Positive on Silver Despite Chronic Oversupply
Source: Mineweb.com (2/22/08)
Speaking at yesterday's excellent inaugural Global Capital Forum on gold and silver in London, Jessica Cross of the VM group was very positive about the price prospects for the metal, despite there being an apparent supply surplus and a steady fall in usage in its principal industrial use in the photography sector.
Cross described silver as "exciting and often ignored, competing in the shadow of gold and platinum". Indeed since the low point in precious metals markets in 2001, silver has outperformed gold by rising 254% as against gold's 235%. As for platinum, which has actually recorded an even greater rise on a genuine supply shortage, that's another issue altogether! Cross said silver had sometimes been somnolent - "but boy it can move!"
Unlike for other metals where one can calculate a likely relationship between price and the marginal cost of production, silver is produced largely as a byproduct (about 65% of world mine production). Even primary silver producers usually generate substantial byproduct output of other precious or base metals. But what this means is that silver tends to be produced without regard at all to the metal price which can be disadvantageous in terms of market control by the miners.