Global Silver Scrap Supply Falls To 26-Year Low

 

By the SRSrocco Report,

Global silver scrap supply fell to its lowest level in 26 years.  World silver recycling in 2017 dropped by nearly 50% since its peak in 2011.  According to the 2018 World Silver Survey, global silver scrap supply declined to 138 million oz (Moz) compared to 261 Moz in 2011.  While the lower silver price is partly responsible for the large drop in silver recycling, there are other market dynamics.

For example, silver recycling from the photography sector has declined since consumption peaked in 1999.  The photography industry was using 228 Moz of silver in 1999 compared to the 44 Moz last year.  Thus, silver consumption in photography has declined by 80% in nearly two decades... and along with it, a great deal of recycled silver supply.

Furthermore, a lot of silverware was recycled during the period of rising prices (2007-2012).   A lot of Millennials who inherited their parent's (and grandparents) silverware decided it was much easier to pawn it rather than spending a lot of time polishing it for holiday gatherings.  Which means, a lot of available stocks of silver scrap have already been recycled.

As we can see in the chart above, even though the $17 silver price in 2017 was four times higher than in 1991 ($3.91), global silver scrap supply is less than it was 26 years ago.  Moreover, world silver scrap was over 200 Moz a year (2005-2009) when the average annual price was much less than it was last year.

Now according to the Metal Focus Silver Scrap Report published in 2015, they forecasted the following percentages of silver scrap from the various sectors:

Industry = 60%

Silverware = 16%

Photographic = 12%

Jewelry = 10%

Coin = 2%

While it is well known that the majority of silver scrap comes from recycling of industrial silver waste, due to the industrial sector being the largest user of silver, jewelry only accounts for 10% but is the second largest consumer.  For example, the 2018 World Silver Survey reported that the industrial sector consumed nearly 600 Moz of silver in 2017 while jewelry fabricators used 209 Moz.  However, silverware and the photographic sectors only consumed 102 Moz, but account for 28% of silver scrap supply.

What this tells us is that owners of silver jewelry are not that motivated to pawn their silver jewelry because there just isn't enough monetary value.  So, a large supply of potential silver scrap will likely never make it to the market, even at much higher prices, due to the relatively small value of silver jewelry held by individuals.

As for gold jewelry, it's quite the opposite.  Nearly 90% of global gold scrap supply comes from recycled gold jewelry.  Thus, a significant increase in the gold price would result in higher gold jewelry recycling, whereas a higher silver price would not generate much of an increase in silver jewelry scrap supplies.  So, each year about 200 Moz of silver are used in silver jewelry fabrication, but only a small amount is ever recycled.

Lastly, annual gold scrap accounts for 28% of total global gold supply compared to only 14% for the silver market.  Even at much higher silver prices, global silver recycling will not be able to supply enough metal when investment demand surges as the broader markets collapse.

Lastly, if you haven't checked out our new PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page, I highly recommend you do.

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Comments

Conax Wed, 04/18/2018 - 13:14 Permalink

Modern kids don't buy real silverware, tea sets or candle sticks, while thousands of tons of grandma's prized possessions have been recycled over the years.

The silver scrap is running out, and at these prices only chumps would bother with it anyhow. 

Go dig for it, scuzzbuckets.

Bastiat Conax Wed, 04/18/2018 - 13:28 Permalink

I use granny's silver plated stuff everyday.  Love the long slender fork tines and giant soup spoons.  Pure sterling is a little too soft -- you have to be careful with the forks.  I like the ergonomics of that old stuff too.  Lots of modern SS stuff feels like a box wrench in the hand after using that. 

In reply to by Conax

jaxville Bastiat Wed, 04/18/2018 - 14:24 Permalink

  I prefer the sterling, especially dinner sized flatware.  It really isn't that hard to look after and I can always find very reasonably priced pieces on Ebay.  Having something of value at home that I actually use is sweet.  Can get 96% of melt in a pinch.

