The Silver Series: Supply and Demand

THE AGE SILVER VISUAL CAPITALIST 2012 2011 2005 2000 SERIES SUPPLY $ DEMAND 20 QUANTITY PART 2 PART I PART 3 The History of Silver Supply and Demand Silver as an Investment In 2011, there were 1040.6 million troy oz of silver produced. Of this, 84% was used in fabrication. Investment 16% TRADITIONAL SILVER USES Only about a third of silver is fabricated for traditional uses such as coins, silverware, and jewelry. Jewelry 18.5% 13.5% Coins, medals, etc Silverware 5.0% INDUSTRIAL SILVER USES Taday most silver is fabricated in over 10,000 industrial applications. 7.5% Silver in Photography The photography industry used to be a powerhouse in silver consumption due to its importance in film development. Today, digital photography has drastically eroded that market. 21.5% 7.2% 3.3% Electrical Silver is the best metal conductor of electricity known to man. In 2011, 1884 million oz was used in electrical and electronic devices (e.g. Cell phones, vehicles, computers, medical equipment). Soldering Silver is also used in brazing and soldering. Using silver alloys helps create smooth, sealed and corrosion- CH, + 0, resistant joints Silver is used to produce 6.8% Ethylene Oxide Ag This substance is one of the most important inputs in polyester, automotive antifreeze, and many laundry and dishwashing detergents. Ethylene Oxide Photovoltaic Approximately 80% of today's photo- voltaic cells contain silver. By 2015, this high-growth sector will increase silver's industrial demand by 10%. SILVER DEMAND BY COUNTRY These five countries make up over 60% of global silver demand! 4.5% 21.6% 14.5% 11.6% 10.7% Jari thread, which accounts for 19% of India's silver consumption, is routinely woven into silk fabrics. Silver is supplied from 3 main sources Moz O Recycling 100 Increased by 12% in 2011 800 O Net Gov't Sales 600 Decreased by 74% in 2011 НО0 O Mine Production 200 Silver mine production has increased for 9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 consecutive years- increasing 28%. Let's take a closer look. Interestingly, most mined silver is produced as a by-product when mining other metals. Mine Production 1 Here's a breakdown of silver output by source metal 700 Millions of oz Copper 600 500 Zinc/Lead 400 300 Gold 200 100 Silver Primary 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 More than half of all mined silver comes from Latin America TOP 10 SILVER PRODUCING COUNTRIES Mexico China Peru Australia United States Chile Russia Bolivia Poland Canada High silver prices drive people to recycle personal jeuwelry and silverware collections for cash. Recycling 2 Net Government Sales 3 Government stockpiles of silver bullion are nearly depleted after years of net sales. NET GOVERNMENT SALES (in millions of oz) *: CHINA RUSSIA OTHER 100 90 80 AG SALE! .l. 30 20 10 EVERYTHING MUST GO! 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Today, government holdings total only 8% of all identified silver bullion in the world. In 1980, the most significant event in silver supply and demand history took place. SILVER THURSDAY It all started in the late 1970s when the Hunt Brothers, a pair of Texan billionaires, attempted to corner the silver market. The Beginning The brothers begin accumulating silver at $2 per troy oz, partly to fight against high US inflation. By 1980, they had accumulated one third the world's silver supply, which drove the price up more than 800% Silver hit a record price of $135 per troy oz in today's dollars William Nelson Silver Price 1960 1970 1980 1990 Silver Rule 7 Silver Thursday The Fallout 1980 March 27, 1980 August 21, 1988 In response, the COMEX implemented new rules that heavily restricted the purchase of commodities on margin, and the price of silver plummeted. The price of silver fell below the Hunts' minimum margin requirements, and they were unable to pay the ensuing margin call. To avoid the crash of several Wall Street banks The brothers were found guilty of civil conspiracy to corner the silver market, and they ultimately declared bankruptcy. and brokerages, a number of banks bailed the Hunts out with a $1.1 billion loan. Even after the events of Silver Thursday and its aftermath, the supply of silver is still receiving a lot of attention. Although all silver ever mined can fit in a 52m cube the majority of silver has been consumed. Vanishing Supply While the actual amount is unknown, Phampoc some silver experts believe as much as 90-95% of all the silver ever mined has been 'lost' to landfills. Ag Crow For this reason, there is likely significantly less silver above ground compared to what has been mined in total. Silver has over 10,000 modern industrial uses - but today, one of the fastest growing segments of silver demand is actually for silver as an investment. COMING SOON Part 3: Silver as an Investment Visual Capitalist is committed to providing independently researched content for educational purposes. Thank you to Endeavour Silver for covering the production costs of this project. Learn more at Www.edrsilver.com ENDEAVOUR SILVER NYSE: EXK TSX: EDR Frankfurt: EJD VISUAL CAPITALIST Educating a new generation of investors on resource investing and management VISUAL CAPITALIST www.visualcapitalist.com Top 5 Sources: http://www.silverinstitute.org/site/wp-content/uploads/2011/07/wss10sum.pdf http://www.silverusersassociation.org/silver/uspolicies.shtml http://www.edrsilver.com/s/silvered.asp?ReportiD=539654 http://www.silverinstitute.org/site/supply-demand/silver-supply/ http://minerals.usgs.gov/minerals/pubs/commodity/silver/mcs-2012-silve.pdf For a complete list of sources, please visit: visualcapitalist.com/sources Oz in millions ||||| ||||