As part of our desire to shine a brighter light on Silver’s supply/demand imbalance we sought to better quantify the growing industrial applications that call for its use; especially from the Net-Zero energy movement so frequently in the news.
This post contains two write ups as part of our ongoing research into China and Silver supply/demand developments
The Impending Eruption Crisis----Silver Extinction
Solar Silver China Demand- GoldFix
Background: Copper-Envy
The impetus for this started with “Copper-envy” a few months ago. We wondered after reading tons of stuff on copper from Goldman and others…Footnote for rest1
How this happened:
We were exchanging ideas across cultures with Bai on Twitter/DMs, and letting our twitter community he was worth a follow. On a daily basis he is a good source of SHFE data and translates it to English... Footnote for rest2
Post 1: Duplication in part or whole without proper citation to both GoldFix and Bai is prohibited
Translated from the original Chinese. Very light editing and headline style-components added. Certain modifying words were intentionally left unchanged as they impart important color to the content. Original is in PDF form at bottom
Bai also shared two other pieces for us to look at exclusively. We will do this after fleshing them out, they are very good in context of current events as well. GoldFix Subs will see those here first.
The Dilemma: China is Running Out of Silver
China stands among the top five silver consumers globally, with an average annual demand of 6300 tons over the past decade. Startlingly, the United States Geological Survey (USGS) data from 2011-2020 reveals that China's yearly silver mineral production barely reaches 3350 tons, leaving a significant supply gap of approximately 3000 tons to be fulfilled through imports.
The crux of our apprehension lies in China's limited proven silver resource reserves, amounting to a mere 41,000 tons in 2020. If current mining rates persist, a meager 11 years of silver mining remains. By 2032, China's underground silver deposits will be fully depleted, leading to resource extinction.
GoldFix Note:
China is indeed a habitual importer of Silver. But in 2022 they were a net exporter for the first time in “forever”. The reason for the 2022 behavior may simply be the demand-pull from india was too large to not satisfy.
China and India Silver Demand…
In 2022 India went crazy buying Silver possibly forcingChian to be an exporter for the first time in years
Circling back with Bai on this we asked about it. His reply was: ‘official data is somewhat less reliant than industry data and is to be taken with a grain of salt’
For our part, feel the current lack of importing for industry is now likely being replaced by China depleting its own vaults this year. That is what vaults are for.3
From 2033 onwards, China's static silver demand of 6300 tons will rely entirely on imports, exacerbating the global imbalance between silver supply and demand.
Mexico Might be Worse
According to the USGS data released in 2020, global silver production reached 25,000 tons, with reserves estimated at 500,000 tons. However, at the current rate of mining, these underground silver resources will vanish within 20 years, reducing mine output to zero.
GoldFix Note:
We would add, Mexico is in the process of soft-nationalizaton2of its remaining Silver as well. We recently did a podcast for Arcadia here. Brics nations are increasingly restricting G7 access to their remaining resources now.
The situation in Mexico is particularly dire. As the world's leading silver producer, Mexico has seen an average annual output of 5,600 tons in the past decade. Unfortunately, its resource reserves dwindle to a mere 37,000 tons as of 2020. If mining continues at the current pace, the country's reserves will be exhausted by the end of 2026, marking a mere five years until the onset of the silver crisis.
Among the top ten silver-producing countries, the total silver resource reserves amount to 57,000 tons, whereas the annual mining output remains at a mere 3,500 tons. By 2036, these countries will face complete depletion of silver deposits, rendering them extinct.
As a result of the silver resource extinction in China, Mexico, and other major silver producers, global annual silver supply will plummet by 15,450 tons. In other words, by 2036, global silver production will dip below 10,000 tons, while demand will continue to exceed 30,000 tons.
The table below displays the projected timeline of silver resource extinction in the top ten silver-producing countries based on USGS data (calculated from the present year):
United States: 25 years
Chile: 19 years
China: 11 years
Mexico: 6 years
Poland: 53 years
Peru: 26 years
Bolivia: 19 years
Australia: 67 years
Russia: 24 years
Other countries: 15 years
Silver depletion varies across different countries due to disparities in resource reserves and mining speeds. However, as Mexico, the largest silver producer, dries up in 2026, a silver panic will ensue.
China's subsequent silver resource depletion will further amplify the crisis. In the following years, more silver-producing countries will announce the depletion of their silver reserves, causing panic to spread globally until all underground silver deposits vanish. Humanity will face the extinction of this vital natural resource for the first time!
