For the ninth straight year, the demand for silver in 1997 exceeded supply leading to substantial ground bullion stocks. In 1997, fabrication demand exceeded supply from mine production and the recycling of scrap by 198 million ounces, according to the World Silver Survey 1998, just published by The Silver Institute.
Increases in mine supply and scrap recycling were insufficient to meet the rise in fabrication demand last year, which grew 6.1 percent. Between 1990 and 1997, cumulative silver fabrication demand has exceeded mine production by 2.2 billion ounces. That gap has been filled by recycled silver scrap and by the drawdown of more than 1 billion ounces of silver bullion inventories. Total identifiable bullion stocks of silver have dropped by 700 million ounces since the end of 1990, with 154 million ounces of this being recorded in 1997, according to the Survey, which was sponsored by 26 companies and organizations worldwide and independently researched and compiled by London-based Gold Fields Mineral Services Ltd.
The 6.1-percent increase in fabrication demand was primarily due to continued strong demand from India and growing industrial demand in the United States. Last year's record consumption, 863.4 million ounces, was a 49-million ounce gain over 1996. Offtake was up 4.5 percent in Europe, 7.7 percent in North America, and 13.5 percent in Japan. North American demand was almost 194 million ounces, with the United States consuming 167 million ounces of that total. India was the second largest user of silver at 131 million ounces, followed by Japan, where offtake totaled 127.2 million ounces.
The industrial sector was the largest single growth area, up 7.4 percent for a total offtake of 323.5 million ounces. Electrical products and electronics were up 12 percent for 1997 and accounted for much of this increase. This growth has mostly been driven by development of new technologies and products that rely on silver's properties of superior electrical and thermal conductivity. Over the past five years, silver demand for industrial uses in the U.S. increased by more than 40 percent to a record 70 million ounces in 1997.
After a 15.6-percent surge in 1996, jewelry and silverware grew another 5.3 percent in 1997 to 280.2 million ounces. Nearly all of the growth was accounted for by Italy, where offtake rose 10.5 percent to 44.8 million ounces, and India, where offtake grew by 3.2 percent to 95.2 million ounces. Two-thirds of India's silver demand is in jewelry, silverware and gift items.
Silver demand for the photographic sector rose by 3.5 percent to 232.3 million ounces in 1997, which is 27 percent of total silver fabrication demand. While most of the photographic fabrication increase in 1997 occurred in the U.S., the largest manufacturer and consumer of photographic products, the fastest growing areas of demand are in the developing world, according to the Survey.
Worldwide mine production increased in 1997 to 512.6 million ounces, a 4.8-percent increase over 1996, the third consecutive year of increased output. Primary silver mines generated 22 percent of the total, up 8 percent, with the remaining 78 percent produced as a by-product of base metal and gold mining.
Fifteen countries produced 94 percent of the world's silver with Mexico remaining the largest producer. For the second straight year, Mexican producer Industrias PeÒoles topped the list of silver producing companies, and contributed more than a third of Mexico's total output of 86.2 million ounces. The U.S. had a 5.5-percent rise in production, to 53.3 million ounces, and maintained its position as the third largest producing nation.
European silver mine production was up 9 percent from 1996 to 67 million ounces, with Poland responsible for 60 percent of the total output with nearly all of it coming as copper by-product from one company, KGHM Polska Miedz S.A.
Not that long ago some people thought it was stuck in the $450 range.
During the last bull market in the early 80's it went up to the $850 range, but taking into account for inflation, that is over $2,500 in todays money.
So even at $600, we are just at the start of a PM Gold & Silver bull market, and in the 70's - 80's the Silver $50 range - that is $150 in todays money and all base metals follow or is frontrunner to Gold -
towards the end of the last Gold bull market, there was a feeding frenzy for mining stocks - a lot of penny stocks ended up in the $20 - $50 range.
Considering FMNJ potential, there is no reason to think that that won't happen for our company. History often repeat itself - Got FMNJ -
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