net short position is around 5000 contracts. "I would estimate JPMorgan's concentrated net short position in COMEX silver futures to now be around 18,000 contracts (90 million oz). That means we are close to the mid-way mark between JPM's all-time low of 13,000 contracts net short in late December and their recent high-water mark of 24,000 contracts into Feb 28.”
As the price of silver trends sideways, it is building a large base of support at $31 an ounce.
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It seems that investors have shrugged off the latest developments around the world, in particular the Eurozone and are looking for direction from the US Federal Reserve. In the meantime, gold prices struggle for a firm direction as investors remain on the side-lines awaiting the next event that will propel prices upward. However, the events are unfolding right before their eyes, even though prices continue to trend slightly lower. After an April 20 meeting during the IMF-World Bank Spring Meetings in Washington, a joint statement issued by the G-20 and the IMF’s policy-setting International Monetary and Financial Committee (IMFC) said there are firm commitments to increase resources available to the IMF by more than $430 billion. The statement added that these resources will be available for the whole membership of the IMF and not earmarked for any particular region. Over the weekend, the Group of Twenty (G-20) advanced and emerging market economies, along with the broader IMF membership, agreed on pledges to boost the institution’s lending capacity by more than $430 billion. Evidently, the total amount of $430 billion of extra contributions to the fund includes $200 billion from the Eurozone, $60 billion from Japan, $15 billion from South Korea, $15 billion from UK, $15 billion from Saudi Arabia, $10 billion from Sweden, $10 billion from Switzerland, $9.3 billion from Norway, $8 billion from Poland, $7 billion from Australia, $5.3 billion from Denmark, $4 billion from Singapore and $1.5 billion from Czech Republic. In addition, $68 billion has been secured from the BRICS countries and some middle-sized economies. However, the exact amounts have not yet been revealed. The final amount from BRICS will be announced at a G20 meeting in Mexico in June. Russia has already said it will commit $10 billion. Although the initial goal of Lagarde was to raise $600 billion, she has managed to double the IMF's current resources of $485 billion to above $1 trillion as a result of this fund raising campaign. Last Tuesday, the Spanish government managed to sell 3.18 billion euros in 12-month and 18-month Treasury bills, higher than the planned 3 billion euros. However, the cost of borrowing increased slightly when compared with previous auctions. The yield for the 12-month T-bill was 2.62% compared with 1.42%, while the yield for the 18-month paper was 3.11%, up from 1.715% in a previous auction. In a second bond auction, held last Thursday, Spain managed to sell EUR 2.54 billion of 2- and 10-year bonds yesterday reaching the maximum target of EUR 2.5 billion. The yield on the 10 year bond rose to 5.743%, which was up from the previous 5.403%. And, the yield on the two year was 3.463%. Demand was solid with bid to cover ratio for the ten year bond at 2.42 times, bid-to-cover ratio for the two year bond was at 3.28. On Tuesday, Spain sold 725 million euros ($951.53 million) of the 3-month bill and 1.2 billion euros of the 6-month bill. The average yield on the 3-month bill was 0.634, up from 0.381% while the 6-month bill cost 1.580% compared with 0.836% a month ago. In the meantime, Italy paid a full percentage point more than a month ago to sell 3.44 billion ($4.5 billion) euros of zero-coupon bonds at an auction on Tuesday. It paid 3.36% on its two-year fixed-rate bond, up from 2.35% a month ago - reflecting investors growing concerns about Italy and Spain's finances.
Even though Spain has been able to raise money through its debt auctions, its financial woes have not gone away. Investors are now focusing on the latest data from the Bank of Spain that shows Spanish banks are burdened with about 176 billion euros of "troubled" real estate assets and that 21% of the 298 billion euros of loans linked to property developers are non-performing. . Spanish banks will also need to set aside EUR 53.8 billion to meet the new real estate rules. Banks will take provisions of EUR 29.1 billion and create a capital buffer of EUR 15.6 billion. Despite the increase in the country's bad loans, the yield on Spain's 10-year bond fell to a 1-1/2 week low of 5.72% on optimism over the bond auctions. To make matter a little worse in the Eurozone, political tensions are increasing in France and Holland. The Dutch Prime Minister Mark Rutte tendered his government’s resignation on Monday following the collapse of talks to implement austerity measures in the Netherlands. This spooked the markets, resulting in a sharp sell-off in global equities and commodities. Moody’s, the credit rating agency, warned that the government's collapse was credit negative. Another negative factor included the French presidential election. In the first round of France's presidential vote, incumbent president Sarkozy came in second to Socialist Hollande. Hollande won 28.5% of vote while Sarkozy won 27.1%. A surprise in the market was that Le Pen won 18.1% vote, a record for the party. The second round takes place on May 6.
