Silver Production By Country

We thought it was time to do a little reasearch and detail and list the worlds silver production by country. Among the top countries are Mexico, China, Peru (might be a surprise), Australia, and Russia. More details below, thanks for reading.

While somewhat tied to the gold markets, silver prices declined significantly in 2013, even though trends for both gold and silver point to gains in 2014. However, some of these gains will rely on silver production for 2014 with several countries producing prodigious amounts of silver for the world market.

Here’s a quick list of the top 5 silver producing countries in the world based on 2012 numbers (2013 numbers are being compiled):

Mexico

With a 2012 production of 162+ million ounces, Mexico is far and away the largest producer of silver in the world. Both Fesnillo and Goldcorp have several assets producing silver in conjunction with other metals such as gold, copper and zinc and with projected reserves of well over 500 million ounces, these companies should keep Mexico in the top slot for some time to come.

China

Up from 104 million ounces, China silver mines produced over 117 million ounces of silver in 2012, surpassing the silver output from Peru to become the second highest silver producing country. China is also the world’s largest producer of gold in the world.

Peru

Although Peru saw a slight increase in production from 2011 to 2012 (111 million ounces up from 110 million ounces), the output from China still outpaced it. Even though Peru is now the third largest country for silver production, with in-ground assets exceeding 120,000 tons (according to USGS), the potential is there to outpace anyone in the world.

Australia

With 2012 production at just under 57 million ounces, the mines in Australia also have the potential to increase dramatically. With in-ground assets that could exceed some 69,000 tons, much of the silver supply in the country comes from the silver bearing lead ore galena which increases production costs.

Russia

Overall, Russia’s 2012 silver output stood at 45 million ounces, most of which was produced by a single company, Polymetal. Their mine in Central Siberia produced over 5% of all Russian silver production with corporate silver production being responsible for well over half (26%) of all Russian silver production for 2012.

Even though silver is used like gold as an investment hedge metal, silver also has many industrial uses which accounts for most of the demand for silver. Although over half of all silver production goes to jewelry, silverware, bullion and other sources, the largest bulk (46%) of all silver demand is for industrial purposes. While overall global production rose slightly for 2013, the price dropped dramatically. Even though trends for 2014 do show a rebound, as an investment metal, silver may not be your best hedge against future economic issues.

Buying Silver

Let’s take a look at silver bullion:

On the whole, silver bullion, whether in 1oz., 100oz. or 1000oz. bars is pretty much directly tied to current silver prices. This means if the spot price for silver drops some 15% as it did over a 2 day period in April, 2013, the value of your silver drops as well. It doesn’t much matter if your bar has the basic hallmarks for purity and actual weight or if your bars were made by a mint or a private firm, silver bullion is only going to be worth what the silver market says it is. If you’re looking at silver from a very strict investment standpoint, this could well be the answer you’re looking for as the buy-in is relatively inexpensive and storage and transport is fairly straightforward.

However, when you take a look at silver coinage, especially coins that were not designed to be a “replacement” for silver bullion, the investment angle takes on a whole new perspective. When you take a look at coins such as the Morgan silver dollars and half dollars, Mercury dimes, Canadian silver coins and a variety of other silver coins from other countries, the investment angle shifts from a strict silver value to the age of the coin, the rarity of the coin and the condition of the coin.

As an example, the current melt value for a common Morgan silver dollar in poor to fair condition is running right at $17 (give or take a few cents). This is based on current silver prices and the fact that a Morgan dollar is actually 90% silver. However, as a coin, a quick scan of eBay shows you’re not going to get one in pretty much any condition for less than $25. To complicate that even further, when you start looking at the rarity of the coin, especially when you’re trying to track down those with a CC (Carson City) mint mark, the price jumps dramatically with some coins in “perfect” condition running over $800 each.

Overall Bullion Vs. Coins

Granted, the buy-in for coins will be higher than purchasing straight bullion bars. However, since coins are valued by far more factors that strictly spot silver market prices, your money is actually somewhat safer since coin prices do not fluctuate nearly as significantly as metal prices. This not only gives you a safer investment but, as most trends show, coin prices rarely drop. As a matter of fact, with the exception of price spikes during the mid-1980s, the price for a MS65 Morgan silver dollar has remained pretty much in the $100-150 range, especially over the last decade. If you’re looking for a great way to conserve capital while keeping a solid investment portfolio, silver coinage definitely has a much more solid platform than bullion.

