The silver price currently has reached a favorable rate since last year when the price was very high. It has been possible for the middle class people to spend some money on their second most favorite precious metal, other than gold. But we should focus upon some critical events that has happened since last year and will greatly affect the silver price globally in the not so distant future.
Let’s take a look on the factors that will affect silver price in the global market.
Production falling at 2 top level silver mines since 2011 is notable. Firstly there is Cannington mine in Australia is the largest silver mine in the world. In 2011, production at that mine decreased by about 6 million oz. the 2nd largest, the Fresnilo mine observed a drop in production by about 5.6 million oz.
Secondly diesel is the main fuel that keeps the mining industry running. But presently, the oil production quantity is decreasing. This will soon give rise to a crisis in the oil price. Mexico, currently being the largest silver producer with more upcoming mines will greatly result in an increase in oil consumption. After some decades, they may not get enough oil required to power up the mines.
Besides decrease in fuel supply, another factor that affects the mining industry is the decrease in quality of average ores and quality of silver ore grades decreased by about 8% in the last 58 years, thus resulting in a significant effect in the US economy.
Research by various analysts shows that by 2020, a great deal of silver will be produced. The amount will increase by about 8200 metric tons than the present amount. But the result is smaller, when compared to the previous output increase in the past decades.
Silver price affecting Indian economy:
Let’s take a look at our country. The silver price is around Rs. 57/gm. The price has taken a sudden fluctuation and has greatly involved the small traders. The main reason for this is the lack of knowledge regarding certain facts regarding global silver price which is greatly known by traders in other countries. This leads the traders to hike prices suddenly to a large level which leads to huge loss in business when the silver price suddenly fluctuates.
It is forecasted that a time may come when gold and silver will both be rare metals, the risk of silver being far greater. There are very few people who know the real reason responsible for buying precious metals. As we continue to rise from the economic crisis, silver price has become an important factor. Countries having high production of precious metals and high export quantities of silver should keep in mind about the monitory system of the overall global economy. Looking at the global production in 2011, it is observed that the major suppliers face the risk of nationalizing their resources in the following years. However in reality, the best policy should be to keep in faith on the oldest form of money and deal with the trade of the physical metals instead of assets.