2012 World Silver Survey

The Silver Institute
World
Silver Survey
2012
THE SILVER INSTITUTE
(major funding companies)
_________________________________________
Barrick Gold Corporation
Cia. de Minas Buenaventura, S.A.A.
Coeur d’Alene Mines Corporation
Endeavour Silver Corp.
Fresnillo Plc
Goldcorp, Inc
Hecla Mining Company
Industrias Peñoles, S.A.B. de C.V.
Johnson Matthey, Inc.
Pan American Silver Corp.
Silver Standard Resources Inc.
Silvercorp Metals Inc.
Silver Wheaton Corp.

World Silver Survey 2012
Produced for The Silver Institute
by Thomson Reuters GFMS
By:
Philip Klapwijk, Global Head of Metals Analytics
Philip Newman, Research Director
Neil Meader, Research Director
Peter Ryan, Senior Consultant
William Tankard, Senior Analyst
Cameron Alexander, Senior Analyst
Rhona O’Connell, Senior Analyst
Paul Burton, Senior Analyst
Matthew Piggott, Metals Analyst
Oliver Heathman, Metals Analyst
Junlu Liang, Metals Analyst
Ayako Furuno, Metals Analyst
George Coles, Metals Analyst
Saida Litosh, Metals Analyst
Consultants & Other Contributors:
Paul Walker
Marcin Szczypka
Emma Hastings
Neil Buxton
Vitaly Borisovich
Thomson Reuters GFMS The Silver Institute

Aldgate House, 33 Aldgate High Street 888 16th Street, NW, Suite 303
London EC3N 1DL, United Kingdom Washington, D.C., 20006, USA
Telephone: +44 (0)20 7369 7049 Telephone: +1 202 835-0185
Fax: +44 (0)20 7369 7015 Fax: +1 202 835-0155
metal@thomsonreuters.com info@silverinstitute.org
www.gfms.co.uk www.silverinstitute.org
About the Major Sponsors of World Silver Survey 2012
A-Mark Precious Metals, Inc.

Established in 1965, A-Mark Precious Metals, Inc. is a full service precious metals trading
company with customers on six continents and revenues in excess of US$7,000,000,000
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dealers, investment advisors and commodity brokerage houses. We are an authorized purchaser for the US Mint, the Royal
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Coeur d’Alene Mines Corporation is the largest U.S.-based primary silver producer and
a growing gold producer. The Company built and commenced production from three
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commenced from a new heap leach pad at Coeur’s long-time Rochester silver-gold mine in Nevada. The Company also
owns and operates the Martha silver-gold mine in Argentina and owns a non-operating interest in a silver-base metal mine
in Australia. Coeur conducts ongoing exploration activities near and within its operating properties in Argentina, Mexico,
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in North and South America.
Fresnillo Plc
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other long-term exploration prospects and, in total, has mining concessions covering approximately 1.91 million hectares
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over 400,000 ounces of gold by 2018.
Industrias Peñoles, S.A.B. de C.V.

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Peñoles’ shares have traded on the Mexican Stock Exchange since 1968 under the ticker PE&OLES. Peñoles
highlights:
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Pan American Silver Corp.
Pan American Silver Corp. was founded in 1994 with the mission to be the world’s
largest low-cost primary silver mining company and to achieve this by constantly
increasing its low-cost silver production and silver reserves. Pan American now owns
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Mexico.
Republic Metals Corporation

Republic Metals Corporation is one of the largest, full services, primary precious
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time and expense. As Republic Metals has expanded its product lines, array of services, and global client base, it has never
compromised its founding principles: excellent customer service, ethical business practices, and an unyielding commitment
to environmental protection and safety of its workforce and clientele. RMC is pleased to announce the opening of its
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leading low cost producer among its global peers. Canadian-based, Silvercorp has 5 operating
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silver at a cash cost of negative $4.55 per ounce – upholding the company’s low cost producer status. With US$168 million
in cash and short-term investments, no long-term debt and strong operations, Silvercorp is growing its resources and
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Established in 2004, Silver Wheaton has quickly positioned itself as the largest
silver streaming company in the world. The company has entered into a number of
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of the silver production from several high-quality mines located in politically stable regions around the globe. Silver
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price while reducing many of the risks faced by traditional mining companies. Silver Wheaton’s shares are traded under the
symbol SLW on the Toronto Stock Exchange and New York Stock Exchange.
World Silver Survey 2012 has been kindly supported
by the following companies
—MAJOR SPONSORS—
A-Mark Precious Metals, Inc. )UHVQLOOR3OF
Pan American Silver Corp. ,QGXVWULDV3HxROHV6$%GH&9
Republic Metals Corporation

—SPONSORS—
Alexco %DUULFN*ROG&RUSRUDWLRQ &RPSDxLDGH0LQDV%XHQDYHQWXUD6$$
Endeavour Silver Corp. *ROGFRUS,QF +HFOD0LQLQJ&RPSDQ\
.*+03ROVND0LHGĨ6$ Scotiabank Silver Standard Resources Inc.
—CONTRIBUTORS—
CME Group
Diamond State Depository, LLC
Golden Minerals Company
Johnson Matthey Inc.
Mitsui Global Precious Metals
Tanaka Kikinzoku Kogyo K.K.
TD Bank
The World Silver Survey has been published annually by The Silver Institute since 1990. Copies of previous
editions can be obtained by contacting The Silver Institute at the address and telephone number on the opening
page. For copies outside of North America, contact Thomson Reuters GFMS at the address on the page overleaf.
ISSN: 1059-6992
ISBN: 978-1-880936-20-7
© Copyright April 2012. The Silver Institute and Thomson Reuters.
We (and where relevant, any identi¿ed contributors or co-authors) are the owner or the licensee of all intellectual property rights in
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savings, loss of goodwill and whether caused by tort (including negligence), breach of contract or otherwise, even if foreseeable.
This is the eighteenth annual survey of the world silver market to be produced for The Silver Institute by Thomson
Reuters GFMS, the London-based analysts of global precious metals markets. The information contained here is
based in part on the analysis of the Thomson Reuters GFMS database of international trade statistics, company
report data and other public-domain information. But more importantly, it is also based on a series of interviews
with the industry’s main players, carried out every year by our team of analysts and consultants, which provide the
essential data to allow the compilation of reliable estimates for world supply and demand.
Thomson Reuters GFMS is grateful to the many miners, re¿ners, bullion dealers, bankers and fabricators throughout
the world who have contributed their time and information to ensuring that the picture of the industry described in
the World Silver Survey is as complete and accurate as possible.
Thomson Reuters GFMS, London April, 2012

Aldgate House, 33 Aldgate High Street, London, EC3N 1DL, UK
Tel: +44 (0)20 7369 7049, Fax: +44 (0)20 7369 7015
E-mail: metal@thomsonreuters.com, Web site: www.gfms.co.uk
Online shop: http://shop.gfms.co.uk
Units used:
supply and demand data are given in units of million troy ounces (Moz) rounded to one decimal place.
1 Moz = 31.103 t (metric tons)
1 ton = 32,151 troy ounces
1 ton = 1,000,000 grams (g)
Terminology:
“-” = not available or not applicable
0.0 = zero or less than 0.05
“dollar” refers to the US dollar unless otherwise stated.
Implied Net Investment = the residual from combining all other GFMS data on silver supply/demand
as shown in Table 1. As such, it captures the net physical impact of all transactions not covered by the
other supply/demand variables.
Prices:
Unless otherwise stated, US dollar prices are for the London Silver Market ¿xing.
Table Rounding:
Throughout the tables and charts, totals may not add due to independent rounding.
Table of Contents
1. Summary and Outlook 8
Supply in 2011 9 Demand in 2011 10
2. Silver Prices 12
Market Analysis 13
3. Investment 17
Overview 17 OTC Market 20 Physical Bar Investment 20
Commodity Exchanges Activity 22 Coins and Medals 23
4. Mine Supply 24
Mine Production 24 Outlook 31 By-product Analysis 31 Production Costs 33
Producer Hedging 34
5. Supply from Above-ground Stocks 35

Overview 35 ,GHQWL¿DEOH%XOOLRQ6WRFNV36 European Dealers’ Stocks 37
Comex Stocks 37 Government Stocks 38 Other Stocks 39 Scrap 39
6. Silver Bullion Trade 43

Europe 43 The Americas 45 0LGGOH(DVWDQG,QGLDQ6XE&RQWLQHQW45
East Asia 47
7. Fabrication Demand 49
Industrial Applications 50 Photography 63 Jewelry 66 Silverware 76
8. Appendices 78
Tables
World Silver Supply and Demand 8 Supply and Demand with Bar Investment 9
Coins and Medals 23 Mine Production 26 Scrap Supply 41
7RWDO)DEULFDWLRQ52 Industrial Applications 54 Electrical and Electronics 60
Brazing Alloys and Solders 60 Photography 64 Jewelry and Silverware 68
Jewelry 72 Silverware 75
Focus Boxes
Silver and Other Commodity Prices 16 Investment in Commodities 18
Exchange Traded Funds 21 An Overview of Corporate Transactions in 2011 30
'H¿FLWVDQG6XUSOXVHVLQWKH6LOYHU0DUNHW38 The Main Uses of Silver 58
New Uses of Silver in Industrial Applications 61 *OREDO3KRWRYROWDLF0DUNHW 62
Digital Technology and the Photographic Market 65 Jewelry and Silverware 68
Consumer Trends and Jewelry Consumption 70
1. Summary and Outlook

Summary and Outlook
For silver, 2011 may best be remembered for its price in base metal prices during the second quarter, linked
rallying to within inches of the all time nominal high, in directly to potential Eurozone damage to metal demand,
doing so generating a record annual average of $35.12 or also hit silver prices. That in itself was a forward looking
more than double where we were two years ago. This is reaction as silver’s industrial offtake at the time was
testament to investors’ ongoing enthusiasm for the metal running at record levels; it was not until the fourth
as World Investment leapt by over 70% in approximate quarter when end-users became nervous about placing
value terms to almost $10 billion. The market did have orders that any real weakness ensued and it was only
to contend with heavy pro¿t taking, most obviously in this, together with an element of substitution, that gave
early May and again in late September, from its more us the slight dip in full year industrial demand. It was
speculative elements, in particular on Comex. However, also of note that other areas of fabrication were fairly
bargain hunting (for example by those seeking physical resilient given silver’s strength and that government sales
bars, whose net purchases rose by around 38 Moz or collapsed despite higher prices.
1,200 t) could usually be relied upon to put a Àoor under
prices. There was also decent support from those with a Looking ahead, it seems likely the market will see another
longer term focus as the very forces that often drove last sizable fundamental surplus, as mine output and scrap
year’s investment, such as the Eurozone debt crisis and show further gains at a time when a less than promising
inÀation concerns, are far from dissipated. economic outlook takes the shine off fabrication. Given
that the market will therefore be reliant on investors to
Many of the above cues were taken from the gold market absorb the vast bulk of this surplus, 2012 is likely to see
but silver also lived up to its hybrid status as weakness another year of wide trading ranges.
Table 1 - World Silver Supply and Demand (million ounces) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Supply
Mine Production 594.5 597.2 613.6 636.6 641.1 665.9 683.6 716.1 751.4 761.6
Net Government Sales 59.2 88.7 61.9 65.9 78.5 42.5 30.5 15.6 44.2 11.5
Old Silver Scrap 197.3 196.0 197.4 201.6 206.0 203.0 200.9 200.0 228.7 256.7
Producer Hedging - - 9.6 27.6 - - - - 50.4 10.7
Implied Net Disinvestment 17.4 - - - - - - - - -
Total Supply 868.3 881.9 882.4 931.7 925.6 911.4 915.0 931.7 1,074.7 1,040.6
Demand
Fabrication
Industrial Applications 355.3 368.4 387.4 431.8 454.2 491.1 492.7 405.1 500.0 486.5
Photography 204.3 192.9 178.8 160.3 142.2 117.6 101.3 79.3 72.1 66.1
Jewelry 168.9 179.2 174.8 173.8 166.3 163.5 158.7 159.8 167.4 159.8
Silverware 83.5 83.9 67.2 67.6 61.2 58.6 57.4 59.1 51.2 46.0
Coins & Medals 31.6 35.7 42.4 40.0 39.8 39.7 65.3 78.8 99.4 118.2
Total Fabrication 843.5 860.1 850.6 873.6 863.7 870.5 875.3 782.0 890.1 876.6
Producer De-Hedging 24.8 20.9 - - 6.8 24.2 8.5 17.4 - -
Implied Net Investment - 0.9 31.8 58.1 55.1 16.6 31.2 132.2 184.6 164.0
Total Demand 868.3 881.9 882.4 931.7 925.6 911.4 915.0 931.7 1,074.7 1,040.6
Silver Price
(Average London US$/oz) 4.599 4.879 6.658 7.312 11.549 13.384 14.989 14.674 20.193 35.119
8
Table 1a - Supply & Demand with Bar Investment Supply in 2011

(million ounces) 2009 2010 2011 :RUOGVLOYHUPLQHVXSSO\LQFUHDVHGE\WRD
QHZUHFRUGOHYHORI0R] W ODVW\HDU
Supply
$VHFRQG\HDURISURGXFHUKHGJLQJVDZD
Summary and Outlook

Mine Production 716.1 751.4 761.6
Net Government Sales 15.6 44.2 11.5 0R] W DGGLWLRQWRWKHJOREDOKHGJHERRN
Old Silver Scrap 200.0 228.7 256.7 6FUDSVXSSO\URVHIRUWKHVHFRQGVXFFHVVLYH\HDU

Producer Hedging - 50.4 10.7 UHDFKLQJDQHZUHFRUGKLJKRI0R] W
Physical Bar Disinvestment 15.4 - - 1HWJRYHUQPHQWVDOHVIHOOE\WR0R]
Implied Net Disinvestment - - - W LQ
Total Supply 947.1 1,074.7 1,040.6
Silver mine production rose for the ninth successive
Demand year in 2011, to a fresh record of 761.6 Moz (23,689 t).
Total Fabrication 782.0 890.1 876.6 Production from primary silver mines fell modestly due to
Producer De-Hedging 17.4 - - lower processed grades and one-off disruptions at several
Physical Bar Investment - 57.4 95.7 large operations, including the world’s two largest primary
Implied Net Investment 147.6 127.2 68.3
mines, Cannington and Fresnillo. These losses prevailed
Total Demand 947.1 1,074.7 1,040.6
over production gains originating from a handful of new
© Thomson Reuters / The Silver Institute
mines ramping up. However, growth was seen for silver
The difference between Table 1 and Table 1a above is produced as a by-product of gold and lead/zinc mining.
that investment in bar form is extracted from our implied
investment series. This was initially done after the explosion At the country level, most signi¿cant was an 8%, or 11
in Indian bar investment in 2008 as this distorted the Moz (342 t) rise for the world’s largest silver producer,
message conveyed by the implied investment residual. Mexico, where output reached 152.8 Moz (4,753 t),
Having originally just shown a ¿gure for India, we have as well as gains from China’s base metals sector and
expanded this to include all bar investment as this has grown increases in Russia, Poland and Guatemala. Offsetting a
materially elsewhere, chieÀy in China, the United States and large part of these rises, production losses were noted in
Germany (indeed, those three plus India represent 93% of Peru, Australia, the United States, Morocco and Turkey,
the global total). This growth was in response to the general that together accounted for a decline of 22.9 Moz (711 t).
factors driving investment and speci¿cally to counterparty
risk, which boosts the tangible appeal of physical investment. Producers added to the global hedge book last year, with
Table 1a brings out the rise last year to a level greater than the delta-adjusted position rising by 10.7 Moz (334 t).
the rede¿ned implied number, although bar investment’s This occurred as several producers added to their existing
importance is perhaps underplayed as the table does not options positions, although in many cases extreme call
show its key support through bargain hunting on price dips. option strike prices meant that the delta against these
World Silver Supply Mobilization of Above-Ground Stocks
1200 Implied Net Disinvestment Real Silver 40 400 40

Price Government Real Silver
Producer Hedging
Price
Government Sales Private Sector
900 30 300 30
Constant 2011 US$/oz

Million ounces
Million ounces
Scrap
600 20 200 20
300 10 100 10
Mine Production Scrap
0 0 0 0
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
Source: Thomson Reuters GFMS Source: Thomson Reuters GFMS
9
contracts at end-2011 was minimal. On the other hand, Demand in 2011

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Summary and Outlook
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jumping 12% to a new all time high of 256.7 Moz (7,985 +LJKSULFHVDQGHFRQRPLFZHDNQHVVFXWMHZHOU\
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rise in industrial recycling and price related scrapping of ,PSOLHGQHWLQYHVWPHQWGURSSHGE\EXW
jewelry and silverware. Electronic scrap Àows bene¿ted UHPDLQHGHOHYDWHGDW0R] W
from not only tighter environment legislation, but also 'HPDQGIRUFRLQV PHGDOVSRVWHGDIUHVKDOO
because of the acute rise in silver prices, with growth in WLPHKLJKULVLQJWR0R] W
this segment intimating a stronger price elasticity than
previously anticipated. However, it was the recovery of Total fabrication in 2011 fell but only by a slight 1.5%
silver from old silverware and jewelry that accounted for to 876.6 Moz (27,265 t) and this was its second highest
the bulk of the 12% rise in world scrap supply. There was level since 2000. However, all categories save coins
also a rise in coin scrap. Fundamental to the overall total saw losses and, if we remove that investment-driven
was a jump in industrialized market collection (principally segment, the rest of fabrication fell by a steeper 4.1%.
from the United States and Europe), which comfortably Some of this was down to the structural factors hitting
exceeded the growth in recycling from the traditionally photography and silverware, but more important was
price sensitive developing world markets (such as India). damage from high silver prices and industrial demand’s
fourth quarter decline as Eurozone concerns erupted.
Net government sales dropped by a considerable
74% year-on-year, falling to a 14-year low of 11.5 Moz Perhaps the key story as regards industrial demand was
(357 t) in 2011. The hefty decline was entirely due to a its largely unexpected slump in the fourth quarter. This
collapse in sales from Russia, the dominant seller from outweighed the year-on-year rise recorded in the other
2007 to 2010, as disposals from the country dropped by three quarters combined (with the second quarter even
nearly 90% last year. Excluding Russia, sales once again hitting an all time high), generating a full year loss of
therefore remained subdued. 2.7% to 486.5 Moz (15,132 t). Weakness late in 2011
was chieÀy the result of industrial end-users slashing
World Silver Demand orders due to fears over the fallout from the Eurozone’s
sovereign debt crisis, although some were also said to
Implied Net Investment have begun the fourth quarter with excessive inventory
1200 Real Silver 40
Producer De-Hedging Price levels. These concerns, however, do seem to have been
Coins
somewhat exaggerated, as evidenced by the rebound for
Silverware
900 30 most in end-user purchases so far this year.
Million ounces
Photography There was also clear pressure on offtake from price-led

600 20
thrifting and substitution in all sectors of industrial use
Jewelry
and, although silver remains irreplaceable in many areas,
300 10 it is of note that (outside of the 2009 dip) industrial
demand has broadly Àatlined since 2007. On a sectoral
Industrial Applications
0 0 basis, the main feature last year was a fall in photovoltaic
2002 2004 2006 2008 2010
Source: Thomson Reuters GFMS demand, which resulted from inventory mismatches,
10
rather than a drop in underlying demand. That also level in our series stretching back to 1990. Some of
explains much of US losses last year, although its this decline was down to ongoing structural factors but
absolute fall was just eclipsed by Japan, which suffered these were greatly exacerbated by high and volatile
more from the fourth quarter drop in end-user orders. prices. Weighty falls were the norm, with absolute losses
Summary and Outlook

The third largest absolute change related to China but in greatest in countries as diverse as Italy, Thailand, India
this instance it was a rise of nearly 5% to a new record. and Russia. China again de¿ed the global trend as gifting
demand led to a 10% rise in its fabrication.
Silver use in photographic applications slipped by 8.3%
last year to 66.1 Moz (2,056 t). This was the smallest It should be stressed that, in spite of an 11% fall to 164.0
absolute loss seen since 2001, thanks largely to a Moz (5,099 t), implied net investment remained close
sluggish rate of conversion into digital systems by both to historical highs in 2011. Investment was concentrated
medical centers and movie theaters, due to the weak in the ¿rst four months of the year. Key to this was dollar
macroeconomic backdrop. That said, photography’s weakness, growing long-term inÀation fears and a still
share of total fabrication continued to slide, falling to just positive economic outlook. Investor sentiment was also
8% compared to the 24% it commanded ten years ago. boosted by silver’s wide trading range in a far smaller and
less liquid market, particularly compared with gold, which
Jewelry fabrication fell by 4.5% to 159.8 Moz (4,971 resulted in a dramatic contraction in the gold:silver ratio
t), chieÀy through a drop in consumption and trade in early 2011. However, as the price peaked and the rally
destocking in most western markets. Some of this was faltered in late April, hefty pro¿t taking led to a major
due to a poor economic backdrop, although silver’s higher correction. Thereafter, while buy-side interest recovered
absolute price and elevated volatility arguably inÀicted somewhat, volumes remained subdued, as investors were
more damage. This is suggested by losses being heaviest further deterred by another sharp, albeit brief, price fall in
for the mass market, with substitution to non-precious late September, itself a result of growing concerns about
metal pieces a common theme. In contrast, the top end, a double-dip recession in industrialized countries and an
especially if branded, fared better, in part as a result of escalating sovereign debt crisis.
gains at the expense of ever more unaffordable gold. The
bulk of the overall losses were borne by export-focused Apart from robust investment from institutional players,
producers, such as Thailand and Italy, and, in fact if we retail demand also performed impressively last year, as
remove those two, offtake rose by over 2%. Much of that coins & medals hit a fresh record of 118.2 Moz (3,677
increase was due to substitution-led gains in East Asia, t) last year, while physical bar investment (see Table
in particular China. In contrast, India saw a slight dip, 1a) grew by 67%. In aggregate, World Investment
although volumes were very volatile during the year. (including implied net investment, bars, plus coins &
medals) totaled 282.2 Moz (8,776 t) in 2011, which was
Last year, silverware suffered another heavy fall as equivalent to a new all time high of nearly $10 billion in
it dropped by 10.2% to 46.0 Moz (1,430 t), its lowest value terms.
World Silver Fabrication Indices Fabrication Demand & World Economic Indicators
150 120 10
Real GDP & industrial production growth (%)
Change in Total Fabrication

Change in fabrication (million ounces)
Industrial
(year-on-year)
Applications
125 80 World GDP 6
Growth
Jewelry
Index (2002=100)
100 40 2
75 Silverware 0 -2
50 -40 Industrial Production -6

Growth*
Photography
25 -80 -10
0
-120 -14
2002 2004 2006 2008 2010
2002 2004 2006 2008 2010
Source: Thomson Reuters GFMS; *Excluding coins & medals
*Advanced economies only; Source: IMF, Thomson Reuters GFMS
11
2. Silver Prices
6LOYHU¶VDQQXDODYHUDJHSULFHLQURVHDQ After the heavy fall in late April and early May to below
LPSUHVVLYHWRDUHFRUGDQGLQGRLQJVR $35, silver clawed its way higher over the middle of the
QHDUO\EUHDFKHGWKHPDUN+RZHYHUWZRVWHHS year, before it saw another tumble in late September.
IDOOV LQODWH$SULOHDUO\0D\DQGLQODWH6HSWHPEHU With economic con¿dence ebbing, the rest of the year
OHIWWKHLQWUD\HDUFKDQJHDWDQGURS was spent under pressure and the ¿nal ¿x of $28.18 left
an intra-year fall of 8%. It was of note that gold, with
3K\VLFDOLQYHVWPHQWUHPDLQHGVWURQJGHVSLWH minimal industrial linkage, managed to hang on to a
WKHVKDUSSULFHIDOOLQWKHVHFRQGTXDUWHUOHDYLQJ 10% intra-year gain. Silver’s tendency to more dramatic
SDUWLFLSDQWVQHUYRXVRIYRODWLOLW\ moves was also illustrated in the January to April average
being 29% higher than the fourth quarter 2010’s average,
Silver’s annual average leapt again in 2011, to $35.12, while gold gained just 3%. Similarly, when the April/May
easily exceeding the previous record of $20.98 in 1980 fall came, gold only shed 8% against silver’s 30%.
and representing a year-on-year gain of 74%. This rise
was therefore far stronger than gold’s 28% increase. The Much of the above was investor driven, although the
Silver Prices
bull run to late April saw the ¿x post a high of $48.70 on contribution from each sector varied. Over-the-counter
April 28th, a level only just beaten by the $49.45 seen in buying, for example, looks to have dominated the initial
January 1980. Intra-day prices brieÀy exceeded $49 in bull run, whilst selling on Comex was integral to the two
April and so only just failed to pierce the psychologically main price corrections. ETF holdings, in contrast, were
important $50 mark. In real terms, silver’s 2011 average perhaps most notable for their stability during the volatile
was the second highest ever, although it was still some ¿nal months. This provided critical underpinning in that
way short of 1980’s $57.29, while the daily peak in 1980 period, as did bargain hunting from other investors, a fair
was equal to just over $135 in 2011 dollars. slice of which was physical investment in bars and coins.
US$ Silver Price The Silver Price in Other Currencies in 2011
1981 1991 2001 2011 Euro/kg Rupee/kg Yen/10g Yuan/kg

Annual Average 10.487 4.057 4.370 35.119 Annual Average 810.9 55,638 899.8 7,292
Maximum 16.303 4.571 4.820 48.700 Maximum 1,056.2 75,020 1,275.1 10,180
Minimum 8.030 3.548 4.065 26.160 Minimum 627.8 42,170 653.7 5,315
Range:Average 78.9% 25.2% 17.3% 64.2% Range:Average 52.8% 59.0% 69.1% 66.7%
London Silver Market: Spot Price
US$/oz; other currencies reindexed to January 4th 2011
50 IEA releases Fed Chairman Bernanke

Political tensions US$ 600 million Fed announces
‘Operation Twist’ Standard & Poor’s fails to mention QE3
25
peak in MENA barrels of
stockpiled oil downgrades 9 euro
Yen nations, 14 put on
negative outlooks
40 Bond sales in
Italy and Rupee
Spain
US$/oz
30 Euro
Standard & Poor’s
downgrades US
ECB launches
debt to ‘AA+’
Osama bin Laden second round of LTRO
Libyan leader
Portugal seeks killed Gadaffi killed
20 EU bailout Greek government Fed says interest
passes austerity cuts rates to stay low
until at least 2014
Earthquake strikes ECB announces
north-east Japan €489 billion LTRO
10
Jan-11 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-12 Feb Mar
Source: Thomson Reuters GFMS
12
Silver prices can lead gold when a trend changes, or a Market Analysis
move accelerates, as silver’s higher volatility encourages
some investors to use silver as a geared gold play. The To say that silver was on a roller-coaster ride during
vicious nature of the second quarter fall, however, meant 2011 would be something of an understatement. With
that part of silver’s investing constituency became a trading range of 64% and with volatility at 61%, the
extremely nervous, only stepping back gingerly into the silver market place was not one for the faint-hearted.
market on occasion, and taking quick pro¿ts rather than The year started with silver ¿xing at $30.67, but falling
holding onto positions. As this element of “risk” became to $26.68 on January 28th. Part of this move was in
increasingly signi¿cant, silver suffered accordingly; sympathy with a retreat in gold, but there was also some
having narrowed markedly to below 32 in late April, the pro¿t taking following silver’s strong performance in the
gold:silver ratio progressively widened and by the end of fourth quarter of 2010. Furthermore, its intra-year gain
2011 it had reached 56. Silver’s recovery in January and of 78% in 2010 meant that some commodity investors
February of 2012 saw the ratio narrow to under 48 but it would have reduced silver holdings when rebalancing
has since begun to surrender these gains. their portfolios at the start of 2011. Towards the end of
January, silver (and gold) came under further pressure in
The loss of nerve by some and the associated reduction response to the announcement that Chinese growth in the
of speculative froth during the year was partly offset fourth quarter of 2010 had just surpassed expectations
Silver Prices
by ¿rm industrial demand through until September, as of 9.6% and the government signaled that it would be
fourth quarter industrial demand was distinctly weak. shifting its emphasis from stimulating growth to the
The market also had to contend with price-led losses containment of inÀation.
for jewelry and silverware and similarly driven gains for
scrap, plus ongoing mine production growth. Fortunately, From this low, investment began to return and the
lower producer hedging and government sales helped ensuing bull run, lasting from late January to late April,
prevent prices from ending the year yet weaker. posted spectacular gains. The majority of metals turned
upwards during February, with rises aided by improved
Lease rates essentially followed a downward path in 2011, consumer con¿dence in the United States, while gold
often dipping below zero. Rates did spike several times and silver also took support from apparent disagreement
during the year when silver rallied, suggesting some among members of the FOMC about the best course
forward selling into strength. A further spike in early of action to take after the conclusion of QE2. While
January 2012, however, is believed to reÀect borrowing base metals prices moved higher in February, their
in order to reverse lending activity in December as some performance became more varied as economic concerns
banks and institutions had wanted to bolster their balance came once more to the fore. Silver, however, rose ever
sheets’ dollar holdings before year-end. higher and, by the end of April, it had staged a massive
59% gain since the start of the year to approach $50.
London Spot Price and 3-month Contango Daily Silver Price Volatility
6 50 150 50
Contango Spot Price Price
Range
4 40 120 40
Contango (%)
Volatility (%)
2 30 90 30
US$/oz
US$/oz
0 20 60 20
-2 10 30 10
Backwardation Volatility
-4 0 0 0
Jan-05 Jan-07 Jan-09 Jan-11 Jan-05 Jan-07 Jan-09 Jan-11
13
Drivers of this bull run were similar to those driving gold Volatility (US$ Price)
(although silver heavily outpaced the yellow metal, partly
2008 2009 2010 2011
as investors played on its higher volatility), and worth
Annual 52% 38% 33% 61%
singling out are the metals’ sensitivity to US monetary
policy. One such example was Fed Chairman Bernanke’s
11.Q1 11.Q2 11.Q3 11.Q4
comments in February, which, while suggesting that
Quarterly 40% 74% 72% 53%
inÀationary pressures in the United States were relatively
low, did at one point include a reference to the “Long-
term ¿scal discipline of the US government”. This was helped to fuel strong physical silver demand. Another
taken by some as him implying that he was concerned factor was some physical purchasers turning to silver
about longer-term inÀationary forces. The Eurozone from gold as a result of its lower unit price. Metal
sovereign debt crisis and the maintenance of low interest became dif¿cult to source and the market went into
rates were other key forces behind this upward move. backwardation during February, suggesting that the only
Not all causal factors were purely economic as increasing major constraint on demand at the time was re¿nery
tension in the Middle East also played a role, although capacity. By the time silver was nearing $40 towards the
this also boosted oil prices and inÀationary tensions. end of March, there were signs of some physical selling
(notably in India, where prices were testing Rs. 57,000/
Silver Prices
Much of the buying behind this move is thought to have kg, a gain of around 30% in just over eight weeks). In
occurred in the OTC market, some of it stemming from China, however, demand remained strong, for industrial
a growing amount of gold:silver ratio trading in silver’s and jewelry use, as well as investment.
favor as some talked of silver being likely to hit radically
higher levels. This fed through to an almost feverish During this surge, some bearish news emerged, such
phase, with many hedge funds buying forwards and out- as the FOMC mid-March statement implying that there
of-the-money calls. In contrast, the net ‘investor’ long would be no further easing after QE2 had ¿nished, and
on Comex showed little overall direction during February- this perhaps contributed to cracks starting to appear. The
April, perhaps as a result of its players knowing how rate of uptake in the ETFs, for example, started to slow
vicious silver can be (especially when trading on margin). in mid-March and, although there was fresh net buying
Physical demand in the West was however soaring, with activity towards the end of the month, pro¿t taking was
the Royal Canadian Mint reporting increasing tightness in starting to appear and there were several days of high-
supply, while US Eagle sales remained very strong. volume net sales in April. The net Comex ‘investor’ long
had already fallen from its peak at the end of February,
Even if inÀation were just a potential threat in the West, although it was not until the end of April that the gross
it was already uncomfortably high in countries such as short-side position was increased to any degree, just
India, China and other parts of the Far East and this ahead of the massive drop in price.
Silver Leasing Rates The Gold / Silver Price Ratio
8 100
7 12-month
6 80
Lease Rates (%)
5
60 1968-2011
4 Average: 52.8
3
6-month 40
2
1
20
0
3-month
-1 0
Jan-05 Jan-07 Jan-09 Jan-11 1968 1973 1978 1983 1988 1993 1998 2003 2008

14
Silver peaked on April 28th and then dropped sharply, these pressures, with silver slumping by 35% to test $26
falling to $34.20 on May 6th, a drop of 30% in just six on an intra-day basis by September 26th. Much of this
trading days. Trading volumes were extremely heavy as was fueled by a massive wash-out on Comex, although
sell-stops were triggered; from April 29th to May 6th, the there was little ETF selling, suggesting that its more
daily average Comex turnover was approximately 80% speculative participants had been Àushed out earlier.
higher than in the period from late January to April 28th,
when silver had been roaring higher. ETF disinvestment Prices, however, managed to stage a decent recovery into
accelerated, with nearly 60 Moz (1,900 t) ofÀoaded in just the mid-$30s by mid-November. Although the markets
less than ¿ve weeks in April and May. were beset by persistent concerns over the state of the
Eurozone and the Chinese economy and there was real
Conditions were quieter overall mid-year, although this weakness in industrial fabrication, silver found good
perhaps more reÀected nervousness than an air of calm. bargain hunting support below $30. This was the level
This period began with silver prices consolidating in May at which physical demand had been robust at the start of
and June. This occurred as the ongoing contraction in 2011 and so it was again towards year-end. By this stage
the Comex net long, through to late June, together with the Rs. 50,000/kg mark, so important as a resistance
further ETF selling, was countered by physical market level earlier in 2011, was now providing support in the
interest, and by the strength in industrial demand at Indian market and rupee prices moved to a notable
Silver Prices
this time (possibly reaching a record quarterly high). premium to loco-London, driven also in part by Festival
Nonetheless, re¿ners were very busy re¿ning secondary buying. Also of signi¿cance was cooperation between a
supply. Prices then crept higher to test $44 in late- host of central banks, which acted to reduce the cost of
August. As prices rallied, physical market interest dollar swaps, improved risk appetite, weakened the dollar,
dwindled but gains for the ETFs and growth in the net and aided sentiment in the commodities sector overall.
Comex ‘investor’ long showed that broader interest was Further support came from signs that the Chinese
again on the rise. Much of this stemmed from gold government was to move towards monetary easing.
market strength, the US downgrade, the release of a
relatively high US PPI ¿gure and Eurozone troubles. The last few weeks of 2011 saw further losses, despite
news on December 21st of the ECB’s €489 billion LTRO,
However, the market was also still fearful of Eurozone which should have improved liquidity. The penultimate ¿x
contagion causing a double-dip US recession and Chinese ($26.16) was the year’s low, although 2011 closed a little
GDP growth was starting to show signs of slowing. Fears higher at $28.18. Industrial fabrication remained poor
also began to intensify about a possible credit crunch but the fall was perhaps more driven by year-end pro¿t
as ¿nancial markets grew increasingly exasperated with taking, technical selling, gold market weakness and lively
the lack of progress in resolving the Eurozone problems. silver lending as institutions chased dollars in order to
Ultimately, the broader commodities sector buckled under bolster their balance sheets by year-end.
The Silver Price and the US Dollar Real Silver Prices
50 Spot Price 1.6

60 1980 Average: $57.29
1.5 50 2011 Average:

US$/Euro
40 $35.12
1.4 40
US$:Euro
US$/oz
30 1.3 30
1.2 20 1976-2011
20 Average: $14.45
1.1 10
10 1.0 0
Jan-10 Jul Jan-11 Jul Jan-12 1976 1981 1986 1991 1996 2001 2006 2011
Source: Thomson Reuters Source: Thomson Reuters GFMS
15
Silver and Other Commodity Prices Correlations of Changes in Daily Prices

Thomson Reuters GFMS believe that the examination
(using log-returns in spot prices)
of correlation coef¿cients is highly useful, not only as
an indication of underlying themes that may inÀuence 10.Q4 11.Q1 11.Q2 11.Q3 11.Q4
the market, but also to con¿rm economic theory with Gold 0.58 0.74 0.57 0.67 0.65
empirical evidence. It must be noted, however, that US$/Euro 0.25 0.29 0.14 0.16 0.31
the existence of either a positive or inverse correlation Oil (WTI) 0.06 0.31 0.28 0.13 0.11
between two assets is not suf¿cient in itself to establish CRB 0.28 0.22 0.27 0.24 0.24
direct causality. GSCI 0.14 0.30 0.30 0.19 0.19