As political and financial problems in the Eurozone continue to worsen, the amount of debt is spiralling out of control. In the end, the ECB will be forced to provide additional bailouts. In a weird irony, this policy of our current central bankers and financial leaders could end up destroying these economies instead of saving them. No matter the price, it is simply prudent to diversify into the highest quality currency available, namely gold and silver bullion.
Gold prices continue to trade sideways as they struggle to find any clear direction. At the moment they remain neutral as they trade between $1625/oz and $$1675/oz.
NEW YORK (April 19, 2012) – Strong silver investment in 2011 paved the way to a record annual average silver price in a year marked by steep price volatility. Despite significantly higher silver prices, total fabrication demand posted its second highest level since 2000, while retail silver investment demand for both physical bullion bars and coins & medals surged to record levels, according to “World Silver Survey 2012″, released today by the Silver Institute.
Silver Price and Investment
Silver posted an annual average price of $35.12 in 2011, more than double the $14.67 annual average price achieved in 2009. This offers further testament to investors’ enthusiasm for the metal as silver World Investment (including implied net investment, silver bars and coins & medals) produced another historic high total last year of 282.2 million ounces (Moz), the equivalent of approximately $10 billion on a net basis, itself a record high.
Physical silver bar investment grew by a massive 67 percent in 2011 to 95.7 Moz, while global coins & medals fabrication rose by almost 19 percent to an all-time high of 118.2 Moz. Western Europe and the United States, which bested 2010’s record performance in terms of American Silver Eagle Bullion Coin sales, led this category to its record high. Elsewhere, strong demand in China accounted for a near 60 percent rise in its bullion coin output last year.
Global silver ETFs holdings in general proved to be quite resilient last year, with a relatively modest drop of 4 percent to 576.1 Moz at end-2011, in spite of marked volatility in investor trading elsewhere. In particular, even though 2011 saw a notable growth of 53 percent in Comex silver futures turnover (in terms of the annual average), net long positions on Comex ended last year down 73 percent.
Total silver fabrication demand stood at 876.6 Moz in 2011, down 1.5 percent but still reaching its second highest level since 2000. Last year, silver’s use in industrial applications fell by 2.5 percent to 486.5 Moz. That said, industrial fabrication in the first three quarters of 2011 was particularly strong; however, the Eurozone crisis during the fourth quarter had a notable impact on industrial demand, resulting in the slight decline in the full year total. Even so, China posted a 5 percent gain in industrial fabrication led by robust household purchases, strong automobile demand and healthy infrastructure spending. Jewelry demand slipped to 159.8 Moz, the product of volatile prices and a weak global economic backdrop. Photography fell by 8 percent, posting the slowest percentage decline in six years, with the medical field deferring migration to digital systems due to a lack of funding. Finally, silverware demand fell to 46.0 Moz, due to the sluggish global economy and ongoing structural losses.
Primary silver mine cash costs rose to $7.25 per ounce last year, driven by higher labor costs and lower grades, despite an increase in by-product credits. Nevertheless, with a significantly higher average annual silver price, simple cash margins grew by an impressive 89 percent to $27.87 per ounce.
Net silver supply from above-ground stocks fell by a notable 14 percent to 278.9 Moz in 2011. The decline was a result of considerably lower net producer hedging and a major decline in government sales. Net-producer hedging weighed in at only 10.7 Moz and was concentrated in the first half of 2011. Net government sales of silver fell by a hefty 74 percent to a 14-year low of 11.5 Moz, driven by a sharp fall in disposals from Russia.
2011 scrap supply rose to 256.7 Moz driven by robust gains in jewelry and silverware recycling on higher prices.
About the World Silver Survey, the Silver Institute and Ordering Information
The 2012 edition of the “World Silver Survey” was independently researched and compiled by London-based Thomson Reuters GFMS, the leading metals research company. The Silver Institute has published this annual report on the global silver market since 1990, to bring reliable supply and demand statistics to market participants and the public at large.
Copies of “World Silver Survey 2012″ are available to the media upon request and can be purchased for US$225 from the Silver Institute, 888 16th Street, Suite 303, Washington, DC 20006, tel +1 202/835-0185; fax +1 202/835-0155, or from the Institute’s web site www.silverinstitute.org
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