The curious case of languishing Silver prices

Clint Siegner Clint Siegner
Money Metals Exchange 

The curious case of languishing Silver prices



Silver has languished despite its persistent structural deficit between silver’s supply versus demand.

The metal is increasingly difficult to find and produce, while demand continues to rise. None of this has seemingly been reflected in the price.

The "paper" silver markets, where the price is set, have been stuck in a range since early 2020.

Supply and demand are economic laws that can only be circumvented temporarily.

Nevertheless, the law still applies.

The forces involved at present point to higher prices for silver.

The Silver Institute reports the all-in sustaining cost (AISC) for producing silver jumped by 57% year over year. The industry average is now estimated at $17/oz for 2023, although some data suggest the attributable cost of producing byproduct silver from (copper, zinc, and lead mines) is much lower.

Many firms, including one of the world’s largest primary silver producers, have costs much higher than the average. Pan American Silver reported AISC at $26.55/oz in Q4 of last year. That was more than $4/oz above the average price they received.

Nearly all miners saw margins take a beating in 2023. While costs surged, the average silver price was essentially flat year over year.

Silver mining stocks have been decimated. The Global X Silver Miners ETF has fallen from a high of $49.65 in August 2020 to $23.33 at Friday’s close.

Given the challenging environment for miners, it is no surprise that silver mine production keeps falling. The Silver Institute estimates that mine output fell by 17.1 million ounces in 2023.

Meanwhile, demand has moved significantly higher since 2020. The chart below tells the story.

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