Copper 0.63 0.44 0.94 0.47 0.58
S&P 500 0.10 0.06 0.08 -0.08 0.10
Silver’s “hybrid” precious and industrial nature leads to
links with gold, copper and the CRB Index that appear
powerful, but which can vary greatly. With regards to
last year, gold and silver enjoyed their closest relationship Silver’s relationship with oil can prove notable, reÀecting
in the ¿rst quarter in the face of fears of medium-term silver’s partial role as an inÀation hedge and the
inÀationary pressures and rising geopolitical tensions, perception that oil drives inÀation, and this proved to
including the supportive development of a Libyan-related be the case in the ¿rst quarter but the correlation sank
Silver Prices
oil price hike in early March. That, however, led to the to low levels by year-end. Silver’s linkage with the CRB
copper price suffering a setback but, even so, silver’s remained stable and relatively low, while that with the
industrial characteristics meant that its correlation with GSCI was more variable; the CRB has a wide range of
copper was still a notable 0.44 in the ¿rst three months. elements, but no primary metals or energy, while the
GSCI is 70% energy. Furthermore, gold and silver react
The second quarter, however, saw a switch from gold to to inÀationary expectations as well as inÀation itself and a
copper, as regards which had the strongest correlation mismatch in the spot indices is not unusual.
with silver. This occurred largely as many investors
took a growing heed of underlying industrial demand Silver’s correlation with the $:ǝ rate was at its highest
fundamentals. The pendulum then swung back to gold in in the ¿nal quarter as the markets focused on Eurozone
the third quarter as the yellow metal’s price spiked and tensions and silver responded to associated changes
this relatively stronger relationship was sustained into in risk appetite. The white metal’s relationship with
the fourth quarter, partly because silver’s late December the equity markets became tenuous during 2011 due
fall was not mirrored in copper or other base metals. to silver’s price volatility, changing perceptions of risk
However, the gap between silver’s correlations with gold and growing expectations of medium term inÀationary
and copper was comparatively narrow. pressures that kept silver more closely attuned to gold.
Quarterly Correlation of the Silver Price Gold, Silver and Copper Prices
1.0 200
Gold Copper
Index (4th January 2011=100)
0.8
Silver
Correlation coefficient
150
0.6
Gold
0.4
100
0.2
Copper
0.0 50
2006 2007 2008 2009 2010 2011 Jan-11 Apr Jul Oct Jan-12
Source: Thomson Reuters GFMS Source: Thomson Reuters
16
3. Investment
Silver Price and Investment Indicators
,QYHVWPHQWDFWLYLW\ZDVWKHSULQFLSDOGULYHURI
2010 2011 Change
ÀXFWXDWLRQVLQWKHVLOYHUSULFHLQ Average Average y-o-y
Silver Price $/oz 20.19 35.12 74%
:RUOG,QYHVWPHQWUHPDLQHGHOHYDWHGDW Contango (3-mth annualized) 0.61% 0.20% n/a
0R] W ODVW\HDUDQGWKHDSSUR[LPDWHYDOXH US$ Libor (3-mth annualized) 0.34% 0.34% n/a
RIWKLVGHPDQGUHSUHVHQWHGDIUHVKDOOWLPHKLJKRI S&P 500 Index 1,140 1,267 11%
DOPRVWELOOLRQ CRB Index 449 539 20%
;AU Index 183 205 12%
VDZDIXUWKHULQFUHDVHLQLQYHVWRULQWHUHVW World GDP Growth* 5.1% 3.8% n/a
LQSK\VLFDOEXOOLRQSURGXFWVZLWKFRPELQHGGHPDQG Advanced Countries CPI* 1.6% 2.6% n/a
IRUEDUVDQGFRLQVDFFRXQWLQJIRUPRUHWKDQWKUHH *Annual rates; Source: IMF World Economic Outlook; GFMS
TXDUWHUVRI:RUOG,QYHVWPHQW
marked silver rally in which the metal soared 60% and
Overview rose to within touching distance of the all-time nominal
high of $50/oz by late-April.
2011 was a year marked by both spectacular price gains
as well as two dramatic corrections for the silver market, A combination of factors was critical to these substantial
and investment demand was invariably the primary investment inÀows, although arguably the most important
inÀuence over these trends. Although down marginally was investment in commodities in general, bene¿ting
year-on-year, at 282.2 Moz (8,776 t), World Investment from a sustained weakness of the US dollar in early 2011.
(the sum of implied net investment and coins & medals) This was in turn a result of the continued ultra-loose
remained elevated in 2011. In addition, one should monetary policy in the United States, which culminated
remember that the majority of these investment inÀows in a carry trade developing in the currency. In addition,
occurred at considerably higher prices. As such, if early 2011 saw long-term inÀation expectations surge,
measured in value terms, World Investment still posted a driven by the Fed’s ongoing QE2 program that started in
fresh record of nearly $10 billion on a net basis in 2011, late 2010 coupled with surging oil prices amid increasing
Investment
up by a considerable 73% year-on-year. geopolitical tension in the Middle East and North Africa.
As such, investors were seen actively hedging against
It is important to note that this robust investment dollar and other ¿at currency devaluation by investing in
demand was heavily skewed to the period from February what were perceived to be ‘hard’ assets, particularly gold,
to April. This undoubtedly was the key driver behind the with silver also being a major bene¿ciary.
World Investment (Moz) World Investment
2009 2010 2011

300 40
Implied Net Investment* 132.2 184.6 164.0 Coins & Medals
250 35
of which, Physical Bar Investment -15.4 57.4 95.7 Implied Net (Dis)investment
Coins & Medals 78.8 99.4 118.2

200 30
Million ounces
World Investment 211.0 284.0 282.2

150 25
Indicative Value US$(bn)** 3.1 5.7 9.9 Real Silver
Price
* Implied Net Investment is the residual from combining all the 100 20
other Thomson Reuters GFMS data on supply/demand as shown
in Table 1. By de¿nition, it therefore captures the net physical 50 15
market impact of all transactions not covered by the other
supply/demand variables. 0 10
**Indicative Value calculated on an annual basis using annual -50 5

average silver prices. 2002 2004 2006 2008 2010
© Copyright Thomson Reuters Source: Thomson Reuters GFMS
17
London Bullion Market (LBM) and Comex Turnover Investment in Commodities

(daily averages) LBM Comex LBM/ Investment in commodities opened strongly in 2011, with the
No. of Turnover Turnover Comex value of net long positions exceeding $115 billion at the end of
Transfers Moz Moz Ratio
the ¿rst quarter, only slightly lower than the record high seen at
2005 331 110 110 1.0:1 the end of 2010 (as shown in the chart below). This performance
2006 447 147 109 1.3:1 was driven primarily by increasing geopolitical tensions in the
2007 462 114 135 0.8:1 Middle East and North Africa (MENA), which heightened the threat
2008 519 126 176 0.7:1 of oil supply disruptions and saw the value of oil’s net long almost
2009 340 97 159 0.6:1 double quarter-on-quarter. Silver also performed particularly well,
2010 381 87 254 0.3:1 springing to 31-year highs (basis the London ¿x), thanks in large
2011 798 174 389 0.4:1 part to gold’s inÀuence.
Source: LBMA, Comex
Thereafter, however, the aggregate value of net long futures

positions slid lower over the remainder of the year. It closed
Given that the silver market is far smaller and less liquid 2011 at around $45 billion, almost two-thirds down on the peak
seen at the end of 2010. The second quarter saw the sharpest
than the gold market, it is not surprising that silver
contraction since the Lehman-induced slump in 2008, with
normally tends to outperform its yellow cousin in major
declines in almost all of the commodities tracked here. Oil’s
market rallies. However, this alone was not suf¿cient
appeal was dampened by the easing MENA crisis, as well as the
to explain a massive fall in the gold:silver ratio, which
looming threat of a double dip recession, while further downward
contracted sharply in early 2011 and by late April had
pressure came from news that the International Energy Agency
fallen towards 30:1, a level last seen in 1980. (IEA) would release 60 million barrels of stockpiled oil. Livestock
futures fell into negative territory, driven by losses in cattle,
A key element to this narrowing in the ratio was the affected by fears that consumers would switch to less expensive
fact that growing numbers of investors bought silver meats. Silver, meanwhile, saw heavy pro¿t taking.
on the belief that it would play ‘catch up’, as the metal
seemed to be signi¿cantly undervalued relative to gold. The second half of the year saw further losses in commodities, as
For example, while gold recorded successive all-time the churning Eurozone debt crisis continued to sour the outlook
for demand. The energy sector (notably oil) continued to weaken,
highs from 2008 onwards, silver remained well below
while cocoa and sugar futures suffered as increased production
its nominal peak of $50/oz in 1980. Furthermore, silver
failed to ¿nd demand. Many industrial metals (copper, platinum,
did not have to cope with an acceleration in scrap supply
Investment
palladium and silver) also suffered. Gold, in contrast, remained

anything like as marked as that seen in the gold market.
relatively stable; despite a heavy bout of pro¿t taking following
Finally, with ample liquidity in the global ¿nancial system
its surge to a record nominal high in September, it accounted for
and very low interest rates, appetite for high yields saw almost two-thirds of the value of the aggregate net long position
certain investors keen to move aggressively into silver at the end of the year.
as it seemed able to provide high returns during the
prevailing climate of commodity strength. Indeed, as its
Value of Speculative Positions in 22 Commodity Futures
rally gathered momentum, silver enjoyed a sharp jump in
interest from more technically driven funds, which tended 120 Other*
to speculate on short term price movements and tactically Livestock

100
Energy
used leverage to gain exposure to rising silver prices.
Silver
80
Gold
US$ Billions
Nevertheless, the substantial rise in speculative interest 60
also meant that silver was prone to a hefty investor sell-

40
off after the rally ran out of steam. Indeed, as the white
20
metal eventually approached its historical peak of $50/oz
in late April, the market saw very aggressive pro¿t taking 0
by speculators, particularly in the futures market. The
-20
situation was exacerbated by the ¿ve margin hikes made Q1-06 Q1-07 Q1-08 Q1-09 Q1-10 Q1-11
within nine days by the CME group, which not only forced * Other includes soft, agricultural and dairy commodities,
platinum, palladium and copper
leveraged traders to make a move towards the exit, Source: Various
18
but also triggered heavy stop-loss selling as the price Net “Investor” Positions on Comex
plunged. Meanwhile, selling also took place in the OTC Contracts Moz Price
market and in ETFs, partly due to pro¿t taking as well as 2007 49,755 249 13.39
the need to meet margin calls on traditional investments, 2008 51,193 256 14.91
although volumes were relatively light. 2009 44,699 223 14.67
2010 52,720 264 19.93
Thereafter, although investor activity recovered 2011 Q1 51,499 257 31.88
somewhat, the scale of net investment inÀows remained Q2 40,100 200 38.43
relatively subdued in the summer before the market Q3 40,288 201 39.07
suffered another massive sell-off in late September. Q4 20,776 104 31.98
Unlike late April and early May when the steep price (average non-commercial and non-reportable net futures
positions, Moz equivalent and average Comex settlement price
correction was driven by technical selling and pro¿t taking
in $/oz; Source: CFTC)
by those who had put on long positions at much lower
price levels, the renewed weakness was largely due to
increasing bearish sentiment towards the global economy Early 2012 saw a sharp rebound in buy-side interest
coupled with escalating fears over the European sovereign in silver, chieÀy in response to the announcement of
debt issue. Related to this was the elevated market additional monetary stimulus policies by authorities in
uncertainty and increasing dif¿culty for those acquiring the major economies. Meanwhile, better than expected
US dollar funding, which saw investors cut exposure economic data, principally in the United States and an
to risky assets and move back to US Treasuries. This easing of the European sovereign debt crisis also boosted
mirrored conditions during the second half of 2008. Over con¿dence in industrial metals, although a reduced scope
that period, a massive bail out of commodities, initially for QE3 in the short term has since weighed heavily on
triggered by the collapse of Lehman Brothers and then sentiment towards the precious metals complex. Turning
the meltdown of the global ¿nancial system, saw a sharp to the prospects for investment, we expect the economic
correction in the silver price along with other risky assets. backdrop to remain broadly positive for silver investment
over the rest of 2012, mainly due to the persistence of
It is of note that the bulk of this selling once again came extremely low, or negative, real interest rates across
from the more speculative investors (especially in the major economies and the likelihood of a resurgence in the
futures markets), with underlying demand for physical sovereign debt crisis. However, given silver’s dual role as
Investment
bullion products including bars, coins and silver ETFs a store of value and industrial metal, we would caution
remaining largely intact. Moreover, silver’s sharp price that it will remain vulnerable to a change in investor
decline was believed to lead to some decent buying from sentiment regarding the global economy which is likely to
those eager to “buy the dips”, which helped to keep the remain sluggish this year. Overall, investment therefore
silver price Àoor at historically high levels in late 2011. is forecast to remain little changed but near record highs.
Comex: Net “Investor” Positions Silver Price & Greek Credit Default Swap Price
y
Non-Commercial & Non-Reportable Net Futures Positions & Price
100 50 50 Spot Price 40

Settlement
Greek Credit Default Swap Price, 5 year
Net positions (contracts, thousands)
Price
35
80 40
40 30
(US$, thousands)
60 30 25
US$/oz
US$/oz
30 20
40 20
15
20 10
20 10 Greek CDS Price
5
0 0 0
10
Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-10 Jul Jan-11 Jul Jan-12
Source: CFTC Source: Thomson Reuters
19
OTC Market Physical Bar Investment
Due to the lack of meaningful publicly available data Physical bar investment surged by two-thirds last year
on activity in over-the-counter (OTC) products in silver to 95.7 Moz (2,975 t), accounting for 34% of World
stemming from the absence of actual statistics on Investment. The massive increase was driven by India
volumes and open interest, we cannot give a precise and, to a lesser extent, China, while demand in western
estimate of the impact of OTC activity on the underlying markets remained broadly Àat in 2011.
physical market. Although the clearing statistics from
the London Bullion Market (LBM) can provide a gauge, We estimate that Indian bar investment more than
this data is an imperfect reÀection of investor activity. doubled, pushing over 61 Moz (1,900 t) last year. As
First, it does not capture the trends in other OTC markets in 2010, the main driver of this rise was the bullish
and secondly, it fails to differentiate between pure sentiment that prevailed, in particular during the run up
investment Àows and other forms of activity. Therefore, to prices above Rs.70,000/kg in April. Our information
we rely on information collected through ¿eld research, suggests that a substantial proportion of this investment
which, in 2011, suggested the OTC market experienced a was actually trade stocking, and some traders found
substantial rise in net investor buying. themselves in substantial dif¿culties when prices
collapsed in May. Ironically, the collapse in prices actually
The bulk of these investment inÀows into the OTC market saw a surge in buying from other traders, reÀected in a
occurred in the ¿rst four months of the year. As net jump in imports that month. After a brief hiatus mid-
long positions on the Comex were broadly Àat in early year, investment rose strongly in the ¿nal quarter as
2011, aggressive investor purchases in the OTC market expectations of rising prices took ¿rm hold.
are therefore believed to have driven much of silver’s
spectacular rise over the same period. This conclusion European demand for silver bars in 2011 was Àat year-
is also supported by the LBM clearing turnover, which on-year as the Eurozone crisis sustained volumes at a
hit successive record highs in April and May. Similar to historically high level. However, we need to explain why
late 2010, investors’ con¿dence in silver at the start of silver did not replicate last year’s notable rise for gold
2011 was underpinned by the metal’s bright outlook for bars. A key background reason is silver bars attracting
industrial offtake. Meanwhile, silver’s greater volatility VAT, although this was partly avoided last year by growth
than gold, but its still close correlation, recommended for coin-bars (such as those issued by Andorra and the
Investment
it to those who regarded silver as a more leveraged Cook Islands), which attract a lower tax rate. (While
alternative to gold, particularly given that silver was these are legally classi¿ed as coins, we count them as
perceived by many to be undervalued versus the yellow bars due to their form and typical buyer being more
metal on a historical basis. Indeed, with silver posting similar.) Silver’s appeal speci¿cally last year was also
a remarkable rally, the market also enjoyed a sharp rise hit by the April/early May price fall and it missed out on
in short-term speculative inÀows, with growing interest the geographical spreading that gold saw to countries
in putting on short gold-long silver trades. Finally, there
was a major increase in purchases of out-of-money call Physical Bar Investment
options by hedge funds. As prices rose, these positions

Other
150
needed to be delta hedged, which pushed prices higher. China
Europe & North America
India
However, as the rally lost momentum in late April, a good 100
Million ounces
portion of these long positions were quickly closed out.

Moreover, despite some fresh buy-side interest (mainly 50
from bargain hunters), investor activities were relatively
quiet in the rest of the year, particularly following the
0
rapid worsening in the sovereign debt crisis in Europe
and a marked squeeze in liquidity in late 2011, which
saw institutional investors shy away from risky assets, -50
2008 2009 2010 2011
especially commodities.
20
Exchange Traded Funds investment activity on the futures markets where net ‘investor’
long positions on Comex dropped by over 30% between late
By end-2011, combined holdings of the silver exchange traded April and end-June.
funds (ETFs) and physically backed Canadian funds fell to
576.1 Moz (17,919 t), 4% or 24.2 Moz (751 t) below the end- In September last year, ETFs and Comex investors again took
year ¿gure in 2010. Despite a modest year-on-year decline, different paths and so was another example of silver ETFs’
ETF holdings remained at elevated levels, particularly in the relative outperformance. This occurred as the price rally
¿rst half of the year, when total volumes reached a fresh high faltered in early September triggered aggressive selling on
of 621.3 Moz (19,324 t) by late April. the futures markets, but lower prices attracted some fresh
investor interest in silver ETFs. By end-September, combined
Looking at the intra-year development, early 2011 saw a holdings stood at 577.9 Moz (17,975 t), up by nearly 8 Moz
declining trend in silver ETF holdings, from January through (250 t) over the month.
to early February. This was triggered by investor pro¿t-taking
after the price rally seen in the ¿nal quarter of 2010 ran out The rest of the year saw a declining trend in net holdings on
of steam early last year and generally on the back of better the back of an increasingly gloomy sentiment towards the
economic conditions, which reduced demand for safe haven world economy and growing risk aversion, which resulted
assets. From mid-February, however, as prices started to in a major sell-off across commodities and other markets.
recover, demand for physically backed silver began to increase, Nonetheless, it is of note that combined ETF volumes at 576.1
picking up to a new record level in late April. Moz (17,919 t) by end-December were only marginally lower
compared to the previous month and just 4% below the level
Thereafter, ETF holdings entered a downward trend that seen at the beginning of the year. In contrast, at year-end,
broadly continued until end-June, when combined volumes net long positions on Comex dropped by 32% over the month
fell to 553.0 Moz (17,201 t), down by some 11% or 68.3 Moz and were considerably lower than the level seen in early 2011.
(2,123 t) from the peak level seen in late April. The fall was
mainly driven by pro¿t taking from institutional players, after Looking at individual products’ performance, although the
silver registered a 31-year high of $48.70/oz on April 28th iShares Silver Trust, the largest silver ETF, saw a reasonable
(basis the London ¿x), although the need to meet margin calls year-on-year decline of 12%, a number of other major funds,
amid a massive sell-off, across the precious metals, was also in fact, registered fair growth in 2011. The biggest increase
Investment
important to the outcome. Nevertheless, it is worth stressing was recorded by Julius Blr, with total holdings rising by 6.3
that, despite a double-digit decline, silver ETF holdings, Moz (196 t), while =rcher Kantonalbank (=KB) registered
in general, proved to be more resilient in comparison to growth of 4.5 Moz (140 t) in 2011.
Silver ETF Holdings Silver ETFs Holdings
800 50
Other** (Moz) end-2010 end-2011
700 Central Fund of Canada
iShares Silver Trust 351.1 308.8
ZKB 40
600 =KB Silver ETF 76.5 81.0
ETF Securities*
iShares Silver Central Fund of Canada 75.2 77.0
Million ounces
500
30
ETF Securities* 51.4 53.3
US$/oz
400
Silver Price Others** 46.0 55.9
20
300 Total 600.3 576.1
200 * includes LSE, Australia, NYSE, GLTR and WITE

10
100
** includes Sprott Physical Silver Trust, Julius Blr, DB
Settlement Price Physical Silver, Claymore, Silver Bullion Trust, Mitsubishi UFJ
0 0 Tokyo, iShares Physical Silver ETC
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Source: Respective issuers
*ETF Securities: includes LSE, Australia, NYSE, GLTR and WITE
**Other: includes Sprott Physical Silver Trust, Julius Bär,
DB Physical Silver, Claymore, Silver Bullion Trust, Mitsubishi UFJ Tokyo,
iShares Physical Silver ETC; Source: Respective issuers
21
newer to bar investment, such as Slovenia and the Silver Turnover on Major Commodity Exchanges
United Kingdom. This left silver still dominated by just
(total volume in nominal million ounce equivalents)
Germany, although a fair portion of its silver is vaulted in Change
Switzerland. Lastly, silver bars enjoyed little of the rise in 2009 2010 2011 y-o-y
retail level interest in gold last summer as the Eurozone Comex 40,001 64,117 98,042 53%
MC; 13,871 19,260 32,598 69%
crisis intensi¿ed, due mainly again to tax issues.
SGE (T+D) 521 2,365 7,942 236%
NYSE LIFFE* 1,187 1,651 1,767 7%
In the United States, small bar demand (100-ounce
Tocom 106 78 120 53%
and below) is estimated to have fallen last year, albeit
modestly. This may surprise, given the strength of US *N.B.: Includes the 5,000-ounce and 1,000-ounce contracts
retail coin demand in 2011. However, it appears as Source: Thomson Reuters, Tocom, MC; and SGE
though high silver prices led to a degree of substitution

in favor of bullion coins, although this trend was far from Analysis of the data on non-commercial and non-
uniform, with some substitution also occurring between reportable net positions in Comex futures and options
the bar sizes. Further complicating the analysis has been provides a proxy for ‘investor’ activity on the exchange.
the production of one-ounce silver rounds, which appears
to have grown noticeably in recent years. Whereas the While net ‘investor’ long positions maintained a general
success, or otherwise, of a 100-ounce bar has been partly upward trajectory in early 2011, the limited scale of the
contingent on there being LBMA or Comex accreditation, increase indicated that the strength of the silver price
this has not inÀuenced retail demand for one-ounce over the same period was mainly due to strong OTC
rounds. This has therefore attracted a small number buying. In addition, even though prices continued to
of private mints, often with the capability of producing power higher, some investors began to take early pro¿ts
relatively large quantities of silver rounds. in mid-April. This was fairly benign initially, before a
series of margin hikes by the CME Group from April 24th
Bar investment posted another strong performance in onwards triggered a massive wave of long liquidation
China, as volumes almost doubled to 11.3 Moz (350 and stop loss selling. By mid-May, net long positions on
t) in 2011. Rising inÀation and persistent negative Comex were already some 40% below the high seen in
real interest rates were the main drivers of this robust early April, which unsurprisingly was the primary driver
demand, with consumers looking to precious metals as behind the sharp price correction in late April/early May.
Investment
a means of protection. Meanwhile, silver’s impressive

price gains and its cheap unit price compared with gold After that, following a period of consolidation, the
provided a further boost to investor con¿dence. It is market suffered another bout of aggressive selling in
of note that our estimate only includes silver bars sold late September when net positions more than halved
to the general public via retail outlets and commercial within two weeks. This was because a return to greater
banks in China. Our information suggests that there was risk aversion led to a massive sell-off across the board,
a considerable increase in privately held silver stocks in amid a bleaker economic outlook and intensifying fears
recent years (including metal held by re¿ners, working regarding the European sovereign debt crisis. The rest
stock for fabricators, local trade and high-net-worth of the year saw investor interest remain subdued before
investors), which could have reached as much as 96.4 year-end pro¿t taking coupled with technical factors sent
Moz (3,000 t) by end-2011. net positions to a 10-year low of 14,132 contracts by end-
2011, down by more than 70% year-on-year.
Commodity Exchanges Activity
Largely driven by the strong price, the last few years saw
2011 saw a remarkable growth of 53% in Comex silver growing investor interest in silver on other exchanges,
futures turnover, with total volumes rising to a fresh particularly the Shanghai Gold Exchange and Indian
high of 19.6 million contracts. This was equivalent to an Multi Commodity Exchange where total volumes for
average daily ¿gure of 389.1 Moz (12,101 t). End-year silver contracts soared by 236% and 69% respectively to
open interest, however, fell to 105,669 contracts, down fresh all-time-highs in 2011.
by 22% on the end-year ¿gure in 2010.
22
Table 2 - Silver Fabrication: Coins and Medals (including the use of scrap - million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
United States 15.3 14.5 15.5 16.6 17.6 16.0 25.4 34.3 41.7 47.8
Canada 1.0 0.3 1.3 1.6 2.9 4.3 9.0 10.8 18.6 23.5
Austria 0.4 0.4 0.5 0.6 0.5 0.5 8.3 9.5 11.6 18.4
Australia 0.6 1.3 1.3 1.0 1.4 3.5 5.9 6.5 8.8 11.3
China 2.1 2.3 2.3 1.8 1.6 2.6 2.8 3.0 3.7 5.8
Germany 6.0 9.7 9.7 9.7 8.7 6.3 7.2 7.4 6.4 3.3
Mexico 1.1 1.5 2.7 2.6 1.9 1.6 1.4 1.7 2.1 1.7
Spain 1.5 1.1 2.2 1.7 1.5 1.2 1.1 1.0 1.3 0.7
Other Countries 3.5 4.5 6.8 4.3 3.7 3.7 4.2 4.5 5.3 5.9
World Total 31.6 35.7 42.4 40.0 39.8 39.7 65.3 78.8 99.4 118.2
Coins and Medals Strong physical investment demand in China accounted

for the near 60% rise in the country’s bullion coin outturn
Global silver coins & medals fabrication recorded another (bar sales also jumped last year). Historically, mintage
strong performance in 2011, with the world total rising limits have been restricted to 600,000 pieces but 2011
by almost 19% to a new record high (with respect to the saw three million one-ounce coins minted, as local bullish
modern coinage era). As in recent years, the growth price expectations, together with fears about rising
was almost entirely due to ¿rmer bullion coin sales in inÀation in China, drove demand to record levels (in
western Europe and the United States. Three main terms of modern coinage issues).
factors accounted for last year’s outcome. First, the
Eurozone crisis drove coin sales higher, with German Partially offsetting these gains was a sharp fall in
speaking markets accounting for the bulk of the increase German minting to its lowest point since the mid-1990s,
(in spite of value-added tax being levied on silver coins, even though the number of coin issues (and issue limits)
albeit at an often far lower rate compared with silver were little changed on 2010. In an effort to prevent the
bars). Second, the poor state of the US economy last contained metal value exceeding the coin’s face value
year, together with concerns over the potential for further (as a result of higher silver prices), the purity of the
quantitative easing, drove US retail investors to buy silver used was lowered from 925 to 600 (in 1998 the
Investment
silver as an inÀation hedge. Finally, high gold prices purity had been raised from 625 to 925), before silver
encouraged smaller investors to switch in favor of its less was replaced entirely with a copper:nickel alloy. Finally,
expensive sister metal, but still bene¿t from leveraged following a brief interruption in 2010, Spanish minting
access to gold, given positive price expectations towards resumed its long-term downward trend last year, with the
the yellow metal. 2011 total the lowest since the early 1990s.
Each of the principal bullion coin producers therefore

Silver Bullion Coin Sales
bene¿ted from notably stronger demand last year,
encompassing the US Eagle, Canadian Maple Leaf, 45
30
Austrian Philharmoniker and Australian Kookaburra Other
Silver Price 40
25 North America
(together with their Koala and Lunar) coins. However,
Europe 35
the pattern of retail investor demand also reÀected
20 30
wider investor sentiment towards precious metals and,
Million ounces
US$/oz
25
as the chart opposite highlights, it was therefore of 15
20
little surprise to see an extremely robust January to
10 15
September performance for western coin demand give
way to a sharp drop during the fourth quarter. Even so, 10
5
the total for the ¿nal three months of 2011 still exceeded 5
0
average quarterly bullion coin demand for the January to 0
Q1-07 Q1-08 Q1-09 Q1-10 Q1-11
September 2010 period. Source: Thomson Reuters GFMS Quarterly Bullion Coin Survey
23
4. Mine Supply
*OREDOVLOYHUPLQHSURGXFWLRQJUHZPRGHVWO\LQ Mine Production
WRDQHZUHFRUGKLJKRI0R] W
)RUWKHQLQWKFRQVHFXWLYH\HDUVLOYHUPLQH
3ULPDU\VLOYHUPLQHVXSSO\IHOOLQGXH SURGXFWLRQLQFUHDVHGJURZLQJE\LQWR
PDLQO\WRDIDOOLQSURFHVVHGJUDGHV7KHWRSWZR UHDFKDQHZUHFRUGKLJKRI0R] W
JOREDOSULPDU\VLOYHUPLQHVVDZRXWSXWGHFOLQHE\D
FRPELQHG0R] W Global silver mine supply has been on an upward trend
since the mid-1990s, and last year this continued,
%\SURGXFWRXWSXWIURPERWKWKHJROGDQGOHDG increasing by 10.2 Moz (319 t) to reach a ninth
]LQFVHFWRUVLQFUHDVHGLQ consecutive all-time high of 761.6 Moz (23,689 t). Over
this period, the key drivers of growth have been the
3ULPDU\VLOYHUWRWDOFDVKFRVWVURVHE\WR by-product lead/zinc and primary silver sectors. A near
R]GULYHQE\KLJKHUODERUFRVWVDQGORZHU decade-long uptrend in the silver price has stimulated
JUDGHVGHVSLWHDQLQFUHDVHLQE\SURGXFWFUHGLWV the development of several primary silver operations,
particularly in Mexico and Latin America. The same effect
)RUWKHVHFRQGVXFFHVVLYH\HDUSURGXFHUVZHUH has been seen in the gold sector, where high gold prices
QHWKHGJHUVRIVLOYHUDFFRXQWLQJIRUDQDGGLWLRQDO have promoted the development of a number of silver
0R] W RIVXSSO\LQ rich gold projects, again in Mexico and Latin America.
Associated silver represents a valuable by-product, and
Top 20 Silver Producing Countries Top 20 Silver Producing Companies
Ranking Output (Moz) Ranking Output (Moz)

2010 2011 Country 2010 2011 2010 2011 2010 2011
1 1 Mexico 141.8 152.8 3 1 KGHM Polska MiedĨ S.A. 1 37.3 40.5
2 2 Peru 117.0 109.8 1 2 BHP Billiton plc. 46.6 39.0
3 3 China 94.0 103.9 2 3 Fresnillo plc. 2
38.6 38.0
4 4 Australia 60.4 55.2 5 4 Goldcorp Inc. 3
23.8 28.8
5 5 Chile 41.0 42.1 4 5 Pan American Silver Corp. 2
24.3 21.9
8 6 Poland 37.7 40.8 6 6 Volcan Cia. Minera S.A.A. 3,4 20.1 21.1
9 7 Russia 36.8 40.0 8 7 Polymetal International plc. 17.3 19.9
6 8 Bolivia 41.0 39.0 9 8 Coeur d’Alene Mines Corp. 2
16.8 19.1
7 9 United States 40.8 36.0 12 9 Cia. De Minas Buenaventura S.A.A 4
13.5 15.3
10 10 Argentina 23.2 22.6 7 10 Hochschild Mining plc. 17.8 15.0
11 11 Canada 18.1 19.1 11 11 Kazakhmys plc. 14.1 13.1
12 12 Kazakhstan 17.6 17.6 13 12 Southern Copper Corp. 12.6 12.7
15 13 India 9.7 11.0 10 13 Sumitomo Corp. 3
15.7 12.4
13 14 Turkey 12.3 9.4 18 14 Kinross Gold Corp. 5
11.3 12.1
16 15 Sweden 9.2 9.1 17 15 Industrias Peñoles S.A.B de C.V. 11.4 11.4
Mine Supply
18 16 Guatemala 6.3 8.8 14 16 Xstrata Zinc 6

11.6 11.1
14 17 Morocco 9.9 7.3 15 17 Teck Resources Ltd. 3
11.5 10.1
17 18 Indonesia 6.7 6.0 19 18 Hecla Mining Company 2
10.6 9.5
19 19 Iran 3.4 3.5 20 19 Yamana Gold Inc. 10.0 9.3
21 20 Papua New Guinea 2.1 3.0 16 20 Eti GĦmĦú A.ù. 11.5 8.4
Rest of World 22.3 24.6 1 Reported metallic silver production 2 Primary producer
3 Estimate 4 Includes production from minority subsidiaries
World Total 751.4 761.6
5 Reported silver sales 6 Reported silver in concentrate and lead bullion
Source: Thomson Reuters GFMS Source: Company Reports; Thomson Reuters GFMS
24
Silver Mine Production Winners and Losers, 2011 versus 2010
Change y-o-y
-5.0 -3.0 -1.0 -0.1 +0.1 +1.0 +3.0 +5.0 Moz
Source: Thomson Reuters GFMS -156 -93 -31 -3 +3 +31 +93 +156 Ton
this can make for compelling development prospects, production in China rose by 11% year-on-year, boosted
some of which rank among the lowest cost gold mines by higher by-product silver output from the country’s
in the industry. Silver also provides an attractive by- base metals sector. Similarly in Poland, silver production
product credit for many polymetallic mines, improving the rose by 3.2 Moz (98 t) as output from KGHM Polska
economics of many lead/zinc projects. MiedĨ increased. In Russia, a 9% increase in silver mine
supply was largely driven by higher output at Polymetal’s
Two of last year’s largest increases came from Goldcorp’s expanded Dukat complex, a primary silver mine.
Peñasquito (lead/zinc) and Fresnillo’s Saucito (primary
silver) mines, both located in Mexico. Their combined North America
output of silver rose by 9.8 Moz (304 t), and was North American production rose by 4% in 2011, to 208.0
behind much of Mexico’s gain of 11.0 Moz (342 t). This Moz (6,469 t). In Mexico, production grew for a ninth
represented the largest annual rise of any country and successive year which, along with gains in Canada,
cemented Mexico’s position as the top global producer, more than offset lower output from the United States.
with output of 152.8 Moz (4,753 t) last year. Elsewhere, Mexican silver mine production continued to grow
strongly last year, rising by 8%, to a new all-time high
of 152.8 Moz (4,753 t), reinforcing the country’s position
World Silver Mine Production as the world’s largest silver producer. Additions came
from primary silver, by-product gold and lead/zinc mines.
800 Silver output at Goldcorp’s Peñasquito sul¿de plant
Oceania Africa
700 CIS Europe (primary zinc) reached 17.2 Moz (533 t), an increase of
57% year-on-year as operations ramped up. At the mill,
Mine Supply
600
throughput rates increased by 50% and metallurgical
Million ounces
500
recoveries reached 74%, up from 58% in 2010.
400 Asia
300 A full year from Gold Resource Corporation’s El Aguila and

