1 Silver Institute · 2018-04-25 · Industrial Jewelry & Silverware Retail Investment. 16 Silver...

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1 Silver Institute

Transcript of 1 Silver Institute · 2018-04-25 · Industrial Jewelry & Silverware Retail Investment. 16 Silver...

Page 1: 1 Silver Institute · 2018-04-25 · Industrial Jewelry & Silverware Retail Investment. 16 Silver Institute SILVER SUPPLY. 17 Silver Institute SILVER MINE PRODUCTION BY REGION AND

1 Silver Institute

Page 2: 1 Silver Institute · 2018-04-25 · Industrial Jewelry & Silverware Retail Investment. 16 Silver Institute SILVER SUPPLY. 17 Silver Institute SILVER MINE PRODUCTION BY REGION AND

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THE SILVER MARKET IN 2017

–SILVER PRICES–DEMAND–SUPPLY

• Mine supply• By products:

– Copper/Zinc/Gold

–INVESTMENT–OUTLOOK

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SILVER PRICES

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SILVER PRICE IN DIFFERENT CURRENCIES IN 2017, Jan 2017 = 100

Prices in different currencies on an intra year basis: Silver in…

• Euro: - 14%

• GBP: - 11%

• Yen: - 5 %

• USD: - 4%

85

90

95

100

105

110

Silver Price in different currencies

US$/oz Eur/oz GBP/oz JPY/gram

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SILVER PRICE IN DIFFERENT CURRENCIES IN 2016, Jan 2016 = 100

Prices in different currencies on an intra year basis: Silver in…

• GBP: + 35% (-11%)

• Euro: + 20% (-14%)

• USD: + 17% (-4%)

• Yen: +15% (-5%)

100

110

120

130

140

150

160

170

Silver Price in different currencies

US$/oz Eur/oz GBP/oz JPY/gram

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SILVER DEMAND

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WORLD SILVER SUPPLY AND DEMAND

Moz 2013 2014 2015 2016 2017 Market share

% ∆ -2016 % ∆ - 2013

Mine Production 823 868 895 889 852 -4% 3%Total Supply

987 1,050 1,044 1,009 992 -2% 0%Jewelry & Silverware 280 288 290 257 268 26% 4% -4%Coins & Bars

241 234 292 208 151 15% -27% -37%Industrial Fabrication

605 596 583 577 599 59% 4% -1%Physical Demand 1,126 1,118 1,165 1,042 1,018 -2% -10%Physical Surplus/Deficit -138 (12%) -68 (6%) -121 (10%) -33 (3%) -26 (3%)

Annual Average Silver Price US$/oz 23.79 19.08 15.68 17.14 17.05 -1% -28%

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INDUSTRIAL FABRICATION OVERVIEW

2017 less 2016, Moz

Other Industrial

Applications

Jewelry

Coins & Bars

Silverware

Industrial Fabrication

Photography

Electric & Electrical

Brazing Alloys & Solders

Ethylene Oxide

Solar

No change

-57

+-

-1

15

4

622

9

2

-3

1

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GLOBAL JEWELRY & SILVERWARE FABRICATION, 2017

178 177 190 191 187221 226 227 205 209

58.4 53.2 51.9 47.5 43.8

59 61 63 52 58

0

5

10

15

20

25

30

35

40

0

50

100

150

200

250

300

350

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Moz

Jewelry Silverware Silver Price $/oz (RHS)

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WORLD RETAIL INVESTMENT SILVER DEMAND ANNUAL CHANGES: 2017 LESS 2016 (Moz)

5

-6

-50

-2

5.1

-5

-60-50-40-30-20-10

010

Moz

1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

1213141516171819202122

1/5/

2016

3/15

/201

6

5/24

/201

6

8/2/

2016

10/1

1/20

16

12/2

0/20

16

2/28

/201

7

5/10

/201

7

7/19

/201

7

9/27

/201

7

12/6

/201

7

2/14

/201

8

Spot

$/o

z

Silver Spot

Silver American Eagle- 1 oz. ($/oz RHS)

SILVER COIN PREMIA

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WORLD SILVER IDENTIFIABLE INVESTMENT VOLUME AND VALUE

012345678

-500

50100150200250300350

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

US$ B

nM

ozIdentifiable investment fell approximately 40% y/y in 2017 in volume and value terms

Bars & Coins ETP Inventory Build Total Identifiable Investment in US$ Bn (RHS)

Identifiable Investment is the sum of bars, coins and ETPs.