Intensifying Crisis Awareness
According to data released by the UK Silver Institute from 2011 to 2020, China's industrial silver demand comprises approximately 60% of the total, amounting to over 3,500 tons. Over the past decade, China's industrial silver demand has witnessed a staggering growth rate of over 50%, making it the fastest-growing country in the world alongside the UK. China has recently unveiled its 14th five-year plan, outlining long-term goals for 2035, with substantial advancements expected in high-tech industries and green energy, including 5G, 6G, AI, computer chips, solar energy, clean power stations, electric vehicles, smart appliances, medical technology, and space stations. This rapid development will further drive China's industrial silver demand, which is projected to exceed 5,500 tons by 2030.
In the face of the global panic triggered by Mexico's silver depletion in 2026 and China's silver exhaustion in 2032, China must address critical questions: How can the country ensure the realization of its national 2035 high-tech development strategy? How can it resolve the severe shortage of silver resources?
China senses an urgent crisis.
The dilemma of industrial demand will also impact silver-consuming countries such as the United States, Germany, the UK, Japan, South Korea, and others. By 2030, the global demand for silver is set to rise to 35,000 tons. However, with Mexico's silver minerals rapidly depleting and China's reserves nearing zero, global supply will plummet to 16,000 tons, exacerbating the silver resource crisis.
Alternate Plans: Silver Substitutes and Europe’s Mines
Some argue that alternative materials can reduce the demand for silver in the industry. Silver possesses unique physical and chemical properties, including high ductility, conductivity, thermal conductivity, and reflectivity. These characteristics render it irreplaceable in high-tech electronics and green energy sectors. While new metals may emerge as substitutes in the future, or scientific and technological advancements may yield innovative materials and processes, such visions cannot be realized within the next 20 years. At that point, silver will be on the verge of exhaustion!
GoldFix Note:
On average, a standard photovoltaic (PV) solar panel typically contains approximately 20 grams of silver.
To provide some context, the global solar industry consumed an estimated 100 million ounces (approximately 2,834 metric tons) of silver in 2020 alone. China's share of this silver consumption is substantial, considering its prominent role in solar panel production.
The counter to all this,technology is trying to use less Silver in applications, thinner coats if you will. So while demand for cells increases tremendously, efficiency is also offsetting that somewhat.
Certain voices suggest that Poland and Australia possess silver resource reserves with a mining period of over 50 years at current rates. They argue that the situation may not be as dire. However, the silver resource crisis pertains to the depletion of resources in major silver-producing countries, leading to a global supply-demand imbalance. Although countries with high reserves and limited exploitation may delay the depletion period, their production is far from sufficient to meet global demand. Even a modest silver supply holds immense value and significance for global industrial development and the continuity of civilization.
Others propose increasing silver production and scaling up supply to alleviate the supply-demand gap. However, it is crucial to note that our primary concern revolves around the depletion of silver resources. The more we extract, the faster silver will deplete, accelerating the onset of the crisis.
Our Perspective: Higher Price and More Time Needed
Regardless of the monetary policies adopted by the Federal Reserve or fluctuations in US labor and CPI data, they cannot alter the imminent depletion of silver or prevent the silver depletion crisis from unfolding. Humanity must seek new mineral resources, find alternative materials, and develop innovative processes to counter the impact of silver depletion. However, these endeavors will require time.
To delay the silver depletion period, measures must be taken, ideally extending it beyond 40 years, allowing humanity sufficient time to discover alternatives and develop new materials and processes.
The most effective approach involves a significant increase in the price of silver coupled with strict controls on mining operations. Such measures would delay the depletion period of silver. Prolonged periods of extremely low prices have been the primary cause of wasteful silver resource consumption and a severe lag in recycling technology. If silver prices were to reach three or four digits per ounce, wastage would be significantly reduced, and research and development in silver recycling technology would make substantial progress.
Substantially raising the price of silver would curb non-industrial demand in areas like jewelry, silverware, silver coins, and bullion. This, coupled with the development of alternative materials and recycling technologies, could alleviate the silver resource crisis.
It is paramount to initiate a global dialogue on the silver resource crisis, raise public awareness, and establish an international organization or alliance committed to silver resource conservation and the development of alternative materials. We must unite to address this impending catastrophe and strive for sustainable industrial development, technological innovation, and the preservation of civilization's continuity.
/end
The Impending Eruption Crisis Of Silver Extinction(1)
Post 2: Duplication in part or whole without proper citation to both GoldFix and Bai is prohibited
China's Solar Panel Production and Silver Demand
When we look at demand for silver in industrial applications, it becomes crucial to consider specific sectors that heavily rely on this precious metal. In this analysis, we will explore the latest trends in industrial demand, with a focus on China's solar panel production and its impact.