Latin America
200 Fresnillo’s Saucito added 2.1 Moz (64 t) and 4.7 Moz (146
100 t) respectively, while Coeur d’Alene’s Palmarejo completed
North America
its second full year of production during 2011, increasing
0
2002 2004 2006 2008 2010
silver output by 54% to 9.0 Moz (281 t).
25
Table 3 - World Silver Mine Production (million ounces) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Poland 38.9 44.2 43.8 40.5 40.5 39.6 39.0 39.2 37.7 40.8
Sweden 9.4 9.9 9.4 9.1 8.6 9.4 8.4 8.7 9.2 9.1
Spain 0.4 0.1 0.0 0.2 0.1 0.1 0.1 0.1 0.7 1.1
Portugal 0.6 0.7 0.8 0.0 0.3 0.9 1.3 0.7 0.7 1.0
Greece 2.4 0.1 0.0 0.0 0.8 1.1 1.1 0.9 0.9 0.8
Bulgaria 0.8 0.7 0.6 0.7 0.6 0.4 0.4 0.5 0.4 0.5
Romania 1.0 0.9 0.9 0.9 0.5 0.1 0.0 0.1 0.2 0.5
Macedonia 0.4 0.2 0.1 0.2 0.4 0.4 0.4 0.5 0.5 0.5
Serbia and Montenegro 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Ireland 0.2 0.3 0.2 0.2 0.1 0.1 0.1 0.1 0.0 0.0
Italy 0.1 0.1 0.0 0.1 0.1 0.0 0.0 0.0 0.0 0.0
Other Countries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
7RWDO(XURSH 54.5 57.2 55.8 51.9 52.0 52.3 50.9 50.8 50.3 54.4
North America
Mexico 88.3 82.6 82.6 93.1 95.5 100.8 104.1 114.3 141.8 152.8
United States 43.4 39.9 40.2 39.2 36.7 40.5 36.0 40.2 40.8 36.0
Canada 44.1 41.0 41.6 34.2 31.2 26.7 21.5 19.5 18.1 19.1
7RWDO1RUWK$PHULFD 175.9 163.5 164.4 166.5 163.3 168.0 161.6 174.0 200.7 208.0
Latin America
Peru 88.8 93.9 98.4 102.6 111.1 112.6 118.3 123.6 117.0 109.8
Chile 38.9 42.2 43.7 44.3 51.5 62.3 45.1 41.8 41.0 42.1
Bolivia 14.9 15.8 14.0 12.8 15.2 16.9 35.8 42.6 41.0 39.0
Argentina 4.1 4.4 4.6 6.0 6.8 8.1 10.7 17.9 23.2 22.6
Guatemala 0.0 0.0 0.0 0.3 1.6 2.8 3.2 4.2 6.3 8.8
Honduras 1.8 1.7 1.6 1.7 1.8 1.7 1.9 1.9 1.9 1.4
Colombia 0.2 0.3 0.3 0.2 0.3 0.3 0.3 0.3 0.5 0.8
Dominican Republic 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.6 0.6
Ecuador 0.0 0.0 0.0 0.3 0.4 0.4 0.4 0.4 0.5 0.5
Brazil 0.2 0.2 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4
Nicaragua 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.3
Other Countries 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.1
7RWDO/DWLQ$PHULFD 149.1 158.8 163.1 169.0 189.3 205.8 216.5 233.9 232.7 226.3
Asia
China 52.9 58.8 63.2 67.0 75.3 78.6 84.2 86.1 94.0 103.9
India 2.2 2.9 3.4 3.3 5.9 5.7 6.8 9.4 9.7 11.0
Turkey 3.7 3.6 4.0 5.2 6.0 7.5 10.1 12.5 12.3 9.4
Indonesia 10.7 9.6 8.6 9.9 7.9 8.6 8.0 7.7 6.7 6.0
Iran 2.6 2.6 2.7 2.9 3.2 2.9 3.2 3.4 3.4 3.5
Papua New Guinea 2.1 2.0 1.7 2.2 1.6 1.4 1.6 2.2 2.1 3.0
Mine Supply
Philippines 0.3 0.3 0.3 0.6 0.8 0.9 0.5 1.1 1.3 1.5
Mongolia 1.1 1.1 1.2 1.2 1.2 1.2 1.1 1.2 1.1 1.1
North Korea 0.7 0.8 0.8 0.8 0.9 0.9 0.9 0.8 0.8 0.9
Thailand 0.7 0.6 0.5 0.6 0.5 0.4 0.4 0.7 0.7 0.8
Japan 2.7 2.7 1.7 1.0 1.1 0.4 0.4 0.4 0.3 0.8
Laos 0.0 0.0 0.1 0.2 0.2 0.1 0.2 0.5 0.6 0.6
Other Countries 0.5 0.6 0.6 0.5 0.4 0.4 0.3 0.3 0.3 0.3
7RWDO$VLD 80.2 85.7 88.8 95.4 105.0 109.3 117.7 126.2 133.5 142.5
26
Table 3 - World Silver Mine Production (million ounces) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Africa
Morocco 9.0 6.7 7.2 7.9 7.9 7.1 8.0 8.5 9.9 7.3
South Africa 3.6 2.8 2.3 2.8 3.0 2.8 2.7 2.9 3.0 2.9
Eritrea 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6
Zambia 0.2 0.2 0.2 0.3 0.4 0.4 0.4 0.4 0.5 0.5
Tanzania 0.2 0.3 0.4 0.4 0.4 0.3 0.3 0.3 0.4 0.4
Botswana 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Ethiopia 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.1
Zimbabwe 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Mali 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Other Countries 0.9 2.3 2.1 1.1 2.3 2.6 1.4 0.1 0.1 0.2
7RWDO$IULFD 14.3 12.7 12.6 12.9 14.3 13.5 13.2 12.6 14.2 12.3
Oceania
Australia 66.8 59.9 71.5 77.4 55.6 60.4 61.9 52.4 60.4 55.2
New Zealand 0.9 1.0 1.0 1.5 1.1 0.6 1.0 0.5 0.5 0.5
Fiji 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
7RWDO2FHDQLD 67.8 60.9 72.5 78.9 56.7 61.0 63.0 52.9 60.9 55.7
CIS
Russia 22.5 29.5 30.3 32.5 31.3 29.3 36.4 42.2 36.8 40.0
Kazakhstan 27.3 25.8 22.6 26.1 25.6 22.8 20.2 19.7 17.6 17.6
Armenia 1.3 1.3 1.3 1.2 1.3 1.2 1.3 1.6 2.1 2.3
Uzbekistan 1.6 1.7 1.9 2.0 2.0 2.5 2.4 1.7 1.9 1.9
Kyrgyzstan 0.0 0.0 0.0 0.0 0.2 0.2 0.3 0.3 0.3 0.3
Azerbaijan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1
Other Countries 0.2 0.2 0.2 0.1 0.1 0.2 0.2 0.2 0.2 0.2
7RWDO&,6 52.8 58.5 56.3 62.0 60.5 56.1 60.8 65.6 59.0 62.4
World Total 594.5 597.2 613.6 636.6 641.1 665.9 683.6 716.1 751.4 761.6
Turning to the losses, silver output at the Fresnillo mine in order to remove built-up material in the shaft. At the
fell by 5.6 Moz (175 t), due to the processing of lower country’s second largest producer, Teck’s Red Dog, output
grade ore. The average silver grade declined by 16%, fell by 13%. This was due to the continued processing
with production from high grade stopes limited due to of weathered ore from the Aqqaluk deposit, which has
increased back¿lling of long hole stopes. The only other higher zinc and lower silver grades. In addition, silver
decline of any note was from Pan American Silver’s output from Rio Tinto’s Bingham Canyon operation
Alamo Dorado, where output fell by 1.4 Moz (44 t), on decreased by 21%, to 3.0 Moz (93 t).
the back of a 29% drop in silver grade. The volume of
silver produced as a by-product from Peñoles’ base metal Canadian production grew to 19.1 Moz (596 t), up 6%
operations was broadly unchanged year-on-year. year-on-year, following six years of consecutive declines.
Mine Supply
Lower output at some of the more established mines

Supply from the United States fell by 12%, to 36.0 was outweighed by growth at Alexco Resource’s newly
Moz (1,120 t), as several operations recorded lower commissioned Bellekeno and at Vale Inco’s Sudbury
production. Hecla’s Greens Creek and Lucky Friday complex. Bellekeno produced 2.0 Moz (63 t) after
operations accounted for a consolidated decline of 1.1 declaring commercial production in January 2011, while
Moz (34 t), with lower plant throughput, down 4% and a full year of production at the Sudbury complex, where
15% respectively, the principal culprit. Lucky Friday was a protracted strike was ended in July 2010, added 1.0
placed on temporary care and maintenance in November Moz (32 t). These gains were partially offset by declines
27
at a number of the country’s more established mines. At balanced by a 1.0 Moz (31 t) decline at Pan American
Canada’s leading silver producing mine, Xstrata Zinc’s Silver’s Morococha, where grades and throughput fell,
Brunswick, silver in concentrate production fell by 10% as the company placed added focus on additional in-¿ll
due to lower head grades. Silver output from Agnico- drilling, infrastructure improvements, labor training and
Eagle’s LaRonde dropped by 0.4 Moz (13 t), owing to mine development.
issues with mine sequencing and ore dilution.
Silver output also fell in Bolivia, by 2.0 Moz (61 t),
Latin America explained by an estimated 20% reduction in silver
Latin American production fell for the second successive output at the San Cristóbal lead/zinc mine, amounting
year, by 6.4 Moz (199 t). The loss was split between the to approximately 3.0 Moz (93 t). This fall came despite
primary silver and copper sectors, with silver from lead/ an increase in base metal output in 2011. Production
zinc broadly Àat year-on-year. The largest drop globally was also hampered by a 12 day strike early in the year.
was recorded in Peru, where silver production fell by Offsetting part of this loss, output rose at Coeur d’Alene’s
7.3 Moz (226 t), or 6%. Primary silver production in San Bartolomé, by 0.8 Moz (25 t), due to an increase
the country contracted by 11%, driven by a combined in both ore grades and throughput. Of note during
3.4 Moz (105 t) reduction at Hochschild’s Arcata and early 2011 were calls from state miners to nationalize
the Pallancata joint venture with International Minerals. the country’s mining industry, with suggestions from
Due to the increase in silver prices over 2011, the government of¿cials that they intended to increase
company took the opportunity to mine low grade, state involvement in the country’s mines through
non-resource narrow vein material, and to reprocess nationalization. However, the move did not reportedly
tailings. Offsetting a part of these losses, Buenaventura’s gain the backing of some of the country’s private sector
Uchucchacua grew silver output by 0.82 Moz (25 t), mineworkers’ unions, which threatened strikes action,
thanks to a 7% increase in mill throughput. By-product and consequently such a move failed to materialize. The
silver from copper mining also fell, by 22%, with a strong government stated at the time, however, that it would
reduction at Antamina of 2.0 Moz (63 t). Despite an seek to renegotiate mining contracts with operators in the
expansion of the mining Àeet, silver grades fell as mining future, a process which is still underway.
progressed to areas of higher copper grades of the pit.
Production in Argentina declined marginally, by
In contrast, the lead/zinc sector saw production slightly 0.6 Moz (18 t). The main loss was seen at Coeur
higher, with Volcan’s Chungar and Cerro de Pasco d’Alene’s Martha, where output fell by 1.0 Moz (33 t)
operations reporting a combined increase of 0.6 Moz (20 due to an 80% reduction in grade as the mine moved
t) due primarily to the contribution from a silver-pyrite from processing remnant ore and tailings to treating
treatment plant. In addition, production from Minera El development ore. Combined output from the Cerro
Brocal’s operations grew by 0.4 Moz (13 t), and output Vanguardia and Veladero mines fell by an estimated 1.0
at Coricancha rose by 0.2 Moz (7 t). These were largely Moz (31 t), with declining ore grades also responsible
at both operations. These losses were balanced by a
Mine Production in the Americas
gain of 0.8 Moz (23 t) at Silver Standard’s Pirquitas,
where improved recoveries, due to improvements to the
500 crushing and Àotation circuits, were responsible. This
Canada Other
United States Bolivia gain came despite two months of production downtime
400
Chile to refurbish and expand the processing circuits. Also
Mine Supply
of note was a full year’s output from Troy Resources’

Million ounces
300
Casposo, which added 0.6 Moz (20 t), having commenced
production late in 2010.
200
Mexico
Against these declines, Guatemala saw a healthy
100
increase in silver output, rising by 2.5 Moz (78 t),
Peru
attributable to Goldcorp’s Marlin. Throughput was
0
2002 2004 2006 2008 2010 increased to optimize production for the commissioning
28
of a ¿lter plant to the process circuit. In conjunction with Grasberg, while in Turkey, silver mine supply fell by
27% higher processed grades, recovery rates rose by 24%, to 9.4 Moz (291 t), largely owing to a 40 day
4%. Chile also saw an increase in output, by 1.1 Moz production stoppage at the country’s largest silver
(35 t), driven by two new project starts. First, Mandalay producing mine, Gümüsköy, owned by Eti Gümüú.
Resources restarted operations at Cerro Bayo, which
accounted for 1.3 Moz (41 t) of growth and, second, from Oceania
the start of Antofagasta’s Esperanza, at an estimated After a strong performance in 2010, Australian
0.56 Moz (17 t). Kinross’ La Coipa also saw a 0.4 Moz production fell markedly in 2011, by 9%, or 5.2 Moz
(11 t) rise in silver production, milling higher silver (163 t). Declining ore grades were behind much of
grades at the expense of gold due to a higher proportion this, although akin to 2009, weather also played a role,
of stockpiled ore feed. The standout decline in Chile causing operational dif¿culties at two of the country’s
was a 1.6 Moz (51 t) fall in copper by-product silver at largest silver producers, in Queensland. The most
BHP Billiton’s Escondida, due to a combination of lower signi¿cant change was in the primary silver sector, as
silver grades in 2011, and a two week strike in the third production from BHP Billiton’s Cannington fell by 6.4 Moz
quarter, which led to a signi¿cant fall in throughput. (200 t) due to a 21% decline in silver grade, plus the
impact of heavy rainfall which led to Àooding in the ¿rst
Asia quarter of 2011. The lead/zinc sector was also affected,
Chinese silver mine production is estimated to have and fell by an estimated 0.3 Moz (9 t). Output declined
increased for a ninth consecutive year in 2011, by 11%, at Xstrata Zinc’s Mount Isa, where silver in crude lead fell
to 103.9 Moz (3,233 t). Approximately 90% of China’s by 0.2 Moz (7 t) due to ¿rst quarter Àooding, plus lower
domestic silver mine supply comes as a by-product of grades and electricity outages in the second half of the
the country’s base metal mining sector, and we estimate year, although this was partially countered by an increase
that on a consolidated basis silver output from these of 0.1 Moz (4 t) at McArthur River.
sectors rose by 12% year-on-year. Last year, China’s
domestic production of lead and zinc rose by 25% and Adding to the losses, Minmetals Resources saw a 44%
16% respectively, driven by a marked increase in output reduction in silver grade at Century, approximately
at a number of the country’s top producing provinces, halving silver output, while lower grades at Golden
while copper production increased by 10%, on the back Grove and Rosebery are also estimated to have impacted
of expansion at some major operations and an increase in production. Mitigating some of these, a slight increase
the number of smaller, provincial mines. came from the copper and gold sectors, of a combined
1.2 Moz (36 t), helped by higher output from Newcrest’s
Chinese lead production was boosted as the country’s Cadia Valley operations, and small contributions of silver
smelters strived to utilize recently expanded capacity, by-product from new gold mines.
meaning that demand for domestically sourced
concentrate remained strong. It should be noted that Commonwealth of Independent States (CIS)
Chinese lead concentrates tend to contain less silver than Silver output in the CIS grew by 3.4 Moz (105 t) in 2011,
the average global product, and as a result of a transition or 6%. This gain was driven by higher output in Russia,
by smelters to process more domestic concentrate, last the region’s largest producer, which rose by 3.2 Moz
year the increase in China’s total re¿ned silver production (98 t) thanks to a 24% increase from the primary silver
was far more muted than the increase we ascribe to sector. The main driver was Dukat, the country’s largest
China’s silver mine production. silver producing operation, which saw output rise by 2.5
Mine Supply
Moz (78 t). First due to the inclusion of higher grade

Elsewhere in Asia, production in India rose by 14%, to ores from Goltsovoye and, second, due to throughput and
11.0 Moz (342 t), as output was boosted by the start recovery improvements at the mill complex, following the
of production at Hindustan Zinc’s silver-rich Sindesar installation of a gravity circuit during the ¿rst quarter of
Khurd mine. In Papua New Guinea, a rise of 0.8 Moz 2011, and modernization of the Àotation cells.
(26 t) was largely attributable to the continued ramp up
of Hidden Valley. Elsewhere, production in Indonesia Production from the gold sector also rose slightly, driven
declined on the back of lower output at Batu Hijau and by a marginal increase in output at Novoshirokinskoye.
29
An Overview of Corporate Transactions in 2011

Many of the transactions within the silver space in 2011 The largest acquisition involving silver was initiated
involved existing producers consolidating ownership of in 2011, announced to the market early in 2012 and
strategic assets and divesting non-core properties. completed at the end of March. Pan American Silver
Corp. acquired Mine¿nders Corp. in a cash and share
In April, Kinross Gold Corp. consolidated its interest in deal which valued the Mexican gold/silver producer at
the Kupol mine and the Kupol East-West exploration approximately US$1.5 billion. Mine¿nders’ principal
licences, in the Chukotka region of Russia, to 100% by asset was the Dolores gold/silver mine, in Mexico, which
acquiring the outstanding 25% held by a state agency produced 74 koz (2 t) of gold and 3.6 Moz (111 t) of
in a cash deal worth US$335 million. In 2011, the mine silver in 2011. At end-2010, the Dolores property had a
produced 6.6 Moz (205 t) of silver as well as signi¿cant reserve containing 2.0 Moz (63 t) of gold and 114.5 Moz
amounts of gold. At end-2011, Kupol had reserves (3,562 t) of silver. In addition, Mine¿nders had 6.2 Moz
containing 37.1 Moz (1,155 t) of silver. (193 t) of silver in Measured & Indicated resources at its
La Bolsa project, also in Mexico.
Silver Standard Resources, meanwhile, embarked on a
partial restructure of its asset portfolio by consolidating Hecla Mining Company consolidated ownership of the
its majority interest in the San Luis project, in Peru, and San Juan Silver project in Colorado, by acquiring the
disposing of the Bowdens silver project, in New South remaining 30% interest from a consortium of local
Wales. At San Luis, Silver Standard acquired the 45% owners. The transaction, valued at US$34 million at the
interest held by Esperanza Resources in a cash and time, fully consolidated ownership of a 37.1 Moz (1,153
shares deal worth C$27 million, plus a 1% net smelter t) total silver resource. Finally, Polymetal International,
royalty. The project has a silver reserve of 7.2 Moz the world’s seventh largest producer of silver in 2011,
(224 t). The company hopes to receive environmental completed a restructuring of the group in March 2012,
approval in 2012, contingent upon which the mine could acquiring all shares in JSC Polymetal, and delisted the
come into production in 2014. latter on the London and Russian stock exchanges.
This came despite a fall at the country’s second largest Europe

silver producing operation, Kupol, where output fell by European silver output rose strongly in 2011, by 8% or
0.1 Moz (3 t) because of a 10% fall in processed silver 4.1 Moz (128 t). The driving force for much of the gain
grades. In contrast, silver output from Russia’s base was seen in Poland, the region’s largest producer, where
metal mining industry is thought to have contracted silver production from KGHM Polska MiedĨ climbed to
slightly last year, to 10.4 Moz (323 t), despite production 40.5 Moz (1,260 t), a gain of 9%, due to higher plant
of these metals increasing year-on-year. throughput of KGHM’s mined copper concentrates. Spain
saw a rise of 0.4 Moz (12 t), due to a 71% increase in the
Although of¿cial statistics show a rise in re¿ned throughput rate of silver-bearing lead/zinc ores at Aguas
production in Kazakhstan, the country’s largest Tenidas. We also estimate that copper by-product silver
producer, Kazakhmys, in fact saw output fall by 7% in from Romania rose slightly last year, in contrast to a
2011, to 13.1 Moz (409 t). Production was driven lower modest fall in silver output for Greece and Sweden.
by declining grades at the maturing Zhezkazgan mines,
despite a 2% increase in the volume of silver bearing Africa
ores extracted. An 11% fall in ore production was Silver production in Africa fell by 13% as the region’s
Mine Supply
mitigated slightly by the release of silver inventory from principal producer, Morocco, recorded a sharp decline.
the smelters and re¿neries carried over from 2010. The Output was adversely affected by civil unrest near the
country’s other integrated producer, Kazzinc, saw output country’s main silver producing mine, Imiter, where
from its own mines drop by 0.9 Moz (27 t). Although the output is estimated to have contracted by 30% year-on-
country’s total re¿ned production rose by a substantial year. Offsetting part of the decline, silver output from
4.0 Moz (125 t), we estimate that around 3.0 Moz (93 Eritrea rose from trivial volumes historically to total 0.6
t) of this was sourced from concentrates originating Moz (17 t) in 2011, lifted by the onset of production from
in Russia. As such, we believe Kazakh output was the oxide portion of the Bisha mine in late 2010.
effectively unchanged year-on-year.
30
Average Prices of Source Metals World Mine Production of Source Metals
($/ton) Change (Thousand tons) Change

2007 2008 2009 2010 2011 y-o-y 2007 2008 2009 2010 2011 y-o-y
Lead 2,595 2,085 1,726 2,148 2,398 12% Lead 3,650 3,793 3,830 4,205 4,615 10%
Zinc 3,250 1,870 1,659 2,159 2,191 1% Zinc 11,133 11,831 11,560 12,275 13,024 6%
Copper 7,126 6,952 5,164 7,539 8,811 17% Copper 15,407 15,460 15,831 15,929 15,953 0%
Gold ($/oz) 695 872 972 1,225 1,572 28% Gold (tons) 2,497 2,429 2,611 2,740 2,818 3%
Source: LME, Thomson Reuters, ILZSG, GFMS Gold Survey 2012, GFMS Copper Survey 2012
Outlook By-Product Analysis
6LOYHUPLQHSURGXFWLRQLVH[SHFWHGWRUHFRUGD 3URGXFWLRQIURPWKHSULPDU\VLOYHUPLQLQJVHFWRU
WHQWKFRQVHFXWLYHDQQXDOLQFUHDVHLQRQWKH HDVHGE\WRWRWDO0R] W DVWKH
EDFNRIKLJKHUSURGXFWLRQIURPWKHSULPDU\VLOYHU WZROHDGLQJSULPDU\PLQHVUHGXFHGRXWSXW
JROGDQGOHDG]LQFVHFWRUV 6LOYHUSURGXFHGDVDE\SURGXFWRIRWKHUPHWDO
PLQLQJZDVUREXVWZLWKKLJKHUVLOYHUSURGXFWLRQ
We expect silver production to again grow in 2012, FRPLQJIURPWKHJROGDQGOHDG]LQFVHFWRUV
boosted by additional supply from all sectors except
copper. Strong silver and gold prices, and an improving Global production of silver from primary silver mines
outlook for base metals, will continue to support the decreased by 2% in 2011. Losses at several of the
project pipeline. In addition, record high silver prices largest primary mines contributed to the lower overall
have boosted many producers’ pro¿t margins, and as trend, with double digit percentage falls at Cannington,
such, a number of companies reported record earnings Fresnillo, Gümüsköy, Arcata and Imiter, which occurred
in 2011. This additional cash Àow is either being used due to lower processed grades and one-off production
to fund future development and exploration work dif¿culties. Some offset came from the ramp-up of new
(sometimes at projects where production has not mines including growth at Palmarejo, plant optimization
already begun), fund M&A activity to grow production, at Pirquitas, along with strong output from Saucito, which
as well as the return of cash to shareholders through commenced commercial production in April. Production
dividend payments. of silver from the gold sector rose strongly to 100.6
Moz (3,129 t) last year. There were several silver-rich
Looking at the speci¿c sources which will drive production gold mines that recorded large increases, such as Marlin
growth higher in 2012, much of the increase will come (Guatemala), Hidden Valley (Papua New Guinea), Dolores
from the Americas, especially from Mexico and Canada, and El Aguila (both in Mexico), which collectively raised
while higher production at a number of key producers in production by nearly 7.6 Moz (236 t). However, the gain
Australia and Turkey are also anticipated to lift production
in those countries. Key drivers in Mexico will be a full
Indexed Silver & By-product Metal Prices
year of capacity production at Goldcorp’s Peñasquito and
the continued ramp-up of Fresnillo’s new underground 220
Saucito mine, while the start of production at Minera Silver
Frisco’s San Francisco del Oro open pit operation and 180
Mine Supply
Concheño development are also expected to added

Index (Q1-08=100)
Gold
strongly to the country total. Meanwhile in Canada, 140
Copper
production is expected to bene¿t from a full year of
steady state production at Alexco Resources’ Bellekeno, 100 Zinc
higher output at Agnico-Eagle’s LaRonde and the

continued ramp-up of Yukon Zinc’s Wolverine mine. 60 Lead
20
Q1-08 Q1-09 Q1-10 Q1-11
Source: Thomson Reuters
31
Silver Output by Source Metal second largest producer, saw its output contract by 20%
(million ounces) to 531,000 t, driven by lower output from Cannington.
2010 % of 2011 % of Change Production was also lower in the next two largest
Output Total Output Total y-o-y
producers, Peru and the United States, with declines of
Primary 224.9 30% 219.7 29% -2%
12% and 10% respectively, which continues a downtrend
Gold 92.7 12% 100.6 13% 9%
that has been in place in both countries since 2008.
Lead/Zinc 270.1 36% 279.0 37% 3%
Copper 160.9 21% 158.7 21% -1%
The pattern of zinc supply has been similar to that
Other 2.9 0% 3.7 0% 27%
of lead, with China underpinning the strong gains in
total output, which last year rose by 6% to 13.0 Mt.
Production in China rose by 608,000 t (16%) to 4.31 Mt,
from the gold sector was broad-based and several mines and accounted for 81% of the total increase to global zinc
recorded small increases. concentrate last year. Production was broadly unchanged
in Australia at 1.47 Mt. A third successive decline was
Base metal prices built on the advances recorded in 2010. recorded in Peru, with a 15% fall to 1.26 Mt, partly the
Average annual copper prices in 2011 posted a gain result of mining a copper-rich (and low-zinc) section of
of 17%, with lead and zinc increasing by 12% and 1% the orebody at the Antamina mine.
respectively. The copper cash quote set an all-time high
of $10,148/t on February 14th, which helped the average In contrast, global copper mine supply increased by just
annual price to a record of $8,811/t. Lead and zinc prices 0.1% last year to 15.95 Mt, representing a second year
did, however, remain well below the highs seen in 2007 of limited expansion. Chilean output fell by 3% in 2011
($2,595/t) and 2006 ($3,273/t) respectively at $2,398/t to 5.24 Mt, the lowest level since 2003, due in part to
and $2,191/t. a 273,000 t reduction at Escondida. Production in Peru
was Àat year-on-year. Although three of the top four
Demand growth within the base metal sector started producing mines, Toquepala, Cuajone and Cerro Verde,
2011 on a ¿rm note, carrying over the momentum seen recorded lower output, largely due to lower grades, this
in 2010. Steel mills and non-ferrous semi-fabricators was offset by growth in copper output at Antamina.
enjoyed buoyant conditions in the ¿rst quarter. China Elsewhere, Mexican output rose by close to 70%, to
remained the key driver; however, the mature economies 414,000 t; this was mainly due to higher output at the
also made a positive contribution in this period. As the Cananea mine (now called Buenavista), which reopened
year progressed, base metal demand weakened, which in 2010. But the main source of extra supply was China,
largely reÀected a broadening and a deepening of the where production rose by 10% to 1.27 Mt; now the
Eurozone debt crisis, which had knock-on effects in a second largest producer of copper concentrate. Although
number of key consuming regions. There were periodic the African Copperbelt also saw good growth, this region
concerns about the sustainability of strong growth within yields only modest volumes of silver.
China, which proved not to be realized; however these
Indexed Global Metal Mine Production
resurfaced in early 2012, prompting some weakness in
base metal prices towards the end of the ¿rst quarter. 130
Lead
Higher prices encouraged concentrate output to increase,

120
Zinc
Mine Supply
particularly for lead and zinc, while structural shortages

Index (2007=100)
of mine capacity have held back copper concentrate

output. According to the International Lead Zinc Study 110 Silver Gold
Group (ILZSG), lead mine production in 2011 rose by

close to 10% for the second year running. In both years, Copper
100
China dominated supply developments, growing by 15%
in 2010 and 27% in 2011. Last year, Chinese production
90
rose by 507,000 t to 2.36 Mt, while output outside China
2007 2008 2009 2010 2011
fell by close to 100,000 t. Supply in Australia, the
Source: ILZSG, Thomson Reuters GFMS
32
Production Costs Silver Mine Production Costs
(US$/oz unless stated) 2009 2010 2011

6LOYHUPLQHFDVKFRVWVURVHIRUWKHVHFRQG Total Cash Costs 5.02 5.47 7.25
VXFFHVVLYH\HDULQE\RQHWKLUG Average Spot Price 14.67 20.19 35.12
Sample Size (Moz) 130.7 138.9 128.5
Silver cash costs in 2011 averaged $7.25/oz, a 33% Global Primary Production (Moz) 212.5 224.9 219.7
rise from a revised ¿gure of $5.47/oz for the prior year. Source: Thomson Reuters GFMS
Nevertheless, with a signi¿cantly higher average annual
silver price, simple cash margins grew by an impressive mines, grades fell signi¿cantly at Arcata (-29%), Alamo
89%, to $27.87/oz. It should be noted that our cost Dorado (-29%), Fresnillo (-16%) and Pallancata (-13%).
analysis is focused on primary silver mines, where data
is available, which accounted for 29% of global silver Of the key producing countries, exchange rates were
mine supply last year. Accordingly, the costed data not a decisive driver of costs in 2011. In Mexico, the
capture of 128.5 Moz (3,996 t) of output represents peso rose by 1% against the dollar, while the Peruvian
58% of global primary silver supply. Even those mines sol and the Russian rouble both gained 3%. Australia
considered ‘primary’ bene¿t from associated by-product experienced the greatest currency appreciation among
metals, most commonly gold, lead and zinc. Silver cash the group, with the Australian dollar 11% stronger.
costs would have been noticeably higher were it not
for the increase in by-product credits, which were once With regard to energy inputs, the average WTI oil
again given a boost by higher prices. The price of gold, price increased by 19% during 2011, to $95/bbl, which
copper, lead and zinc all rose, by 28%, 17%, 12% and continued to drive costs higher, particularly affecting
1% respectively. However these increases alone were not open pit operations and mines that have a reliance on
suf¿ciently large to outweigh cost inÀation. on-site power generation. In Mexico, the average cost of
diesel expressed in US dollars increased by 15%, partly
A key driver of cost inÀation in recent years has been the reÀecting the Mexican government’s decision to align fuel
labor market (frequently the largest single component of prices with those of the United States.
a mine’s operating cost). Labor costs have been rising at
rates above inÀation, partly due to a shortage of skilled Other factors contributing to mining cost inÀation included
workers in the industry; this looks set to remain one of higher prices for electricity and mining consumables.
the key drivers going forward. For example, the Minerals Moreover, general increases in commodity prices have
Council of Australia has estimated that an additional been accompanied by rising royalty rates and production
86,000 workers will be needed in Australia by 2020. taxes (which are often linked to metal prices), and in
some instances measures to re-structure royalty regimes.
Another signi¿cant factor pushing costs upward in 2011
was the lower grade of ore processed. Among the larger
Historical Silver Cash Costs Silver Mine Cash Costs

Cash cost curves
40 40
2011 average silver price ($35.12/oz)
Silver Price 30
Silver cash costs (US$/oz)
30 2011 Cash Costs

Mine Supply
2010 Cash Costs

20
US$/oz
20
10
10
Simple Margin
0
Cash Costs
0 -10
2002 2004 2006 2008 2010 0 20 40 60 80 100
Cumulative production (%)
33
Producer Hedging In contrast, the forward sales portion of the global hedge
book contracted year-on-year, falling from 47.1 Moz
3URGXFHUVZHUHQHWKHGJHUVRIVLOYHULQ (1,465 t) to 25.3 Moz (787 t) at end-2011, after these
DGGLQJ0R] W RIVXSSO\ ¿xed structures impacted a number of producers’ cash
Àow during the year. Notably, after expanding its forward
Following a return to net producer hedging in 2010, position by 9.6 Moz (300 t) in the ¿rst four months of
miners once again added to their positions in 2011. At 2011, Frisco bought back 16.7 Moz (519 t) of forwards
end-year, the delta adjusted global hedge book stood in the third quarter, leaving its forward position at year-
at 94.7 Moz (2,945 t), an addition of 10.7 Moz (334 end totaling 10.8 Moz (337 t). Elsewhere, a number of
t). Hedging activity was concentrated in the ¿rst half producers elected not to replace, or did so at a lower
of 2011, as a number of companies took advantage of volumes, positions they held at end-2010. For example,
strong prices in the ¿rst four months. By end-year, the Minera Volcan replaced only 60% of its end-2010
options portion of the global book had increased, on a position, amounting to 6.1 Moz (188 t) of de-hedging.
nominal (volume of contracts) basis, by a net 108.1 Moz
(3,364 t), or by 32.5 Moz (1,012 t) when adjusted for There was some project related hedging during 2011.
option delta. The adjusted ¿gure represents the true Boliden hedged 6.8 Moz (211 t) of silver in February
draw on the silver market from these positions, through against its investment in the Garpenberg mine expansion,
the risk hedging actions of counterparty banks. Among although including deliveries this amounted to a net 4.5
options hedgers, Barrick Gold entered into a costless Moz (139 t) addition year-on-year. Elsewhere, Cobar
collar option structure covering an additional 30.0 Moz Consolidated Resources, Alcyone Resources and Discovery
(933 t) of silver output. At end-2011, Barrick’s position Metals hedged a combined 4.4 Moz (135 t) of silver.
covered 45.0 Moz (1,400 t), primarily designated to
safeguard the project economics of Pascua-Lama. Brady’s Trinity™ trading and risk management software
is used for the calculation of delta against producers’
In addition, Industrias Peñoles, KGHM Polska MiedĨ option contracts. From the chart below, and assuming
and Minera Frisco expanded their options cover, while all other factors remain equal, the hedge book at end-
Minera Volcan and Mandalay Resources established new 2011 appears relatively insensitive to small changes in
option positions. Peñoles entered into a zero cost collar price, due to the fact that a large portion of the option
structure in the ¿rst quarter, covering 13.4 Moz (417 t) of book comprises collar option structures, of which the put
re¿ned silver output out to early 2013, while KGHM added and call options typically have a wide strike spread. With
a combination of option structures, covering 14.4 Moz three quarters of the put options moving into the money
(448 t) of silver production in 2012-2013. Frisco, which at prices around $20-$25/oz, and with the strike prices of
held a large portion of the option book at end-2010, also sold calls on average very much higher than the end-year
added puts and calls in the ¿rst half. At year-end these price, the option book is functioning more as effective
options covered 56.1 Moz (1,744 t) of future production. downside price protection than a cap on the upside.
Producer Hedging: Outstanding Positions Sensitivity of the Global Hedge Book
120 40 160
Delta-adjusted Options End-2011 Comex Net Puts
Forwards Silver silver price
140 Net Calls
Price $27.88
100 Forwards
120
Mine Supply
30
80
Million ounces
100
Million ounces
US$/oz
60 20 80
60
40
10 40
20
20
0 0 0
2002 2004 2006 2008 2010 7.88 17.88
27.88 37.88 47.88
US$/oz
34
5. Supply from Above-Ground Stocks

Total Silver Supply
6XSSO\IURPDERYHJURXQGVWRFNVIHOOE\WR © Thomson Reuters / The Silver Institute
Above-Ground Stocks
0R] W LQ (Moz) 2009 2010 2011
Supply from
Implied Net Disinvestment - - -
7KHGHFOLQHZDVDUHVXOWRIFRQVLGHUDEO\ORZHU Net Producer Hedging - 50.4 10.7
QHWSURGXFHUKHGJLQJDQGDPDMRUGHFOLQHLQQHW Net Government Sales 15.6 44.2 11.5
JRYHUQPHQWVDOHVZKLFKZHUHSDUWO\RIIVHWE\ Sub-total Bullion 15.6 94.6 22.2
IXUWKHUJURZWKLQVLOYHUVFUDSVXSSO\ Old Silver Scrap 200.0 228.7 256.7
Total from Above- 215.6 323.3 278.9

1HWJRYHUQPHQWVDOHVGURSSHGE\DKHIW\ Ground Stocks
WRD\HDUORZRI0R] W LQ Mine Production 716.1 751.4 761.6
SULPDULO\GULYHQE\DVKDUSIDOOLQGLVSRVDOVIURP Total Supply 931.7 1,074.7 1,040.6
5XVVLD
The decline in supply from above-ground stocks was
6FUDSLQURVHIRUWKHVHFRQGVXFFHVVLYH primarily driven by a hefty fall in net producer hedging
\HDUZLWKYROXPHVKLWWLQJDQHZUHFRUGRI and much weaker government sales, which were partly
0R] W WKDQNVWRUREXVWJDLQVLQMHZHOU\DQG offset by healthy gains in scrap supply. Meanwhile,
VLOYHUZDUHUHF\FOLQJRQKLJKHUSULFHV consistent with the trend seen in previous years,
investors remained a major source of demand last year.
Overview Looking at each component, the largest contribution

The supply of silver to the market can be divided into two to supply from above-ground stocks has been from
categories, namely Àows from new mine production and the recycling of fabricated products. At a new all-time
Àows from above-ground stocks. The latter can either high of 256.7 Moz (7,985 t), scrap supply accounted
be sourced from the recycling of fabricated products or for a quarter of total supply in 2011. This increase was
from the mobilization of bullion stocks owned by private largely attributed to the boom in receipts from jewelry,
individuals or by governments. As illustrated in the silverware and coins. While industrial scrap continued to
accompanying table, in 2011, overall supply from above- grow, the year-on-year increase was fairly limited due to
ground stocks fell by 44.4 Moz (1,380 t), compared with the one-off surge in recovery from ethylene oxide (EO)
a small increase of 10.2 Moz (319 t) in mine production. plants that occurred in 2010. In contrast, photographic
Above-ground stocks’ contribution to total silver supply scrap remained on a declining trend, as a result of the
therefore dropped to 27% in 2011 from 30% in 2010. ongoing weakness in photographic fabrication demand.
As is discussed in detail on page 39, it is of note that

Changes in Above-ground Stocks (2002-2011)
despite a remarkable price rally in the last decade, silver
scrap supply trended broadly sideways over much of the
10
2000s. Behind this apparent conundrum is the fact that
8 most sources of recycled silver are a good deal less price

sensitive than those, for example, for gold.
6
Billion ounces
In gold’s case, the bulk of fabricated products are in