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SOLAR DEMAND – SILVER POWDER PRODUCTION

0102030405060708090

100

Moz

Solar Silver Powder Production

ChinaUSJapan

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ELECTRICITY GENERATION BY SOURCE

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SILVER USE IN AUTOMOTIVE

- Silver coated contacts- Infotainment systems- Window defogging- Heated seats- Luminescent display- 50 Moz in 2017 -> could be as much as

14% or 150 Moz by 2040

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WORLD PHYSICAL SILVER DEMAND (Moz)

642 528 634 662 600 605 596 583 577 599

236 230

242 239 231 280 288 290 257 268

198

95

150 213160

241 234 292208 151

0

200

400

600

800

1,000

1,200

1,400

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Moz

Industrial Jewelry & Silverware Retail Investment

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SILVER SUPPLY

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Silver Institute

SILVER MINE PRODUCTION BY REGION AND ANNUAL CHANGE

Global mine production declined by 4.1% in 2017 to a total of 852 Moz (26,502 t), the second consecutive fall. At the regional level, losses in the Americas were partly offset by gains in India and Kazakhstan.

South America

32%

North America

28%

Asia21%

Europe13%

Oceania4%

Africa2%

Silver Output by Region 2017

500

550

600

650

700

750

800

850

900

950

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

World Silver Mine Production, Moz

-1%

0%

1%

2%

3%

4%

5%

2000

2002

2004

2006

2008

2010

2012

2014

2016

3-year CAGR in Mine Production

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SILVER MINE PRODUCTION WINNERS AND LOSERS, 2017 VS 2016

Silver Institute

Russia (Rank 4)• 4.6 Moz, 10% decline yoy

Australia (Rank 8)• 8.1 Moz, 19% decline yoyArgentina (Rank 10)

• 4.2 Moz, 14% decline yoy

Mexico (Rank 1)• 10.1 Moz higher yoy

Canada (Rank 14)• 0.3 Moz, 2% decline yoy

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SILVER MINE PRODUCTION WINNERS AND LOSERS, 2017 VS 2016

Silver Institute

China (Rank 3)• 2.2 Moz, 2% decline yoy

Peru (Rank 2)• 1.2 Moz, 1% decline yoy

Chile (Rank 1)• 7.5 Moz lower yoy

United States (Rank 9)• 3.3 Moz, 9% decline yoy

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SILVER OUTPUT BY SOURCE METAL

World Silver Production by Source – primary, Lead/Zinc, Copper, Gold

28% 29% 30% 29% 30% 28%

38% 37% 37% 35% 35% 36%

20% 21% 21% 22% 23% 23%12% 13% 13% 13% 12% 12%

2012 2013 2014 2015 2016 2017primary lead/zinc copper gold other

Primary Silver Mine Supply % of World Production

2011

2014

2017

primary silver supply as % of total

29

30

28

80

90

100

110

120

130

140

150

160

170

180

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source Metal Index, 100=2007

primary lead/zinc copper gold

Silver Institute

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ZINC MARKET FUNDAMENTALS AND OUTLOOKAlthough concentrate supplies to improve, we do not anticipate a quick return to a positive market balance. We currently estimate some 600kt of contained zinc supply coming from ramp-ups, expansions and restarts. Overall zinc supply in 2018 is expected to grow only moderately in line with a slow improvement in mine supply. Prices remain supported by low stocks and a weaker dollar.

-600-500-400-300-200-1000100200300

12,800

13,000

13,200

13,400

13,600

13,800

14,000

14,200

14,400

2014 2015 2016 2017 2018

Zinc Market Balance (kt)

balance global production global consumption

Africa 4%

Asia48%

Europe9%

Americas32%

Oceania7%

Mine Production by region (2017)

Africa Asia Europe Americas Oceania

Silver Institute

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Warehouse Stocks and Treatment ChargesZinc stocks see increases in Q1 2018 after declining throughout much of 2017. Treatment charges for zinc are trending down.

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Warehouse stocks –zinc

Zinc (LME,COMEX,SHFE)

0

50

100

150

200

250

Zinc TCs

Zinc Conc. TC 50% CIF China U$/MT (Source: Asian Metal)

Silver Institute

Source: Asian Metals

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COPPER MARKET FUNDAMENTALS AND OUTLOOKDespite the major supply disruptions that plagued copper in the early months of the 2017 and underpinned widespread talk of deficits, we estimate that the market was more or less in balance last year. A surplus is expected to develop again in 2018, albeit relatively modestly, before showing signs of contracting on a sustainable basis as the end of the decade approaches.

