When I think about China and precious metals I primarily associate China with gold. I
have read many articles written about China’s ongoing huge appetite for gold. I have
written a couple of such articles myself. However, it now appears that all that glitters in
China is not just gold. It is silver as well. Silver has become a hot commodity in China,
a trend that may well drive the price of silver up on the world-wide market for the
foreseeable future.
If you ever want to know something about silver you need to be aware of the Silver Institute (www.silverinstitute.org). The Silver Institute is recognized worldwide for its expertise on all things silver. The Silver Institute takes part in precious metals conferences worldwide and it is a co-sponsor of the annual China Silver Conferences. It has been observing the trends in China regarding silver for many years and it recently issued a report on its observations in a press release entitled, “China Playing a Major Role in Global Silver Market” on December 13, 2012. (http://www.silverinstitute.org/site/2012/12/13/china-playing-a-major-role-in-global-silver-market/) This press release reports in part:
“Total silver demand in China has grown by over 100 million ounces (Moz) in the past ten years, to a record 170.7 Moz. The strength of the Chinese economy, assisted by a boom in the manufacturing sector, along with heavy investment in infrastructure, has boosted domestic demand for silver since the liberalization of the Chinese silver market at the start of 2000. This has propelled China into becoming the world’s second largest silver fabricator, with its share of global demand standing at 17 percent at the end of 2011. Overall silver fabrication demand has grown from 67.1 Moz to 159.5 Moz during the period 2002-2011, a rise of 137 percent.
Moreover, the Chinese silver jewelry market has grown an impressive 211 percent from 2002-2011, to 54.4 Moz, as it enjoys greater exposure across the country’s interior. Further growth is expected in coming years as ongoing urbanization should lead to the expansion of retail jewelry outlets in larger cities.
Chinese silverware fabrication nearly doubled over the last decade, making China the second largest silverware fabricator globally behind India.
Investment demand from Chinese silver investors has jumped in recent years, making China the world’s biggest market for both physical investment and paper trading of silver futures and other similar contracts. Of note, during the first full year after the liberalization of the Chinese silver investment market in 2009, net demand for silver bars and coins doubled to 9.8 million ounces (Moz). In 2011, the figure soared to 17.0 Moz, accounting for 8 percent of global net purchases of silver bars and coins.”
China has been a world leading producer of silver for many years. The Press release reports:
On the supply side, Chinese mine production has almost doubled over the last decade, assisted by the base metals mining sector, leading to a sharp rise in silver produced as a by-product. China’s mine production of silver now accounts for 14 percent of global supply, and it is likely to be recorded as the second largest silver producing country in 2012.”
Because silver is both a precious metal and an invaluable industrial use metal the demand for it will increase as time goes on and its intrinsic value will continue to increase especially because the supplies of silver are not keeping up with the demand for it. Silver is a whole different animal than gold in terms of production and refining. Competition for silver will be widely affected by the amount of silver China can secure from the world supply. Everyone will be watching this closely.
The Silver Institute press release contains a hotlink to their report with the same title as above. The complete Silver Institute report entitled “The Chinese Silver Market” can be found at, (http://www.silverinstitute.org/site/wp-content/uploads/2012/12/ChineseSilverMarket2012.pdf). If you are considering an investment in silver this report is something you may want to check out.
Hawkeye in China
– LEX SMITH