4
the form of jewelry, scrap from which is highly price
2 sensitive due to the metal content accounting for a very
high portion of the ¿nished product’s value. The same
0
is true for silver jewelry, silverware and coins but, in this
-2 instance, the absolute value of contained metal is usually
Private Sector Government Fabricated Products
far lower. On the other hand, silver-bearing ¿nished
35
products in the industrial and photographic sphere (with ,GHQWL¿DEOH%XOOLRQ6WRFNV

a few exceptions) tend to have a low contained metal Thomson Reuters GFMS’ analysis of identi¿able bullion
content and value. As such, silver scrap tends to be stocks includes inventories for which suf¿cient evidence
relatively inelastic to price levels and volatility, and is is available to form a statistical picture. In contrast,
Above-Ground Stocks
mostly driven by the performance of the relevant sector silver bullion held in depositories on which information
as well as environmental legislation. Having said that, is not available, as well as in private investors’ vaults,
Supply from
as the silver price breached the $20/oz mark in late is excluded from our ¿gures. Besides suggesting the
2010, scrap supply eventually posted some price elastic existence of additional stocks of silver, this caveat has
response over the last two years, particularly from the implications for the interpretation of changes in our
jewelry and silverware sectors, although the scale of the estimates of identi¿able bullion stocks. Speci¿cally, in
increase for the total has been relatively limited. addition to such changes being driven by the absorption
of surpluses or the ¿lling of de¿cits, they could in theory
As for net government sales, its total is estimated to be explained by metal Àowing out of unidenti¿able stocks
have fallen by a considerable 74% to a 14-year low of and into identi¿able ones or vice versa.
11.5 Moz (357 t) in 2011, almost exclusively driven by a
substantial decline in disposals from Russia. Elsewhere, As illustrated in the table on the next page, in total,
sales once again remained subdued, with the majority of identi¿able bullion stocks dropped marginally in 2011,
these related to releases of old coins stocks by a number ending the year at 1,155.0 Moz (35,924 t). At ¿rst sight,
of countries. As such, net government sales’ contribution the fall may seem counterintuitive, given the 141.8 Moz
to total silver supply last year fell to just above 1%. (4,409 t) net inÀow derived by the difference between
implied net investment and the sum of net producer
Unlike gold, where the bulk of liquidity for the lending hedging and net government sales over the year.
market is provided by central banks, the metal used
to fund producers’ activities in the silver forward and Central to this is implied net investment data which
derivatives market is largely sourced from privately held aggregates investor activity in all areas. As such, the
stocks of bullion. The 10.7 Moz (334 t) net increase divergent trend between the two was partly due to
in the producers’ hedgebook last year is understood robust physical investment, with demand for bullion bars
to be comfortably offset by the 118.2 Moz (3,677 t) for example surging to 95.7 Moz (2,975 t) in 2011. In
coins & medals and the 164.0 Moz (5,099 t) implied net addition, the difference could have been related to the
investment ¿gure derived for the year. This suggested fact that some of the bullion was moved from identi¿able
that privately held stocks of silver bullion rose by a total sources to non-identi¿able stocks held by private
of 271.4 Moz (8,443 t) last year. In other words, the investors and non-reporting institutions. Supporting this
private sector demanded rather than supplied silver view is that a growing number of banks and logistics
bullion on a net basis in 2011.
,GHQWL¿DEOH%XOOLRQ6WRFNV Bullion Stocks in Dealers’ Vaults in Europe
1000 Lease Rate 150

1400
Others
3-month rate (basis points, end-year)
Comex 120
1200
Government 800
Million ounces (end-year)
1000 European Dealers 90

Million ounces (end-year)
600
800 60
600 30
400
400 0
200
200 -30
0 0 -60
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
36
,GHQWL¿DEOH%XOOLRQ6WRFNV Comex Silver Stocks
(Million ounces) (Million ounces; end period)

end-2010 end-2011 Q1 Q2 Q3 Q4
European Dealers 928.3 925.3 2008 135.9 136.0 135.5 127.7
Above-Ground Stocks
Comex 104.5 117.3 2009 125.4 117.6 115.4 112.4
Government 108.5 97.0 2010 116.6 114.0 111.1 104.5
Supply from
Other Stocks 17.3 15.4 2011 105.4 98.7 108.0 117.3
Total 1,158.6 1,155.0 Source: Comex
companies have opened (or planned to open) new It is important to note this Àat line hides some important
precious metals vaults in the last couple of years, due intra-year developments in 2011. Last year began with
to booming investor demand for physical gold and silver a rapid expansion of bullion stocks held at European
(these stocks are unlikely to be included in our ¿gures). dealers’ vaults, driven by heightened investor interest in
the white metal, as our information suggests that total
Moving to the breakdown of identi¿able bullion stocks at volumes could have hit an all time high of over 960 Moz
year-end, last year’s fall was led by the 11.5 Moz (357 t) (29,850 t) by early April. Nevertheless, all these gains
decline in government owned silver, while both European were soon wiped out during the investor sell-off in late
dealers’ inventories and other stocks (predominantly held April and early May, dominated by major redemptions
by the Japanese trade) posted very small drops. These in silver ETFs (discussed in the relevant focus box
losses were largely offset by the 12.8 Moz (397 t) rise in in Chapter 3). Thereafter, European dealers’ stocks
Comex stocks. resumed positive growth, albeit at a much slower rate,
helped by renewed interest in silver ETFs and a small
rise in allocated accounts managed by banks. Finally,
European Dealers’ Stocks the slowdown in industrial fabrication demand in the ¿nal
quarter of the year would also have contributed to the
Since 1996, we have conducted a con¿dential survey recovery in stocks.
of bullion stocks held in European dealers’ vaults and
have reported an aggregate end-year total for these in
the World Silver Survey. At the end of 2011, European Comex Stocks
dealers’ silver stocks amounted to 925.3 Moz (28,779 t),
marginally lower from the peak of 928.3 Moz (28,873 t) Consistent with the trend seen in 2010, stocks held at
seen at end-2010. Comex depositories continued to decline in the ¿rst half
of 2011, falling to 98.7 Moz (3,070 t) by end-June which
was their lowest level since mid-2001. Central to this was
Comex Warehouse Stocks buoyant demand for physical silver bullion products, the
ongoing strength of industrial demand and a temporary
140 50 shortage of silver supply in the US market.
120
40
Since then, however, with investor interest softening and
Million ounces (end-month)
100
industrial demand weakening, Comex stocks began to
30
80 rise again. Compounding this was an apparently excess
US$/oz
60 Settlement Price supply in the market, which eventually led to a rapid

20
build-up in Comex stocks at end-2011. This tendency
40
has continued to strengthen in early 2012: as of end-
10
20 February, a further 13.1 Moz (408 t) of silver had been
shipped to the exchange’s vaults, leaving inventories at
0 0
Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 130.4 Moz (4,056 t), a level last seen in late 2008.
Source: Comex
37
'H¿FLWVDQG6XUSOXVHVLQWKH6LOYHU0DUNHW
From 1990 to 2003, the silver market saw a series Meanwhile, silver has also bene¿ted from a commodity
of massive market de¿cits - de¿ned as the difference boom (notwithstanding the massive sell-off in late
Above-Ground Stocks
between supply from mine production plus scrap and 2008) over the last decade driven by the strong growth
Supply from
demand from fabrication (note that for this analysis, performance of emerging market economies. In
fabrication excludes coin minting, which instead is treated addition, its wide trading range in a far smaller and less
as new bullion demand). Over the period, the gap was liquid market, particularly compared with gold, has also
primarily ¿lled by the mobilization of above-ground recommended the white metal to those more speculative
bullion stocks held by private investors and governments. investors. This helps to explain a spectacular rise in
buy-side interest in silver from late 2010 through to
Since 2004, however, the picture changed dramatically, April 2011. Despite two bouts of heavy long liquidation
with a market surplus ¿rst appearing that year and then thereafter, the silver market saw investors, on balance,
rising to 260.0 Moz (8,086 t) in 2011. Given the ongoing remain net buyers, which kept the price Àoor elevated by
government sales over the last few years, almost all historical standards.
these market surpluses have been comfortably purchased
by investors, with stocks held by private and institutional
6LOYHU'H¿FLWVDQG6XUSOXVHV
investors estimated to have risen by nearly 1,200 Moz
(37,300 t) from 2004 to 2011. 40
300
250 35
There were several reasons behind this massive increase
200 30

in investor interest in silver. First and foremost is surging
150
Million ounces
safe haven purchases, following the credit crunch in late Surplus 25

100
2008 and then a rapidly worsening sovereign debt crisis 20
50
in major developed countries since 2010. Related to this 15
0
has been the persistence of extremely low or negative
10
-50 Real
real interest rates and massive injections of liquidity by Silver Price
-100 5
monetary authorities in recent years, which have not only Deficit
-150 0
raised concerns over ¿at currencies but also fueled long-
1990 1995 2000 2005 2010
term inÀation fears. Source: Thomson Reuters GFMS
Government Stocks con¿dent when it comes to measuring the annual changes

in stocks, as shown in our government sales data.
Thomson Reuters GFMS estimate that net government
sales stood at 11.5 Moz (357 t) in 2011, down by 74% Last year’s massive decline was overwhelmingly driven by
year-on-year to the lowest level in more than a decade. Russia, the source of most government sales from 2007
By the end of 2011, total government silver stocks were to 2010, as disposals from the country plunged by nearly
estimated to have fallen to 97.0 Moz (3,017 t). 90% year-on-year to below 5.0 Moz (160 t). However,
it is important to stress here that the fall came from an
It should be noted that these estimates are largely based exceptionally high base in 2010 and that, if anything, this
on private information we have received in the course of merely represents a return to normality. Indeed, one
our ¿eld research, as there is very little publicly available should remember in this regard that in 2010 government
data on levels of and changes in government silver stocks sold by Russia almost tripled, most likely driven by
stocks. This is a particularly important caveat when it the attractive silver prices on offer.
comes to the outstanding level of government stocks
where our numbers are somewhat at the conservative Interestingly, even though the silver price powered higher
end of the spectrum. Nevertheless, we are far more in early 2011, it failed to stimulate another wave of hefty
38
sales from Russia, which may indicate a much reduced Scrap

level of government owned stocks by end-2010 after the
country released more than 200 Moz (6,220 t) of silver 7KHULVHIRUJOREDOVFUDSVXSSO\WRDQHZ
into the market from 2004 to 2010. Nevertheless, given UHFRUGWRWDOZDVODUJHO\GXHWRJURZWKLQ86
Above-Ground Stocks
the high degree of uncertainty over the size of remaining UHF\FOLQJDORQJZLWKEURDGEDVHGJDLQVLQ(XURSH
state stocks, it is probably unwise to rule out completely
Supply from
the return to a higher level of Russian sales in the future. The last two years have witnessed a material lift in global
silver scrap supply. For much of the 2000s, recycling
Excluding Russia, total sales were in fact up by a small was little changed, with a variance of only 5% from the
amount last year, albeit from an extremely low base. The 200.3 Moz (6,230 t) annual average achieved during
majority of these sales were believed to have related to the 2002-08 timeframe. In broad measure, this saw
disposals of old coin stocks by a handful of countries. structural losses continue for photographic scrap which,
up until the late 2000s, had accounted for the largest
Finally, looking at China and India, once again, both share of global silver recycling. However, the decline in
countries were absent from the market last year. As photo-related scrap was not as steep as the fall seen in
far as China is concerned, it is our understanding that, photographic offtake. The less pronounced decline for
following several years of heavy sales, its silver stocks photo recycling was due to both the large volume of X-ray
have already been reduced signi¿cantly from “excessive” material that was scrapped (accounting for comfortably
levels, and remaining stocks will play some small part in the largest share of photographic scrap), but also the
diversifying its reserves portfolio away from US dollars. relative price insensitivity of this segment. Here, health
legislation has often dictated the tenure of archive X-rays
and therefore the point at which they can be released
Other Stocks into the market. However, given the extended period
of losses in photographic demand (which date back to
In addition to the above-mentioned stocks, we also track 2000), it was not entirely unexpected that photo scrap
those registered on the Tokyo Commodities Exchange, eventually entered a period of more sustained losses,
the CME Group (previously the Chicago Board of Trade) which broadly characterized 2010-11.
and Japanese trade stocks, as reported by the country’s
Ministry of Trade and Industry. Due to their only In contrast, the recovery of silver from scrapped industrial
accounting for a small fraction of the overall ¿gure, we products has enjoyed a period of near uninterrupted
have aggregated these under the “Other Stocks” category growth during the mid to late 2000s. There were,
in the chart on page 36 and the table on page 37. At however, at times contrasting trends within the sub-
end-2011, these stocks had fallen by 1.9 Moz (60 t) year- categories. First, electronic scrap (E-scrap) has grown
on-year to 15.4 Moz (479 t). noticeably, a function not only of tighter environmental
legislation (principally in western markets), but also
Net Government Stocks Sales because of the rise in silver prices. In this regard, ¿eld
research has indicated that price developments may
100
Others have a greater bearing on E-scrap, a segment which
Russia was previously thought to be largely price inelastic, with
80 China
prevailing prices having transformed the economics of
recovering silver from industrial products.
Million ounces
60
The recycling of spent ethylene oxide (EO) catalysts

40
also accounts for a large slice of industrial silver scrap.
However, this sector has enjoyed a varied performance in
20
recent years, with a post-recession surge in 2010 (which
0 bene¿ted from changeouts postponed from the previous

2002 2004 2006 2008 2010 year) giving way to a smaller volume of recycling in
Source: Thomson Reuters GFMS 2011. In contrast to E-scrap, the recovery of silver
39
from EO catalysts is more closely aligned with economic World Scrap Supply
growth and how this feeds through to demand for glycol
300 40
products, such as plastics. Silver prices are therefore India
Real Silver
Price
unlikely to affect the timing of changeouts, but high 250 Others 35
Above-Ground Stocks
prices are likely to require a more rapid recovery of the

30
200
contained silver, given its impact on cash Àow. In spite
Million ounces
Supply from
25
of the decline in EO recycling it does appear as though 150
global industrial silver scrap grew last year. Japan 20
100
15
United States
There was a far stronger response for the recovery of
50
10
silver from old silverware and jewelry and it is these EU-25
sectors that we believe to have accounted for the bulk 0 5

2002 2004 2006 2008 2010
of the 12% rise in world scrap supply in 2011 (following Source: Thomson Reuters GFMS
a 14% lift in 2010) to a new peak of 256.7 Moz (7,985
t). Central to this outcome was a surge in western Italy, was placed on the boom in receipts from silverware.
market supplies (principally from the United States), Given that the pool of silverware in that country could
which comfortably exceeded the growth in recycling from easily exceed 200 Moz (6,000 t), it is not surprising that
the traditionally price sensitive markets (such as India). high prices and a gloomy economic backdrop trigger
Although above-ground western jewelry stocks far exceed weighty selling of now dated pieces. This can also be
those in the developing world, little of this material would done easily as a collection network based on gold jewelry
in the past have been considered near market, given has already been established. A signi¿cant, if perhaps
the elevated level of retail markups. Even so, there fairly temporary, contribution last year was also made
was a clear price linked response from consumers but from old coins. Some came from pro¿t taking collectors
of similar importance was the boost to distress selling and some were commemorative coins being melted down
from a dispiriting economic backdrop and the fact that as their ¿ne silver value exceeded the face value.
the development of an organized and high pro¿le gold
jewelry scrap collection industry transformed the ease The rise for total scrap would have been larger but for
with which consumers these days have been able to the ongoing slide in photographic scrap. Some segments
recycle unwanted silverware and jewelry. There was also within this, such as receipts from the motion picture
a notable surge in western coin scrap last year. industry, were broadly steady but there was a marked
drop in the recovery from processing liquids due to the
European silver scrap grew by 18% last year to a record ongoing shift to digital in both consumer ¿lm and X-rays.
53.0 Moz (1,650 t). A fair portion of the gain was due There was also a slump in recovery from the far larger
to industrial contributions, which have bene¿ted from category of ¿lm, much of which is old X-rays. This was
higher silver prices, as this can make recovery economic mainly due to both the ongoing slide in yields, which itself
from various low grade sources. There was also a boost stemmed in part from hospitals’ shift to dry view X-ray
from an increase to the re¿ning capacities for those technologies, and to a drop in gross receipts. The latter
taking in E-scrap, at a time when yields are holding more is thought largely due to collectors having already sought
stable as their historical slide looks to be bottoming. The out the bulk of old X-rays that can now be destroyed.
industrial segment remains a gray area, however, as it is
very dif¿cult to separate out what is truly old scrap from Last year, US silver scrap supply posted the largest
process scrap, particularly if cross-border movements in increase in volume terms, with the country total rising by
this material occur. That said, we feel this sector is likely 17% to a record high. This performance was entirely due
to remain the largest supplier of old scrap. to the jump in the recycling of old jewelry and silverware,
whose combined volume is likely to have exceeded the
The fastest growth, however, appears to have been contribution from industrial scrap. As touched on in the
recorded at the high grade end of the spectrum. Some of introduction, the success of the US gold scrap collection
this is attributable to old jewelry coming from individuals industry (itself motivated by high metal prices), against
and being melted down but much emphasis, especially in a backdrop of a struggling economy, contributed to this
40
Table 4 - Supply of Silver from the Recycling of Old Scrap (million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Above-Ground Stocks
Germany 16.7 19.0 19.2 17.6 15.1 15.1 14.6 12.6 14.9 16.7
UK & Ireland 13.6 13.0 12.4 11.6 10.9 11.2 10.9 10.2 9.6 10.9
Supply from
Italy 3.6 3.6 3.3 4.3 5.5 5.6 5.9 5.8 6.5 9.7
France 3.9 4.1 3.8 4.1 4.5 4.6 5.1 5.5 6.2 7.0
Spain 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.7 1.3
Netherlands 1.4 1.4 1.4 1.4 1.3 1.1 1.1 1.0 1.1 1.2
Austria 1.9 1.5 1.6 1.3 1.3 1.2 1.2 1.1 1.1 1.2
Sweden 1.0 1.0 1.0 1.0 0.9 0.9 0.9 0.8 0.8 0.9
Belgium 0.6 0.6 0.6 0.7 0.6 0.6 0.6 0.6 0.6 0.7
Denmark 0.5 0.5 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.5
Portugal 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Czech & Slovak Republics 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Finland 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.4
Norway 0.7 0.5 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Switzerland 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2
Other Countries 1.2 1.1 1.1 1.0 1.0 1.0 1.0 1.0 1.0 1.0
7RWDO(XURSH 47.1 48.4 47.5 45.6 43.8 44.0 43.8 41.0 44.9 53.0
North America
United States 60.2 58.8 55.6 57.0 53.2 53.6 55.4 54.4 64.6 75.2
Mexico 1.5 1.8 1.9 2.1 2.3 2.7 3.1 3.2 4.0 4.5
Canada 1.4 1.5 1.4 1.5 1.4 1.6 1.7 1.5 1.6 1.8
7RWDO1RUWK$PHULFD 63.1 62.1 58.9 60.5 57.0 57.9 60.2 59.1 70.2 81.5
Latin America
Brazil 1.0 1.2 1.0 1.0 1.0 1.0 1.0 1.1 1.4 1.6
Argentina 0.6 0.6 0.6 0.6 0.8 0.6 0.5 0.4 0.6 0.7
Chile 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.6 0.7
Other Countries 0.8 0.8 0.8 0.9 1.1 1.0 1.0 1.0 1.3 1.6
7RWDO/DWLQ$PHULFD 2.8 3.0 2.8 3.1 3.4 3.2 3.0 2.9 3.8 4.6
0LGGOH(DVW
Saudi Arabia & Yemen 7.2 0.7 1.3 1.6 1.8 1.9 1.9 1.9 2.2 2.3
Turkey 1.4 1.7 1.5 1.3 1.1 1.0 1.1 1.2 1.1 1.3
Egypt 1.3 1.1 1.4 1.4 1.5 1.5 1.7 1.8 2.0 0.9
Oman 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Other Countries 0.3 0.4 0.5 0.4 0.5 0.5 0.5 0.5 0.6 0.7
7RWDO0LGGOH(DVW 10.4 4.1 4.8 4.9 5.1 5.0 5.4 5.7 6.1 5.4
Indian Sub-Continent
India 6.8 9.5 10.4 16.1 22.5 16.1 13.8 15.0 17.9 20.6
Other Countries 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.8 1.0
7RWDO,QGLDQ6XE&RQW 7.2 9.9 10.9 16.6 23.1 16.6 14.4 15.6 18.8 21.6
East Asia
China 11.8 13.1 15.2 17.5 20.4 22.5 22.7 25.3 29.2 31.9
Japan 30.2 29.9 28.3 27.4 26.0 25.7 23.7 21.3 20.9 23.0
South Korea 6.7 7.1 7.2 7.3 7.7 7.8 7.7 8.4 9.4 10.0
Taiwan 2.3 2.5 2.7 2.7 2.8 2.9 3.1 3.6 4.1 4.5
Thailand 1.9 2.1 2.4 2.2 2.6 2.7 2.9 3.1 3.7 3.7
Singapore 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.6
Hong Kong 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5
Indonesia 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5
41
Table 4 - Supply of Silver from the Recycling of Old Scrap (million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Vietnam 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4
Above-Ground Stocks
Philippines 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Other Countries 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2
Supply from
7RWDO(DVW$VLD 54.7 56.4 57.7 59.0 61.7 63.8 62.2 63.7 69.6 75.4
Africa
Morocco 0.5 0.5 1.3 0.6 0.9 0.9 0.9 1.0 1.0 1.1
Other Countries 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.7
7RWDO$IULFD 1.0 1.1 1.8 1.2 1.5 1.5 1.5 1.6 1.7 1.8
Oceania
Australia 2.3 2.1 2.0 1.8 1.7 1.7 1.6 1.6 1.6 1.6
7RWDO2FHDQLD 2.3 2.1 2.0 1.8 1.7 1.7 1.6 1.6 1.6 1.6
CIS
CIS 8.5 9.0 10.9 9.0 8.9 9.3 8.7 8.8 12.1 11.7
Total CIS 8.5 9.0 10.9 9.0 8.9 9.3 8.7 8.8 12.1 11.7
World Total 197.3 196.0 197.4 201.6 206.0 203.0 200.9 200.0 228.7 256.7
outcome, which was all the more impressive, given Silver scrap in East Asia grew by 8% last year to a new
the lack of advertising (of silver buybacks). However, record level of 75.4 Moz (2,346 t). The stronger price
as discussed in Gold Survey 2012, high levels of environment, coupled with industrial fabrication gains in
unemployment, together with a lack of readily available several markets, generated the marked rise in recycling.
consumer credit, encouraged the public to sell back what
were typically high margin products. Scrap receipts in China rose by 9% last year to 31.9 Moz
(992 t), assisted partly by increased X-ray and consumer
In contrast, the recovery of silver from spent ¿lm processing (from a low base), and a rise in recovery
photographic products fell last year, while industrial scrap from EO catalysts. In addition, greater monitoring from
also edged lower. The latter occurred in spite of a further environmental groups on electronic scrap collection has
lift in E-scrap and in this regard it is worth noting the seen advancements in this area, with the higher silver
growth in US capacity, against an expected rise in US prices adding incentive for the industry to follow stricter
E-scrap supplies. In spite of this, an important offset guidelines. Elsewhere, Indonesia saw gains over 12%
was the drop in the recovery of silver from spent EO last year, principally from the remelt of jewelry and
catalysts. However, this must be viewed against what silverware (both from consumers and across the supply
was an elevated total in 2010, during which changeouts, chain), while industrial recycling accounted from much of
postponed (where feasible) from late 2008 and 2009, the growth in recycling in Taiwan and South Korea.
were carried out. However, with no repeat of this last
year it was of little surprise that EO scrap fell. Last year, Japanese scrap supply rose by 10%. This
was driven by a lift in volumes from old X-rays, elicited
The third largest rise in silverware and jewelry recycling from hospitals by the strong silver price. It is worth
emerged in India, where total scrap supply in 2011 noting, however, that major Àuctuations do not occur
jumped by 15% although, at 20.6 Moz (642 t), this from this source, because the medical sector is legislated
still fell short of 2006’s record high. In fact, last year’s to hold stock for a given length of time which means that
performance would have been far weaker were it not supplies cannot be drawn out early. Electronics scrap,
for a surge in third quarter supplies, as local prices rose meanwhile, remained largely unchanged, despite higher
to a peak of just over Rs. 65,000/kg. This may appear silver prices. This was due to the lackluster economic
surprising as this peak fell short of the April record of Rs. backdrop as consumers refrained from scrapping old
75,000/kg. However, bullish price expectations during items, thus limiting the supply of electronics products
the ¿rst quarter had discouraged recycling, but the end- entering the recycling supply chain.
April price retreat instead motivated consumers to take
advantage of subsequent price strength.
42
6. Silver Bullion Trade
1HW8.EXOOLRQLPSRUWVVOXPSHGE\DOPRVW London terminal market), and also doré and concentrates

PDLQO\WKURXJKORZHULQÀRZVIURP5XVVLDDQGD (a great deal of which goes to Switzerland, with some of
VXUJHLQVKLSPHQWVWR,QGLDZKLOH6ZLW]HUODQGWRR the world’s largest re¿neries). These inÀows can often
ORRNVWRKDYHVHHQKLJKHURXWÀRZVWRWKDWFRXQWU\ exceed the apparent de¿cit, which, in conjunction with
sizable loco-London and loco-Zurich stocks, means bullion
1HW,WDOLDQEXOOLRQLPSRUWVIHOOE\RYHUGXH exports from Europe can also prove substantial. Bullion
PDLQO\WRDGURSLQIDEULFDWLRQDQGDVXUJHLQORFDO movements for Italy and Germany are also signi¿cant but
DQGLPSRUWHGVFUDSZKLOH6ZLW]HUODQGLVWKRXJKWWR these Àows tend to be overwhelmingly intra-European.
KDYHVHHQKLJKHUVFUDSGHULYHGEXOOLRQLPSRUWV
UK bullion export data for 2011 shows a rise of a marked
,QGLDQVLOYHUEXOOLRQLPSRUWVURVHE\RYHUDWKLUG 19% to 92.2 Moz (2,867 t), chieÀy through shipments to
LQGHPRQVWUDWLQJDKLJKO\YRODWLOHSDWWHUQ India more than doubling to 57.6 Moz (1,791 t). After a
Silver Bullion Trade

RYHUWKH\HDUWKDWZDVKHDYLO\GLFWDWHGE\LQYHVWRU quiet ¿rst quarter when 3.7 Moz (114 t) was exported to
SULFHH[SHFWDWLRQV that destination, these grew dramatically to an early peak
in May and, after a quiet summer, to a yet higher peak in
:HDNLQGXVWULDOGHPDQGOHGWRDGURSLQEXOOLRQ October of 17.7 Moz (550 t). This illustrates the extent
LPSRUWVDFURVVPXFKRI(DVW$VLDZKLOH7KDL to which demand in India can be inÀuenced by price
LQÀRZVIHOOGXHWRVRIWMHZHOU\RIIWDNH6LQJDSRUH movements. In contrast, there were marked declines in
ZDVWKHRQO\FRXQWU\WRVHHLWVUHFHLSWVJURZ shipments to Germany and Canada and a fair sized drop
for outÀows to Switzerland and the United States.
Europe
Europe is one of the world’s main structural de¿cit UK bullion imports fell a notable 25% to 106.5 Moz
regions as regards silver as its fabrication greatly (3,312 t). This was largely due to the 38.2 Moz (1,188
exceeds the supply derived from mine production and t) slump in receipts from Russia, which would certainly
locally generated scrap; last year, supply from those two tie in with the story of lower government sales from that
amounted to 54.4 Moz (1,693 t) and 53.0 Moz (1,650 t) country. There was also a notable drop for inÀows from
respectively, while fabrication stood at 147.3 Moz (4,582 Hong Kong, despite a surge in volumes in May last year.
t). Part of that resultant de¿cit of almost 40 Moz (1,250 In contrast, there were fair sized gains for imports from
t) is covered by imported scrap. However, that still Germany and Switzerland. This meant a collapse in net
leaves a clear need for imports of re¿ned bullion (much UK imports from 64.8 Moz (2,014 t) in 2010 to just 14.3
of which goes to the United Kingdom, as home to the Moz (444 t) last year.
UK Bullion Imports UK Bullion Exports
60 Leasing Other 5 120 50

Rate Other
USA
Silver Price
50 4 100 Switzerland
40
India
3-month leasing rate (%)
40 3 80 North America
Million ounces
Million ounces
30
US$/oz
30 2 60
20
20 1 40
10
10 0 20
0 -1 0 0
Q1-06 Q1-07 Q1-08 Q1-09 Q1-10 Q1-11 Q1-06 Q1-07 Q1-08 Q1-09 Q1-10 Q1-11
43
As reported by country of origin, Swiss bullion imports over 10% to around 46 Moz (1,435 t), which no doubts
grew by around 20% to almost 54 Moz (1,680 t). Greater reÀects the country’s 12% drop in total fabrication and its
receipts from Hong Kong, Belgium and Italy explain much 12% rise in scrap. As for exports, these fell by 29% to
of the rise, suggesting higher volumes of scrap derived 56.9 Moz (1,771 t), basis of¿cial German gross ¿gures.
supply. There was an increase for inÀows from origins If we then add in data from the missing countries and
whose metal is likely to primarily be mine output, such as convert this to a ¿ne weight, we derive a drop of 25% to
Chile, Kazakhstan and Mexico, but, on a ¿ne weight basis, a level only slightly higher of almost 61 Moz (1,900 t).
their combined increase was outweighed individually by This analysis therefore suggests a swing from net imports
each of the above more scrap focused origins. Not all in 2010 of around 3.5 Moz (100 t) to net exports of just
origins fully disclose data and we are led to believe that over 14.5 Moz (450 t), much of which was shipped to the
there was a notable drop for these countries. As such, it United Kingdom, Austria and the United States.
is possible that true Swiss imports did not grow at all.
Italian trade data shows a drop in 2011 of 48% in its
Swiss exports as reported by destination stand at some silver bullion imports to 14.2 Moz (441 t), largely as a
39 Moz (1,200 t, up 3% year-on-year) but this ¿gure result of lower receipts from Germany. At the same time,
lacks real meaning as the largest home, India, has only exports rose by 92% to 12.6 Moz (393 t), with outÀows
released numbers to end-July. As a result, we need to to the United States and Switzerland explaining much of
make an allowance for that and, since demand in India the rise. This left net imports falling by 93% to just 1.5
was reported strong beyond July (especially in October), Moz (48 t). There are no obvious distorting factors to
total Swiss exports should have been higher, perhaps these ¿gures and so the reality they portray instead is a
close to 46 Moz (1,440 t) and therefore up around 20% notable drop in bullion requirements as fabrication fell by
on 2010. However, industry comment suggests lower 20%, at the same time as both domestic and imported
outÀows to homes that fail to fully disclose data and, as a scrap grew more strongly.
result, actual Swiss exports last year could have dropped
slightly. Nonetheless, this would still leave the country Silver bullion exports from the Commonwealth of
with fair sized net imports in 2011. Independent States fell in 2011, largely due to a drop
in Russian deliveries. This in itself was chieÀy because
Of¿cial German ¿gures show bullion imports falling of lower Russian government sales, in spite of last year
in 2011 by 10% to 26.1 Moz (813 t) in gross weight seeing a rise in the underlying supply/demand surplus
terms. However, that number is understated due to data (a 9% lift for mine supply, along with a 16% drop in
suppression for certain countries and, if data as supplied fabrication). Elsewhere, bullion exports from Kazakhstan
by the latter on exports to Germany were included, true fell last year even though mine supply was unchanged,
German imports would be roughly double the above while in fact re¿ned silver output grew. However, a
number. If that tonnage is then converted to a ¿ne change in government legislation disrupted exports,
weight, we are left with bullion imports falling by just although “normal” levels had resumed by year-end.
2I¿FLDO,WDOLDQ%XOOLRQ,PSRUWV ([SRUWV &,6%XOOLRQ([SRUWV 5XVVLDQ*RYHUQPHQW6DOHV
12
100
Bullion Exports Government Sales
10
Imports
80
8
Million ounces
Million ounces
60
6
40
4
Exports
2 20
0
0
Q1-06 Q1-07 Q1-08 Q1-09 Q1-10 Q1-11 2002 2004 2006 2008 2010
44
7KH$PHULFDV that the pace of fabrication demand had eased. This

