Is there a Silver Shortage?

One question we are asked regularly is if there is a silver shortage. This is something people ask us because well, we are in the business of buying, selling and minting of precious metals.  Now, it would be easy for me to stand here as a bullion dealer and say, “Of course there is a shortage so you better buy a whole bunch of silver right now”, which means dot dot dot, “BUY FROM US!”  So with that in mind, please know that I am not trying to scare you into buying silver from us.  I’ll do my best to give you an unbiased answer, so you can come to your own conclusions about whether there really is a silver shortage.

Let’s start by looking at the number of ounces of silver that were mined in 2011: According to the Silver Institute(http://www.silverinstitute.org/site/supply-demand/), the amount of Silver that was mined in 2010 was 735.9 Million ounces of silver, which sounds like a lot, but only equals about 2.35 ounces per person in the United States.  But remember, 735.9 MILLION ounces is what the entire world mined in 2010.  So with a world population of 6.8 BILLION people, that gives each person just 0.1 ounces of silver, and that would deplete the entire world supply of silver for that year.

Lucky for you and me, not everyone is buying silver, but the demand for the metal is equal to, if not greater than, the amount of silver being produced.  Besides being used in Jewelry and coinage, Silver also has a huge demand in electronics such as: Phones, Cellphones, Televisions, Microwaves, and even Batteries.  And not just that; because Silver is a spot killer of Bacteria, you will find it being used for medical purposes such as Silver cremes and ointments, even Hospital gowns and blankets that have silver particles in them to decrease the risk of spreading unwanted bacteria. Bottom line… Silver is an industrial metal, and new uses for it are being created as new inventions, and innovative ideas require its use.

If you were one of those people following the silver market in 2008, then you saw the demand for silver as an investment go sky high.  That was around the same time that the Housing Bubble burst, and U.S. bailouts started happening.  This brought fears about the future of the dollar, and made silver look very appealing to investors.  During that time, some dealers and mints had wait times of up to six months before customers would get a finished product.  The reason I do not consider this a “Silver Shortage” is because we could buy the silver we needed.  It took a lot longer for the silver to arrive, but we were still able to purchase the silver.