Silver has been getting a bit of polish of late. Almost five years after it reached a 31-year peak of $48.44 an ounce in April 2011, the poor man’s gold looks to be recovering from its long hangover, with a 13% gain this month.
Aside from the usual reasons about low interest rates spurring demand for precious metals and rising bullish bets from investors, there’s another wind at silver’s back: Miners are producing less of it.
Silver is somewhat unusual among major commodities in that no one is really set on mining the stuff. It occurs naturally in ores with copper, lead and gold, so is produced mostly as a byproduct of other metals. Even Mexico City-based Fresnillo, the world’s biggest silver producer, often makes more money selling gold.
Whereas most commodities have a fairly stable leader board of major producers, that’s not the case with silver. Indeed, there’s not been a year since 2011 when the rankings of the top five producers stayed the same.
BHP Billiton, the biggest miner of the metal as recently as 2012, has all but ceased production after spinning off its Cannington mine as part of new venture South32.
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