Last year, US silver bullion imports rose by 12% to an was reÀected in softer bullion imports over the April to
estimated 207.8 Moz (6,464 t), comfortably the highest September period, but commitments to deliver metal into
total in our 22-year data series; this followed on from a the United States resulted in a surge of excess supply
(then) record high the previous year. On both occasions, towards year-end as imports jumped against a backdrop
this occurred in spite of the near absence of deliveries of far weaker industrial offtake. It was therefore of little
from Peru which, in 2008, had shipped around 39 Moz surprise to see much of this intake delivered into Comex
(1,200 t) to the United States. In sharp contrast, last warehouses, although the growth in silver stocks only
year Peruvian shipments totaled a paltry 3.8 Moz (118 t). materialized between December 2011 and February 2012.
The rise in inbound trade reÀected improved US industrial Turning to Canada, the rise in bullion imports in part
offtake, prior to the fourth quarter and higher investment reÀected a legacy of the strike-related closure of the
demand, both of which often demanded four 9s purity Industrias Peñoles Met-Mex facility during early 2010,
material (on occasion backed up with LBMA and/or Comex as well as the country’s lower port charges compared
accreditation). With the Peruvian Doe Run La Oroya with the United States. Canadian bullion imports had
lead/zinc smelter facility also off-line, premiums on high therefore ¿rst jumped in 2010 (to 45.2 Moz, or 1,407 t,

purity silver surged from a typical 1-2 cents/ounce (over compared with 17.7 Moz, or 550 t, in 2009). Last year,
Comex silver) to a high of 20 cents. In broad measure, Canada’s inbound trade built on these gains, with an 8%
this phase lasted from late 2010 through to early 2011, rise to a new record high.
a period suf¿ciently long to draw in material from a
variety of locations. These included Poland, Germany, Middle East and Indian Sub-Continent
South Korea and Italy which, together, delivered 40.0 Moz Robust demand in India helps explain the healthy rise in
(1,244) of silver bullion to the United States last year, silver bullion imports to the United Arab Emirates last
compared with just 9.6 Moz (297 t) the year before. year. While banks and traders predominantly shipped
silver directly to India from source markets, supply also
The rapid growth in the number of countries supplying was regularly vaulted in Dubai during periods of softer
bullion to the United States provides an indication of the demand or when discounted prices (compared with
scramble for metal which characterized late 2010/early international prices) stimulated stock building. Imports
2011. The strength of ¿rst quarter silver demand in the from Switzerland and Hong Kong dominated shipments,
United States was reÀected in the level of bullion imports both recording signi¿cant increases, while deliveries from
at this time, which jumped to 60.1 Moz (1,869 t), against the United Kingdom dropped by over 1.3 Moz (40 t) from
a (still elevated) quarterly average of 46.8 Moz (1,454 the levels seen in 2010.
t) for 2010. As the year progressed, US bullion imports
remained at a high level (albeit lower than the opening Turkey’s bullion imports have long served to satisfy
three months), but by the second quarter it was clear any shortfall in supply which may have emerged either
US Bullion Imports Dubai Bullion Imports
Other 50 9
80
Peru
Poland Silver Price
40
60 Canada
Mexico 6
Million ounces
Million ounces
30
US$/oz
40
20
3
20
10
0 0 0
Q1-06 Q1-07 Q1-08 Q1-09 Q1-10 Q1-11 2002 2004 2006 2008 2010
45
as a result of variations in domestic mine production or Indian Bullion Imports

through a seasonal pick-up in local demand. Last year,
Moz 2007 2008 2009 2010 2011
Eti Gümüú, which dominates Turkish silver mine supply,
OGL^ 78.9 160.3 40.1 95.7 130.0
saw its output fall by 27% to 8.4 Moz (260 t). However,
Others** 1.2 2.0 1.2 1.8 1.4
reported bullion imports, despite doubling, only reached
Total Imports 80.0 162.3 41.3 97.4 131.4
1.4 Moz (42 t), although this in itself was surprising,
Local Premium* 6% 5% 5% 8% 5%
given the decline realized by Turkish jewelry and
^Open general licence
silverware fabrication last year. However, it emerged that * average percentage above London price at the of¿cial exchange rate
the United Arab Emirates (UAE) had accounted for much (excluding all local duties and taxes)
** includes Direct Imports, Non-Resident Indians, Special Import Licence,
of the growth in Turkey’s bullion imports, with a similar and Replenishment Imports (i.e. imports of silver bullion for manufacture
volume subsequently re-exported. This therefore also and re-export).
boosted Turkey’s total silver bullion exports.
Indian bullion imports staged another strong increase in ran at approximately 40% higher than the average for the
2011, rising by 36% to 130.0 Moz (4,045 t). The import 2000s, eclipsed only by 2001 and 2008. In the former
trade has always been extremely volatile and in this year, demand had been very strong in the jewelry and
regard 2011 was no exception. Monthly imports varied silverware sectors, while 2008 was similar to 2011, with
and the price-elasticity of demand was amply illustrated investment driving the market.
by the way in which trade jumped in May and October
following silver’s two very sharp price declines. Imports The broad trend in imports reÀected strong demand
were driven by the surge in Indian investment demand, in January, when silver prices weakened, and then a
itself partly the result of a shift away from gold because sharp decline in February and March as the run up in
of the latter’s high price, while combined demand for prices developed, when the local market was nervous
industrial, jewelry and silverware uses ran at broadly of approaches towards Rs. 50,000 per kilogram. Then,
similar levels to 2010. Imports furnished 85% of total as sentiment turned and investors came to believe that
silver demand over the year. the price rise was sustainable, demand rose and imports
accelerated in April, just as the price approached its peak,
Shipments from all major sources grew in 2011 compared of a little over Rs. 70,000/kg (in late April).
with 2010. Thomson Reuters GFMS estimate that
Greater China (China, Hong Kong and Taiwan) was the There was a substantial rise in imports during May after
largest regional supplier, accounting for over 30% of the the price had corrected, with momentum carrying through
total, followed by the United Kingdom which approached into June, when import levels broadly matched those
20%. Switzerland was again an important supplier, of April. Interest waned in July though to September;
while shipments from Russia are believed to have almost during this period Rs. 48,000/kg emerged as a key
doubled by comparison with 2010. Silver imports in 2011 support level, before the price rose towards Rs. 63,000/
Gross Monthly Indian Bullion Imports Indian Bullion Imports
50 15 200 70
Constant 2011 rupees/kg (thousands),
Real Price 60
Price Premium at Official Rate (%)
40
10 150 50
& % premium/discount
30 Premium/Discount
to London Price
Million ounces
Million ounces
40
20
5 100 30
10
20
0 0 10
50
Premium/Discount
-10 to London Price 0
-20 -5 0 -10
2002 2004 2006 2008 2010
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
46
kg during late September. Part of this rise and fall the VAT), which now appears to have largely abated.
reÀected dealer attitudes; the price slump precipitated Not surprisingly, Hong Kong remained the dominant
heavy stocking, but not all of this material was sold on, destination for bullion exports last year (accounting for
and so imports fell away thereafter. The second price- over 90% of the total), with deliveries to this regional
related surge came in October and the pattern was entrep{t slipping just 10% to 35.4 Moz (1,103 t).
broadly repeated. However, it was other traditional markets that saw more
substantive falls, with shipments to Thailand (China’s
These patterns were reÀected in exceptionally high second largest export destination) dropping by more
shipments from the United Kingdom in both May and than 60%, while deliveries to the United Kingdom fell by
October. In June, however, receipts from the United almost half.
Kingdom declined, while those from Hong Kong surged.
When deliveries jumped again in October, the United There appear to be two main drivers for the recent
Kingdom was again the dominant supplier, although Hong slide in exports and an apparent building of privately
Kong remained signi¿cant. (It should be noted that held stocks in China (including metal held by re¿ners
these are proprietary Thomson Reuters GFMS estimates and working stock by fabricators), which we estimate
of imports into India which in some circumstances differ to have exceeded 96 Moz (3,000 t) last year. The

markedly from of¿cial trade data.) chief catalyst for this was a reduction in the premium
differential between the Shanghai Gold Exchange (SGE)
At the start of 2012, the Indian government changed the and international markets, which has deterred exports.
duty payable on gold and silver from ¿xed rates to an ad Furthermore, a rapidly expanding domestic market (for
valorem tariff. The silver duty had previously been set both jewelry and industrial fabrication), together with
at Rs. 1,500/kg but this was changed to 6%. With silver the removal of VAT on silver bullion exports, have all
prices, at the time of the announcement, at almost Rs. combined to inhibit bullion Àows out of the country.
48,000/kg, this represented a doubling in the duty. The
government raised the duty on gold a second time in Hong Kong’s bullion imports fell by almost 25% last
March, but left silver untouched. By early March the local year (on a calculated basis) to an 11-year low of just 38.7
price had risen to a seven-month high and investment Moz (1,243 t) according to of¿cial trade statistics. Not
sentiment was again very bullish; these early indications surprisingly shipments from China dominated the inbound
would suggest that imports will again be strong this year. trade, with receipts from the mainland contributing
over 80% of the total. Although these were 15% lower
East Asia in 2011, a more telling comparison reveals that Hong
Thomson Reuters GFMS estimate that Chinese silver Kong imports from the mainland in 2011 were almost
imports (a combination of bullion and base metal 45% below the 2006 peak. In terms of last year, higher
concentrates) fell by 8% in 2011 to 143.7 Moz (4,469 domestic demand (across all sectors) and the smaller
t). Reviewing each segment in isolation reveals that the premium (between the SGE and international prices)
largest contributor (at 88% of net imports) remained
imported base metal concentrates, which, following a
&KLQHVH2I¿FLDO%XOOLRQ,PSRUWVDQG([SRUWV
modest rise in 2010, slipped 6% last year to a calculated
net quantity of 138.6 Moz (4,310 t). Elsewhere, bullion 200
imports were also weaker in 2011, falling 40% to just 5.1 Imports Exports
Moz (160 t), with deliveries from Hong Kong accounting

150
for over 60% of the total.
Million ounces
100
Turning to exports, of¿cial trade statistics reveals that
these continued their recent downwards trend, falling
17% to 37.9 Moz (1,178 t), a level not seen for almost a 50
decade. Indeed, last year’s total represented a signi¿cant

step down from the 2006-2009 average of over 128 Moz
0
(4,000 t), although, importantly, imports during this 2002 2004 2006 2008 2010
period were inÀated by round tripping Àows (to reclaim
47
provided little incentive for smelters to export surplus South Korean bullion imports dropped by almost one-
stock, with many content to accumulate stock. The third last year to a 13-year low of 1.9 Moz (59 t). Weaker
other main contributors to Hong’s Kong imports were industrial demand accounts for part of the decline though
Taiwan and, to a lesser extent, Switzerland, which both a rise in silver recovered from base metal concentrates
saw material falls, the former by over 55%. Turning to (mainly zinc) also limited the need for fresh bullion.
bullion exports, these rose by over 30% last year, with Imports from China and Kazakhstan accounted for the
deliveries to Taiwan and India up sharply, the latter by bulk of South Korea’s imports last year, both recording
more than 75%, while shipments to the United Kingdom material gains, while shipments from Australia (the
and Thailand declined. largest supplier in 2010) dropped by more than 90%.
Exports, meanwhile, recorded healthy gains, rising 30%
Singapore’s bullion imports rose by 62% in 2011 to to 62.3 Moz (1,937 t). Shipments to Japan, which rose
4.2 Moz (134 t) on a calculated basis as deliveries from by 18%, dominated these Àows (accounting for over 70%
South Korea and Indonesia (the largest contributors) of the total), rising 18%. Elsewhere, deliveries to Hong
rose sharply, easily offsetting substantive falls in imports Kong saw a marked increase over the previous year, as
from Hong Kong and the Chinese mainland. In addition, did Àows to the United Kingdom, Canada and Singapore.
growth in photovoltaic fabrication in Singapore boosted
demand from both Germany and the United States. In 2011, bullion imports into Japan edged higher by
Exports also recorded growth, rising by over 10% to 2.0 around 2%. The rise was concentrated in the second
Moz (63 t), with deliveries to India (accounting for three quarter, as concerns over future supply shortages
quarters of total exports) more than doubling to offset a (as a result of the March earthquake), together with
fall of around two-thirds in shipments to Indonesia. robust demand expectations, encouraged fabricators
to build stocks. However, neither of these occurrences
Weaker jewelry fabrication saw Thai bullion imports materialized, causing inÀows to fall sharply over the ¿nal
fall by 25% in 2011, to an estimated 24.3 Moz (756 three months of last year.
t), the lowest total in our data series (which begins in
the early 1990s). This owed much to a sharp drop in Exports, meanwhile, provided a mirror image to
jewelry exports as demand from the industrialized world the import trend, with shipments shrinking to near
remained sluggish. Combined bullion imports from Hong insigni¿cant levels in the second quarter, before surging
Kong and the Chinese mainland still dominated imports in the fourth; over half of the year’s total shipments left
(at almost 50% of the total), though volumes from here Japan in this period. This reÀected the scale of surplus
fell by over 40%. Moreover, the other major suppliers to metal that had been accumulated by end-2011, caused
the Thai market, namely Switzerland, Germany and South by poor demand and over-stocking earlier in the year.
Korea, each posted lower deliveries, with South Korea
(the largest of these three) falling by 7%.
.RUHDQ/HDGDQG=LQF&RQFHQWUDWH,PSRUWV Thai Bullion Imports
6 Poland Other
600 South Korea China/Hong Kong
Zinc Lead 5
500
4
Million ounces
Tons (thousands)
400
3
300
2
200
100 1
0 0
Q1-07 Q1-08 Q1-09 Q1-10 Q1-11 Q1-04 Q1-06 Q1-08 Q1-10
Source: WBMS Source: Thomson Reuters GFMS
48
7. Fabrication Demand
:RUOGVLOYHUIDEULFDWLRQIHOOE\ODVW\HDU In 2011, global silver fabrication fell by 1.5% to 876.6
EXWVWLOOSRVWHGWKHWKLUGKLJKHVWWRWDORQUHFRUG Moz (27,265 t). Although this may appear disappointing,
given world GDP growth of 3.8%, two points are worth
(YHU\FDWHJRU\RIVLOYHURIIWDNHGHFOLQHGLQ noting. First, last year’s total still compares favorably
ZLWKWKHH[FHSWLRQRIFRLQPLQWLQJZKLFKVDZ with 2010’s record level, which in fact has been revised
DQHZUHFRUGKLJK higher since World Silver Survey 2011 (following a
re-assessment of industrial demand). As such, last
7KHIDOOIRULQGXVWULDOIDEULFDWLRQZDV year achieved the third highest total for global silver
FKLHÀ\GXHWRDVKDUSIDOOLQIRXUWKTXDUWHUDFWLYLW\ fabrication in our 22-year data series (2000 also
ZKLFKRIIVHWDVWURQJ¿UVWKDOISHUIRUPDQFH saw higher offtake, thanks to photographic demand
being sizable). Second, the intra-year trend varied
$QHDUFROODSVHLQIRXUWKTXDUWHUSKRWRYROWDLF considerably, largely because of developments within the
GHPDQGGURYHGRZQWKHJOREDOHOHFWULFDO industrial segment and, were it not for a material fourth
HOHFWURQLFVWRWDOZKLOHLQFRQWUDVWEUD]LQJDOOR\V quarter drop, 2011 may have seen a new record level.
VROGHUVDFKLHYHGDUHFRUGKLJKWRWDOLQ
The fall in industrial offtake was largely unexpected
+LJKVLOYHUSULFHVDQGZHDNHFRQRPLFJURZWK and reÀected overstocking of the supply chain, which
FRQWULEXWHGWRWKHIDOOLQMHZHOU\LQVSLWHRI produced a sharp fall in end-year silver demand as
VXEVWLWXWLRQDZD\IURPJROGLQPDQ\PDUNHWV anticipated orders failed to materialize. High silver
prices also played a role, with thrifting, for example,
3KRWRJUDSKLFIDEULFDWLRQUHDOL]HGIXUWKHUORVVHV in photovoltaics gaining some momentum. Elsewhere,
LQDOWKRXJKWKHUDWHRIGHFOLQHHDVHGWR robust and volatile prices also impacted jewelry demand
in 2011. Also of importance was the depressed nature
)ROORZLQJLWVEULHIXSWLFNLQVLOYHUZDUH of most western economies, which offset the bene¿ts of
GHPDQGLQUHSHDWHGWKHGRXEOHGLJLW substitution-led gains from gold. Turning to photography,
Fabrication Demand
SHUFHQWDJHGHFOLQHVHHQGXULQJ this continued its long-term decline, while structural
losses also impacted silverware. High silver prices and
&RLQPLQWLQJMXPSHGE\ODVW\HDUWR weak economic growth also contributed to the weakness
LWVKLJKHVWWRWDOLQRXU\HDUGDWDVHULHVOHGE\ in this sector, while this same backdrop, by contrast,
VWURQJEXOOLRQFRLQGHPDQGLQWKH8QLWHG6WDWHVDQG drove the impressive performance for coins & medals
ZHVWHUQ(XURSH fabrication in 2011, which was (chieÀy) led higher by
robust western investment demand for bullion coins.
World Silver Fabrication (by category) World Silver Fabrication (by region)
1000 Coins & Medals Real Silver 40 1000 Other 40

Real Silver
Silverware Price India Price
35 35
800 800
30 30
Photography
25
Million ounces
25
Million ounces
600 600
Jewelry 20 20
Japan
400 400
15 15
United States
10 10
200 200
5 5
Industrial Applications EU-25
0 0 0 0
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
49
Industrial Applications being undermined by growing thrifting and substitution.

Nonetheless, we should not underestimate the major
,QGXVWULDOIDEULFDWLRQIHOODPRGHVWODVW\HDU contribution from this sector since, if we subtract its
WR0R] W DVDUHVXOWRIDVXUSULVH silver requirements, industrial demand last year only
GURSLQIRXUWKTXDUWHUGHPDQG stood at a level similar to 2005’s. That highlights
the strategic importance of new end-uses for silver’s
/RVVHVZHUHPDLQO\LQFXUUHGLQWKH8QLWHG6WDWHV industrial demand as thrifting and substitution impact use
DQG-DSDQZKLOH&KLQDVDZDPRGHVWULVH in traditional areas. Furthermore, with delays in testing
and implementation for technologies that trim silver use,
Global industrial offtake fell by a slight 2.7% in 2011 to this process would be likely to continue even with a major
486.5 Moz (15,132 t), a level that was also lower than price retreat, although silver’s irreplaceability in many
in both 2007 and 2008. All of last year’s decline was areas will curtail the extent to which this is possible.
down to marked and largely unexpected losses in the
fourth quarter, since fabrication in the ¿rst three quarters Europe
combined was higher year-on-year. In fact, offtake in European silver industrial demand dropped by a modest
the second quarter looks to have achieved an all time 3% last year to 62.5 Moz (1,943 t). It might surprise
high. That demand was so variable was largely due to that its losses were smaller than those recorded in the
the Eurozone crisis as that fed through to a slump in United States and Japan, even though much of the
fourth quarter buying from industrial end-users of silver, cause of global losses was the uncertainty caused by the
at a time when some fabricators were carrying overly Eurozone’s sovereign debt crisis. This mismatch is largely
ambitious inventory levels. The response of end-users explained by success for European original-equipment-
has been described by some as an over-reaction to the manufacturers (OEMs) in exporting to emerging markets
sovereign debt issue and that view seems vindicated by and also Europe’s role in the PV market; the continent
the marked recovery in end-user buying early this year. may dominate solar cell installation but we record
Despite the focus of the cause of problems being Europe, fabrication at the ¿rst point of transformation from
it was the United States and Japan that incurred the bulk bullion and, in the context of PV, this is the production of
of these fourth quarter (and full year) losses, although powder which is overwhelmingly conducted elsewhere.
the US ¿gure also hit by setbacks in photo-voltaic (PV) As such, our European industrial statistics will not reÀect
Fabrication Demand
demand. Indeed, if we remove those two countries, the volume of silver lying in cells in say Germany nor
demand in the rest of the world rose by 0.1%, thanks in the sector’s fourth quarter problems. Furthermore, as
the main to the 5% rise in Chinese demand. European industrial demand therefore missed out on the
PV boom, this helps explain the slide in Europe’s share
It is worth noting that the above PV losses stemmed of global industrial demand to 13% from around 20%
mainly from inventory mismatches rather than true a decade ago, although less dynamic GDP growth and
end-use losses, although PV’s silver consumption is factory relocations to emerging markets also featured.
Components of Industrial Applications EU Industrial Fabrication
600 130 80 130

Brazing Alloys Brazing Alloys & Solders EU Industrial
Industrial Production Index (2005=100)
& Solders Production

120
500
Industrial 120
Production* 110 60
Other
400
Million ounces
100
Million ounces
Other 110
300 90 40
80 100
200
70 20
Electrical & Electronics 90
100
Electrical & Electronics 60
0 50 0 80
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
*Advanced economies; Source: Thomson Reuters GFMS, IMF Source: Thomson Reuters GFMS, OECD
50
European offtake is dominated by electronic and electrical North America

demand, chieÀy in the form of contact materials. It was Last year, US silver industrial fabrication fell by 5.1%
this that saw modest losses overall in 2011 as initial gains to 119.8 Moz (3,727 t), although the 2011 total still
were countered by fourth quarter losses, again as orders achieved the second highest level in our 22-year data
from end-users slumped due to the threat of a debt-led series. However, this headline does not convey the
recession. The likelihood of poor industrial end-use within marked variation between the ¿rst half performance and
Europe this year, especially early on, has led to notable that of the ¿nal three months of last year. In essence,
caution over inventory levels and this has been illustrated the initial six months was characterized by record levels
by a much slower recovery this year from last year’s of industrial offtake in the United States, with a quiet
painful fourth quarter than in many other regions. third quarter then giving way to a steep decline during
the October to December timeframe. Although the ¿rst
Another factor behind losses was substitution to other half saw signi¿cant levels of multi-ordering the speed
metals and perhaps more so, thrifting on the use of with which demand then weakened towards end-2011
silver within components, such as a move to thinner was still widely unexpected, but more importantly this
silver layers on ever smaller contacts. This issue was for explains why the data series has been revised downwards
instance cited as a factor behind disappointing demand compared with our more upbeat assessment at the time
from the automotive industry. Much of this was down of the (early November) Silver Interim report.
to the elevated absolute price of silver, although several
industry contacts also reported damage stemming from Overall, the United States’ performance last year was
high price volatility. There was also a negative swing in due to the tremendous market share it has gained in
the cycle of infrastructure-led high voltage end-use. the PV industry, covering both the production of silver
powder and pastes. The surge therefore in PV production
The remaining areas of silver demand had a mixed the year before was reÀected in the growth in US silver
year. Demand for silver chlorides was reported to have electrical & electronics offtake (of which PV is a major
fallen notably, while brazing alloy offtake only dipped sub-category), which jumped by 35% in 2010. In
slightly. The latter result was again mainly down to particular, the second half of 2010 had seen a ramp-up
typical factors such as substitution and fourth quarter in PV demand, which had carried over into early 2011.
losses but the North African crisis also actually featured At that time, robust forecasts, concerning the outlook
Fabrication Demand
as this fed through to poor demand within Europe from for PV installations, encouraged the supply chain to
the ventilation and air-conditioning sector. Demand from invest in new capacity, not least in the production of
novel technologies was reported to have risen again, but silver powders. For a time, this positive outlook became
only to still limited levels. By country, total industrial partly self-ful¿lling as companies further down the
demand fared better in the more robust northern supply chain started to multi-order silver powder and
European countries, many of whom are also home to pastes, as fears grew that PV-related supplies would not
successful OEM exporters. match the expected growth in PV installations. To some
US Silver Powder Exports US Industrial Fabrication
50 140 Other US Industrial 120

Other
Production
Brazing Alloys & Solders

Japan 120 Catalysts 110
40 Taiwan
EU 100 100
Million ounces
Million ounces
30 China
80 90
60 80
20
Electrical
40 70
10
20 60
Electronics
0 0 50
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
Source: Thomson Reuters GFMS Source: Thomson Reuters GFMS, OECD
51
Table 5 - World Silver Fabrication (including the use of scrap - million ounces) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Germany 35.4 39.1 40.4 40.5 41.0 40.2 40.9 33.0 38.5 34.0
Italy 57.4 55.8 55.4 50.8 46.7 44.0 39.7 35.3 36.0 28.9
UK & Ireland 42.5 43.4 51.6 42.8 32.6 25.1 23.3 18.9 20.4 22.2
Austria 1.2 1.2 1.3 1.3 1.2 1.2 9.0 10.1 12.2 19.0
Belgium 30.8 29.3 27.6 26.2 28.7 27.3 23.9 19.0 17.1 13.8
France 27.7 26.3 13.0 12.5 12.7 13.2 13.5 10.3 11.8 11.2
Spain 5.2 4.8 6.3 5.6 5.0 4.5 4.3 4.0 4.3 3.3
Poland 3.2 3.8 4.3 4.7 4.8 4.4 4.2 3.5 3.6 3.1
Switzerland 3.4 3.0 3.1 3.3 3.1 3.1 3.1 2.8 3.0 3.0
Netherlands 2.1 1.9 2.5 2.2 2.0 2.0 2.0 1.7 1.9 1.8
Greece 2.8 2.9 2.8 2.6 2.5 2.3 2.2 1.8 1.5 1.3
Portugal 1.7 2.7 4.1 1.7 1.5 1.4 1.4 1.3 1.3 1.3
Norway 1.9 2.0 2.1 1.8 1.7 1.3 1.3 1.0 1.0 1.1
Sweden 1.0 1.2 1.2 1.2 1.2 1.1 1.1 0.9 1.0 0.9
Denmark 0.8 0.7 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6
Yugoslavia (former) 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Hungary 0.4 0.4 0.4 0.4 0.2 0.2 0.3 0.3 0.3 0.3
Finland 0.5 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.2
Cyprus & Malta 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.2
Romania 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.2 0.2 0.2
Other Countries 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.1 0.2 0.1
7RWDO(XURSH 219.8 220.7 218.9 200.4 187.7 173.9 172.7 146.1 156.1 147.3
North America
United States 177.0 175.3 180.3 189.4 185.8 178.7 185.6 167.2 201.1 197.4
Canada 3.1 2.5 3.5 4.0 5.7 8.0 12.4 13.0 21.5 26.2
Fabrication Demand
Mexico 18.1 20.2 21.9 22.3 18.9 18.5 17.5 16.4 17.3 16.0
7RWDO1RUWK$PHULFD 198.2 198.1 205.8 215.7 210.4 205.2 215.5 196.6 239.8 239.7
Latin America
Brazil 6.4 6.6 7.3 7.5 4.7 7.2 6.9 6.4 7.7 7.4
Argentina 1.9 2.4 2.5 2.6 1.9 1.8 1.4 1.1 1.2 1.2
Dominican Republic 0.2 0.4 0.4 0.5 0.6 0.6 0.9 1.5 1.4 0.9
Peru 1.0 0.7 0.7 0.6 0.7 0.7 0.7 0.8 0.8 0.7
Colombia 0.7 0.7 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6
Chile 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Other Countries 1.0 0.9 1.1 1.0 1.1 1.1 1.4 1.4 1.5 1.3
7RWDO/DWLQ$PHULFD 11.6 12.1 13.1 13.3 10.2 12.5 12.4 12.2 13.7 12.4
Middle East
Turkey 8.2 9.4 10.3 9.9 8.9 8.0 8.4 7.1 6.5 6.1
Israel 2.7 2.6 2.7 2.8 2.8 2.8 2.6 2.2 2.2 1.8
Iran 1.4 1.5 1.5 1.6 1.6 1.6 1.5 1.4 1.4 1.3
Egypt 1.6 1.8 2.0 1.8 1.7 1.7 1.6 1.4 1.4 0.6
Other Countries 1.8 1.8 1.9 2.0 2.0 2.0 2.0 2.1 2.3 2.4
7RWDO0LGGOH(DVW 15.6 17.1 18.4 18.0 16.9 16.1 16.3 14.3 13.9 12.6
India 106.4 106.4 69.5 91.6 82.8 89.1 92.2 104.3 94.1 91.1
Bangladesh & Nepal 4.8 4.5 4.2 3.7 3.6 3.6 3.7 3.6 3.5 3.3
Other Countries 2.1 2.1 2.3 2.4 2.4 2.4 2.3 2.2 2.0 1.8
7RWDO,QGLDQ6XE&RQW 113.3 113.0 76.1 97.7 88.8 95.1 98.2 110.1 99.6 96.1
52
Table 5 - World Silver Fabrication (including the use of scrap - million ounces) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
East Asia
China 59.7 67.7 76.1 82.7 91.1 104.2 114.3 110.1 127.2 139.9
Japan 118.7 116.0 123.0 124.1 131.7 128.4 108.4 70.6 102.1 94.6
South Korea 20.7 22.2 23.6 25.5 27.1 29.0 30.7 24.5 29.9 30.3
Thailand 32.6 36.6 37.0 37.0 37.0 36.7 33.6 30.7 30.7 25.1
Taiwan 10.2 11.0 10.6 12.0 13.2 14.7 15.5 12.5 15.3 15.9
Indonesia 4.5 4.7 5.8 5.1 5.7 5.5 5.4 5.4 6.2 6.9
Hong Kong 3.4 3.2 3.4 3.5 3.8 4.0 3.9 3.2 3.7 3.7
Vietnam 0.8 0.9 1.0 1.0 1.1 1.2 1.3 1.3 1.4 1.6
Myanmar, Laos & Cambodia 1.0 1.0 0.9 0.9 0.8 0.8 0.8 0.8 0.9 0.9
Malaysia 0.6 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.7 0.7
Other Countries 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.8 1.0 1.1
7RWDO(DVW$VLD 252.6 264.4 282.6 292.9 312.6 325.7 315.1 260.5 319.0 320.7
Africa
Morocco 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.6 0.6
Tunisia 0.3 0.3 0.4 0.4 0.3 0.4 0.4 0.3 0.3 0.3
South Africa 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Algeria 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Other Countries 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.4 0.4 0.4
7RWDO$IULFD 1.7 1.7 1.8 1.8 1.8 1.9 1.9 1.7 1.8 1.7
Oceania
Oceania 5.8 6.3 5.8 3.9 4.3 6.5 8.7 9.1 11.6 14.2
7RWDO2FHDQLD 5.8 6.3 5.8 3.9 4.3 6.5 8.7 9.1 11.6 14.2
CIS
CIS 25.0 26.7 28.2 29.7 31.0 33.6 34.5 31.4 34.6 31.8
7RWDO&,6 25.0 26.7 28.2 29.7 31.0 33.6 34.5 31.4 34.6 31.8
World Total 843.5 860.1 850.6 873.6 863.7 870.5 875.3 782.0 890.1 876.6
Fabrication Demand
extent, this trend was reminiscent of 2000 when the against a backdrop of deteriorating new PV cell orders,
dotcom technology bubble had created near panic among led to a steep decline in silver powder fabrication towards
companies looking to secure electronic supplies, against year-end. Supplies to both domestic and overseas paste
a backdrop of ever more bullish end-use forecasts. In houses fell sharply, with the latter reÀected in far weaker
terms of the PV market, although an increasing number US silver powder exports. Against average quarterly
of countries had installed PV infrastructure, Europe shipments of 10.2 Moz (318 t) during the ¿rst nine
not only still dominated the market (in terms of newly months, powder exports dropped to 4.0 Moz (124 t) for
installed capacity), but the industry remained heavily the October to December 2011 period. This uncertainty
reliant on long-term subsidies (known as Feed in Tariffs carried through into early 2012 with, for example,
or FiTs). Downside risks to the PV forecasts began to overseas deliveries remaining depressed, although orders
emerge as the Eurozone crisis intensi¿ed and with it a did gradually recover as excess stocks (of both powder
focus on expenditure cuts, which led to some FiTs being and paste) were depleted.
renegotiated, while orders for PV cells wee scaled back.
The PV market last year was also impacted by high silver
The uncertainty the Eurozone crisis created led to a prices, which encouraged manufacturers to reduce silver
slowdown in orders across the supply chain, at a time contained in the paste (see the Focus Box on page 62).
when production of silver powder and pastes in the United However, outside of the paste industry (taken as a proxy
States was being ramped up. The build up of stocks for PV offtake, but also including, for example, the plasma
at the start of the fourth quarter, which then emerged, display panel market), there was little obvious sign of
53
Table 6 - Silver Fabrication: Industrial Applications (including the use of scrap - million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Germany 21.2 21.7 23.5 23.9 25.5 27.4 27.5 20.2 26.6 25.6
UK & Ireland 13.9 14.9 15.5 12.4 12.5 12.0 12.1 9.1 10.2 11.3
Italy 10.4 10.2 11.5 10.9 10.9 11.3 11.2 9.0 9.9 9.3
France 14.6 13.8 10.3 10.2 10.4 10.7 10.8 7.5 8.8 8.0
Switzerland 2.7 2.3 2.4 2.6 2.5 2.5 2.5 2.2 2.4 2.4
Netherlands 1.5 1.5 1.6 1.6 1.6 1.6 1.6 1.3 1.5 1.5
Spain 1.3 1.2 2.1 1.9 1.9 1.9 1.9 1.7 1.8 1.4
Poland 0.7 0.7 0.7 0.7 0.7 0.8 0.8 0.7 0.7 0.7
Austria 0.5 0.5 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.5
Norway 0.6 0.6 0.8 0.7 0.6 0.5 0.5 0.4 0.4 0.4
Sweden 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Belgium 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2
Other Countries 0.7 0.7 0.7 0.7 0.7 0.8 0.8 0.6 0.7 0.7
7RWDO(XURSH 69.1 69.0 70.5 67.0 68.6 70.8 71.0 53.9 64.3 62.5
North America
United States 83.1 86.8 94.2 100.8 106.8 114.1 119.0 97.8 126.3 119.8
Mexico 3.0 3.1 3.0 3.2 3.1 3.3 3.1 2.7 2.9 2.8
Canada 0.5 0.5 0.6 1.0 1.7 2.7 2.4 1.3 1.9 1.9
7RWDO1RUWK$PHULFD 86.6 90.4 97.8 105.0 111.6 120.0 124.6 101.8 131.1 124.5
Latin America
Brazil 3.2 3.0 3.7 4.5 2.9 4.0 3.9 3.5 4.2 4.2
Argentina 0.6 0.6 0.6 0.9 1.0 1.1 1.0 0.8 0.9 0.9
Colombia 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1
Fabrication Demand
Ecuador 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Other Countries 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.4 0.4
7RWDO/DWLQ$PHULFD 4.5 4.3 5.0 6.0 4.6 5.7 5.5 4.8 5.7 5.7
Middle East
Turkey 1.2 1.4 1.5 1.5 1.6 1.6 1.6 1.4 1.5 1.6
Israel 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.7 0.7 0.7
Oman 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Egypt 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Other Countries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
7RWDO0LGGOH(DVW 2.3 2.4 2.5 2.5 2.6 2.7 2.7 2.3 2.5 2.5
India 44.4 44.4 33.9 53.7 54.2 63.9 65.0 64.8 63.6 61.9
Pakistan 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
7RWDO,QGLDQ6XE&RQW 44.7 44.7 34.1 54.0 54.6 64.2 65.3 65.1 63.9 62.2
East Asia
China 37.7 42.6 47.2 52.9 58.2 67.5 78.0 73.1 84.4 88.5
Japan 59.1 60.4 73.7 84.1 89.5 90.9 73.7 45.6 79.0 71.6
South Korea 16.2 17.5 19.0 20.8 22.3 24.1 25.9 19.7 24.5 24.5
Taiwan 9.9 10.7 10.3 11.6 12.7 14.2 15.0 12.1 14.7 15.4
Hong Kong 3.0 2.9 3.1 3.2 3.4 3.6 3.5 2.8 3.3 3.3
Other Countries 0.5 0.5 0.6 0.6 0.6 0.6 0.8 1.0 1.4 1.6
7RWDO(DVW$VLD 126.3 134.6 153.8 173.1 186.6 201.0 196.9 154.3 207.3 204.8
54
Table 6 - Silver Fabrication: Industrial Applications (including the use of scrap - million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Africa
Morocco 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.2 0.3 0.3
South Africa 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Other Countries 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
7RWDO$IULFD 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6
Oceania
Oceania 2.1 2.2 2.2 2.0 2.1 2.1 2.1 1.9 2.0 2.1
7RWDO2FHDQLD 2.1 2.2 2.2 2.0 2.1 2.1 2.1 1.9 2.0 2.1
CIS
CIS 19.3 20.3 20.9 21.6 22.9 23.9 23.9 20.5 22.5 21.6
7RWDO&,6 19.3 20.3 20.9 21.6 22.9 23.9 23.9 20.5 22.5 21.6
World Total 355.3 368.4 387.4 431.8 454.2 491.1 492.7 405.1 500.0 486.5
thrifting. In the electrical & electronics sector, although India

silver coated copper has gained some traction, at the Last year, total silver industrial demand in India fell
expense of silver wire, its market share gain has been by 2.7% to 61.9 Moz (1,925 t). Although this marked
modest and as such the impact on electrical & electronics the second successive year of weaker output, a more
silver demand has gone almost unnoticed. In contrast, accurate assessment would be that industrial fabrication
there was little change in the composition of multi-layer in 2011 was in fact still only down slightly on 2008’s
ceramic capacitors, with the 70:30 silver:palladium blend record high of 65.0 Moz (2,022 t). In fact, last year’s
similar a year ago, reÀecting the relatively low price performance was surprisingly robust, given not only the
sensitive, high-end nature of most end-users. slowdown in Indian GDP growth (to a full year average of
7.1%, compared with 10.1% in 2010), but also in light of
The brazing alloys & solders market is one area which far stronger rupee prices (which surged by 74% in 2011,
has experienced thrifting, in terms of move to lower basis the annual average, to a record Rs. 55,638/Kg).
Fabrication Demand
silver containing alloys and substitution, such as a shift in
favour of plastic tubing. However, US offtake is believed As the above commentary alludes to, a more accurate
to have risen last year in spite of the weak housing analysis of Indian industrial demand calls for “authentic”
sector, principally it seems because of market share gains industrial offtake to be treated separately from its
at the expense of imported products. price sensitive components. Taking each in turn, what
immediately stands out is the record level of fabrication
In contrast, the use of silver in the ethylene oxide (EO) realized last year for the ¿rst of these two categories,
industry weakened last year, due to sluggish global GDP which encompasses electrical & electronics (which grew
growth. Even so, silver offtake has bene¿ted from a by almost 15% to 13.5 Moz or 551 t) and brazing alloys
trend to larger plants (in terms of the installed poundage & solders (which saw a 10% improvement to 5.7 Moz or
of EO catalyst), as well as a lift in the contained silver per 221 t). As stated above, this occurred against a backdrop
plant. As a result, it has become more common for new of still decent GDP growth. (Here, more so than in most
capacity to contain over 2 Moz (62 t) of silver, compared other large industrial fabricators, local market indicators
with less than 1 Moz (31 t) as three to ¿ve years ago. have a far greater bearing on the country’s silver
industrial output, given the only limited export of silver-
bearing components.)
United States Industrial Production
(Index, 2005 = 100) Looking at last year in more detail, it is clear that the
gains for the true industrial sector were concentrated in
2007 2008 2009 2010 2011
the ¿rst half, as growth slowed in the third quarter then
105.0 101.5 89.7 94.5 98.4
Source: OECD
fell during the October to December period. Although
55
Indian Vehicle Production the traditionally price elastic components) some 6%
(units, 000s) down in absolute terms on the 2000 total. However,

2007 2008 2009 2010 2011 against the 2007 peak, last year’s total was around 20%
1,985 2,095 2,464 3,247 3,579 lower. Although this demonstrates the high degree of
Source: Global Insight price elasticity of some demand segments, including
jari and foil, of concern has been the substitution away
growth in Indian manufacturing output slowed in 2011, a from silver. In other words, looking ahead, should prices
select number of sub-categories did performed well. In weaken materially, Indian demand may only see a limited
particular, automotive production enjoyed another strong price elastic response, given the investment that has now
performance, with a 10% gain to 3.6 million vehicles. To been made in qualifying low or silver-free products.
put this into perspective, as recently as 2008 the country
total was a little over 2.0 million units. In addition to In terms of the sub-categories of price elastic industrial
the rise in Indian car production, the growing in-car demand, the 10% decline in the use of silver in jari in
functionality offered to consumers boosted the average 2011 (which covers the production of thread for the
contained silver per vehicle, although it would be fair to garment industry) marked the sixth straight year of
say that this trend was by no means widespread, with far losses. That said, it was surprising in 2011 not to see a
greater visibility at the top end of the market. more than 10% reduction, given both the dramatic surge
in rupee silver prices and the ongoing substitution in favor
Elsewhere, brazing alloys & solders silver demand of less expensive materials. However, anecdotal evidence
responded to the lift in infrastructure spending across the suggests that silver offtake in the jari market jumped
country, although a generally healthy performance last following the end-April/late-September price action.
year was punctuated by a sharp decline during the late
third quarter/early fourth quarter period. East Asia
Japanese industrial demand reached 71.6 Moz (2,226
Turning to the price sensitive areas, in 2011 these t) last year, some 9% lower than the 2010 level and still
accounted for 60% of Indian industrial offtake. As over a ¿fth below the peak seen in 2007. This proved to
signi¿cant as this may appear, this compares with a be a disappointing outcome for a year that started with
healthy demand and a sense of optimism that dimmed
Fabrication Demand
contribution (to the overall total) of around 85% at the

turn of the millennium. In essence, the declining market the memory of the 2009 contraction. The decline began
share has been due to the impact of rising rupee silver to emerge in the third quarter, before gathering pace
prices (over an extended period), compared with the in the fourth. Furthermore, persistent yen strength
development, in particular, of the country’s infrastructure. throughout the year did little to help the export-oriented
However, the decline has not only been relative to the Japanese market.
more “authentic” uses, with total offtake last year (for
Indian Fabrication Indian Industrial Fabrication, 2011
160 70
Constant 2011 Rupees/kg (thousands)
Jewelry Miscellaneous
Real Silver 60
Silverware 16% Electrical
Price 29%
120 Industrial
50
Jari
Million ounces
6%
40
80
30
20
40 Plating Solders & Brazing
26% 11%
10
0 0 Pharmacy & Chemicals