Silver Bullion

Silver Bullion Options

When it comes to buying silver bullion, you have a few options available to you. While some involve actual physical ownership of silver in one format or another, a couple involve paper investments instead.

Here is a quick overview of the basic silver bullion options you have available

• Bars – Silver bullion bars are available in several different types and sizes. The most popular bar for collectors are the custom minted bars made by everyone from government mints to small private firms. Most often, these are 1 ounce bars and are a very inexpensive way to start investing in silver bullion. Also, bars that weigh 100 ounces and even 1000 ounces are available. Most of these usually only have a hallmark denoting purity and weight.
• Bullion Coins – Many government mints and private firms also produce silver coins designed to be used as an alternative to bar stock. In values from $1 to $50, these coins not only have a direct tie to spot silver bullion pricing but, in some cases as with commemorative coins, actually have value as coinage as well which improves the return on your investment. While not as compact as bar stock, coins have a bit more “back story” which gives coins a bit more value than straight bullion.
• Silver Options – This is a contract that gives the holder the right to purchase a certain amount of silver at a fixed price in the future. The holder can opt not to purchase the silver if the price of silver doesn’t move the right way, conserving capital and only losing the value of the transaction fees and contract fees.
• Silver Futures – While similar to an options contract, this does obligate the trader to purchase silver within the timeframe of the futures contract. While this can work well if the price of silver has dropped and is trending higher, this can lock a trader into a high price if silver has moved higher.
• Silver ETF – This is a special type of stock which gives you ownership of silver without having to deal with the inconvenience of storing and handling silver bars or bar stock. Valuation for an ETF is strictly tied to spot prices and the overall idea is to give you the ability to own silver without any of the inconveniences.

Silver is a great way to enter the metals investment markets. However, as with any investment, there is a distinct possibility for loss, just as there is with actually earning a decent ROI. Unless you simply plan to buy in now and keep your investment for an extended period of time, you’ll want to pay close attention to the current silver market to ensure you do have positive gains.

2013 Silver Market

saw some of the heaviest silver price drops seen in recent years, actually taking the price of silver below prices seen in 2010. For those hoping for a better 2014, you may want to rethink your stocks and bonds strategy and take a harder look at gold as an investment source instead of silver.

2013 Silver Marke At A Glance

Although silver started off the year at a good level, when gold dropped $200/oz. in a 2 day period in April, 2013, silver took an even worse battering percentage-wise. With gold running at $2,000/oz dropping 10% was bad enough but with silver, dropping $4 to go below $25/oz was devastating to investors with a drop far above the 10% level. This meant that many silver mining companies cut back production dramatically to prop up prices and silver streamliners saw a significant drop in throughput. For corporate investors, this was a major blow and for individual investors who purchased silver at over $30/oz, it was an unmitigated disaster.

What Happened?

Although both gold and silver have seen a solid ROI over the last few years, both metals are heavily dependent on what the Federal Reserve does. While the Fed has been strong in bond buys the last few years, they tapered that back in 2013 and the fears of more tapering drove both gold and silver prices lower. Although silver does have industrial purposes that gold doesn’t, thereby giving silver markets that gold doesn’t have, the overall result didn’t provide the support silver investors hoped for. Because of the Fed’s reluctance to continue to be strong in the bond markets, both metals suffered, however the silver market suffered the brunt of the blow.

So, What’s Coming?

2014 won’t be a banner year for silver, although there are hopes it will be somewhat stronger than 2013. The actions of the Fed are pretty straightforward at the moment as they wind down the supports they’ve had in place for gold as an inflation hedge. Current results showed an uptick at the end of 2013, although it isn’t quite as strong as the recovery in August and September of 2013 . As the market continues to settle, prices for silver should further stabilize and start to climb, possibly reaching over $25/oz by the end of 2014. For those buying in now, this could show a good ROI, although this trend may not stick depending on changes to Fed activity.

All in all, the silver market remains volatile and the industry involvement in silver isn’t going to have a major impact on overall silver pricing. What the Fed does, especially when you take the housing market into account and actions pertaining to withdrawal from the metals marketplace, will have an effect on current trends and could stall or even reverse current gains. For long-time players in the silver market, this may be an extended blip on your radar, but for those who are thinking about silver as a new investment strategy, coins or stocks may be a better play, especially as a short-term prospect.