Is It Time To Buy Silver? Part 2

 |  Includes: AGQ, SIVR, SLV, ZSL
by: Arie Goren

The first part of this article, published here, introduced the demand for silver, this 2nd part will discuss the tendency of silver supply and reserves.

Mine Production

The total world silver mine production rose from 13,290 metric tons in 1986 to 23,800 metric tons in 2011, while the Compound Annual Growth Rate (OTCPK:CAGR) was 2.36%. At this point, the growth rate was greater than the world silver industrial demand.

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Production of Old Silver Scrap

The total world production of old silver scrap rose from 5,810 metric tons in 2000 to 7,984 metric tons in 2011, while the Compound Annual Growth Rate (OTCPK:CAGR) was 2.93%. The increase in the price of silver has made its recovery more profitable.

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World Proven Silver Reserves

The total world proven silver reserves rose from 280,000 metric tons in 1994 to 530,000 metric tons in 2011, while the Compound Annual Growth Rate (OTCPK:CAGR) was 3.82%. It means that new discoveries and new mining technologies surpass the quantity of silver that has been mined.

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On the one hand, silver mine production and silver proven reserves are growing at a higher rate than its industrial demand, so lack of supply is not the factor causing higher silver prices.

On the other hand, like in the case of gold, we see a significant increase in silver demand for coins and medals and for physical silver ETFS and silver bars.

Since there is a direct correlation between the price of gold and the price of silver, we can expect an increase in the price of silver along with the price of gold.

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Some Liquid ETFS for Silver:

iShares Silver Trust (SLV)

ETFS Physical Silver Shares (SIVR)

ProShares Ultra Silver (AGQ)

ProShares UltraShort Silver (ZSL)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.