2002 2004 2006 2008 2010 Foil 8%
4%
56
Japanese Industrial Production Japanese Non-Photographic Nitrate & Contact Production
Million ounces
(Index, 2005 = 100)
2008 2009 2010 2011
2007 2008 2009 2010 2011 non-photo nitrates 20.8 12.9 19.6 17.4
107.2 103.8 81.7 94.8 91.4 contacts 9.9 4.8 9.0 8.4
Source: OECD Source: Thomson Reuters GFMS
The ¿rst two months of the year saw healthy gains from growth in new items requiring silver nitrate (such as
end-2010 levels. However, in early March, an earthquake tablet computers), the amount used per unit is marginal
and tsunami struck the country. Somewhat counter and has proved insuf¿cient to outweigh losses elsewhere.
intuitively, however, this did not lead to a contraction It would appear, therefore, that demand for silver in silver
in silver demand. In fact, the opposite was true; in nitrate in Japan has in fact fallen below that seen ¿ve
the period immediately after the earthquake, silver years ago. Demand for contacts also slipped, due to the
offtake surged. This was caused by the highly uncertain decline in auto production, which was heavily affected by
operating environment, which saw fabricators stockpiling both the Japanese earthquake and Thai Àooding.
metal while they still could, in fear of future supply
issues. In terms of silver used in brazing solders and alloys,
this too saw a sharp contraction in the fourth quarter.
These fears proved largely unfounded, however, with few Sluggish demand from the construction industry, as
instances of supply problems in terms of silver users. well as for refrigerators and air conditioning units,
This was largely thanks to a low concentration of silver- were behind the fall. In addition, although silver has
related plants in the north-east region, although there bene¿ted from the switch from lead-based solders in
were some disruptions due to the rolling blackouts that many areas, its high price nonetheless means that there
ensued as a result of the nuclear crisis. is considerable pressure to reduce silver content; some
makers are targeting a two-thirds reduction of the white
Following the surge in demand in the second quarter, metal from current levels in the mid-term.
however, orders began to slow in the third, as it
Fabrication Demand
transpired that shortages were now unlikely to Demand for silver powder for use in photovoltaics,
occur. Even those fabricators that had been affected meanwhile, posted a year-on-year decline for the ¿rst
recovered more quickly than expected. In addition, time in Thomson Reuters GFMS’ records, with volumes in
end-use demand began to weaken, primarily due to the the ¿nal quarter falling to around half of their peak levels.
contraction in the key European market as the effects This was due to a combination of factors, including the
of the sovereign debt crisis began to make its mark, large surplus of cell production from 2010 and aggressive
compounded by a sluggish US market.
The brunt of the decline came in the fourth quarter,

however, when the Eurozone debt crisis was in full swing. Japanese Industrial Fabrication
The need for fresh metal was severely constrained, as not
only did demand fail to materialize as anticipated, but the 100 110
Industrial
signi¿cant stocking that took place in the second quarter Production
meant that fabricators already had excess inventory. 75

Declines were seen across all major areas of demand. 100
Million ounces
50
The use of silver nitrates fell by some 15%, in line with
the downturn in demand for electronics and electrical 90
items. Silver nitrate also faced attrition from thrifting. 25
Indeed, the amount used per item (such as cell phones

and computers) has been on a sharply declining trend
0 80
over the last ¿ve years; although there has been strong 2002 2004 2006 2008 2010
Source: Thomson Reuters GFMS, IMF, OECD
57
The Main Uses of Silver For example, silver is used in formaldehyde catalysts for the
Silver has unique properties which include its strength, manufacture of plastics and, to an even greater extent, in
malleability and ductility, its electrical and thermal conductivity, ethylene oxide catalysts for the petrochemical industry. Silver
its sensitivity to and high reÀectance of light and, despite it being is employed as a bactericide and algicide in an ever increasing
classed as a precious metal, its reactivity which is the basis for number of applications, including water puri¿cation systems,
its use in catalysts and photography. This versatility means that surface treatments and disinfectants. The joining of materials
there are few alternative metals in most applications, particularly (called brazing if done at temperatures above 600º Celsius
in high-tech applications in which reliability, precision and safety and soldering when below) is facilitated by silver’s Àuidity and
are fundamental. strength. Silver brazing alloys are used widely in applications
ranging from air conditioning and refrigeration equipment to
Industrial power distribution equipment in the electrical engineering and
Silver possesses a number of technological qualities which make automobile industries.
it ideal for a range of industrial applications. In particular, silver
is the best electrical and thermal conductor of all metals, which Photography
makes it indispensable in numerous electrical applications, The photographic process is based on the presence of light-
including conductors, switches, contacts and fuses. This includes sensitive silver halide crystals, prepared by mixing a solution of
the use of silver in electronics in the preparation of thick-¿lm soluble silver, usually silver nitrate, with a soluble alkali metal
pastes, including silver-palladium for use as silk-screened circuit halide such as sodium chloride or potassium bromide. These
paths, in multi-layer ceramic capacitors, in the manufacture of grains are then suspended in the unexposed ¿lm. The effect of
membrane switches, silvered ¿lm in electrically heated automobile light on the silver halide disturbs the structure of this compound,
windshields and in conductive adhesives. rendering it selectively reducible to metallic silver by reducing
agents called developers. The resulting negative image is
Contacts provide junctions between two conductors that can converted to the positive by repeating the process under speci¿c
be separated and through which a current can Àow, and also conditions. Photographic ¿lm is used in radiography, the graphic
accounts for a sizable proportion of electrical demand. Conductive arts and in consumer photography.
silver inks, made from silver paste (manufactured from silver
powder), are printed onto a wide array of devices, including photo Jewelry and Silverware
voltaic cells, solid state lighting devices, sensors, radio frequency Silver possesses working qualities similar to gold, enjoys greater
Fabrication Demand
identi¿cation tags and plasma display panels. Silver provides reÀectivity and can achieve the most brilliant polish of any metal.
both exceptional conductivity and ease of electro-deposition Consequently, the silversmith’s objective has always been to
from a double-alkali metal cyanide, such as potassium or silver enhance the play of light on silver’s already bright surface. Pure
cyanide, or by using silver anodes, at relatively low cost. Silver silver (999 ¿neness) does not tarnish easily but to make it durable
is also used as a coating material in optical data storage media, for jewelry it is often alloyed with small amounts of copper. It is
including DVDs. also widely used with base metals in gold alloys. Sterling silver,
at a ¿neness of 925, has been the standard of silverware since
The unique optical reÀectivity of silver, and its property of being the 14th century, particularly in the manufacture of “hollow-ware”
virtually 100% reÀective after polishing, allows it to be used both and “Àatware”. Plated silverware usually has a coating of 20-30
in mirrors and glass coatings, cellophane or metals. Batteries, microns, while jewelry plating is only 3-5 microns.
both rechargeable and non-rechargeable, are manufactured
with silver alloys (increasingly silver-zinc) as the cathode and Coins
are regarded as a rapid growth area. Although expensive, silver Historically, silver was more widely used in coinage than gold,
cells have superior power-to-weight characteristics than their being in greater supply and of less value, thus being practical
competitors. The most common of these batteries is the small for everyday payments. Most nations were on a silver standard
button shaped silver oxide cell (approximately 35% silver by until the late 19th century with silver coin forming the main
weight) used in watches, cameras and electrical products though circulating currency. But after the gold rushes, the silver standard
demand from laptop and automotive industries is growing rapidly. increasingly gave way to gold. Silver was gradually phased out of
regular coinage, although it is still used in some circulating coins
Silver, usually in the form of mesh screens but also as crystals, and especially in American, Australian, Canadian, Austrian and
is also used as a catalyst in numerous chemical reactions. Mexican bullion coins for investors.
58
Global Semi-conductor Billings devices, as well as tablet and net book computers, which
registered a 30% year-on-year increase in sales.
350
Other Asia/Pacific
Japan
300 In addition, further growth from within the Chinese
Number of shipments (millions)
Europe
250
automotive sector added to demand as production
Americas
exceeded 18 million units last year. Moreover, demand
200
for silver in this segment has grown in recent years as
150 increasing safety requirements, coupled with higher
consumer expectations, continued to augment the usage
100
of electrical (contacts, switches and metallization pastes)
50
and electronic components. Last year’s threefold increase
0 in electric vehicle production also added to demand and is
2002 2004 2006 2008 2010
Source: SIA
an area expected to grow strongly in coming years.
thrifting (addressed more fully on page 61), as well as With only marginal growth in new capacity, the use of
the ongoing shift of production to elsewhere in East Asia. silver as a catalyst in the production of ethylene oxide
(EO), used primarily in the production of mono ethylene
Despite a modest slowdown in economic growth and glycol, rose by less than 1% year-on-year. However,
a sizable drop in exports in the ¿nal quarter of 2011, fabrication of silver metallization paste most commonly
industrial offtake in China surpassed the previous year to used in photovoltaic (PV) cell production, antennae
set a new record high of 88.5 Moz (2,754 t), representing and various circuits rose sharply in the ¿rst half before
a 5% year-on-year gain. suffering a sharp drop in the last quarter of the year.
Moreover, solar cell exports from China were just 3%
Last year’s growth in household consumption was higher in 2011, a sizable drop on the 260% jump in
bolstered by ongoing subsidies and rebates for purchases 2010. Three quarters of Chinese solar cell exports
of white goods which lifted output across several are destined for the EU. Withdrawal of or reduction in
industrial sectors, especially in the period leading up to subsidies in Feed in Tariffs (FiTs) in many EU member
the expiry of the government’s scheme at the end of last countries, coupled with the dour economic sentiment
Fabrication Demand
year. This three-year policy was designed to boost the in the region, were behind the slide in demand for new
proliferation of white goods and consumer electronics, installations. Interestingly, China’s fabrication of silver
largely in rural areas. It allowed for a tax rebate of up paste was almost exclusively based on imported silver
to 13% on purchases of air conditioners, refrigerators, powder (mainly from the United States and Japan) and
washing machines, LCD TVs and other consumer therefore credited to these countries of origin using our
electronics. The National Bureau of Statistics of China methodology. Paste producers within China, however,
reported that 66.7 million household washing machines, having made signi¿cant improvements in technology,
139.1 million domestic air conditioners, 96.9 million can now satisfy over 10% of demand for paste from
household refrigerators were produced in 2011, each domestically fabricated powders.
product showing a healthy double digit rise year-on-year.
Industrial fabrication in Hong Kong is estimated to have
Looking in more detail, rising brazing alloys & solders remained broadly unchanged in 2011 at 3.3 Moz (103
demand bene¿ted from China’s ongoing surge in
Global Billings
infrastructure expenditure rising by 7% to a record
high 29.9 Moz (929 t). Similarly, electrical & electronic (semi-conductor shipments per year, millions)
fabrication grew by 4% to 37.4 Moz (1,243 t), although World Americas Europe Japan Other
stronger ¿rst half gains were offset by a slowdown Asia
towards year-end as export markets softened. China’s 2010 295.3 52.9 37.7 46.1 158.6
semi conductor (especially integrated circuits) sector 2011 302.4 55.6 38.2 43.5 165.1
continued on the growth path started in 2000 and rose Change 7.1 2.7 0.5 -2.6 6.4
Change % 2% 5% 1% -6% 4%
by 10% year-on-year. Behind this performance was a
Source: SIA
surge in fabrication of cell phones, electronic personal
59
Table 6a - Silver Fabrication: Electrical and Electronics (including the use of scrap - million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
United States 37.6 39.5 47.4 52.1 55.0 57.7 61.4 53.4 71.9 67.5
Japan 29.4 30.2 38.0 43.7 46.0 46.8 38.7 28.2 51.1 46.2
China 17.1 18.8 21.0 23.5 25.8 31.5 35.5 31.3 38.4 40.0
Germany 15.6 16.2 17.7 18.3 19.7 21.4 21.7 15.7 21.5 20.4
India 4.9 5.1 5.4 9.6 10.0 12.5 13.5 14.2 15.4 17.7
South Korea 9.8 10.7 11.6 12.9 13.8 14.7 15.9 12.5 16.1 16.0
Taiwan 8.4 9.0 8.4 9.4 10.3 11.7 12.3 9.9 12.1 12.7
France 9.9 9.5 8.1 8.0 8.2 8.5 8.6 5.7 6.9 6.1
UK & Ireland 5.5 5.9 6.1 4.5 4.4 4.5 4.7 3.4 3.9 4.0
Italy 2.8 2.9 3.8 3.5 3.6 3.9 4.1 3.4 3.9 3.4
Hong Kong 2.8 2.7 3.0 3.0 3.3 3.5 3.3 2.7 3.1 3.1
Mexico 1.8 1.9 1.8 2.1 2.0 2.1 2.1 1.8 1.9 1.8
Brazil 1.3 1.2 1.7 2.1 0.9 1.5 1.5 1.2 1.6 1.6
Turkey 0.8 1.0 1.0 1.0 1.0 1.1 1.1 0.9 1.0 1.1
Australia 0.6 0.7 0.7 0.7 0.7 0.7 0.7 0.6 0.7 0.7
Netherlands 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.4 0.5 0.5
Switzerland 0.4 0.5 0.5 0.4 0.4 0.4 0.5 0.4 0.5 0.5
Spain 0.0 0.0 0.3 0.3 0.3 0.4 0.3 0.3 0.3 0.3
Austria 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Other Countries 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.6 0.8 0.8
World Total 149.6 156.7 177.2 196.2 206.4 223.9 226.8 187.0 251.7 244.6
Table 6b - Silver Fabrication: Brazing Alloys and Solders (including the use of scrap - million ounces)
Fabrication Demand
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
China 12.2 14.4 15.8 17.8 18.8 20.7 25.4 25.9 28.0 29.9
India 1.9 2.0 2.2 4.2 4.3 5.2 5.7 6.1 6.5 7.1
United States 8.4 7.9 7.3 7.7 7.2 7.7 7.2 5.2 5.9 6.0
Japan 3.3 3.3 3.7 3.8 3.9 4.0 3.7 2.3 3.4 3.0
Germany 3.0 3.1 3.2 3.2 3.4 3.6 3.4 2.3 2.8 2.8
UK & Ireland 2.5 2.8 3.0 2.9 3.1 2.4 2.3 1.8 2.3 2.4
South Korea 1.4 1.4 1.6 1.9 2.0 2.4 2.6 2.1 2.3 2.4
Italy 2.1 2.0 2.0 2.2 2.4 2.5 2.4 1.7 1.8 1.7
Canada 0.3 0.3 0.4 0.8 1.5 2.4 2.2 1.1 1.7 1.7
Switzerland 1.3 1.4 1.4 1.5 1.4 1.4 1.4 1.2 1.3 1.3
Taiwan 1.0 1.1 1.1 1.1 1.2 1.3 1.2 1.0 1.2 1.3
Brazil 0.7 0.7 0.7 0.8 0.8 0.8 0.8 0.9 1.0 1.0
France 1.0 0.8 0.7 0.8 0.8 0.9 0.8 0.5 0.6 0.6
Australia 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.6
Spain 1.0 0.9 0.8 0.6 0.6 0.6 0.6 0.6 0.6 0.5
Mexico 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.4 0.4 0.4
Netherlands 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Indonesia 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.2
Other Countries 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.3
World Total 41.6 43.7 45.5 50.8 52.9 57.4 61.3 54.0 61.0 63.4
60
New Uses of Silver in Industrial Applications

The use of silver is well established in the industrial applications packaging, medical products (such as bandages, creams and
outlined in this chapter. There are, however, a signi¿cant catheters), toiletries, cooking utensils, white goods (washing
number of ‘new’ uses for silver. While many of these have machines, refrigerators) and water puri¿cation devices. Wood
already achieved commercial success, they have yet to make preservatives are another growth area.
a signi¿cant impact on silver demand, but hold the potential to
become signi¿cant end-users of the metal. In other words, we In terms of products that make novel use of silver’s conductive
appear to be some way from seeing one of these new areas of properties, these include articles such as solid state lighting
demand from making a similar impact to photovoltaics which, (SSL), radio frequency identi¿cation tags (RFID) and printed
until just a few years ago, was labeled a new use of silver. inks in a wide range of electronics products. Another use
may be in batteries; although silver oxide button batteries
Silver’s main uses, both new and established, are often are, of course a well established product, demand for silver-
centered on harnessing its biocidal or conductive properties. zinc batteries may grow strongly, given their use in products
Many of these applications can use ‘nanosilver’ which, although including smart phones, laptops, and tablets. In such items,
not a new substance in the strict sense of the word, has performance is paramount, and silver’s high performance
only recently gained commercial recognition, appearing in offsets its higher cost. Silver-zinc batteries may also have
a wide range of products including textiles, food packaging a future in electric vehicles, although it would be some time
and medical uses. The main difference with ‘ordinary’ silver before these would become signi¿cant end-users. Another
is particle size: nanosilver typically measures between potential large user of silver may be superconductors, where
1-100 nanometers. Nanosilver essentially replicates silver’s silver can be used as a carrier of the conductive material, for
established properties, but often performs them using a far its anti-heating properties.
smaller volume of metal, owing to the greater surface area of
each silver particle which enhances its potency. In most of the With regard to these uses, it is important to note that while
uses addressed below, it is possible to use nanosilver in place the silver consumption per unit may be small, their collective
of ordinary silver. use may amount to substantial volumes in future. Given that
the number of possible applications is likely to proliferate, their
With regard to the former, silver can be used in a diverse total silver use holds strong scope for future growth.
range of products, including textiles (towels, bedding), food
Fabrication Demand
in the second half offsetting ¿rst half gains. Expansion a shadow on consumer sentiment, curtailing domestic
of Chinese mainland production augmented fabrication spending for household and personal appliances. Exports,
demand in Hong Kong for electrical parts and components meanwhile, bene¿ted from a weaker won which enhanced
such as resistors, capacitors, inductors and printed circuit local ¿rms’ price competitiveness in the global market,
boards (PCBs), with trade to the mainland accounting for with exports in the ¿rst half of the year improving on
over 75% of total fabrication in this sector. To that end, 2010 levels. However, the developing Eurozone debt
Hong Kong’s electronics exports rose 9% in 2011 after crisis, coupled with a lackluster US economy, saw demand
surging by 28% in 2010, with China, not surprisingly, the from these key markets slide in the ¿nal quarter of 2011,
chief catalyst for the rise. Moreover, exports to western dragging down annual totals.
markets weakened, with the Eurozone debt crisis and
sluggish US economic growth impacting demand in the Looking at individual sectors in detail reveals a similar
second half of 2011. pattern across a myriad of applications, with expansion in
the ¿rst half giving way to a decline in the latter stages
South Korean industrial demand remained broadly of the year. Indeed, it is estimated that silver fabrication
unchanged in 2011 after a second half slowdown negated in the key electronics industry fell at the margin to 16.0
robust gains earlier in the year. Thomson Reuters GFMS Moz (499 t), while solder & brazing alloys demand saw
estimate silver used in industrial applications reached a 17% ¿rst half gain all but wiped out by a sharp drop
24.5 Moz (762 t), still 1.4 Moz (44 t) below the 2008 in the ¿nal quarter, with the annual total increasing just
peak. Domestic demand for electrical & electronics 2% to 2.4 Moz (73 t). Silver fabrication was further
was subdued as the South Korean economy grew at its supported by 7% growth in the automotive sector, given
slowest pace in two years and rising inÀation also cast its increasing reliance on sensors, contacts and micro
61
Global Photovoltaic Market module prices, which led to several high pro¿le casualties,
Over the past ¿ve years, silver demand in photovoltaics has primarily Western companies that proved unable to compete
seen tremendous growth. The main driver has been Feed-in- on costs with their Chinese counterparts (who accounted for
Tariffs (FiTs), which incentivize investment in solar by offering almost 60% of total cell production last year).
renewable energy providers a preferential rate (to fossil
fuel) for their energy over a ¿xed period, typically 15 to 25 In terms of demand for silver paste, we estimate that a
years. This covers the cost of the initial investment and gives decline was seen last year, marking the ¿rst fall in our
investors a return over the contract life. They face periodic records. Although the drop was slight at not more than 5%,
downwards revisions to reÀect reduced costs in implementing this nonetheless emerged against a backdrop of increased
the technology and can, therefore, cause large swings in solar cell production. There were two main factors behind
demand, depending on changes to the terms of tariffs. The the fall. First, the slowdown in demand for solar cells over
point at which subsidies should no longer be necessary to most of the year (bar the latter part of the fourth quarter),
drive solar investment is when grid parity is achieved; grid compounded by the signi¿cant oversupply of cells from
parity is the point at which the cost of generating solar power 2010, led to reduced need for fresh pastes. Second, the
equals that of producing fossil fuel power. slower rate of growth in cell production revealed the extent
to which thrifting and substitution have made inroads on
There are two main types of solar cell: thick ¿lm and thin silver volumes. Silver loadings per 156x156mm2 cell, for
¿lm. Thick ¿lm is based on mono or polycrystalline silicon example, are believed to have fallen to around half of their
and needs an estimated average of 90 kgs silver to generate 2008 levels, with considerable advances made in replacing
one MW. Silver is used on both the front and rear side of silver with aluminum, notably on the rear-side of cells.
each cell. As for thin ¿lms, these include Copper Indium
Gallium Selenide (CIGS), Cadmium Telluride (CdTe) and Looking ahead, there remains considerable pressure on
amorphous silicon (a-Si). Of these, we understand that only silver in photovoltaics. It comprises the second-highest
a-Si uses silver, albeit in marginal volumes (less than 1% of cost component of the solar cell, so is a major target for
that used in thick ¿lm). Historically, thick ¿lm has dominated thrifting and substitution by the industry. At present, the
the market, due to its roots in the established semi conductor most likely alternative to silver is copper, although nickel’s
industry. It also boasts higher ef¿ciency than thin ¿lm, which potential is also being explored. That said, there are other
has outweighed its higher cost. cost areas arguably in need of attention apart from silver,
namely balance-of-system costs (including inverters,
Fabrication Demand
Last year, solar cell installations posted growth of around mounting, frames, glass, batteries and labor). Given silver’s
40%. The increase was concentrated in the ¿nal quarter, technical aptitude in solar applications, therefore, we are of
springing a surprise ending to a year that had seemed the opinion that the white metal is unlikely to be completely
destined to post a far more muted gain, given weak demand eliminated, particularly in the context of lower silver prices
in the face of the Eurozone’s economic dif¿culties. The and as grid parity becomes a wider reality.
boom at end-2011 was due to a rush in orders from markets
which were due to substantially reduce FiTs from 2012
Photovoltaic Production
(notably Germany, other European countries and China).
This represented demand that was pulled forward, therefore, 40 70
rather than reÀecting a jump in new demand. Europe
Photovoltaic cell production (Gigawatts)
Thin Film Silver

Silver fabrication (million ounces)
Thick Film Fabrication 60

maintained its position as the world’s leading solar market,
30
accounting for almost 70% of total new installations. 50
40
Thick ¿lm solar cell production, meanwhile, posted a gain of 20
around 30% year-on-year. Whilst this may sound robust, 30
this was in fact the slowest rate of increase seen since 20

10
2003 and many moons away from the surge in 2010, when
10
demand more than doubled over 2009. This was the legacy
of ballooning output in 2010, when fabricators ramped up 0 0
2002 2004 2006 2008 2010
production aggressively in anticipation of strong demand in Source: Solarbuzz, Photon International,
2011. The oversupply in the market caused a sharp drop in Thomson Reuters GFMS
62
electro-mechanical components. Furthermore, despite a Photography

fourth quarter drop in orders for solar power installations
in Europe and the United States, demand for silver paste 'HPDQGIRUVLOYHULQSKRWRJUDSKLFDSSOLFDWLRQV
for the photovoltaic sector was solid on the strength of IHOOE\ODVW\HDUSRVWLQJWKHVORZHVWSHUFHQWDJH
growing proliferation of solar installations in Asia, most GHFOLQHVHHQLQVL[\HDUV
notably China.
Last year, photographic demand for silver fell by 8% to
Last year, Taiwan’s silver industrial fabrication rose 4% 66.1 Moz (2,056 t), the lowest recorded level in our data
to 15.4 Moz (479 t). As a result, it exceeded the record series. This saw photographic offtake account for just 8%
high set in 2008. The fact that it took three years to of total fabrication demand, compared with almost 25%
regain this threshold is chieÀy down to Taiwan’s reliance ten years ago. That said, it is worth noting that 2011
on exports (these accounted for 73% of GDP last year posted the lowest year-on-year percentage fall in six
and the electronics industry in turn shipped 28% of all years. Even so, early 2012 saw the iconic Eastman Kodak
exports). This meant that sluggish shipments to the ¿le for Chapter 11 bankruptcy protection in the United
industrialized world fed through to lower Taiwanese silver States, a reminder of the still challenging nature of the
fabrication and it was not until this could be made good photographic market (in terms of its silver consumption).
by the expansion in exports to China (Taiwan’s largest
single export destination) that silver fabrication could Unsurprisingly, the move into digital has been the chief
surpass the earlier high. Fabrication growth speci¿cally in architect of photography’s declining trend over the past
the electrical & electronics sub-category therefore played 12 years (with regards to the consumption of silver). In
a key role in lifting overall industrial fabrication, with terms of the principal end-use segments, demand for
much of the gains here stemming from strong sales of ¿lm last year fell by around 25%, although color negative
electronic consumer items. paper dropped by a comparatively modest 10% (both
according to Photo¿nishing News). The decline in ¿lm
Taiwan remains the world’s number one producer of offtake was largely due to the established dominance
notebook computers, while its share of global cell phone of digital cameras (rather than a shift into them, as the
production remains at almost two-thirds, according to market is now arguably approaching saturation), which
the Ministry of Economic Affairs. Furthermore, Taiwan is has eroded the need for traditional ¿lm. Color negative
Fabrication Demand
also dominating tablet and e-reader product lines, with paper’s resilience, however, reÀects the growth in photo
over 60 million tablets shipped in 2011, giving Taiwanese books, an increasing number of which use photo paper, as
fabricators more than 85% share of the market. Silver well as the growing popularity of online printing studios.
used within the photovoltaic industry (mainly conductive
silver pastes) also saw gains last year in crystalline silicon In addition, the relatively modest drop seen in 2011 was
wafers, and module fabrication, with Taiwan only second due to the only slight fall in the medical sector (as shown
to China in this ¿eld. in the chart below), which accounts for comfortably the
World Photographic Fabrication Consumer Film Sales & X-ray Production
4 200
250
Other Japan
X-ray production (m2 , million)
200 China
3
Billions of rolls/disks
150
Million ounces
150 X-ray Production

Japan Others
2
100
United States 100
1 Europe
50
EU-25
United States
0 0 50
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
Source: Photofinishing News Inc.
63
Table 7 - Silver Fabrication: Photographic Use (including the use of scrap - million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
EU-25 66.9 65.0 61.6 54.7 46.9 38.9 33.5 27.4 25.8 22.9
Romania 0.2 0.2 0.2 0.2 0.1 0.0 0.0 0.0 0.0 0.0
7RWDO(XURSH 67.1 65.2 61.8 54.8 47.0 38.9 33.5 27.4 25.8 22.9
North America
United States 64.8 58.9 55.2 56.4 46.4 34.4 28.1 23.4 20.2 17.9
7RWDO1RUWK$PHULFD 64.8 58.9 55.2 56.4 46.4 34.4 28.1 23.4 20.2 17.9
Latin America
Brazil 2.1 2.2 2.2 1.4 0.0 1.4 1.3 1.0 1.4 1.2
Argentina 1.1 1.5 1.5 1.3 0.5 0.3 0.0 0.0 0.0 0.0
Total Latin $PHULFD 3.2 3.7 3.7 2.7 0.5 1.7 1.3 1.0 1.4 1.2
India 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2
Sri Lanka 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0
7RWDO,QGLDQ6XE&RQW 0.5 0.5 0.5 0.5 0.5 0.4 0.3 0.3 0.3 0.2
East Asia
Japan 57.8 53.9 47.4 38.0 40.2 35.4 32.4 22.5 20.3 20.3
China 5.7 5.8 6.1 5.4 5.0 4.6 3.7 3.1 2.6 2.4
7RWDO(DVW$VLD 63.5 59.7 53.6 43.3 45.3 40.0 36.1 25.6 22.9 22.6
Oceania
Australia 2.3 2.1 1.5 0.1 0.1 0.1 0.1 0.1 0.1 0.1
7RWDO2FHDQLD 2.3 2.1 1.5 0.1 0.1 0.1 0.1 0.1 0.1 0.1
CIS
CIS 3.0 2.8 2.7 2.6 2.4 2.1 1.8 1.5 1.4 1.2
7RWDO&,6 3.0 2.8 2.7 2.6 2.4 2.1 1.8 1.5 1.4 1.2
World Total 204.3 192.9 178.8 160.3 142.2 117.6 101.3 79.3 72.1 66.1
Fabrication Demand
largest portion of silver-related photo demand. Due to year, which translates into a fall in excess of 90% from
continued economic weakness last year, many hospitals ten years ago (according to Photo¿nishing News). There
deferred their migration to digital systems because of a were also some instances of hospitals switching into
lack of funding (although Europe proved an exception). digital due to the high silver price, which had a notable
Furthermore, growing X-ray demand from developing impact on the market, given that radiography remains the
countries helped to mitigate the decline. In these largest end-user of silver in photographic applications.
markets, digital technologies still tend to be prohibitively
expensive, but economic growth here helped to generate Photographic offtake in the United States declined by
demand for conventional X-rays. 12% in 2011 to 17.9 Moz (556 t). The rate of decline
proved relatively restrained, however, compared with
A lack of funding also limited the pace of losses in motion the average 18% fall seen over the ¿ve preceding years.
pictures last year. There is still, therefore, considerable
scope for future losses in both the medical and the
Film & Paper Consumption & Photographic Fabrication
motion picture sectors, although silver demand is likely to
remain in niche applications such as artistic or graphic-art 2008 2009 2010 2011 yoy %
based photography. Film** 1,021 751 557 427 -23.2%
Paper^ 1,085 958 850 773 -9.0%
European demand fell by 11% last year, extending the Fabrication* 101 79 72 66 -8.3%
long-term declining trend. Demand for 24 exposure rolls **Million of rolls, ^millions square meters, *Moz
Source: Photo¿nishing News Inc., Thomson Reuters GFMS
(for professional and consumer use) fell by 30% year-on-
64
Digital Technology and the Photographic Market

The main driver of silver’s declining use in photographic
applications has, of course, been the massive and rapid Digital and Film Camera Sales
switch into digital technology. As the chart opposite
shows, sales of re-usable ¿lm cameras have plummeted
140 Other 100
by some 90% since 2002, while sales of digital still Europe
Re-usable film camera sales (millions)

cameras (DSC) have almost trebled over the same period. 120 Japan
Digital camera sales (millions)

80
United States
DSCs have, however, faced some pressure in recent 100
Re-usable
years. Indeed, as indicated in this chart, offtake has Film Camera 60
80 Sales
posted relatively subdued gains since 2010. In part, this
was due to the challenging macroeconomic environment, 60
40
which saw sales of DSCs come under pressure as they
40
are not a consumer necessity. In addition, competition 20
20
from other consumer goods, such as tablet computers
and MP3 players, has also impacted DSC sales. Perhaps 0 0
2002 2004 2006 2008 2010
the largest issue for DSCs, however, has been the rapid
Digital camera sales include toy & entry level cameras
rise of smartphones with cameras. In China last year, for Source: Lyra Research Inc., Photofinishing News Inc.,
Thomson Reuters GFMS
example, there was a notable fall in DSC sales, which has
been attributed to the rapid uptake of smartphones with
camera resolutions of over eight mega pixels.
This outcome in part reÀected the comparatively slow continued to switch into digital. Export demand, however,
switch by motion picture theatres into digital formats, due posted an increase, with developing markets unable
to ¿nancial constraints. However, a raft of funding has to leapfrog halide technology into digital, due to high
recently been secured in the United States, which should costs. Elsewhere, exports of instant ¿lms (polaroids)
lead to steeper falls in motion picture (silver) demand saw demand increase; polaroids have also gained some
Fabrication Demand
in the future. That said, it is unlikely that multiplexes popularity as an artistic medium, albeit niche.
will instigate a wholesale switch of their screens, which
should mitigate the rate of decline going forward. In In China, photographic demand dropped by 9% last year
contrast, the use of silver in both 24 exposure ¿lm and to 2.4 Moz (75 t). This was symptomatic of the long
color paper posted far more rapid declines, of 23% and term secular trend of substitution into digital technology.
15% respectively (according to Photo¿nishing News). At the consumer level, a signi¿cant drop off in the use
of analog ¿lm as low cost digital camera’s continued to
In contrast, demand for silver in photographic penetrate into China’s interior was chieÀy responsible for
applications remained broadly unchanged in Japan last the decline. According to Photo¿nishing news, sales of
year, marking the ¿rst year since 2006 that the industry analog ¿lm in China slumped by over a third in 2011.
has avoided a double-digit percentage decline. This
was, however, largely due to a gain in market share, In contrast, one area that has limited the slide in
rather than a sign of recovery. As was the case in other photographic demand has been the area of health care.
markets, Japanese photographic ¿lm production faced China’s ambitious health care reform program began in
severe downward pressure, falling by 33% last year 2009 in an effort to improve health care coverage of the
(according to Photo¿nishing News). In contrast, photo country’s poorer, rural communities. Part of the reforms
paper posted a far slower decline, thanks in large part involved helping providers in the countryside buy new
to the popularity of photo books as well as online photo equipment, with analog X-ray facilities one area that has
studios. witnessed substantive growth. While China’s larger cities
are rapidly migrating to digital machines it is rapid growth
Finally, silver use in X-rays in the domestic Japanese in these smaller facilities that have augmented silver
market also came under pressure last year as hospitals halide demand.
65
World Color Photographic Paper Consumption gains, most countries suffered losses, of which almost
90% was attributable to Italy.
2000
Japan
Italian silver jewelry offtake in 2011 fell a hefty 25% to
Millions of square meters
1500 16.5 Moz (512 t), in doing so cutting demand to less than
Others
half the ¿gure recorded a decade earlier. The blame for
this lies mainly in exports, with customs ¿gures showing
1000
their gross weight fell by 25% in 2011. Our analysis
Europe
of their ¿ne weight, however, suggests that, once the
500
distortions of the intra-EU export/re-import trade are
United States removed, the true ¿ne weight in exports fell around 30%.
0
2002 2004 2006 2008 2010
The graph opposite shows EU Àows including this intra-EU
Source: Photofinishing News Inc.
business but, if we exclude that, the drop in shipments to
Jewelry the EU rockets up to just over 30%, placing it on a similar
7KHIDOOLQJOREDOMHZHOU\RIIWDNHZDVGXHWR scale as the drop for North America. In fact, exports to
ZHDNHURXWSXWLQHYHU\PDMRUIDEULFDWLQJFRXQWU\ essentially all western countries suffered heavy losses,
ZLWKWKHH[FHSWLRQRIDUHFRUGKLJKWRWDOLQ&KLQD regardless of whether they were at the economically
robust end of the spectrum (such as Germany) or at the
Last year, silver jewelry fabrication fell back below the more troubled end (such as Spain). That is not to say the
2010 level, with the 4.5% decline leaving the global macro economic backdrop played no part, as shipments
total at 159.8 Moz (4,971 t). Of the top ¿ve jewelry to Canada did not fare as badly as those to the United
producers, only China achieved growth, of 20%, which States and the drop in Àows to Portugal and Greece
not only cemented its position as the largest jewelry exceeded 40%. This relative lack of differentiation is
fabricator, but achieved a record high. Excluding China, suggestive of other factors being at work and here we
the global total would have realized a 10% decline, the have to cite the price, in particular the April/May spike.
product of high and volatile prices and a weak economic This greatly unsettled the trade as it made planning all
backdrop, which together offset the bene¿ts of western- but impossible for several weeks but, even if the price
Fabrication Demand
led substitution gains at the expense of karat gold. had been more stable, notable losses would still have
occurred because of the high absolute price. Average
Europe weights, for example, continued to fall because of this,
After 2010’s modest uptick, jewelry fabrication in Europe with some contacts noting more interest in hollow chain.
last year fell by a steep 17% to 29.3 Moz (911 t) as
the downward path that had been in place since 2001 People might have expected silver to bene¿t more overtly
resumed. While a few countries such as France enjoyed from price-led substitution from gold and indeed this
World Jewelry Consumption World Jewelry Fabrication
200 40 200
India Real Silver Price Indian Sub-Continent Other
Middle East
150 30 150
Million ounces
Other North America

