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LAWRIE WILLIAMS: World’s top silver producers becoming pandemic hotspots

Last month we published a listing of the top 20 global silver producers for last year, from which I’ve extracted the table below for the top 11 producing countries last year ( see below).  A disproportionate number of these are rapidly becoming the epicentres of the global COVID-19 virus pandemic – not I may add because of any association of the virus with silver, but probably because of the regions in which they are mostly located – and there are suspicions that the governments and health systems of a number of these are hugely under-reporting the true extent of the virus spread within their borders .

Top silver producing nations (Millions of ounces)

Rank

Country

2019 output

Virus case ranking

1

Mexico

190.3

18

2

Peru

135.4

13

3

China

110.7

11

4

Australia

  42.9

51

5

Russia

  42.4

3

6

Poland

  40.4

31

7

Chile

  38.2

19

8

Bolivia

  37.2

66

9

Argentina

  34.8

50

10

USA

  31.5

1

11

India

  20.4

12

Sources:  Metals Focus, Lawrieongold, Worldometers

Between them these 11 countries account for around 680.4 million ounces of annual silver production – equivalent to nearly 80% of global new mined silver production.

What is perhaps most worrying is, though, that several of these countries are in the throes of exceptionally rapid growth in reported virus cases.  Well known is that the USA comfortably tops the table of coronavirus cases, and Russia will probably move into the No.2 spot within the next couple of days.  Mexico, Peru, Chile and India are rapidly becoming global epicentres with big rises in infections being reported daily (indeed some, if not all, of these are almost certainly under-reporting daily infections and death statistics as testing numbers are mostly well behind the curve).  The rapidly rising incidence in Latin America suggests that Bolivia and Argentina will soon join the top spreaders too. Both countries border on Brazil which is currently seeing a huge surge in virus numbers.  It is currently No. 6 in the world for virus cases, but at the recent reported rate of spread it could well leapfrog both Italy and the UK in total cases within a week assuming it doesn’t change its reporting procedures.

China and Australia seem to be past their respective peaks, but as the latter moves into the winter months, perhaps it, along with other southern hemisphere nations, will see a resurgence of virus incidence.  No-one yet knows quite how climatic conditions affects virus spread, but if the incidence of seasonal ‘flu infections is anything to go by, this tends to peak in the winter months and disappear almost altogether in the summer period.

There is obviously much uncertainty around how the virus case incidence will affect silver production in these countries.  Some may legislate mine closures as part of a lockdown, while others may see mining as a strategic industrial sector and keep mines open.  However, in nearly all cases there will be some effect given some workers will succumb to the infecton, while others may choose to stay at home.

The virus incidence in these key producing nations could thus seriously affect silver supply/demand fundamentals and drive the metal from a global surplus situation to a shortage.  We have tended to be rather dismissive of silver as a wise investment option vis-a-vis gold, but this could add another dimension into the supply/demand equation which could boost silver’s investment appeal.  This particular analysis of the potential virus effect on global silver output appears to have so far flown under the investment radar, but it is noticeable that the Gold:Silver Ratio, which has hugely favoured gold of late, does at long last appear to be moving, just a little so far, in favour of silver as the gold price has also seen something of a pick-up.  Perhaps we have been too premature in largely writing off gold’s much less costly sibling.  It could yet be worth an investment punt!

15 May 2020 | Categories: Silver

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