Silver is what happens to miners when they’re planning other things. About two-thirds of the world’s output is a byproduct scraped up when companies dig for base metals.
As producers react to weak Chinese demand by slashing output of copper, zinc and lead, a side effect is silver prices are getting a boost as less of the precious metal is unearthed. Production will fall this year for the first time in more than a decade, say Societe Generale SA and Standard Chartered.
We’ll continue to see mine cutbacks this year and that will play into the hands of silver,” said Ole Hansen, head of commodity strategy at Copenhagen-based Saxo Bank A/S . “This will give silver its long overdue attention.” Prices have already gained 14% in 2016 to about $16 an ounce after three years of losses.
Silver, known as the devil’s metal because of its often wild price swings, has still been outpaced by gold’s 18% jump this year. Some of silver’s volatility comes from its from its dual aspect; part store of wealth popular during times of crisis, part industrial metal with demand linked to the economic cycle.