Million ounces
100 20 100
Europe
EU-4*
50 10 50
East Asia
United States
0 0 0
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
*Germany, Italy, UK, France; Source: Thomson Reuters GFMS
66
was widespread but only at the top end of the silver France de¿ed the regional trend as its fabrication grew
market. This niche also bene¿ted from many brands’ by 15%. Much of this was due to a rise in domestic sales
greater interest in silver as price points could still be met of 10% (in value terms at the retail level, source: Société
that generated the margins their promotional campaigns 5). However, there also looks to have been support from
require. However, while this was good for the value of a stock build at the trade level and some market share
sales, it did little to boost weight and here silver lost out gain from imports. It was of note that this growth was
through substitution to non-precious jewelry, with brass possible despite a short-term reaction to the April/May
and bronze getting much attention last year. Key to this price spike and the jump in sales of 9-karat gold.
is that silver prices today mean many pieces have been
pushed towards the €100 mark at a retail level. Given the trivial level of UK jewelry offtake, a review
of local consumption is more relevant. This weakened
The above forces meant that consumption within Italy in 2011, although not to the extent of the 30% drop in
similarly suffered, if not as badly. It would also be wrong hallmarking, which itself reÀected a shift to lighter pieces.
to assume that all seemingly Italian pieces on sale within
the country are locally made as many, even those from In 2011, Russian silver jewelry fabrication saw a 19%
some upscale brands, are imported. Competition from decline, to 2.7 Moz (84 t), although this must be seen
rivals was of course not just restricted to the home in the context of what was a record total in 2010.
market as this was singled out as a reason behind losses Last year’s decline was largely due to greater import
in many export markets, the United States being perhaps competition as last year saw a rapid growth in the
the most obvious example, especially at a generic level. number of jewelry shops selling imported items.
Previous years’ modest losses in German silver jewelry North America

consumption accelerated sharply last year and, although In the United States, one of the key drivers affecting
questionable trade data makes the picture complex, it the silver jewelry market in 2011 was the continued rise
does appear that imports bore the brunt of this drop. in gold and silver prices, although the impact of each was
This occurred as imported pieces chieÀy serve the mass quite different. It is initially worth pointing out that an
market and this sector looks to have suffered at the analysis of the US market concentrates on silver jewelry
hands of a switch to non-precious metal jewelry and consumption, rather than fabrication, not only because
Fabrication Demand
through overt destocking, both triggered by high silver the latter accounts for a relatively modest 25% of retail
prices. The top end, in which German producers tend to demand, but as the United States is, by some distance,
specialize, performed better, partly through downshifting the largest consumer of silver jewelry on a global basis.
from gold, and it is mainly for this reason that the drop in
German fabrication was restricted to 3%. With regards to the rise in precious metal prices, US silver
jewelry consumption has only bene¿ted from the surge
in gold prices over the past two to three years. Instead,
gold’s initial run up saw the retail trade ¿rst adopt several
2I¿FLDO,WDOLDQ-HZHOU\([SRUWV strategies before turning to silver, including a move to
lighter weight pieces and a greater use of gem stones,
35 Others both of which also impacted the silver market last year.
Latin America
30 EU
United States In terms of the initial forays into silver, this had initially
25
focussed on using the metal to create a gold product,
Million ounces
20 most commonly in terms of gold plated silver. However,

it soon became evident that there was little opportunity
15
to develop this product beyond the mass market retailers.
10
As gold prices continued to rise major retailers therefore
5 expanded into sterling silver, both at the expense of
karat gold and gold plated silver lines. However, with the
0
2002 2004 2006 2008 2010 United States focused on the perceived value of a given
Source: Thomson Reuters GFMS;* finished pieces only
67
Table 8a - Silver Fabrication: Jewelry and Silverware (including the use of scrap - million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Italy 46.9 45.3 43.4 39.5 35.4 32.3 28.1 25.9 25.8 19.3
Germany 7.9 7.7 7.3 6.8 6.8 6.5 6.2 5.3 5.4 5.2
Poland 2.3 2.9 3.1 3.4 3.6 3.2 3.1 2.4 2.5 1.9
Other Countries 16.3 15.9 14.6 13.4 12.8 11.4 11.2 10.1 9.9 9.8
7RWDO(XURSH 73.3 71.8 68.3 63.1 58.5 53.5 48.5 43.8 43.6 36.2
North America
United States 13.7 15.1 15.4 15.7 15.0 14.2 13.0 11.6 12.9 11.9
Mexico 14.0 15.6 16.2 16.4 14.0 13.6 13.0 12.0 12.3 11.5
Canada 1.5 1.7 1.6 1.4 1.2 1.1 1.0 0.9 0.9 0.9
7RWDO1RUWK$PHULFD 29.3 32.4 33.2 33.5 30.1 28.9 26.9 24.6 26.1 24.3
Latin America
7RWDO/DWLQ$PHULFD 3.9 4.0 4.4 4.6 5.0 5.1 5.6 6.3 6.5 5.5
Middle East
Turkey 6.8 7.9 8.7 8.3 7.2 6.2 6.7 5.6 4.9 4.3
Other Countries 6.4 6.6 7.0 7.0 6.9 7.0 6.7 6.2 6.1 5.2
7RWDO0LGGOH(DVW 13.2 14.5 15.7 15.3 14.1 13.2 13.4 11.8 11.1 9.5
India 61.7 61.7 35.4 37.6 28.2 24.9 26.9 39.2 30.2 28.9
Other Countries 1.7 1.7 1.9 1.9 1.9 1.9 1.9 1.9 1.7 1.5
7RWDO,QGLDQ6XE&RQW 68.2 67.9 41.5 43.3 33.8 30.5 32.5 44.7 35.4 33.7
East Asia
China 14.3 17.1 20.5 22.6 26.2 29.5 29.8 30.9 36.5 43.1
Thailand 32.3 36.2 36.9 36.8 36.8 36.5 33.3 30.4 30.5 24.8
Fabrication Demand
Indonesia 4.0 4.1 5.2 4.5 5.1 4.8 4.8 4.8 5.4 6.1
South Korea 4.5 4.6 4.7 4.7 4.8 4.9 4.8 4.8 5.4 5.8
Other Countries 5.1 5.1 5.4 5.8 5.7 5.9 5.8 5.9 6.4 6.6
7RWDO(DVW$VLD 60.1 67.2 72.7 74.4 78.6 81.6 78.6 76.8 84.1 86.4
Africa
7RWDO$IULFD 1.1 1.2 1.2 1.2 1.2 1.3 1.3 1.2 1.2 1.1
Oceania
7RWDO2FHDQLD 0.8 0.7 0.8 0.7 0.7 0.7 0.7 0.7 0.7 0.8
CIS
Russia 1.8 2.6 3.6 4.4 4.6 6.6 7.8 8.5 9.3 7.7
Other Countries 0.6 0.7 0.7 0.7 0.7 0.8 0.8 0.7 0.6 0.6
7RWDO&,6 2.4 3.3 4.3 5.2 5.4 7.4 8.6 9.1 10.0 8.3
World Total 252.3 263.1 242.0 241.4 227.5 222.2 216.1 218.9 218.6 205.8
Jewelry & Silverware markets, many of which faced economic malaise in

Although the World Silver Survey has featured separate 2011. Even so, the world total would have suffered a
jewelry and silverware series for the past six years we sharper fall last year had it not been for further growth
continue to show the two together in Table 8a above for in the Chinese market, which set a new record high.
comparative purposes. As the data shows, combined
jewelry and silverware offtake in 2011 fell by 5.9% to In terms of silverware, ongoing structural losses,
205.8 Moz (6,401 t). Both categories posted lower totals principally in western markets, combined with silver’s
last year, although the decline, in volume terms, was price action to push the global total below 50 Moz
much greater for jewelry, given the dominance of western (1,500 t) for the ¿rst time in our data series.
68
product, combined with the trade’s wariness of being 862I¿FLDO6LOYHU-HZHOU\,PSRUWV

seen to downgrade assortments, the supply chain focused
60
on private label and branded, rather than generic, Thailand Others
China Mexico
pieces. This strategy was important for two reasons.
50 Italy
First, design oriented pieces tend to be noticeably lighter
than generic products, with far less of the retail price 40
Million ounces
accounted for by the raw material. Second, the growing
30
popularity of private label pieces enabled sterling silver to
quickly gain acceptance at the retail level and therefore to 20
make rapid inroads at the expense of karat gold.

10
While the growth in sterling silver had ¿rst emerged 0

2002 2004 2006 2008 2010
among the major retailers, the past 18 months have seen Source: Thomson Reuters GFMS
independent retailers play a far greater role in this area.
Also symptomatic of the rise in private and branded label
prices has been the growth in high end, small scale US Middle East
manufacturing, which has helped to raise the pro¿le and Last year, Turkish jewelry fabrication is believed to
perceived value of silver jewelry in the domestic market. have declined by almost 10%, marking the third straight
As well as gold prices impacting silver jewelry demand year of weaker output. With the lira falling against the
last year, the dramatic surge in silver prices also played dollar, local silver prices more than doubled (basis annual
a role. In essence, this encouraged the trade to adopt averages) in 2011. This contributed to softer jewelry
lighter weight pieces. In addition, major retailers were fabrication for the local market, due not only to lower
forced to reduce their silver jewelry inventories, in a unit sales, but also because of a move towards lighter
manner which has afÀicted the US gold retail trade for and more design oriented pieces. In addition, silver
several years. jewelry exports fell in 2011, even though the export
industry continued to shift away from karat gold in favor
Silver jewelry additionally suffered from the growth in of silver pieces, principally for the US market. However,
alternative metals (which have also taken market share recent years have seen exporters concentrate more on
Fabrication Demand
from karat gold), with relatively new introductions, such gold plated silver, rather than sterling silver jewelry, but
as cobalt, gaining some traction. These developments, with the US market shifting away from plated items, the
together with the move away from generic pieces, Turkish trade appeared to lose market share there to
resulted in the volume of US silver jewelry consumption suppliers of sterling silver pieces.
falling last year. However, the strength of the design
segment meant that the indicative value of silver The political upheaval in Egypt accounted for the slump
consumption fared much better. Even so, this could not in jewelry fabrication last year to comfortably its lowest
prevent the volume of jewelry imports from declining level in our 22-year data series. The near collapse during
sharply during 2011, although this must be seen in the the ¿rst half was compounded by the sharp rise in local
context of what was a record high import total in 2010. silver prices at this time. However, towards end-2011,
there were signs of a modest upturn in manufacturing,
Mexican jewelry fabrication declined last year as in part as softer Egyptian prices encouraged a degree of
both domestic sales and exports to the dominant US trade restocking.
market suffered important losses. In the local market,
substitution gains from gold have largely already taken Indian Sub-Continent
place and, more importantly, the jump in peso silver Indian jewelry fabrication in 2011 fell for the second
prices to record levels has hit consumption and created consecutive year, slipping to 12.2 Moz (380 t). Although
¿nancial dif¿culties for manufacturers and retailers, the decline was modest at 3%, offtake last year stood at
affecting their ability to process and hold jewelry stocks. just 35% of the 1993 peak. Much of that historic decline
As intimated above, exports also fell, with total of¿cial was rooted in a structural shift away from silver jewelry
shipments in 2011 down by 28% in volume terms. as a form of investment in favor of bar and coin due
69
&RQVXPHU7UHQGVDQG-HZHOU\&RQVXPSWLRQ the subject of brands, some of the more high pro¿le

players have recently reported poor ¿nancial ¿gures
The consumption of silver jewelry last year in its core but commentators have often said that relates more to
markets of the western world weakened modestly last company speci¿c developments or to the more volatile
year, a still remarkable result given the jump of 74% nature of a fashion-led business and as such these results
in annual average prices. However, we could interpret should not be readily taken as sign that the mass market
the issue of ¿ne metal prices almost as a cause of near branded arena is in decline. Another feature of these
stability in that the hike in the absolute level of the structural trends is a slide in average weights, and the
gold price to a yet more unaffordable level led to its higher price of silver continued to encourage this change,
consumption in these same markets falling by over 10% explaining, for example, the ongoing popularity of ‘open-
as consumers shifted to less expensive silver. Such a work’, which gives a large piece with minimal metal use.
shift during economically uncertain times should come as
little surprise, although a review of trade data suggests On a speci¿cally fashion front, last year saw the ongoing
relatively little differentiation between western markets, popularity of vintage styles, a trend in part ascribed to
despite their varying economic backdrop. consumers wishing to appear more discrete in troubled
times, and this fed through to strength for arti¿cially aged
Far more than the price and economics were, of course, designs, such as a hammered ¿nish. This is arguably
at work. Many markets continue to report that silver easier to achieve with a yellow metal and there was
remains typically a more fashionable choice than gold, something of shift in favor of the ‘yellow look’ in some
especially among younger consumers, and this no doubt markets, such as Japan, as consumers were also said
assisted the substitution process. Industry contacts even to be seeking warmth. This was not all bad for silver,
inform us that silver’s image improved in some markets, however, as many contacts talked of good sales for fully
most obviously southern Europe, where previously silver gold-plated silver or for silver pieces with gold accents.
had little by way of precious connotations.
Illustrations of
Recent Trends
The substitution process, however, was not entirely to
silver’s bene¿t as its own higher price led to a shift to
non-precious metals. Arguably, this too had a link to
Fabrication Demand
image since, for example, the use of bronze or brass in

Italy became seen as more acceptable in accessory level
jewelry, while in the US market, the likes of titanium
made inroads into segments such as men’s wedding
bands as the ‘performance’ quality of these metals was
pushed and overcame their base connotations. In weight
terms, silver appears to have been something of a net
loser through substitution overall, although in value terms
that would be less the case (and the inverse was in fact
true in some markets) as those shifting from gold opted
for high design, branded silver, often with stones.
Even with no substitution, it is likely that we would have

seen greater use of stones, a shift from unbranded to
branded and so forth as these are some of the structural
factors that have been affecting the whole jewelry market
for many years. This process is also far from ¿nished,
Clockwise from top left: Alcozer & J charm
with, for example, stone-set silver sales in France rising
bracelet in bronze (photo courtesy of l’Orafo
by 9% last year, whereas plain silver was Àat (in pieces Italiano); Gurhan oxidized silver with gold
terms, source: Société 5). This matters as it diverts accent earrings (photo courtesy of Savor
expenditure away from metal to other materials or Silver); cobalt grooved band, and accented
pendant by Stuller; Fiorelli silver earrings
intangible costs such as promotional campaigns. On
with Swarovski crystals by Gecko.
70
to the latter two enjoying lower margins and being far jewelry consumption was hit by silver’s high and volatile
less prone to under-karating, and this no doubt made a price. US imports from India, for example, fell by 18%
contribution to last year’s dip. last year. In fact, if we allow for this drop in exports, it
becomes possible that the consumption of silver jewelry
A second structural change is a relative shift from within India actually rose last year. However, we should
traditional heavy jewelry to more modern designs with caution that tracking the route taken by the key guide to
a much lower average weight. Losses for the former fabrication of bullion imports is complex and it may be
are very much bound up with the above investment that some of this supply went merely to the building of
story, while gains for the latter are due to the rise of stocks, either in bullion form or, more likely, as ¿nished
India’s middle class, with the disposable income and goods by the trade. As such, the outcome for retail level
inclination to buy pieces that are far more adornment- consumption is far from clear.
oriented. Many of these modern designs will carry stones
(sometimes even diamonds) and may well be rhodium or East Asia
gold plated. This shift has therefore been very supportive Silver jewelry fabrication in Thailand dropped by 18%
of the value of jewelry sales but has done less for the ¿ne last year to 22.9 Moz (712 t). The acute fall drove Thai
weight of silver consumed. fabrication to its lowest level in our data series (since
1990), with offtake last year tumbling 30% below
The analysis of the battle between these two forces, the 2006 high. Despite the substantive fall, Thailand
however, was complicated by the impact of silver’s price remained the second largest fabricator globally (behind
last year as the rise in the annual average had clear only China), as similar sizable declines also emerged in
budgetary implications. However, in part as a result of other key fabricating countries.
substitution from gold and due to the interplay of quasi-
investment buying and the price, it does appear that the Much of the weakness was driven by a sharp drop in
second quarter as a whole was comparatively strong, exports which, for much of the past two decades, has
even if high volatility did unsettle the trade and therefore been the mainstay of local offtake. The substantial 74%
negatively affect the more fashion-oriented segment. jump in dollar silver prices, coupled with the 38% rise
It is also important to look at prices in rupee terms as in 2010, undoubtedly contributed to this. In addition to
second half currency weakness meant that the local price elevated prices, high price volatility adversely affected
Fabrication Demand
actually rose 8% intra-year, rather than falling by that the order book for most large fabricators as export clients
amount in dollar terms, and this contributed to demand were reluctant to place orders in an uncertain market,
actually proving quite weak in the fourth quarter. while those that did reduced orders as a means of
protection against sharp movements in price. According
Another signi¿cant negative was the slump in exports to to the trade data, gross jewelry exports dropped by
western countries as the mass market segment of their 20% in 2011, driven lower by a fall in deliveries to the
,QGLDQ-HZHOU\DQG6LOYHUZDUH)DEULFDWLRQ 7KDL-HZHOU\DQG6LOYHUZDUH)DEULFDWLRQ
40 70 40 1100
Real Silver
Silverware Jewelry Jewelry Silverware
Price
Constant 2011 Rupee/kg (thousands)
35 Real Silver 60
Price 900
30 30
Constant 2011 Baht/oz
50
Million ounces
Million ounces
25 700
40
20 20
30
15 500
20
10 10
300
5 10
0 0 0 100
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
71
Table 8 - Silver Fabrication: Jewelry (including the use of scrap - million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Italy 36.7 35.7 34.2 31.5 28.2 25.8 22.6 21.3 21.8 16.5
Germany 3.3 3.6 3.7 3.8 3.8 3.9 3.9 3.7 3.8 3.7
France 2.4 2.4 2.0 1.5 1.6 1.7 1.6 1.7 1.9 2.2
Poland 2.2 2.8 3.0 3.3 3.5 3.2 3.0 2.4 2.4 1.9
Spain 1.5 1.7 1.4 1.4 1.3 1.1 1.1 1.2 1.1 1.1
Portugal 1.4 1.5 1.4 1.2 1.1 1.0 1.1 1.0 1.0 1.0
Greece 0.9 1.0 1.0 1.1 1.1 1.0 1.2 1.0 0.9 0.8
UK & Ireland 1.8 1.2 1.2 1.0 1.0 0.5 0.4 0.4 0.4 0.4
Sweden 0.3 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3
Switzerland 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Denmark 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2
Cyprus & Malta 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Norway 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1
Finland 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Austria 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Countries 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.6 0.6 0.6
7RWDO(XURSH 52.4 52.0 50.0 46.9 43.4 40.1 36.7 34.5 35.2 29.3
North America
United States 11.8 13.4 13.8 14.1 13.5 12.9 12.0 10.7 12.0 11.1
Mexico 11.5 13.0 13.6 14.0 12.0 12.2 11.8 11.1 11.6 11.0
Canada 1.3 1.4 1.4 1.2 1.0 0.9 0.8 0.8 0.8 0.8
7RWDO1RUWK$PHULFD 24.6 27.7 28.7 29.3 26.4 26.0 24.6 22.6 24.5 22.9
Latin America
Brazil 1.0 1.2 1.3 1.4 1.5 1.5 1.5 1.7 1.9 1.8
Peru 0.4 0.3 0.3 0.3 0.4 0.3 0.4 0.5 0.5 0.5
Fabrication Demand
Argentina 0.1 0.1 0.2 0.2 0.3 0.3 0.3 0.2 0.3 0.3
Colombia 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Ecuador 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1
Other Countries 0.6 0.8 1.0 1.1 1.2 1.2 1.8 2.5 2.5 1.8
7RWDO/DWLQ$PHULFD 2.5 2.8 3.1 3.4 3.8 3.8 4.4 5.3 5.6 4.7
Middle East
Turkey 4.1 5.0 6.0 5.7 4.8 4.1 4.5 3.9 3.4 3.1
Saudi Arabia 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.7 0.8
Egypt 1.2 1.4 1.5 1.4 1.3 1.4 1.3 1.2 1.1 0.5
Israel 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.4 0.4 0.3
Other Countries 1.1 1.1 1.1 1.2 1.2 1.2 1.2 1.2 1.4 1.5
7RWDO0LGGOH(DVW 7.3 8.3 9.5 9.2 8.3 7.7 8.0 7.3 7.0 6.1
India 25.9 25.7 16.1 16.4 11.9 10.4 11.4 15.7 12.5 12.2
Other Countries 0.8 0.8 0.8 0.9 0.9 0.9 0.9 1.0 0.9 0.8
7RWDO,QGLDQ6XE&RQW 28.7 28.4 18.8 19.0 14.5 13.1 14.2 18.6 15.3 14.9
East Asia
China 11.0 13.1 15.6 17.4 20.2 22.9 23.6 26.2 31.2 37.4
Thailand 28.4 32.1 32.5 32.3 32.5 32.0 29.1 26.7 28.0 22.9
Indonesia 3.3 3.5 4.5 3.7 4.4 4.2 4.2 4.2 4.7 5.5
South Korea 3.8 3.9 4.0 3.9 4.0 4.2 4.1 4.2 4.7 5.2
72
Table 8 - Silver Fabrication: Jewelry (including the use of scrap - million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Japan 1.6 1.5 1.8 2.0 1.9 2.1 2.0 2.1 2.2 2.2
Vietnam 0.8 0.8 0.9 0.9 1.0 1.1 1.2 1.2 1.4 1.5
Myanmar, Laos & Cambodia 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.6 0.7 0.7
Malaysia 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.7
Hong Kong 0.3 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3
Taiwan 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Other Countries 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
7RWDO(DVW$VLD 50.8 57.0 61.2 62.3 66.1 68.5 66.0 66.5 74.4 77.1
Africa
Morocco 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2
Tunisia 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Algeria 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Other Countries 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.3 0.3 0.3
7RWDO$IULFD 0.9 0.9 0.9 0.9 0.9 1.0 1.0 0.9 0.9 0.9
Oceania
Australia 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.7 0.7
7RWDO2FHDQLD 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.8
CIS
Russia 0.6 0.9 1.2 1.5 1.6 2.3 2.5 3.0 3.3 2.7
Other Countries 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.5 0.5 0.4
7RWDO&,6 1.1 1.4 1.8 2.1 2.2 2.9 3.1 3.5 3.8 3.1
World Total 168.9 179.2 174.8 173.8 166.3 163.5 158.7 159.8 167.4 159.8
Fabrication Demand
United States (Thailand’s largest export market), despite Plain sterling silver jewelry was the chief casualty of the
Thailand regaining its preferential tariff treatment via the weaker export sector last year as items were reduced
Generalized System of Preferences in 2011. Shipments in size (dropping to as low as three grams) to meet
to Denmark and the United Kingdom also fell markedly. retail price points. At the low-end of the market (which
dominates in terms of absolute volumes), an increased
A key ¿nding from ¿eld research visits last year was use of stones in the design to limit precious metal
the work being done on building new export regions to requirements and to offer higher margins was an obvious
compensate for losses in traditional markets. To this reaction to price pressures. Last year, the “diamond
end, trade with eastern Europe (most notably Poland) look” or cubic zirconia gemset jewelry was popular, as
picked up as did shipments to India. Similarly, deliveries were large single colored stones (mainly non-precious
to China recorded growth in 2011, though at this stage, in this segment). One area that did not suffer the same
at least, expansion in these new markets failed to offset degree in 2011 was the fabrication of branded jewelry.
declines elsewhere. Moreover, fabricators producing branded jewelry under
contract for well known US and European fashion labels
On a recent research visit to Thailand, it was apparent reported that sales held up well last year and increased
that many small silversmiths have left the industry, as in some markets. Jewelry in this segment is often large
the price strain coupled with pressure to reduce margins and chunky (wrist cuffs, for example), with one piece
from the contracting client, and rising production costs, accounting for a signi¿cant volume of ¿ne silver.
have seen pro¿ts eroded. In addition, these small family
run operations normally carry out sub-contracted work On the domestic front, sales of silver jewelry are
from the major fabricators, so when orders slow the ¿rst principally aimed to the tourist and back packer export
contraction is normally from this source. trade (predominantly to Australia and neighboring South
73
East Asian markets). This trade was hit heavily by the by almost 20% in 2011 to a new record high of 37.4 Moz
severe Àooding across Thailand in the ¿nal quarter of (1,163 t).
the year. Indeed, sales during this period saw hefty falls
as buyers and tourists alike cancelled travel due to the Looking back, expansion in 2011, and indeed across
natural disaster. much of the last decade, has principally been a function
of China’s strong economic performance, which again
Jewelry fabrication in South Korea rose for the third exceeded expectations in achieving GDP growth of
consecutive year to a new record level of 5.2 Moz (162 t). 9.2% last year. This rapid economic development led to
This healthy 10% gain was largely a function of stronger disposable incomes rising sharply, boosting consumption
domestic consumption, with silver bene¿ting from price- across all segments (including jewelry). Added to this
led substitution from gold. Indeed, popular white gold has been the success in building a substantial export
designs were reproduced in rhodium plated sterling silver trade for silver jewelry, with low labor costs providing a
as fabricators who previously relied on gold shifted at competitive advantage over rivals. Indeed it has been
least part of their output (and retail space) to silver in a this advantage that has seen China win market share
bid to capture the growing demand. This interest in the at the expense of traditional markets (like Italy) whose
“other” white metal was ¿rstly supported by the youth production costs in most segments are far greater.
demographic, but now, increasingly, by the broader urban
community. In contrast, jewelry exports were again Last year’s fabrication growth of almost a ¿fth is even
weaker last year, falling almost 30% on a gross basis, more noteworthy when considering that silver jewelry
in part as South Korea’s high fabrication costs limited exports actually retreated last year. According to of¿cial
competitiveness. trade statistics, gross exports dropped almost 20% to the
lowest level in eight years as western orders slumped due
Jewelry fabrication demand in Indonesia saw solid gains to the sluggish economic environment and destocking.
for the second year running, increasing by 18% last year Exports to the United States, the largest destination,
to 5.5 Moz (172 t). Most of the growth last year was dropped by an estimated 19%, while Àows to Hong Kong
attributable to a rise in domestic consumption, with the (a redistribution point for exports globally) declined by
24% year-on-year rise in the rupiah gold price resulting in more than a quarter.
signi¿cant substitution gains for the less expensive metal.
Fabrication Demand
Growth in this segment has been dominated by a younger As a result, it was growth in domestic consumption that
demographic who are looking to silver for its lower entry bolstered fabrication, with several important contributing
point status and array of fashionable designs. factors at play last year that reinforced the robust
domestic performance. Firstly, signi¿cantly higher price
Dedicated silver retail outlets have been expanding levels for other rival white metals, namely platinum and
in shopping malls as demand has increased, with white 18-karat jewelry also contributed to the rise in
several gold fabricators converting at least part of their domestic consumption. Fabrication growth was largely at
operations to silver to meet this demand, although the lower end of the market as consumers (predominantly
much of this is still largely serviced by imports from the youth demographic) were eager to adopt the lower
China. Jewelry exports were weaker last year as demand priced metal as an alternative low cost fashion accessory.
declined in traditional western markets. However, part The second factor has been the rapid urbanization
of these losses were offset by gains closer to home witnessed across rural China, with this economically
(particularly in Australia), as robust hand carry trade driven improvement generating expansion of new
limited the damage. shopping precincts and retail outlets at unprecedented
levels. The comparatively low cost of establishing a new
Substantive growth in silver jewelry fabrication last silver retail outlet (in comparison to gold) has seen a
year extended the gap between China (as the largest proliferation of stand alone fashion jewelry outlets across
fabricating market) and its main competitors, with both China’s interior, boosting fabrication volumes as new
Thailand and Italy losing ground. Thomson Reuters outlets build inventory levels.
GFMS estimate that Chinese jewelry fabrication jumped
74
Table 9 - Silver Fabrication: Silverware (including the use of scrap - million ounces)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Italy 10.1 9.6 9.1 8.0 7.2 6.6 5.5 4.6 4.0 2.8
Germany 4.5 4.1 3.5 3.0 2.9 2.7 2.3 1.6 1.6 1.5
Greece 1.9 1.9 1.7 1.5 1.4 1.2 1.0 0.8 0.6 0.5
Norway 1.1 1.1 1.0 0.9 0.9 0.6 0.7 0.5 0.5 0.4
Sweden 0.4 0.5 0.5 0.5 0.4 0.4 0.4 0.3 0.3 0.3
Denmark 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Other Countries 2.5 2.3 2.1 2.0 1.8 1.6 1.6 1.2 1.2 1.1
7RWDO(XURSH 20.9 19.8 18.3 16.2 15.1 13.4 11.8 9.3 8.4 6.9
North America
United States 1.9 1.8 1.6 1.5 1.4 1.4 1.0 0.9 0.8 0.8
Mexico 2.5 2.7 2.6 2.5 2.0 1.4 1.2 0.9 0.7 0.5
Canada 0.3 0.3 0.3 0.3 0.2 0.2 0.1 0.1 0.1 0.1
7RWDO1RUWK$PHULFD 4.7 4.7 4.5 4.3 3.6 2.9 2.3 1.9 1.6 1.4
Latin America
Colombia 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2
Peru 0.5 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.1
Other Countries 0.6 0.5 0.6 0.7 0.7 0.7 0.7 0.6 0.5 0.4
7RWDO/DWLQ$PHULFD 1.4 1.2 1.2 1.2 1.3 1.3 1.2 1.0 0.9 0.8
Middle East
Turkey 2.7 2.9 2.8 2.6 2.4 2.1 2.2 1.8 1.5 1.3
Israel 1.4 1.4 1.4 1.5 1.5 1.4 1.3 1.1 1.0 0.7
Egypt 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1
Other Countries 1.5 1.6 1.7 1.7 1.7 1.7 1.7 1.5 1.4 1.3
7RWDO0LGGOH(DVW 5.9 6.2 6.2 6.1 5.8 5.5 5.4 4.5 4.1 3.3
Fabrication Demand
India 35.8 35.9 19.3 21.2 16.4 14.5 15.5 23.5 17.7 16.7
Other Countries 1.0 1.0 1.0 1.1 1.1 1.0 1.0 0.9 0.8 0.7
7RWDO,QGLDQ6XE&RQW 39.6 39.5 22.6 24.2 19.3 17.4 18.4 26.1 20.0 18.8
East Asia
China 3.3 3.9 4.8 5.2 6.1 6.5 6.3 4.7 5.3 5.8
Thailand 3.9 4.1 4.4 4.5 4.3 4.5 4.3 3.7 2.5 1.9
Indonesia 0.7 0.7 0.8 0.8 0.7 0.6 0.6 0.7 0.7 0.6
South Korea 0.7 0.7 0.7 0.8 0.7 0.7 0.7 0.6 0.6 0.6
Other Countries 0.8 0.8 0.8 0.8 0.7 0.7 0.7 0.6 0.6 0.5
7RWDO(DVW$VLD 9.3 10.2 11.4 12.0 12.5 13.2 12.6 10.3 9.6 9.3
Africa
Africa 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2
7RWDO$IULFD 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2
Oceania
Oceania 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
7RWDO2FHDQLD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
CIS
CIS 1.3 1.9 2.5 3.1 3.2 4.5 5.4 5.7 6.2 5.2
7RWDO&,6 1.3 1.9 2.5 3.1 3.2 4.5 5.4 5.7 6.2 5.2
World Total 83.5 83.9 67.2 67.6 61.2 58.6 57.4 59.1 51.2 46.0
75
Silverware growth in silverware imports eroded the market share

held by domestic manufacturers.
6WUXFWXUDOIDFWRUVDQDFXWHMXPSLQDYHUDJH
VLOYHUSULFHVDQGDVOXJJLVKJOREDOHFRQRP\ North America
DOOFRQWULEXWHGWRWKHGURSLQVLOYHUZDUH In 2011, the 7% fall for US silverware fabrication, to 0.8
IDEULFDWLRQWR0R] W Moz (24 t), marked the sixteenth straight year of losses;
in just seven years US silverware output has halved.
Last year global silverware fabrication slipped a further Last year’s downturn, the product of the struggling US
10% to a new low (in our series which covers 1990- economy and high prices, was concentrated in the mass
2011) of 46.0 Moz (1,431 t). Of the large producers, market. In contrast, production destined for the high-end
only China saw its output rise in 2011. Elsewhere, higher market, which is characteristically far less price sensitive
silver prices, coupled with ongoing secular changes and (and therefore rarely sees a shift in favor of lighter weight
economic weakness, affected silverware fabrication. pieces), was a little higher compared with 2010.
Europe Middle East

Silverware fabrication fell by a steep 18% in 2011 to 6.9 Turkish silverware offtake weakened by close to 19% in
Moz (214 t), or less than a tenth of volumes seen in the 2011, to just 1.3 Moz (39 t); two factors accounted for
early 1990s. This long run decline was chieÀy due to the much of the decline. First, a near doubling of local silver
collapse in sales of traditional pieces, often as gifts at prices saw domestic consumption (chieÀy of locally made
weddings. Even though the bulk of that change is behind pieces) shift in favor of either lighter weight, smaller
us, heavy items continued to perform the worst as high items, or towards the plated sector. Second, shipments
prices made them yet more unaffordable. Lighter, more of ¿nished products to Turkey’s two largest export
modern items (for example, laminated photoframes) markets, namely Israel and the United States, fell sharply
fared better, as did the very top end. Evidence for the in 2011.
latter comes from the trade data for France, a country
that specializes in high value output, which shows a rise Silverware fabrication in Israel also fell heavily, by 26%
in exports. For this same reason, fabrication in Germany in 2011, declining for the ¿fth year in succession to 0.7
performed better than many, although its trade data is Moz (22 t). In large part, elevated silver prices helped
Fabrication Demand
misleading as exports’ steep rise is thought mainly driven accelerate the substitution to both plating and the use
by old silverware being shipped out for re¿ning. of laminates at the expense of sterling silver pieces. In
the local market, demand for Judaic items was weaker (a
The largest absolute decline not just in Europe but also function of higher prices), while exports fell, principally
globally was in Italy, as its offtake fell by 29% last year, because of far lower deliveries to Israel’s key US market.
leading to several producers going bankrupt. Most output
is sold domestically and it is not dif¿cult to see how high
prices and a stuttering economy should trigger heavy
losses, often by way of a shift to silver-plated items and Italian Silverware Exports
many retailers failing to replace sterling items once sold.
Exports were also weaker than the customs ¿gure gross 10
Others
weight drop of 2%, despite success in some emerging CIS
8 Middle East
markets. The domestic market, however, was not Àooded
North America
by imports, as the of¿cial data also implies. EU-27
Million ounces
Russian silverware fabrication fell by nearly 17% last

4
year to 5.2 Moz (156 t) for two main reasons. First and
most importantly, the elevated level of production seen 2
in 2010 resulted in overstocking of the supply chain, with
the drawdown of these inventories in 2011 accounting for 0
2002 2004 2006 2008 2010
much of the drop in fabrication last year. Second, robust Source: Istat
76
Indian Sub-Continent A robust rise in domestic sales, combined with stable

In 2011, Indian silverware fabrication fell by a relatively export markets, saw Chinese silverware fabrication run
modest 5%, to 16.7 Moz (520 t), in spite of local (annual counter to the global trend, with a 10% increase last year
average) silver prices rising by 74%. However, this to 5.8 Moz (179 t). The rise, while remaining 0.8 Moz
volume represented less than half the total achieved (25 t) below the peak in 2007, cemented China as the
during the early 2000s. Taking a longer term view of second largest global market behind India, which posted
silverware fabrication in India is important as this goes lower offtake last year. To put China’s performance into
some way to explaining why last year posted such a context, over the last ten years offtake has risen by 75%,
modest fall. In other words, the apparent lack of price while global silverware fabrication has retreated by 45%.
sensitivity reÀects our understanding that the market
may have reached a baseload of core fabrication demand, The solid growth in domestic consumption last year,
which has therefore limited the potential for further, in an environment of acutely higher silver prices, was
heavy losses in silverware demand to be sustained going chieÀy driven by two supporting factors. First, China’s
forward. strong economic growth (GDP rose by 9.2% last year)
has delivered wealth, with the growth in disposable
Leaving aside issues of price sensitivity, last year incomes boosting consumption across a range of sectors.
witnessed further market share losses at the expense of Speci¿cally, the country’s economic progress has seen
bar and coin products. Although by no means unique the creation of a huge middle class across China that is
to 2011 (in fact previous years have seen far more now spending more money on household items and its
sustained losses), this reÀected investors’ desire not only more wealthy members have often made silverware a
for lower margin products, but also their concerns over bene¿ciary of this. That said, it is important to note there
inherent under-karating across much of the silverware has been a notable trend away from heavy items for the
industry. home, though Chinese consumers have continued to
purchase small items that enhance a table setting or are
In addition to weaker local consumption, Indian used during more formal occasions.
silverware exports, albeit accounting for a small share
of Indian offtake, also seem to have fallen last year. The second contributing factor was the elevated gold
Fabrication Demand
Available trade data for 2011 points to a sharp drop in price level. Indeed, with the RMB gold price surging
deliveries to the key US and European markets, although 23% last year those offering gifts or incentives to assist
it does appear as though there was some offset in terms in business transactions looked to silver as a more
of ¿rmer shipments to East Asia. affordable alternative. Moreover, for the same cost of a
diminutive gold ornament, a large silverware item (for
East Asia example, a table or desk display of a traditional design)
The 22% fall in Thai silverware fabrication last year, to was often chosen, with silver therefore increasingly
1.9 Moz (60 t), followed on from a sharp drop of almost gaining favor as an acceptable gift.
one-third in 2010, driving offtake to its lowest level in
our 22-year data series. While structural changes have World Silverware Fabrication
impacted end-user demand for some time, last year’s

