Sunday, April 22, 2012

Silver Price and Investment

The silver price continues to be a healthy investment despite the little change in the first quarter of 2012.

According to the Silver Institute, The silver price has more than doubled in two years, from an average of $14.67 in 2009 to $35.12 in 2011. How many other investment strategies can say the same? An investment in silver does not carry any dividends or interest perhaps, but in these days of deteriorating paper money returning a negative interest, the importance of preservation of assets comes to the fore.

Silver investment achieved a historic high last year (2011) of over 282 million ounces (Moz) in silver investment including silver bars, coins and medals. This was equivalent to around ten billion dollars on a net basis, figures not to be demised. In fact silver bar investment grew sixty seven percent in 2011 to 97 Moz and global coins and medals fabricated by nearly twenty percent to over 118 Moz.

China is not just after gold. There was a 60 percent rise in their silver bullion coin output also.

Here is the world silver supply and demand expressed in millions of ounces, as per the Silver Institute. Note that the totals may not add due to rounding.

Mexico produced the most silver in 2011 followed by Peru, China, Australia and Chile. Global production continues to drop apparently due to a fall in processed grades

“Primary silver mine cash costs rose to $7.25 per ounce last year, driven by higher labor costs and lower grades, despite an increase in by-product credits. Nevertheless, with a significantly higher average annual silver price, simple cash margins grew by an impressive 89 percent to $27.87 per ounce” , according to the Silver Institute.

Long term, the silver price continues to be a sound investment and seems set to continue being a leader in asset preservation despite any volatility with the spot price.

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