Silver Lining

In 2022, the Silver Institute, a nonprofit international association with members from across the silver industry, released a report stating that global silver mine production had dipped 0.06% compared to the previous year, resulting in a total output of 822.4 million ounces. However, the world’s silver supply received a boost from recycling sources, which added 180.6 million ounces to the overall tally. This brought the grand total of silver available worldwide to just over 1 billion ounces.

The Silver Institute reported a deficit of 242.4 million ounces in 2022, which is even more significant than the 51.1 million ounces deficit in 2021. The Institute is also predicting a deficit of 142.1 million ounces for 2023. The combined deficits of the previous two years have offset the surpluses of the last 11 years. This development raises a crucial question: where will the silver come from to meet growing demand?

The graph below shows the amount of silver held in COMEX warehouses. COMEX is a primary market for trading metals. Registered silver is silver that is physically held in COMEX warehouses and is ready for delivery. Currently, there are just under 32 million ounces of registered silver in COMEX warehouses.

comex silver stockpiles

There are currently 152,633 open futures contracts for silver on the COMEX. Each contract represents 5,000 ounces of silver, so there are a total of 763,165,000 ounces of silver tied up in these contracts. However, there are only 32,005,428 ounces of silver available for physical delivery as of June 22. This means that there are 2,384% more open contracts as of June 22 than there is silver available for delivery. If all of the open contracts were to be exercised at once, it would be impossible to deliver all of the silver. I have been expressing my concern about this issue for over a year.

Just like any other commodity, silver needs to be extracted from the ground. However, what sets silver mining apart is that only around 27% of it comes directly from silver mines. The remaining 73% is obtained as a byproduct during the mining of copper, gold, lead and zinc. In many ways, the production of silver depends on companies mining these other metals. This distinction is crucial to understand.

silver mine production by source

The question that needs to be addressed is the number of new silver mine discoveries made worldwide in the last few years. As of June 22, 2023, there have been no noteworthy silver mine discoveries during this year. Nonetheless, in recent years, there have been several notable discoveries, including the ones listed below:

  • The San Marcial Area discovery by GR Silver Mining in Mexico in 2019. This discovery has the potential to be a major new source of silver production.
  • The Plomosas Mine Area discovery by GR Silver Mining in Mexico in 2020. This discovery is also a potential major new source of silver production.
  • The Silver Queen discovery by Silver Standard Resources in Nevada in 2021. This discovery is a high-grade silver deposit that has the potential to be a significant new source of silver production.

The recent discoveries of silver as mentioned above are indeed good news. However, it is important to consider the timeline for actual mining operations to commence. It is unlikely that any of these three discoveries will enter production before 2026-2027.

Let’s reflect on the Reko Diq Mine, which was discovered in Pakistan in 1978, marking 45 years since its discovery. This mine is estimated to hold approximately 16.5 billion pounds of copper and 65 million ounces of gold. Ownership of the mine has changed hands multiple times, and it has been entangled in the international legal system for many years. In 2022, the Pakistani government reached an agreement permitting Barrick Gold to acquire a 50% stake in the Reko Diq project. While production is set to commence in 2027-2028, it is worth noting that this will be a substantial mining operation.

The number of new silver mines being discovered is decreasing due to several factors. These include the high costs associated with silver exploration, the present market price of silver, and increasingly stringent environmental regulations.

It is important to remember that silver is often mined as a byproduct of other metals, such as copper, gold, lead, and zinc. According to the International Copper Study Group (ICSG), only two major copper mines started operations between 2017 and 2021. The construction and initiation of a new mine is a time-consuming process. For a copper mine, it typically spans between 10 to 20 years. These factors explain why there are concerns about the future production of numerous commodities, including silver.

Some people might say that I am being too pessimistic, but I would like to point out two things. First, silver production has been relatively stable since 2014, at around 1 billion ounces per year, including both mined and recycled silver. However, demand for silver has been increasing, especially in recent years due to the growing demand for solar panels, electric vehicles, and physical silver. In 2022, the global demand for silver soared to a record-breaking 1.24 billion ounces, an increase of 18% from 2021. Demand for silver in every category achieved record levels in 2022, while supply remained flat.

In other news that could affect silver supplies, Newmont Mining announced on June 8 that it has suspended operations at its Penasquito mine in Mexico due to a strike by the National Union of Mine and Metal Workers of Mexico. The Penasquito mine produced 32.4 million ounces of silver in 2022, making it the largest silver mine in Mexico and the second largest silver mine in the world. The longer the strike continues, the greater the impact it will have on silver supplies in 2023. As of June 22, the mine is still suspended.


Let’s start with one of the primary factors that drives the demand for silver, a topic that is frequently discussed in the media: electric vehicles (EVs). Each EV contains approximately 150 to 250 electrical contacts. Although some of these contacts may be made of other base metals, it is likely that the majority of them are composed of silver. The reason is straightforward: silver is the most efficient conductive material on Earth.

silver automotive demand

The graph above shows that the demand for silver in EVs has been increasing since 2020. I believe that in the coming years, the automotive industry will use over 100 million ounces of silver annually, which would account for about 10% of the current yearly supply.

In 2022, electric vehicles accounted for 14% of the market share. This growth is being driven by a number of factors, including government incentives, increasing consumer demand, and the growing availability of EVs. By 2030, it is estimated that electric vehicles will account for 25% of all new car sales worldwide.

Here are some of the key reasons why the demand for silver in electric cars is increasing.

