What is Silver used for?
Silver is produced for 2 sources of demand: investment and industrial.
Investment demand is sourced from individual and institutional investors into physical silver such as coins and bars, Silver ETFs and Silver focused funds. Industrial demand comes from applications in electronics, medicine, jewelry, and silverware, solar and water applications just to name a few.
In 2010, 487.4 million ounces of silver were used for industrial applications, 167.0 million ounces were consumed in the jewelry market, 50.3 million ounces were used in the silverware market and over 101.0 million ounces were used in coins and medals.
How much Silver is out there?
In 2010, global Silver production reached 736 million ounces of Silver and 85 million ounces of Gold. In addition, 215 million ounces of Silver and 53 million ounces of Gold produced from recycled scrap. In total, brings a ratio of nine ounces of Silver to one ounce of Gold. Similarly, there is a 10-to-1 ratio for in-situ (extractable) silver and gold reserves.
Putting the above numbers into perspective as Silver is used for investment and industrial use, for 2010, approximately 610 million ounces of Silver came from non-investment demand (industrial photographic, silverware). This leaves approximately 341 million ounces of Silver towards investment demand. For Gold, industrial demand totaled 13 million ounces, leaving approximately 125 million ounces for investment demand. In conclusion, about 2.7 times that for Gold is left for investment demand. However, it is important to note that there are other potential sources of Silver that are not included in the above numbers to supply the shortfalls in supply, due to decades of underinvestment, the amount of Silver bullion is relatively small.
Source: Silver Institute, Mining Markets Magazine; The Northern Miner (Sprott Interview), SilverStrategies.com