Silver
Introduction
Silver (Chemical symbol-Ag) is a brilliant grey-white metal that is soft and malleable.
Silver’s unique properties include its strength, malleability, ductility, electrical and thermal conductivity, sensitivity, high reflectance of light, and reactivity.
The main source of silver is lead ore, although it can also be found associated with copper, zinc and gold and produced as a by-product of base metal mining activities.
Secondary silver sources include coin melt, scrap recovery, and dis-hoarding from countries where export is restricted. Secondary sources are price sensitive.
Demand and Supply
In 2011, the worldwide silver fabrication demand was 876.6 million ounces (Moz)—down by 1.5% from the value in 2010, but still reaching its second highest level since 2000.
Globally, in 2011, the physical silver bar investment grew by 67% to 95.7 Moz, while fabrication of coins and medals rose by almost 19% to an all-time high of 118.2 Moz.
In 2011, silverware offtake dropped by 10.2% to 46.0 Moz from the previous year, as a result of lower demand in India. Higher prices coupled with ongoing structural decline in the western markets caused a fall in the Indian silverware demand. Part of this fall was offset by some gains in China.
The world silver mine production increased by 1.4% to a new record level of 761.6 Moz in 2011, as compared with the previous year.
In 2011, scrap supply rose by 12% over the previous fiscal to a second straight record of 256.7 Moz, driven by gains in jewellery and silverware recycling on higher prices.
Government sales fell by a massive 74 per cent to a 14-year low of 11.5 Moz in 2011.The drastic decline was entirely due to a collapse in sales from Russia, where disposals dropped by nearly 90%.
Notable production losses were observed in Australia, Peru, the United States and Turkey in 2011, amounting to 20.3 Moz.
Global Scenario
Silver is predominantly traded on the London Bullion Market Association (LBMA) and COMEX in New York.
LBMA, the global hub of over-the-counter (OTC) trading in silver, is the metal’s main physical market. Comex is a futures and options exchange, where most funds’ activities are focused.
Silver is invariably quoted in US Dollars per troy ounce.
Indian Scenario
The average annual demand for silver in India is about 2500 Metric tonnes (MT) per year. In 2011, the country’s production was around 342.13 MT.
Nearly 60% of India's silver demand comes from farmers and rural India, who store their savings in the form of silver bangles and coins.
Factors Influencing the Market
Economic events such as India’s industrial growth, the global financial crisis, recession and inflation affect metal prices.
Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring affect the market.
Governments set trade policy (implementation or suspension of taxes, penalties, and quotas) that affect supply by regulating (restricting or encouraging) the material flow.
Geopolitical events involving governments or economic paradigms and armed conflict can cause major changes.
A faster growth in demand against supply often leads to a drop in stocks with the government and investors.
Silver demand is underpinned by the demand from jewellery and silverware, industrial applications, and overall industrial growth.
In India, the real industrial demand occupies a small share in the total industrial demand for silver. This is in sharp contrast to most developed economies.
In India, silver demand is also determined to a large extent by its price level and volatility.
Introduction
Silver (Chemical symbol-Ag) is a brilliant grey-white metal that is soft and malleable.
Silver’s unique properties include its strength, malleability, ductility, electrical and thermal conductivity, sensitivity, high reflectance of light, and reactivity.
The main source of silver is lead ore, although it can also be found associated with copper, zinc and gold and produced as a by-product of base metal mining activities.
Secondary silver sources include coin melt, scrap recovery, and dis-hoarding from countries where export is restricted. Secondary sources are price sensitive.
Demand and Supply
In 2011, the worldwide silver fabrication demand was 876.6 million ounces (Moz)—down by 1.5% from the value in 2010, but still reaching its second highest level since 2000.
Globally, in 2011, the physical silver bar investment grew by 67% to 95.7 Moz, while fabrication of coins and medals rose by almost 19% to an all-time high of 118.2 Moz.
In 2011, silverware offtake dropped by 10.2% to 46.0 Moz from the previous year, as a result of lower demand in India. Higher prices coupled with ongoing structural decline in the western markets caused a fall in the Indian silverware demand. Part of this fall was offset by some gains in China.
The world silver mine production increased by 1.4% to a new record level of 761.6 Moz in 2011, as compared with the previous year.
In 2011, scrap supply rose by 12% over the previous fiscal to a second straight record of 256.7 Moz, driven by gains in jewellery and silverware recycling on higher prices.
Government sales fell by a massive 74 per cent to a 14-year low of 11.5 Moz in 2011.The drastic decline was entirely due to a collapse in sales from Russia, where disposals dropped by nearly 90%.
Notable production losses were observed in Australia, Peru, the United States and Turkey in 2011, amounting to 20.3 Moz.
Global Scenario
Silver is predominantly traded on the London Bullion Market Association (LBMA) and COMEX in New York.
LBMA, the global hub of over-the-counter (OTC) trading in silver, is the metal’s main physical market. Comex is a futures and options exchange, where most funds’ activities are focused.
Silver is invariably quoted in US Dollars per troy ounce.
Indian Scenario
The average annual demand for silver in India is about 2500 Metric tonnes (MT) per year. In 2011, the country’s production was around 342.13 MT.
Nearly 60% of India's silver demand comes from farmers and rural India, who store their savings in the form of silver bangles and coins.
Factors Influencing the Market
Economic events such as India’s industrial growth, the global financial crisis, recession and inflation affect metal prices.
Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring affect the market.
Governments set trade policy (implementation or suspension of taxes, penalties, and quotas) that affect supply by regulating (restricting or encouraging) the material flow.
Geopolitical events involving governments or economic paradigms and armed conflict can cause major changes.
A faster growth in demand against supply often leads to a drop in stocks with the government and investors.
Silver demand is underpinned by the demand from jewellery and silverware, industrial applications, and overall industrial growth.
In India, the real industrial demand occupies a small share in the total industrial demand for silver. This is in sharp contrast to most developed economies.
In India, silver demand is also determined to a large extent by its price level and volatility.