  • Electric vehicles use more silver than traditional cars. This is because electric vehicles have more electrical components than traditional cars, and silver is a key component in many of these components.
  • The market share for electric vehicles is growing. As more and more people switch to electric vehicles, the demand for silver in electric cars will continue to grow.
  • Governments are providing incentives for people to buy electric vehicles. These incentives make electric vehicles more affordable, which will lead to more people buying them.

Jewelry & Silverware

In 2022, jewelry and silverware accounted for 30% of global silver consumption, with 234.1 million ounces used for jewelry and 73.5 million ounces used for silverware. However, I expect this trend to reverse in 2023, as discretionary purchases tend to decline during economic downturns.

Here are some of the reasons why I expect jewelry and silverware consumption to decline in 2023:

  • The global economy is slowing down. This will lead to job losses and wage stagnation, which will reduce people’s disposable income.
  • Inflation is stubborn. This is making it more expensive to buy discretionary items such as jewelry and silverware.
  • People are becoming more cautious with their spending. They are saving more money and cutting back on non-essential purchases.


The industrial sector, which includes industries such as electrical, electronics, photovoltaics, brazing alloys, and solders, has a significant demand for silver. In 2022, this demand reached a total of 556.5 million ounces. The Silver Institute predicts that industrial consumption will increase by 4% in 2023, reaching 578.76 million ounces or close to 60% of all mined silver.

Solar Panels

Solar panels are one of the biggest drivers of silver demand. Photovoltaic (PV) technology uses silver to convert sunlight into electricity. According to the Silver Institute, 140.3 million ounces of silver were used in solar panels in 2022, nearly three times the amount used in 2010. Projections indicate that demand for silver in PV applications will reach over 160 million ounces in 2023.

Scientists at the University of New South Wales estimate that solar manufacturers will need over 20% of the current annual silver supply by 2027. By 2050, they estimate that solar panel production will use 85-98% of the current global silver reserves.

There is no real substitute for silver in solar panels. Copper, an alternative, oxidizes over time, thereby reducing the lifespan of a solar panel. Among all metals, silver excels as the best conductor of heat and electricity. Moreover, its high luster allows it to reflect light exceptionally well.


Silver is a key component in many electronic devices. It is a highly conductive metal, so it is used in electrical connections, such as the power button on your device. Look around your home and you’ll see silver in computers, iPads, cell phones, refrigerators, printers, and TVs. VR headsets are the latest addition to the ever-expanding list of devices that use silver.

The potential for technology is limitless. We cannot predict where it will ultimately lead us. A decade ago, virtual reality headsets would have been considered science fiction, but today they are a reality. So, we can only wonder what new electronic devices will emerge in the future that will also rely on silver.

Physical Investment

Silver has a long history as a form of currency. It has been used as a medium of exchange for thousands of years, starting from around 3,000 BCE in Anatolia (present-day Turkey). Throughout ancient times, civilizations like Greece, Rome, and China also used silver as currency.

During the Middle Ages, silver took precedence as the primary currency in Europe. Kings and emperors minted silver coins, which people used for buying and selling goods and services.

In the 19th century, gold became the world’s primary currency, overshadowing silver. However, certain countries, including the United States, continued to use silver coins as legal tender until 1964.

In recent times, there has been a surge in physical silver investments. In 2022, the purchase of silver bars and coins reached a record high of 332.9 million ounces.

Several factors contributed to this remarkable increase in demand during 2022:

  • Rising inflation: Inflation in 2022 hit a 40-year high, leading people to seek assets like silver that could safeguard their purchasing power.
  • Geopolitical uncertainty: Ongoing conflicts, such as the situation in Ukraine, coupled with concerns of a global recession, prompted a greater demand for safe-haven assets like silver.
  • Fear of declining dollar: With the national debt surpassing 32 trillion dollars (see US Debt Clock below), there is growing apprehension about the dollar’s future.
  • Economic crises: Instances of bank failure and problems in the commercial real estate sector created an atmosphere of uncertainty, prompting investors to turn to commodities like silver.
us debt clock

Currently, the national debt stands at just over 32 trillion dollars, with the expectation of it reaching 50 trillion by 2030. The removal of the debt ceiling until 2025 poses a new problem, as it allows for unchecked spending by leaders in Washington, potentially leading to increased inflation. Continuously printing money diminishes the value of each dollar held.

In the face of inflation, geopolitical uncertainty, and bank failures, many investors have turned to commodities like gold and silver. The price of gold reached an all-time high in May, and both gold and silver are considered reliable stores of value, devoid of third-party risks. The purchase of silver or gold is really a loss of faith in fiat currency. There have been over 1,500 different currencies in use throughout history. Today, there are around 180 currencies in use around the world. With the constant printing of money, which continues to erode purchasing power, no wonder demand for physical silver hit a record last year.

As well, global governments have made it a goal to reach zero carbon by 2050-2070. Silver will play a big part in that path. Silver has also proven itself as a means of money for over thousands of years. But it also has so many practical applications that can’t be replaced by any other metal.

Over a decade, silver production and recycled silver have remained relatively stable, fluctuating within a range of about 50 million ounces from the annual output of one billion ounces. As the demand for silver continues to rise in both physical and industrial sectors, it will be intriguing to observe how the industry handles potential shortages in the future. This is particularly important as new applications for silver emerge, such as utilization in the medical field. Due to its robust antimicrobial properties, silver is increasingly being employed in medical coatings, wound dressings, and ointments.

With demand for silver yet again to exceed supplies for 2023, you have to ask the question, “How do you determine the price of something when there is no supply?” In the upcoming years, we may witness the answer to this question as the situation in silver demand unfolds.

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