Why Invest In Silver Miners?

May 30, 2013 4:14 AM ETCDE, PAAS, WPM, POYYF, FNLPF7 Comments
Mind Spot profile picture
Mind Spot

If I had money in silver mining shares I would be asking myself questions like, why am I in this space? That would lead me to question why any company I have invested in, or may consider investing in, is in this space. Certain realities of the silver mining business force the prudent investor to consider what is so great about being a primary supplier.

Supply beyond miners' control

"Silver distinguishes itself from many metals, including gold, by the fact that more than two-thirds of silver mine supply is a by-product of other metal mining, (in most cases lead, zinc, copper or gold)," says Polymetal International, one of the world's largest producers.

Imagine that. Companies dig for other things and they just happen upon hundreds of millions of ounces of silver that they pour onto the market, needed or not. These companies, considered secondary producers, find more silver than the people who do it for a living.

But lend silver mining companies an ear and they will proudly promote the fact that they are primary producers. They will also proudly announce goals to produce increasing amounts of silver. And they will celebrate it as a success when this happens.

Folks, borrow your ear back for a second. Silver production has been rising for a decade already. According to Thomson Reuters GFMS, silver supply exceeded over 1 billion ounces in 2012. There is a surplus and this has been the case for several years now.

Look at the numbers. Since the Silver Institute is considered an industry authority and it relies upon GFMS for data, let's do the same.

Last year, GFMS calculates that 787 million ounces of silver came from mines. Primary silver mine supply accounted for about 28 percent of that, or about 220 million ounces, and according to figures tossed around at

This article was written by

Mind Spot profile picture
I am an inquisitive individual investor who believes in fundamental analysis and a thoughtful approach. I have a voice and a plan to use it because of a natural urge to put forth my two-cents. Little wonder that I chose writing as a career. Much of my work involves analyzing companies and the markets that they are in. I have a particular interest in the metals and minerals industries and I will likely have a lot to say about them here. I believe diversity is important, both in my portfolio and in my work, so it is also likely that I will have a thing or two to say about a broad range of stocks, ETFs, markets and maybe even some economic issues.

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