050100150200250300350400450

21,000

21,500

22,000

22,500

23,000

23,500

24,000

24,500

25,000

2016 2017 2018e 2019e 2020e

Copper Market Balance (kt)

balance (rhs) global production

global consumption

Africa10%

Asia20%

Europe10%

Americas55%

Oceania5%

Mine Production by Region (2017)

Africa Asia Europe Americas Oceania

Silver Institute

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Gold Market Fundamentals and Outlook

The gold market is projected to remain in substantial surplus, although this narrows on improving demand from uptick in jewelry sector and ETF buying, the latter in part due to geopolitical tensions. Sentiment to improve, and a correction in equity markets to support rising gold prices.

-1% 0% 1% 2% 3%

Africa

Asia

Europe

Americas

Oceania

World total

3-year CAGR by Region (2017-2020)

3year CAGR

0100200300400500600700800

3,500

3,700

3,900

4,100

4,300

4,500

4,700

4,900

Gold Market Balance (tonnes)

balance (rhs)global supplydemand (inc. inventory build)

Africa19%

Asia27%

Europe10%

Americas33%

Oceania11%

Mine Production by Region (2017)

Africa Asia Europe

Americas Oceania

Silver Institute

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GLOBAL SILVER SCRAP SUPPLY

0%

5%

10%

15%

20%

25%

30%

0

50

100

150

200

250

300

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Moz

Scrap supply stabilized. Share of Total Supply RHS

China India North America Europe ROW Share of Total Supply

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SILVER INVESTMENT

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ABOVE GROUND STOCKS

0

500

1,000

1,500

2,000

2,500

3,000IndustryGovernmentExchangeETPsCustodian Vaults

Moz

North America

18%

Asia49%

Europe33%

Custodian Vault Stocks by Region (excstocks allocated to ETPs

Page 28: 1 Silver Institute · 2018-04-25 · Industrial Jewelry & Silverware Retail Investment. 16 Silver Institute SILVER SUPPLY. 17 Silver Institute SILVER MINE PRODUCTION BY REGION AND

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INVESTORS’ POSITIONS IN COMEX SILVER FUTURES & OPTIONS

CFTC Managed Money• A lot of activity on the gross

shorts in 2017

• Current sentiment very bearish on Managed Money, record gross short in 2018

• Latest value US$ -3.23 Bn

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GLOBAL OTC SILVER TRANSFERS

0.00.51.01.52.02.53.03.54.0

- 20 40 60 80

100 120 140 160 180

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$TR

Bn

oz

Global Silver OTC Transfers Bn oz

Notional Value US$ Trn (RHS)

Page 30: 1 Silver Institute · 2018-04-25 · Industrial Jewelry & Silverware Retail Investment. 16 Silver Institute SILVER SUPPLY. 17 Silver Institute SILVER MINE PRODUCTION BY REGION AND

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GLOBAL ETP HOLDINGS, MARKET SHARE END-2017

010020030040050060070080020

0020

0220

0420

0620

0820

1020

1220

1420

16

Moz

Ishares48%

ZKB12%

Central Fund of Canada

11%

ETF Securities

9%

Sprott8%

Other12%

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PRICE OUTLOOK

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LONG TERM GOLD/SILVER RATIO

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DISCLAIMER

The information and opinions contained in this presentation have been obtained from sources believed to bereliable, but no representation, guarantee, condition or warranty, express or implied, is made that suchinformation is accurate or complete and it should not be relied upon as such. Accordingly, Reuters Ltdaccepts no liability whatsoever to the people or organizations attending this presentation, or to any third party,in connection with the information contained in, or any opinion set out or inferred or implied in, thispresentation. This presentation does not purport to make any recommendation or provide investment adviceto the effect that any gold related transaction is appropriate for all investment objectives, financial situations orparticular needs. Prior to making any investment decisions investors should seek advice from their adviserson whether any part of this presentation is appropriate to their specific circumstances. This presentation isnot, and should not be construed as, an offer or solicitation to buy or sell silver or any other metal.Expressions of opinion are those of Reuters Ltd only and are subject to change without notice.