Breaking down the silver market

Facts ‘N’ Figures

In a recent report on silver demand — published jointly by the Washington, D.C.-based Silver Institute and London-based precious metals consultant GFMS — jewelry and silverware are now listed as separate items in terms of fabrication demand — a first since the two groups started working together on silver-related publications a few years ago.

The most significant publication to emerge from the partnership is the World Silver Survey, to be published in late May. The survey has always featured jewelry and silverware as a combined total in the main country-by-country tables, but this year that will change.

A glimpse of what’s to come recently appeared in a 56-page report titled Silver Jewelry Report, a look at the silver market in advance of the World Silver Survey. Silver Jewelry Report shows how the demand for silverware has declined over the past 25 years.

“There has been a marked drop off in silverware demand over the course of the last number of years,” says Michael DiRienzio, executive director of the Silver Institute. “It’s kind of stabilizing now.”

The Silver Institute commissioned the report from GFMS last year to get a better handle on the jewelry sector. Silver Jewelry Report is one of a number of smaller reports on the silver market commissioned by the Silver Institute. Over the past couple of years, the institute has published several smaller reports, including ones on China and photography.

“We think (the report) adds value to the (silver) industry,” DiRienzio says.

The report features a 10-year look at global jewelry and silverware, as well as a detailed analysis of the silver jewelry market. Some other items in the report are as follows:

* a review of trends in silver jewelry fabrication, at a regional level as well as focusing on countries with manufacturing volumes exceeding 1 million oz., including China, India, Italy and the U.S.;

* separate data on the leading silver jewelry consuming nations is provided, including country-by-country data for the 10 largest consumers from 2000 to 2005; and

* jewelry consumption, and in particular, competition for silver jewelry. The review is not limited to competition from white or yellow gold but extends to other materials, both precious and non-precious.

Some of the findings in Silver Jewelry Report include:

* global silver jewelry output grew to 171.8 million oz. in 2005 from 146.4 million oz. in 1996;

* the U.S., India, Germany, Italy and Mexico were the top consumers of jewelry in 2005;

* over the last decade, Chinese silver fabrication has skyrocketed to 17.4 million oz. in 2005 from 2.2 million oz. in 1996;

* global silver jewelry trade has leapt in recent years, to US$2.6 billion in 2005 from US$1.4 billion in 2000; and

* globally, twice as much silver as gold ends up in jewelry.

“It is interesting to note that silver jewelry demand in 2005 was larger for the first time than photographic demand at 171.8 million ounces versus 164.8 million ounces,” DiRienzo says. “Additionally, silver jewelry demand is arguably of better quality than photographic demand because the rate of recycling is far higher for the latter than the former.” About 60% of all silver used in photography worldwide comes back to the market while relatively little silver jewelry does.

Copies of the report may be downloaded by visiting www.silverinstitute.org. Chinese and Spanish translations are available.

Founded in 1971, the Silver Institute is an international industry association. Its members include the leading silver producers, refiners, manufacturers and silver bullion dealers.