Silver Supply Issues Could Push Silver Price Higher


Over the past several decades, we have come to expect that we can buy whatever we want, whenever we want. The advent of the internet has accelerated that phenomenon, with things like overnight shipping or even same-day delivery making it ultra-convenient for us to get what we want when we want it. But what happens when the supply chains that allow that to happen get upended, and we can’t fulfill our needs or desires as quickly as we hoped?

Events of the past couple of years have illustrated that modern supply chains are incredibly fragile creatures. All it takes is a minor disturbance and all of a sudden everything is thrown out of kilter.

COVID lockdowns started the ball rolling in 2020, and supply chains have yet to recover. Once businesses went back to work, it wasn’t easy at all to build up inventories to where they used to be. Shortages of critical parts such as computer chips, or of raw materials, hampered companies at various stages of the production process. And consumers today are still feeling those effects, with periodic shortages in various industries.

From food to toilet paper to cars, hardly an industry in the world hasn’t been affected by supply chain shortages. And now those shortages are once again rearing their head in the precious metals industry.

US Mint Silver Supply Issues

The US Mint recently announced its decision to suspend all 2022 production of some of its popular silver coins. The reason? It can’t source enough silver blanks from its suppliers to meet the explosion in demand for its silver products.

When you read about total world silver production, you may wonder how that can happen. World silver production in 2021 was about 24,000 tonnes, or nearly 850 million ounces. Surely there’s enough there to go around, right? Maybe not.

Roughly half of world silver in a normal year is used in industrial purposes, being used in electronics, medical gear, or solar panels. Much of the rest gets turned into jewelry or silverware, or is refined and minted into silver coins or bars for investors.

But before that silver can be used by mints, it has to be refined to certain fineness standards, which today for most silver coins means 99.9% or 99.99% purity. Then that nearly pure silver has to be formed into coin blanks of the proper size and thickness for mints to use in their presses.

That entire process takes time, and it isn’t exactly a simple process either. And if suppliers have blanks for one type of coin but not for another, it isn’t easy or cost effective to melt down those blanks and reform them. In other words, just because there might be a lot of silver out there in the world, or just because there might be blanks of some sort in supply, doesn’t mean that that silver is in a form that is useful for mints to make available to investors.

The US Mint’s recent production hiatus should impress upon silver investors that we’re still dealing with potential supply chain issues when it comes to availability of popular silver coin products. In the past, we’ve had to deal with supply issues due to COVID striking mint workforces, or COVID-related shipping restrictions holding up imports of silver coins from abroad.

Now we may have to deal also with war-related supply issues, as Russia accounts for 5-10% of world silver production. With Russia being the target of Western sanctions and nearly cut off from world markets, that’s a hit to silver supply that may result in higher silver prices.

If war expands or heats up in Europe, there’s also a possibility of shipping issues with getting silver products from Europe to the US. And if investor demand rises in Europe as fears of conflict with Russia increase, there could also be fewer silver products making their way across the ocean.

Don’t Take Silver Supply for Granted

All of this is to say that silver investors or would-be silver investors shouldn’t take current silver supply or silver availability for granted. What’s here today could be gone tomorrow, and could be gone much sooner than you think.

We’ve all known that silver has a great potential for price appreciation, particularly as it has been lagging gold in recent years. With silver’s history of making greater gains than gold during precious metals bull markets and during times of crisis, now is the opportunity to capitalize on that by buying silver while it is still cheap and, more importantly, available.

Many investors watched as silver more than quintupled in price in the aftermath of the 2008 financial crisis. It was one of the success stories of the crisis, a bright spot in an investment climate that otherwise looked incredibly bleak. And many who saw silver’s performance then vowed to invest in silver the next time a crisis came around.

Now may be that time, as a weakening economy, war in Europe, and high inflation are combining to form a perfect storm threatening everyone’s financial health and well-being. No one could have predicted at the beginning of 2020 what has happened between now and then. Who can predict what will happen during the next two years, and even beyond?

Protect Your Assets With Silver

In this world of uncertainty, investors want to reconnect with sources of financial stability. With markets having recently entered correction territory, fears of a pending stock market collapse are growing. Investors want safety and security, and silver can help offer that.

These are the times during which silver shines, and with modern investment vehicles it can be easier than ever to protect your assets with silver. With a silver IRA, you can protect your retirement savings while simultaneously enjoying the same tax advantages as you would with a conventional IRA account. And you can roll over assets from an IRA, 401(k), TSP, or similar retirement account into a silver IRA tax-free, allowing you to protect your investment gains with a silver investment without taking a big tax hit.

If you want to learn more about protecting your wealth with silver, contact the precious metals experts at Goldco today. With over a decade of experience helping people just like you benefit from silver, our representatives are ready to answer your questions and help you start the process of safeguarding your hard-earned savings with silver.

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About the Author: Trevor Gerszt