Last Updated : 05 March 2013 at 23:00 IST
As recently as 1997, the US was the world's second largest producer of silver accounting for 14% of silver mined in the entire planet. Blame it on four factors: depletion in mines on a large scale, harder to access ore, regulatory burdens, and a lack of new discovery; the US had to vacate the top spot in a decade.
US' domestic mine production of silver in 1997 was seen at 1600 tons.
“The average price of silver through the first 9 months of 1997 was $4.628 per ounce, which was down from the average $5.19 per ounce through the first 9 months of 1996. The silver price at the end of 1996 was at about $4.73 per ounce. The price began to rise in January 1997, briefly breaking through the $5.00 mark on January 27 before falling back. The highest price of the year occurred on February 27 at $5.26 per ounce. The price remained above $5.00 until April 1, falling back to $4.74 on April 4. During the next 4 months the price of silver fluctuated between $4.30 and $4.95. The price on September 30, 1997, was $5.21 per ounce.” this USGS picture gives a brief overview of the price of silver for the period.
Since 2001, the mine production of silver in US has registered a declining trend and has come down by 40%. Compared to the 1990s, the output declined by 50%. [China, currently the second-largest producer of silver was then not even in the picture in 1990s.]
“It really is amazing that one of the world’s top silver producers could tumble in such epic fashion during one of the most powerful bull markets this metal has ever seen. Factoring into this decline is large-mine depletion, pinched economics for harder-to-access ore, regulatory burdens, and a lack of new discovery.” writes Adam Hamilton & Scott Wright in the bull.com.au
When the bear hugged the silver-mining sector in 1980s and 1990s, several primary silver districts were shut down, and as a result, silver output from US is now a byproduct of copper, gold mining. And needless to say, US' output of copper and gold is also declining.
“But per my recent research looking at the universe of silver juniors, I found there to be a lot of exploration activity in the countries that are the two biggest losers over the course of this bull. Nearly a third of all juniors have a project in the US, with nearly a third also having a project in Canada.” the authors note.
In 2012, the United States produced approximately 1,050 tons of silver with an estimated value of $1.01 billion. Silver was produced as a byproduct from 35 domestic base- and precious-metal mines. Alaska continued as the country’s leading silver-producing State, followed by Nevada.
As one can see from the data, the value surge in silver mined in 2012--$1.01 billion--is not even comparable with the value of silver that it produced in 1996 at $0.23 billion. You may have to adjust it to inflation; still the 2012 value may hold more in firepower.
This ultimately is propelling many junior miners to keep their drills busy. Unlike the past, they also know where the silver is, and great resources beckoning along with advanced technology, the juniors are finding great success in their exploration endeavors.
“I suspect we’ll see a US and Canada silver revival in the coming years that will finally turn around their decade-long downward trends.” Adam and Scott said.
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