The increasing supply of silver from new mine production is weighing heavily on the price of the precious metal. “Because the large proportion of this production comes from the byproduct mining of copper, lead and zinc, the downward trend in silver prices during the 1980s has not been a deterrent in bringing this metal to market,” says the Silver Users Association of Washington, D.C.
“So long as the demand for base metals remains strong, this source will be important to a stable silver market.
“In contrast, supplies from scrap could be smaller not only because of the lower prices, but also because of lower usage by industry during the 1980s due to technological changes.”
The political and economic changes shaping Europe seem to have had no immediate effect on consumer demand for silver, but the association suggests this situation should change as disposable incomes improve over the longer term.
Industrial demand for the metal has cooled, particularly in the areas of residential and commercial construction and automobile production. Reduced spending on defence will also have a negative impact on silver use.
“Until there is a resurgence in investor demand, conditions for which are currently difficult to envision, and some dramatic increase by industry, silver trading during the next 12 months could be similar to that of the previous 24 months,” the association says.
During the past two years, it says, the metal’s average price ranged between US$5.19 and US$6.48 per oz.
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