BofA -  Silver & Silver Industry Primer: First Edition

• Silver & silver industry primer: First edition
• BofA Global Research Media Relations

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Precious Metals Primer: Silver

 Global Gold & Precious Metals: Silver & silver industry primer: First edition
 
•  We publish our First Edition Silver and silver industry primer. Sections are silver supply-demand and producer fundamentals
•  In 2019, the key components of demand included: Industrial (52% of demand), jewelry (20%) and new physical investment (19%)
•  Historically silver stocks have traded between 1-3x NAV, a wider range than gold producers due to fewer silver producers

Silver and silver industry primer: First edition

Intended as a desk reference for generalists or new analysts covering the precious metals sector, our first edition Silver and Silver Industry Primer, written in collaboration with our Commodities team, tackles subjects germane to the global silver sector. Key sections include silver supply and demand trends, producer fundamentals and sector valuations. For those interested in the geology and mining of precious metals (including silver) deposits, please review our Geology & Mining 101 Primer (link here). 

Silver supply-demand trends in 2019

In 2019, total global silver supply was 1,023 million ounces (Moz), +0.6% yoy. The major sources of silver supply included mine production (81.8% of overall 2019 supply), recycling (16.6%), net hedging (1.5%) and net official sector sales (0.1%). Global silver production was 836.5Moz in 2019. Silver demand totaled 991.8Moz in 2019, +0.4% yoy. The largest component of global physical silver demand was industrial fabrication at 510.9 million oz, 52% of total physical demand in 2019. The next largest component was jewelry at 201.3Moz (20%), followed closely by net physical investment at 186.1 million oz (19%), then silverware at 59.8Moz (6%) and photography at 33.7Moz (3%).

Fun facts about silver and the silver industry

For those unfamiliar with silver, here are fifteen 'fun' facts: 1) Silver is an element with the chemical symbol Ag and atomic number 47;  2) Silver is a soft, white, lustrous transition metal; 3) Silver has the highest electrical conductivity of any element and the highest thermal conductivity of any metal; 4) Silver naturally occurs in its pure, free form (native silver) and as an alloy with gold (electrum), as well as in various minerals, such as argentite and chlorargyrite; 5) Most silver is produced as a byproduct of copper, gold, lead and zinc refining. Primary silver production (240.0Moz) accounted for just 29% of global silver output in 2019; 6) Reflecting how fragmented the sector is, the top 15 silver mines accounted for only 27% of 2019 global output; 7) The total dollar value of silver demand was $16.1 billion in 2019, a fraction (7.6%) of the $210 billion of total dollar value of gold demand in the same year; 8) Silver has been mined for some 5,000 years, with evidence found in ancient slag dumps in Turkey and Greece; 9) Argentum is the basis for the name of the country Argentina; 10) Both ancient Greece and the Romans used silver coins as currency; 11) The gold to silver ratio recently peaked at a record high of 120.

Little wonder silver is called the poor man's gold; 12) Silver has a melting point of 962C and a boiling point of 2,162C; 13) Silver, despite its classification as a precious metal, is more exposed to industrial production (52% of demand) vs. gold (~10%); 14) Because it is a heavy, silvery-white liquid metal, Mercury, and not silver, is called 'quicksilver'; and 15) Silver is one of the few words in the English language that is nearly impossible to rhyme.