Silver’s 2011 Annual Average Price Posts All-Time Record at $35.12
Annual Average Price Rises by an Impressive 74 Percent Last Year
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.
Fabrication Demand
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.
World Silver Supply and Demand (million ounces)
(totals may not add due to rounding)
(totals may not add due to rounding)
Supply
| | 2010 | 2011 |
| Mine Production | 751.4 | 761.6 |
| Net Government Sales | 44.2 | 11.5 |
| Old Silver Scrap | 228.7 | 256.7 |
| Producer Hedging | 50.4 | 10.7 |
| Implied Net Disinvestment | - | - |
| Total Supply | 1074.7 | 1040.6 |
Demand
| | 2010 | 2011 |
| Fabrication | | |
| Industrial Applications | 500.0 | 486.5 |
| Photography | 72.1 | 66.1 |
| Jewelry | 167.4 | 159.8 |
| Silverware | 51.2 | 46.0 |
| Coins & Medals | 99.4 | 118.2 |
| Total Fabrication | 890.1 | 876.6 |
| Producer De-hedging | - | - |
| Implied Net Investment | 184.6 | 164.0 |
| Total Demand | 1074.7 | 1040.6 |
Mine Supply and Costs, Above-Ground Stocks, Producer Hedging, Government Sales and Scrap Supply
Silver mine production rose by a modest 1.4 percent to 761.6 Moz in 2011, largely due to gains from by-product gold and lead/zinc mining. Mexico was the world’s largest silver producing country in 2011, followed by Peru, China, Australia and Chile. Global primary silver mine supply dipped slightly last year due mainly to a fall in processed grades, to account for 29 percent of total silver mine production in 2011.
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.
“World Silver Survey 2012″ was sponsored by 24 companies and organizations from North and South America, Europe and Asia. These firms are involved in most aspects of the global silver industry, from mining and refining to trading and manufacturing. Founded in 1971, the Silver Institute is an international industry association. Its members include leading silver producers, refiners, manufacturers and dealers.
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