Silver

Major Characteristics

  • Silver (Chemical symbol-Ag) is a brilliant grey-white metal that is soft and malleable.
  • Silver has unique properties such as its strength, malleability, ductility, electrical and thermal conductivity, sensitivity, high reflectance of light, and reactivity.
  • The main source of silver is lead ore, although it can also be found associated with copper, zinc and gold and produced as a by-product of base metal mining activities.
  • Secondary silver sources include coin melt, scrap recovery, and dis-hoarding from countries where export is restricted. Secondary sources are price sensitive.
  • Silver is unique amongst metals due to the fact that it can be classified as both a precious metal and an industrial metal.
  • Today, silver is sought as a valuable and practical industrial commodity and as an investment.
  • Silver is an important element of the global monetary reserves.
  • It is an effective portfolio diversifier.
silversilver

Demand and Supply Scenario

  • Worldwide silver fabrication demand was 876.6 million ounces (Moz) in 2011, down 1.5 per cent but still reaching its second highest level since 2000.
  • Physical silver bar investment grew by 67 per cent in 2011 to 95.7 Moz, while global fabrication of coins and medals rose by almost 19 per cent to an all-time high of 118.2 Moz.
  • Silverware off take dropped by 10.2 per cent to 46.0 Moz as a result of lower demand in India on higher prices coupled with ongoing structural decline in western markets, although part of the fall was offset by some gains in China.
  • World silver mine supply increased net by 1.4% to a new record level of 761.6 Moz.
  • Scrap supply rose 12 per cent to a second straight record of 256.7 Moz driven by gains in jewellery and silverware recycling on higher prices.
  • Government sales fell by a massive 74 per cent to a 14-year low of 11.5 Moz in 2011.The hefty decline was entirely due to a collapse in sales from Russia where disposals dropped by nearly 90 per cent.
  • Notable production losses were observed in Australia, Peru, the United States and Turkey, amounting to 20.3 Moz (-632 t).

Global Scenario

  • Silver is predominantly traded on the London Bullion Market Association (LBMA) and COMEX in New York.
  • LBMA, as the global hub of over-the-counter (OTC) trading in silver, is its main physical market. Comex is a futures and options exchange, where most funds' activities are focused.
  • Silver is invariably quoted in the US dollars per troy ounce.

Indian Scenario

  • India's silver demand averages 2500 Metric Tonnes(MT) per year, whereas the country's production was around 342.13 MT in 2011.
  • Nearly 60% of India's silver demand comes from farmers and rural India, who store their savings in silver bangles and coins.

Factors Influencing the Market

  • Economic events such as national industrial growth, global financial crisis, recession, and inflation affect metal prices.
  • Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices.
  • Governments set trade policy (implementation or suspension of taxes, penalties, and quotas) that affect supply by regulating (restricting or encouraging) material flow.
  • Geopolitical events involving governments or economic paradigms and armed conflict can cause major changes.
  • A faster growth in demand against supply often leads to a drop in stocks with the government and investors.
  • Silver demand is underpinned by the demand from jewellery and silverware, industrial applications, and overall industrial growth.
  • In India, the real industrial demand occupies a small share in the total industrial demand of silver. This is in sharp contrast to most developed economies.
  • In India, silver demand is also determined to a large extent by its price level and volatility.

Measurement

Weight Conversion Table

To convert fromToMultiply by
1 Moz MT 31.103
1 Ton Troy ounces 32,511
1 Ton Grams 1,000,000

Silver M :

February 2013 Contract Onwards

Silver Micro :

February 2013 Contract Onwards