  Those who say they got rid of their silver because it was too much a hassle looking after are the same types who would pave over their front lawn because weeding and cutting grass is a hassle.  Definitely lacking class...

In reply to by Bastiat

jaxville jaxville Wed, 04/18/2018 - 14:41 Permalink

  Forgot to mention....Back in 2011 when silver made it's big move, many larger bullion bars made their way to various smelters as there was little public demand for them.  People were buying smaller units such as one to ten ounce coins and wafers.  We were also taking in huge amounts of 100 oz bars once those trading the silver/gold ratio could get three 1 oz gold coins for one.  Many of those bars we bought were also from long defunct refineries that sprang up during the first big silver melt in the late seventies. 

  So much bullion was making it's way to refineries that they actually stopped buying 1000 oz bars for a time.  That was my clue that silver prices were about to turn down.  Got lucky there. I know that this was the case in most North American and European markets.  Not sure if this was happening in Asia though.

  The article doesn't really account for the bullion that was re processed five or six years ago.  I am sure the amounts well exceeded all other scrap supplies for a year or two.  I also know that there still remain many stale longs just waiting for the price to rise so they can exit with dignity. 

In reply to by jaxville

TroyPDX One of We Thu, 04/19/2018 - 15:03 Permalink

Colloidal silver for me was the final proof that the medical establishment is completely corrupt. Works on so many things, and quickly. I had cystic acne that had plagued me off and on me since I was a teen...very painful. Colloidal silver clears it up in a few days when it used to take weeks or months no matter what pharmaceutical I used. I even use it on my dog when he gets a hot spot or a rash. 

Guess you can't patent an element so they use scare tactics to keep people away and sell you their overpriced garbage that doesn't work.

In reply to by One of We

El Oregonian cheech_wizard Wed, 04/18/2018 - 17:34 Permalink

We only use vintage silver forks, knives, and spoons. Yes, these feel so much better in your hand to use, plus the antimicrobial properties are great for your health. There was a good reason for that old saying: "Born with a Silver Spoon", other than being wealthy, it was also for health reasons... But most folks have forgotten about the benefits.

In reply to by cheech_wizard

cheech_wizard Conax Wed, 04/18/2018 - 15:02 Permalink

Being the eldest, I inherited all of it from the grandmother/mother because the younger children didn't want it.
And what is it about the parents/grandparents giving you stuff back that you bought for them in your youth?
I recently got handed 15 years worth of Gorham sterling silver snowflakes back when mom decided to clean out the attic.

My only problem is when I have to break out the sliver polish. (Excuse me now while I dash off into the woods to let out a blood-curdling scream)

In reply to by Conax

jaxville cheech_wizard Wed, 04/18/2018 - 15:22 Permalink

  If you use it every day it is much easy to keep clean as most tarnish is washed away.  Certain things like fork tips after eating eggs need to be dipped from time to time.  I only have to polish about twice a year and I usually combine inventory with a cleaning.

  The sad part about eating with nice flatware at home daily is that the nicest restaurants are usually a big let down once you pick up their cutlery.

In reply to by cheech_wizard

Grandad Grumps Wed, 04/18/2018 - 13:57 Permalink

People have been pushing the same line for at least the last 30 years. Then when you realize all of the silver stackers just have hidden inventory that will come out for the right price, one realizes that there is a huge excess of silver available to the commercial market.

Bemused Observer Wed, 04/18/2018 - 14:53 Permalink

There IS a lot of 'dormant' silver out there, mostly jewelry. And there hasn't been any interest in it, yet. But, as with all things, there will come a price point where it suddenly becomes worthwhile to spend a few hours going through the old boxes of bling. It happened with gold, several times in recent years, but then gold, being much higher in price, WOULD get the attention. However, since gold jewelry has not been hugely popular in recent years (except among some groups, like rappers), those 'home stashes' have not been replenished, so every gold run depletes the total amount available for the next gold run, and so on.

