According to Metals Focus, global silver mines produced more of the precious metal in 2013 than they did in 2021…

Global mine production of 26,293 tons in 2013 to 25,587 tons of silver in 2021, shows the needle hasn’t moved much over the last decade. If it wasn’t for silver recycling, we would be in a massive supply deficit…

Silver mines are forecasted (see chart below) to produce 26,226 tons in 2022, a slight increase from last year by about 2.5%…

Silver Demand to Outpace Supply in 2022

On the demand side, according to The Silver Institute in Q1 of 2022,

“The outlook for silver demand is exceptionally promising for 2022 with global silver demand forecast to rise to a record high of 1.112 billion ounces (Boz) in 2022. The increase will be driven by record silver industrial fabrication, which is forecast to improve by 5 percent, as silver’s use expands in both traditional and critical green technologies. Physical silver investment demand (consisting of silver bar and bullion coin purchases) is projected to jump 13 percent in 2022, achieving a 7-year high. Silver’s use in jewelry and silverware is also expected to strengthen in 2022 by 11 percent and 21 percent, respectively…”

As with many other commodities, global silver mine production cannot miraculously skyrocket year-over-year. It takes time, sometimes years or even a decade, along with political and market support, to dramatically increase global silver mining production…

In fact, the most significant year-over-year increase we’ve seen in global silver mine production since 2013 was roughly 1,290 tons. And that increase came after global silver mine production had dropped by approximately 1,700 tons the prior year!

The estimated demand (see chart below) of 34,270 tons in 2022 easily exceeds the total forecasted supply of 32,045 tons of silver (including recycling).

On the surface, this provides an argument for higher silver prices and may set the scene for substantially higher silver prices if the U.S. dollar significantly weakens from its near 20-year high.

Silver Supply and Demand

Silver Supply and Demand Chart Past 10 Years
Source: Metals Focus/ World Silver Survey 2022


History suggests that we will need to see some weakness in the U.S. dollar for gold and silver to launch a sustained breakout. Dollar weakness comes when the Fed pivots. That is when we believe capital will flow back into risk assets once again.

In the meantime, concerning silver, higher rates and inflation will likely make it less enticing for producers to boost supply, potentially setting the stage for a significant revaluation in the precious metal.

All the best with your investments,