When those 'home stashes' have been thoroughly picked-over for their gold content, they will turn to silver. Just as with gold, every decent price jump will bring out the recyclers, and that dormant mound of jewelry silver will be pulled out of the cobwebs and sold for scrap.

While it won't be as valuable as gold, you should be able to stock up on cheap silver now. As with gold, I tend to stick with vintage jewelry, because that is my cheapest buy-point for the metals. Plus there is often a premium for antique gold jewelry that far exceeds the ones charged for coins and bullion, which I get to charge when I sell (I never PAY it). And I can tell you that today, silver jewelry is DIRT CHEAP if you know where to look. You can get POUNDS of sterling silver and pay 5 dollars or less...it's insane. Gold too, although there is less of it out there. There is a literal mental block in place, where people just do NOT see PM's as having real value. Why else would a person sell a 22 gram 14k gold bracelet for a dollar? I know this happened, because she sold it to me last summer. She knew it was gold, and had a sterling cross she was asking 10 dollars for, because it was her Dad's. But the bracelet? Ah, give me a dollar, she says, it's an old one, and it's real gold, she says, as if to encourage me to part with that dollar bill...

The best was the 2 little old ladies selling their old jewelry at a yard sale. I saw that much of it was clearly marked, and they had it priced at 50 cents to a dollar apiece. I told them they could scrap the stuff for a lot more than they were selling it for, and they looked at me like I was nuts and said, "We don't have time for that shit!"...well, ok then. So I bought it all for 30 bucks. Sold several pins for 2-300 apiece, and kept the rest, the GOOD stuff...mind-blowing!

Don't know, or care, why and how this keeps happening. All I know is that this one asset, for whatever reason, is being slapped around like a red-headed stepchild and is being both overpriced and given away for free in a market that seems to suspect the stuff has value, but just isn't sure. A lot of folks have simply thrown their hands up and said, 'fuck it'...and when they do, I am there to take it off their hands.

jaxville Bemused Observer Wed, 04/18/2018 - 16:03 Permalink

  I maintain that the largest hoard of unaccounted silver is bullion.  I know several people who have a ton or more.  I also know several who are waiting for $35+ to sell. The next time silver runs up I suspect we will see several tons a month cross the counter.  There are still old timers who bought in the early seventies waiting for the big pay day.  I know this sounds anecdotal and I would not even hazard a guess aside from "many years of industrial demand" is still socked away in stale long hands.  I would guess that conservatively as much as 25% of US silver coin remains in coin form and much of that is held by very very stale longs.

 

In reply to by Bemused Observer

Bemused Observer jaxville Wed, 04/18/2018 - 17:19 Permalink

One of the reasons I prefer jewelry is that there are always two separate markets for it...the metals market for the content, and the jewelry market, which can often come with a nice premium over the metal content. The metals market is a bit more liquid when you need to sell, but you'd be surprised at how steady demand IS for nice, well made jewelry, even during tough times. 

Even during the depths of the Depression, women were steady jewelry buyers...that's when Bakelite became popular. No one could afford gold, but colorful plastics? Hell yeah...I guess a smart stacker back then would add a pile of catalin rods to his 'stack'.

In reply to by jaxville

Silver Savior Thu, 04/19/2018 - 01:19 Permalink

Anytime I come across any silver scrap I hoard it along with the bullion. Even scrap is highly valuable to me and fiat currency is the last thing I want for it. Ha.

rosiescenario Thu, 04/19/2018 - 11:39 Permalink

Silver exploration is currently at about 25% of the level from 4 years ago.

When a viable find is made it takes between 4 to 10 years to bring a new mine into production. The time depends upon the country's regulations and permitting processes mainly.

Eventually, demand for silver should outstrip its supply. That may even be the situation today. Due to the lack of exploration and long lead times to complete a new mining operation, there may well be a persistent shortage of the metal for many years, during which higher silver prices will draw more of the metal out of the household sector as happened during the Hunt Bros. period.