74% jump in (average annual) silver prices, coupled with 100 Other
most industrialized economies being fragile, saw demand North America
80 Middle East
in many key export markets weaken. As a result,
East Asia
according to available trade statistics, Thai silverware
Million ounces
60
exports dropped by 47%, led lower by an acute fall in
shipments to the United Kingdom. Sales into the local
40
market also fell heavily, with price once again the chief
Europe
culprit, though severe Àooding across Thailand (including
20
greater Bangkok), during a period of peak tourism, also
hit retail sales. 0
2002 2004 2006 2008 2010
77
8. Appendices
Contents
Page
Appendix 1 World Silver Supply and Demand (tons) 79
World Silver Mine Production (tons) 80
Silver Fabrication: Coins and Medals (tons) 82
Supply of Silver from the Recycling of Old Scrap (tons) 82
World Silver Fabrication Including the Use of Scrap (tons) 84
Silver Fabrication: Industrial Applications (tons) 86
Silver Fabrication: Electrical and Electronics (tons) 88
Silver Fabrication: Brazing Alloys and Solders (tons) 88
Silver Fabrication: Photographic Use (tons) 89
Silver Fabrication: Jewelry and Silverware (tons) 90
Silver Fabrication: Jewelry (tons) 92
Silver Fabrication: Silverware (tons) 94
Supply and Demand with Bar Investment (tons) 95
Appendix 2 Nominal Silver Prices, 1978 - 2011 96
Appendix 3 Real Silver Prices, 1978 - 2011 97
Appendix 4 Silver Prices, in US$ per ounce (London and Comex) 98
US Prices in 2011 (monthly) 98
Leasing Rates in 2011 98
Appendix 5 Leading Primary Silver Mines 99

Appendices
Silver Mine Production by Source Metal 99
Silver Mine Production by Main Region and Source Metal 99
Appendix 6 Comex and London Bullion Market Turnover 100
Quarterly ETF Volume and Holdings 100
78
Appendix 1
Table 1 - World Silver Supply and Demand (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Supply
Mine Production 18,490 18,575 19,085 19,800 19,939 20,711 21,263 22,272 23,370 23,689
Net Government Sales 1,841 2,759 1,924 2,051 2,441 1,322 949 485 1,375 357
Old Silver Scrap 6,137 6,097 6,139 6,269 6,408 6,313 6,248 6,221 7,113 7,985
Producer Hedging - - 299 859 - - - - 1,568 334
Implied Net Disinvestment 541 - - - - - - - - -
Total Supply 27,009 27,432 27,447 28,979 28,788 28,346 28,459 28,978 33,426 32,365
Demand
Fabrication
Industrial Applications 11,052 11,459 12,050 13,432 14,127 15,274 15,323 12,601 15,552 15,132
Photography 6,353 5,999 5,562 4,987 4,423 3,657 3,150 2,465 2,241 2,056
Jewelry 5,252 5,574 5,438 5,406 5,173 5,086 4,936 4,970 5,207 4,971
Silverware 2,596 2,610 2,089 2,101 1,904 1,824 1,785 1,839 1,592 1,430
Coins & Medals 983 1,110 1,318 1,246 1,237 1,235 2,031 2,450 3,092 3,677
Total Fabrication 26,237 26,751 26,457 27,172 26,863 27,076 27,224 24,324 27,684 27,265
Producer De-Hedging 772 651 - - 211 753 266 541 - -
Implied Net Investment - 29 990 1,807 1,714 517 969 4,113 5,742 5,099
Total Demand 27,009 27,432 27,447 28,979 28,788 28,346 28,459 28,978 33,426 32,365
Silver Price (London US$/oz) 4.599 4.879 6.658 7.312 11.549 13.384 14.989 14.674 20.193 35.119
World Silver Supply World Silver Demand
40 Real Silver 40 40 Implied Net Investment Real Silver 40

Implied Net Disinvestment
Price Price
Producer Hedging Producer De-Hedging
Silverware
32 Government Sales 32
Coins
Appendices
30 30

Tons (thousands)
Tons (thousands)
24 Scrap 24
Photography
20 20
16 16
Jewelry
10 10
8 Mine Production 8
Industrial Applications
0 0 0 0
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
79
Table 2 - World Silver Mine Production (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Poland 1,211 1,376 1,362 1,261 1,260 1,233 1,212 1,220 1,171 1,270
Sweden 293 307 291 284 266 294 263 270 285 283
Spain 13 2 0 5 2 2 2 5 23 35
Portugal 19 22 25 0 10 28 41 22 23 31
Greece 75 4 0 0 25 35 35 29 27 25
Bulgaria 25 22 19 21 18 14 11 15 13 17
Romania 32 29 28 27 15 3 0 3 7 16
Macedonia 14 5 3 7 11 11 13 14 15 14
Serbia and Montenegro 4 1 1 1 1 1 1 1 1 1
Ireland 8 9 7 6 4 4 5 2 1 1
Italy 2 2 0 3 3 1 0 0 0 0
Other Countries 0 0 0 0 0 0 0 0 0 0
Total Europe 1,695 1,779 1,736 1,616 1,616 1,626 1,584 1,581 1,565 1,693
North America
Mexico 2,747 2,569 2,569 2,894 2,970 3,135 3,236 3,554 4,411 4,753
United States 1,350 1,240 1,250 1,220 1,140 1,260 1,120 1,250 1,270 1,120
Canada 1,373 1,276 1,295 1,063 969 829 669 608 563 596
Total North America 5,470 5,085 5,114 5,177 5,079 5,225 5,026 5,412 6,244 6,469
Latin America
Peru 2,762 2,921 3,060 3,191 3,456 3,501 3,681 3,844 3,640 3,414
Chile 1,210 1,312 1,360 1,379 1,602 1,936 1,404 1,301 1,276 1,311
Bolivia 462 491 434 399 472 525 1,114 1,326 1,274 1,214
Argentina 126 138 145 187 211 252 333 555 721 703
Guatemala 0 0 0 10 50 88 100 129 195 273
Honduras 56 54 50 54 56 54 59 58 58 44
Colombia 7 10 9 7 8 10 9 11 15 24
Dominican Republic 0 0 0 0 0 0 0 18 19 19
Ecuador 1 1 1 11 13 13 13 13 15 16
Brazil 7 7 8 9 10 11 11 11 12 12
Nicaragua 2 2 3 2 3 3 3 5 7 8
Total Latin America 4,636 4,938 5,073 5,256 5,887 6,400 6,733 7,275 7,239 7,040
Asia
China 1,646 1,828 1,967 2,082 2,341 2,446 2,618 2,679 2,923 3,233
India 67 91 105 102 183 178 212 292 300 342
Turkey 114 113 126 162 187 235 314 389 384 291
Indonesia 332 297 266 308 246 268 248 240 209 186
Iran 82 82 84 90 100 90 98 106 106 108
Papua New Guinea 64 63 54 68 51 44 50 67 67 92
Appendices
Philippines 9 10 9 19 24 28 14 34 41 46
Mongolia 35 34 36 36 37 37 36 36 35 33
North Korea 20 25 25 25 29 29 29 25 26 27
Thailand 22 18 16 20 17 13 13 21 23 25
Japan 85 83 54 32 34 14 12 12 11 24
Laos 0 1 3 6 6 4 7 15 17 18
Other Countries 16 19 18 17 13 12 11 10 11 8
Total Asia 2,494 2,665 2,763 2,967 3,266 3,399 3,662 3,925 4,151 4,433
80
Table 2 - World Silver Mine Production (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Africa
Morocco 279 209 225 247 247 222 250 264 307 228
South Africa 113 87 71 88 93 86 84 92 93 92
Eritrea 0 0 0 0 0 0 0 0 0 17
Zambia 6 6 8 10 12 12 13 14 15 16
Tanzania 7 8 13 13 12 11 9 11 12 13
Botswana 4 4 4 4 4 3 3 4 4 4
Ethiopia 1 1 2 1 1 1 1 2 2 3
Zimbabwe 4 4 4 4 3 2 2 2 3 3
Mali 3 2 2 2 3 3 2 3 2 2
Other Countries 29 71 65 33 71 81 44 3 4 6
Total Africa 445 394 393 402 446 421 410 393 442 383
Oceania
Australia 2,077 1,864 2,222 2,407 1,728 1,879 1,926 1,631 1,880 1,717
New Zealand 29 30 30 46 35 19 32 14 14 14
Fiji 2 1 2 1 1 0 0 0 0 0
Total Oceania 2,108 1,895 2,254 2,454 1,764 1,898 1,959 1,645 1,894 1,731
CIS
Russia 699 918 941 1,010 972 910 1,132 1,312 1,145 1,243
Kazakhstan 849 802 703 812 796 708 629 614 548 547
Armenia 39 41 40 37 39 37 41 49 65 72
Uzbekistan 49 53 60 64 63 78 73 52 58 58
Kyrgyzstan 1 1 1 1 6 6 10 9 10 10
Azerbaijan 0 0 0 0 0 0 0 0 1 4
Total CIS 1,643 1,820 1,751 1,929 1,881 1,744 1,890 2,040 1,835 1,940
World Total 18,490 18,575 19,085 19,800 19,939 20,711 21,263 22,272 23,370 23,689
World Silver Mine Production Silver Producer Hedging: Outstanding Positions
24 4 40
Europe CIS Options Delta
Oceania Africa Silver
Forward Positions
20 Price
Tons (thousands, end-year)
3 30
Appendices
Tons (thousands)
16
US$/oz
Asia
12 2 20
8 Latin America
1 10
4
North America
0 0 0
2002 2004 2006 2008 2010 2002 2004 2006 2008 2010
81
Table 3 - Silver Fabrication: Coins and Medals Including the Use of Scrap (tons)
© Thomson Reuters / The Silver Institute © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
United States 476 452 483 517 548 497 790 1,067 1,296 1,487
Canada 32 10 40 51 89 133 281 336 580 729
Austria 13 13 15 18 17 17 259 296 360 571
Australia 20 40 40 32 43 109 182 201 272 350
China 65 72 72 57 50 81 88 94 116 180
Germany 187 301 301 303 272 195 223 232 200 102
Mexico 34 47 85 81 58 51 43 52 64 52
Spain 47 34 70 54 46 38 34 32 41 21
Other Countries 109 141 212 134 115 115 132 139 163 184
World Total 983 1,110 1,318 1,246 1,237 1,235 2,031 2,450 3,092 3,677
Table 4 - Supply of Silver from the Recycling of Old Scrap (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Germany 520 592 598 546 470 471 455 391 465 519
UK & Ireland 423 404 386 360 340 348 340 316 298 340
Italy 113 112 104 133 170 175 183 181 203 303
France 120 126 118 127 139 142 158 170 193 217
Spain 13 14 14 13 13 12 14 16 23 40
Netherlands 44 44 45 42 40 35 34 32 35 38
Austria 58 48 50 40 40 38 36 33 35 38
Sweden 32 32 32 31 29 28 27 26 26 28
Belgium 20 20 20 20 20 20 19 18 20 21
Denmark 17 17 17 16 16 16 15 14 16 17
Portugal 14 14 14 13 13 13 12 12 12 14
Czech & Slovak Republics 13 13 14 14 14 14 13 12 13 14
Finland 12 13 12 12 11 11 10 10 10 11
Norway 21 14 10 9 9 8 9 9 10 10
Switzerland 10 10 10 10 8 8 8 7 7 7
Other Countries 36 34 34 32 31 32 31 30 30 32
Total Europe 1,466 1,506 1,476 1,418 1,363 1,370 1,363 1,276 1,395 1,650
North America
United States 1,872 1,828 1,728 1,772 1,656 1,667 1,724 1,692 2,008 2,340
Mexico 48 55 60 64 72 84 95 98 123 140
Canada 44 47 44 46 44 50 52 48 51 55
Appendices
Latin America
Brazil 32 36 32 32 32 32 32 34 42 51
Argentina 20 20 20 20 24 20 16 14 19 23
Chile 12 12 12 14 16 16 16 14 18 21
Other Countries 24 25 24 29 33 30 30 30 39 49
Total Latin America 88 93 88 95 105 98 94 91 118 143
Middle East
Saudi Arabia & Yemen 224 23 40 50 56 58 59 60 69 73
82
Table 4 - Supply of Silver from the Recycling of Old Scrap (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Turkey 44 52 47 41 35 30 36 38 34 40
Egypt 40 35 42 43 46 48 52 55 62 27
Oman 5 5 5 5 6 6 6 6 7 7
Other Countries 11 11 15 13 15 16 16 16 19 21
Total Middle East 324 126 149 152 158 157 168 176 191 168
India 210 294 323 500 700 500 430 465 558 642
Other Countries 15 15 15 16 17 17 17 20 26 31
Total Indian Sub-Cont. 225 309 338 516 717 517 447 485 584 673
East Asia
China 368 407 473 544 636 700 705 787 909 992
Japan 940 930 880 852 810 800 736 662 649 714
South Korea 208 220 225 226 240 242 240 262 294 310
Taiwan 72 77 85 84 88 91 97 111 129 141
Thailand 60 66 74 69 80 85 91 96 115 116
Singapore 13 13 14 14 16 16 15 15 17 18
Hong Kong 12 12 13 13 14 14 14 14 15 16
Indonesia 10 10 11 11 12 12 12 12 13 15
Vietnam 9 10 10 11 11 12 12 11 12 13
Philippines 6 6 6 6 6 6 6 6 7 7
Total East Asia 1,701 1,755 1,794 1,834 1,919 1,983 1,934 1,982 2,165 2,346
Africa
Morocco 16 16 40 19 29 28 29 31 32 35
Other Countries 17 17 17 17 18 18 18 18 20 22
Total Africa 33 33 57 36 47 46 47 50 52 57
Oceania
Australia 73 65 64 55 53 52 51 49 49 49
Total Oceania 73 65 64 55 53 52 51 49 49 49
CIS
CIS 263 280 340 280 276 288 272 275 375 364
Total CIS 263 280 340 280 276 288 272 275 375 364
World Total 6,137 6,097 6,139 6,269 6,408 6,313 6,248 6,221 7,113 7,985
World Silver Scrap Supply World Scrap Supply, 2011
9 40
Others Real Silver Other
8 Price 10%
India East Asia
29%
Appendices
7 30
Indian Sub-
Continent
6 8%
Tons (thousands)
5
20
4
Japan
3
United States 10
2 Europe North America
32% 21%
1
EU-25
0 0
2002 2004 2006 2008 2010 Source: Thomson Reuters GFMS
83
Table 5 - World Silver Fabrication Including the Use of Scrap (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Germany 1,102 1,216 1,257 1,260 1,275 1,249 1,271 1,028 1,197 1,058
Italy 1,786 1,736 1,722 1,579 1,451 1,368 1,235 1,097 1,119 898
UK & Ireland 1,323 1,350 1,604 1,330 1,013 780 725 588 634 690
Austria 37 37 40 40 38 38 279 315 380 591
Belgium 958 910 858 814 894 850 743 591 532 428
France 862 819 404 389 396 410 421 319 366 350
Spain 161 148 198 175 156 141 132 125 132 103
Poland 100 120 134 145 149 135 132 109 112 95
Switzerland 106 94 96 101 97 97 97 88 94 94
Netherlands 64 60 79 69 63 63 61 53 58 57
Greece 87 90 86 82 77 70 68 56 46 40
Portugal 53 82 127 54 45 43 42 40 41 40
Norway 60 62 65 56 52 40 40 30 33 34
Sweden 33 37 38 38 37 35 34 29 30 29
Denmark 24 22 21 21 21 21 20 18 19 18
Yugoslavia (former) 7 7 8 8 9 9 10 8 9 8
Hungary 13 13 13 12 7 7 9 8 8 8
Finland 14 13 12 12 13 10 10 8 8 8
Cyprus & Malta 10 9 9 9 9 9 9 8 8 7
Romania 12 12 12 12 12 8 8 6 7 7
Total Europe 6,837 6,865 6,807 6,232 5,839 5,410 5,372 4,544 4,856 4,582
North America
United States 5,505 5,454 5,608 5,891 5,778 5,558 5,771 5,199 6,255 6,140
Canada 96 78 109 126 178 250 386 404 667 816
Mexico 564 629 682 693 587 576 545 510 537 498
Latin America
Brazil 198 204 227 232 145 223 215 199 241 229
Argentina 58 74 78 80 60 56 44 34 39 39
Dominican Republic 7 11 13 17 19 20 28 46 42 29
Peru 32 23 21 19 22 21 23 25 26 22
Colombia 22 22 22 21 21 21 19 17 18 17
Chile 13 13 13 13 13 13 13 12 13 12
Other Countries 30 29 34 32 35 35 44 45 48 39
Middle East
Turkey 254 294 321 309 276 247 262 222 203 189
Appendices
Israel 83 81 83 86 88 87 82 69 67 56
Iran 43 45 47 50 49 49 48 44 43 40
Egypt 49 57 62 55 52 53 50 45 43 20
Other Countries 56 56 59 61 62 63 64 67 76 86
India 3,309 3,309 2,163 2,850 2,575 2,770 2,868 3,244 2,926 2,833
Bangladesh & Nepal 150 140 132 116 113 113 114 112 108 102
Other Countries 66 66 71 73 74 75 71 67 63 56
Total Indian Sub-Cont. 3,525 3,515 2,366 3,039 2,762 2,958 3,054 3,423 3,097 2,990
84
Table 5 - World Silver Fabrication Including the Use of Scrap (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
East Asia
China 1,856 2,106 2,367 2,571 2,832 3,242 3,556 3,424 3,957 4,350
Japan 3,693 3,607 3,826 3,860 4,097 3,995 3,372 2,195 3,175 2,942
South Korea 643 689 735 795 842 903 955 763 929 941
Thailand 1,014 1,138 1,151 1,150 1,150 1,140 1,046 954 956 781
Taiwan 316 343 331 372 409 458 483 390 474 496
Indonesia 139 146 181 159 178 170 168 167 193 216
Hong Kong 105 99 107 110 118 125 120 99 114 114
Vietnam 26 28 30 32 35 37 39 40 45 49
Myanmar, Laos & Cambodia 30 32 28 28 26 26 26 26 28 28
Malaysia 20 21 22 21 20 20 20 20 21 23
Other Countries 14 15 14 15 14 14 14 26 31 35
Total East Asia 7,855 8,223 8,791 9,112 9,722 10,130 9,800 8,104 9,921 9,974
Africa
Morocco 18 18 19 19 19 20 19 17 18 18
Tunisia 10 11 11 11 10 11 11 10 11 10
South Africa 7 8 8 8 8 8 8 8 8 8
Algeria 5 6 6 6 6 6 6 6 6 5
Other Countries 12 12 13 13 13 14 15 13 13 13
Total Africa 52 54 57 58 57 59 60 54 56 54
Oceania
Australia 180 193 178 121 133 200 271 283 360 441
New Zealand 1 1 1 1 1 1 1 1 1 1
Total Oceania 181 195 179 122 134 201 272 284 361 443
CIS
CIS 776 831 878 925 963 1,046 1,074 977 1,076 990
Total CIS 776 831 878 925 963 1,046 1,074 977 1,076 990
World Total 26,237 26,751 26,457 27,172 26,863 27,076 27,224 24,324 27,684 27,265
World Silver Fabrication World Silver Fabrication, 2011
35 40
Coins & Medals Real Silver Other
Price CIS 4%
Silverware Europe
30 4%
Indian Sub- 17%
30 Continent
Appendices
25
11%
Tons (thousands)
Photography
20
20
15 Jewelry
10 North America
10
27%
5
Industrial East Asia
37%
0 0
2002 2004 2006 2008 2010
85
Table 6 - Silver Fabrication: Industrial Applications Including the Use of Scrap (tons)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Germany 659 675 730 744 794 851 856 630 828 795
UK & Ireland 433 464 483 385 388 372 378 282 316 351
Italy 324 318 357 338 340 352 350 281 307 289
France 455 430 320 317 322 334 336 232 274 249
Switzerland 84 72 76 81 77 77 76 69 75 74
Netherlands 48 47 48 49 49 49 49 40 47 46
Spain 40 38 65 60 58 59 58 53 55 45
Poland 21 21 22 22 23 24 25 21 23 22
Austria 17 17 17 17 17 17 17 15 16 16
Norway 20 19 26 22 17 16 15 11 13 12
Sweden 10 10 10 10 10 11 11 8 10 9
Belgium 8 8 8 8 8 8 8 6 7 7
Other Countries 21 22 22 22 23 24 24 20 22 21
Total Europe 2,148 2,148 2,193 2,085 2,135 2,202 2,208 1,675 2,001 1,943
North America
United States 2,584 2,699 2,931 3,134 3,323 3,548 3,703 3,042 3,929 3,727
Mexico 93 96 93 101 95 102 98 84 90 87
Canada 16 16 19 31 53 83 75 40 60 59
Latin America
Brazil 98 94 115 139 91 124 121 110 132 131
Argentina 20 20 20 28 32 34 32 24 28 28
Colombia 6 6 6 5 5 5 5 4 5 4
Ecuador 2 2 2 2 2 2 2 2 2 2
Other Countries 13 12 12 12 12 12 12 11 12 11
Middle East
Turkey 39 44 45 47 48 50 51 43 46 48
Israel 24 24 24 25 26 26 25 21 23 22
Egypt 3 3 3 3 3 3 3 3 4 2
India 1,381 1,381 1,053 1,670 1,687 1,986 2,022 2,017 1,979 1,925
Pakistan 8 8 9 9 10 10 10 9 9 9
Total Indian Sub-Cont. 1,389 1,389 1,062 1,679 1,697 1,996 2,032 2,026 1,988 1,934
East Asia
Appendices
China 1,172 1,324 1,468 1,644 1,809 2,101 2,425 2,274 2,626 2,754
Japan 1,839 1,879 2,292 2,614 2,783 2,827 2,293 1,418 2,456 2,226
South Korea 504 545 590 648 694 750 806 612 762 762
Taiwan 307 333 319 359 394 442 467 375 458 478
Hong Kong 93 90 97 99 107 113 109 88 102 102
Other Countries 15 17 19 19 19 20 24 32 45 50
Total East Asia 3,929 4,188 4,784 5,383 5,805 6,253 6,125 4,799 6,448 6,371
86
Table 6 - Silver Fabrication: Industrial Applications Including the Use of Scrap (tons)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Africa
Morocco 8 8 8 8 9 9 8 7 8 8
South Africa 4 4 4 4 4 4 4 4 4 4
Total Africa 17 17 18 19 19 20 20 18 20 19
Oceania
Oceania 66 68 69 63 65 66 65 58 63 66
Total Oceania 66 68 69 63 65 66 65 58 63 66
CIS
CIS 600 630 650 672 712 744 744 637 700 672
Total CIS 600 630 650 672 712 744 744 637 700 672
World Total 11,052 11,459 12,050 13,432 14,127 15,274 15,323 12,601 15,552 15,132
Components of Industrial Demand World Silver Industrial Fabrication, 2011
18 120 Other
Brazing Alloys & Solders CIS 2%
Europe
4%
13%
15 Industrial 110
Production*
13%
Appendices
100
Tons (thousands)
12
Other North America

9 90 26%
6 80
3 Electrical & Electronics 70 East Asia

42%
0 60
2002 2004 2006 2008 2010
*Advanced economies; Source: Thomson Reuters GFMS, IMF Source: Thomson Reuters GFMS
87
Table 6a - Silver Fabrication: Electrical and Electronics Including the Use of Scrap (tons)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
United States 1,168 1,228 1,474 1,622 1,710 1,796 1,909 1,660 2,235 2,100
Japan 913 940 1,181 1,360 1,432 1,457 1,204 877 1,588 1,438
China 532 584 652 730 801 981 1,103 975 1,196 1,243
Germany 484 503 551 569 613 665 674 488 668 635
India 151 159 167 300 312 390 420 442 480 551
South Korea 306 333 360 400 430 456 495 390 500 499
Taiwan 260 280 260 293 320 363 384 309 377 395
France 309 297 252 248 254 264 269 178 215 189
UK & Ireland 172 183 190 141 138 139 145 107 120 125
Italy 87 90 118 108 112 121 127 107 121 105
Hong Kong 87 85 92 94 101 108 104 83 97 97
Mexico 56 58 56 64 61 65 64 56 60 57
Brazil 40 38 52 66 27 48 46 37 50 49
Turkey 25 30 31 31 32 33 34 29 31 33
Australia 20 21 21 22 23 23 22 20 22 22
Singapore - - - - - - - 12 16 20
Netherlands 16 16 16 17 17 17 17 13 16 15
Switzerland 12 14 14 13 13 13 15 13 14 15
Spain - - 10 10 10 11 11 8 10 8
Austria 7 7 7 7 7 7 7 6 7 6
World Total 4,653 4,873 5,511 6,102 6,419 6,964 7,055 5,815 7,829 7,607
Table 6b - Silver Fabrication: Brazing Alloys and Solders Including the Use of Scrap (tons)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
China 380 448 492 554 584 644 790 807 870 929
India 60 63 67 130 134 161 177 190 201 221
United States 260 247 228 240 224 240 225 162 183 187
Japan 104 104 116 119 122 123 114 70 105 94
Germany 95 97 100 98 105 112 107 71 87 86
UK & Ireland 79 86 92 90 95 76 72 57 72 76
South Korea 42 44 50 59 64 74 81 64 72 74
Italy 64 63 64 67 74 78 75 52 57 54
Canada 9 9 12 24 46 76 68 34 53 53
Switzerland 40 42 42 48 44 44 42 38 41 41
Taiwan 31 33 35 36 39 40 39 31 38 39
Appendices
Brazil 23 22 23 25 26 26 25 27 30 31
France 32 25 22 25 26 27 26 17 20 19
Australia 19 20 20 16 17 17 17 15 17 18
Spain 30 28 25 20 20 20 20 18 18 16
Mexico 16 17 16 16 15 16 15 12 13 13
Netherlands 7 7 8 7 7 7 7 6 7 7
Austria 3 3 3 3 3 3 3 3 3 3
Other Countries 2 2 2 2 2 2 7 5 11 12
World Total 1,295 1,359 1,416 1,579 1,646 1,784 1,907 1,680 1,897 1,971
88
Table 7 - Silver Fabrication: Photographic Use Including the Use of Scrap (tons)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
EU-25 2,081 2,023 1,916 1,700 1,458 1,209 1,043 852 803 711
Romania 5 5 5 5 5 - - - - -
Total Europe 2,086 2,028 1,921 1,705 1,463 1,209 1,043 852 803 711
North America
United States 2,017 1,832 1,716 1,753 1,442 1,071 875 728 630 556
Total North America 2,017 1,832 1,716 1,753 1,442 1,071 875 728 630 556
Latin America
Brazil 64 68 68 43 - 45 40 32 45 37
Argentina 34 48 48 40 16 8 - - - -
India 10 10 10 10 10 9 9 8 8 8
Sri Lanka 4 4 4 4 4 4 1 - - -
East Asia
Japan 1,799 1,677 1,476 1,180 1,251 1,100 1,008 700 630 630
China 176 180 190 167 157 143 115 95 81 74
Total East Asia 1,975 1,857 1,666 1,348 1,408 1,243 1,123 795 711 704
Oceania
Oceania 71 64 47 4 4 4 3 3 3 2
Total Oceania 71 64 47 4 4 4 3 3 3 2
CIS
CIS 92 88 83 80 76 64 56 47 42 38
Total CIS 92 88 83 80 76 64 56 47 42 38
World Total 6,353 5,999 5,562 4,987 4,423 3,657 3,150 2,465 2,241 2,056
Appendices
89
Table 8 - Silver Fabrication: Jewelry and Silverware Including the Use of Scrap (tons)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Italy 1,457 1,408 1,348 1,230 1,101 1,006 875 806 802 599
Germany 245 240 226 213 210 203 193 166 169 161
France 84 81 69 55 57 59 57 59 64 73
Poland 71 91 95 105 111 101 95 76 77 61
Greece 87 90 86 82 77 70 68 56 46 40
Spain 74 76 63 61 52 44 41 41 37 37
Portugal 49 52 48 42 38 36 39 36 38 37
UK & Ireland 68 50 48 43 41 26 23 21 21 20
Sweden 22 26 27 27 26 24 22 20 20 19
Norway 40 42 37 32 34 25 26 19 20 18
Denmark 21 19 18 18 18 18 17 16 16 16
Switzerland 10 10 10 10 10 10 10 9 9 9
Cyprus 10 9 9 9 9 9 9 8 8 7
Finland 11 10 9 9 10 7 7 5 5 5
Austria 7 7 7 5 4 4 4 3 3 3
Other Countries 23 22 23 22 23 23 24 21 22 21
Total Europe 2,279 2,235 2,124 1,963 1,821 1,665 1,510 1,361 1,357 1,125
North America
United States 428 471 479 487 465 442 404 362 400 370
Mexico 437 486 504 511 434 423 404 374 383 359
Canada 48 52 50 44 36 34 30 28 28 27
Total North America 913 1,009 1,033 1,042 935 899 838 764 811 756
Latin America
Brazil 36 42 44 50 54 54 54 57 64 60
Peru 29 20 18 16 19 18 20 22 23 19
Colombia 16 16 16 16 16 16 14 13 14 13
Argentina 4 6 10 12 12 14 12 10 11 11
Ecuador 12 10 10 8 10 10 10 7 7 7
Other Countries 25 31 38 42 45 46 63 85 83 61
Middle East
Turkey 211 245 272 258 224 194 207 175 153 134
Israel 57 56 57 59 61 60 56 46 43 32
Egypt 46 53 58 52 48 50 46 42 39 17
Other Countries 77 79 83 86 86 87 86 82 85 85
Appendices
India 1,918 1,918 1,100 1,170 878 775 837 1,219 939 900
Other Countries 54 54 58 60 60 61 61 59 54 47
Total Indian Sub-Cont. 2,122 2,112 1,290 1,346 1,051 949 1,012 1,390 1,101 1,049
East Asia
China 443 530 637 702 816 917 928 961 1,134 1,342
Thailand 1,004 1,127 1,147 1,145 1,146 1,136 1,037 946 947 772
Indonesia 124 129 162 140 159 151 149 150 168 190
90
Table 8- Silver Fabrication: Jewelry and Silverware Including the Use of Scrap (tons)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
South Korea 139 144 145 147 149 153 149 150 167 179
Japan 52 49 56 64 61 65 62 65 70 69
Vietnam 26 28 30 32 35 37 39 40 45 49
Malaysia 20 21 22 21 20 20 20 20 21 23
Taiwan 9 10 12 13 12 12 12 11 12 13
Other Countries 23 21 21 21 22 22 22 21 23 24
Total East Asia 1,869 2,091 2,260 2,313 2,446 2,539 2,444 2,390 2,615 2,688
Africa
Morocco 11 10 11 11 11 11 11 9 10 10
Tunisia 9 10 10 10 9 10 10 10 10 9
Algeria 4 5 5 5 5 5 5 4 4 4
Other Countries 11 12 13 13 13 13 14 13 12 12
Total Africa 35 37 39 39 37 39 40 36 36 35
Oceania
Australia 23 22 23 22 21 21 20 20 22 23
New Zealand 1 1 1 1 1 1 1 1 1 1
Total Oceania 24 23 24 23 22 22 21 22 23 25
CIS
Russia 55 80 112 138 144 205 241 263 291 240
Other Countries 20 21 22 23 23 25 25 21 20 18
Total CIS 75 101 134 161 168 229 266 284 311 258
World Total 7,849 8,184 7,527 7,508 7,076 6,910 6,720 6,809 6,799 6,401
World Jewelry & Silverware Fabrication World Jewelry & Silverware Fabrication, 2011
Other
10 7%
Other
Middle East Europe
18%
8 North America Indian Sub-
Continent
Appendices
16%
Tons (thousands)
Indian Sub-Continent North America

12%
4
Europe
2 Middle East
5%
East Asia East Asia
42%
0
2002 2004 2006 2008 2010
91
Table 8a - Silver Fabrication: Jewelry Including the Use of Scrap (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Italy 1,142 1,110 1,065 980 876 802 703 663 679 512
Germany 104 113 116 118 119 120 122 115 119 115
France 76 74 62 48 50 52 49 54 59 68
Poland 68 88 92 102 108 98 92 74 75 58
Spain 46 52 42 44 40 35 35 38 34 35
Portugal 44 47 43 37 34 32 33 31 32 32
Greece 28 30 32 34 33 32 36 32 28 25
UK & Ireland 56 38 36 32 30 16 14 12 13 12
Sweden 10 12 12 12 12 11 10 9 10 10
Switzerland 7 7 7 7 7 7 7 7 7 7
Denmark 10 9 8 8 8 8 8 7 7 7
Cyprus & Malta 7 6 7 7 7 6 6 5 5 5
Norway 6 6 6 5 5 5 4 5 5 5
Finland 3 3 3 3 3 2 2 2 2 2
Austria 3 3 3 2 1 1 1 1 1 1
Other Countries 20 19 20 19 20 20 21 19 19 19
Total Europe 1,629 1,617 1,554 1,458 1,351 1,248 1,143 1,072 1,095 911
North America
United States 368 416 428 440 420 400 372 334 374 346
Mexico 358 403 423 434 372 380 368 346 362 342
Canada 40 44 42 36 30 28 26 24 25 24
Total North America 766 863 893 910 822 808 766 704 761 712
Latin America
Brazil 32 38 40 45 48 48 48 52 60 57
Peru 13 10 9 8 11 10 13 16 17 15
Argentina 3 4 7 7 8 9 8 7 8 8
Colombia 6 6 6 6 6 6 6 7 7 7
Ecuador 7 6 6 5 6 6 6 4 5 5
Other Countries 17 24 30 34 38 38 55 78 78 56
Middle East
Turkey 129 154 185 176 150 127 139 120 105 95
Egypt 36 44 48 43 41 43 40 36 34 16
Israel 13 13 13 14 13 14 14 12 13 10
Other Countries 33 33 34 36 37 37 37 38 43 47
India 804 800 500 510 369 323 355 487 390 380
Appendices

Other Countries 24 24 26 27 27 28 29 30 29 26
East Asia
China 341 408 486 540 627 713 733 814 971 1,163
Thailand 884 999 1,011 1,005 1,012 995 904 832 870 712
Indonesia 103 108 139 117 137 131 129 129 146 172
South Korea 117 121 123 122 126 130 127 131 148 162
Japan 50 48 55 63 60 64 61 64 69 68
92
Table 8a - Silver Fabrication: Jewelry Including the Use of Scrap (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Vietnam 24 26 27 29 33 34 37 38 42 47
Malaysia 18 19 20 19 19 18 19 19 20 21
Hong Kong 8 7 7 7 8 8 8 8 9 10
Taiwan 6 7 8 9 9 9 8 8 9 10
Total East Asia 1,579 1,772 1,905 1,939 2,057 2,129 2,053 2,069 2,315 2,397
Africa
Morocco 8 8 8 8 8 9 8 7 8 8
Tunisia 6 7 7 7 6 7 7 7 7 7
Algeria 3 3 4 4 3 3 3 3 3 3
Other Countries 9 10 10 10 10 10 11 11 10 10
Total Africa 27 28 29 29 28 30 30 28 28 28
Oceania
Australia 22 21 21 21 20 20 19 20 21 22
New Zealand 1 1 1 1 1 1 1 1 1 1
Total Oceania 23 22 22 22 21 21 20 21 22 24
CIS
Russia 19 28 38 48 51 70 79 92 104 84
Other Countries 15 16 16 17 17 18 18 16 15 13
Total CIS 34 43 55 64 68 89 97 108 119 97
World Total 5,252 5,574 5,438 5,406 5,173 5,086 4,936 4,970 5,207 4,971
World Jewelry Fabrication World Jewelry Fabrication, 2011
7 Middle East Other

Other
Indian Sub-Continent 7%
6 Indian Sub- Europe
Continent 18%
Appendices
9%
5
Tons (thousands)
4
North America
North America
3 14%
Europe
East Asia
1 48% Middle East
East Asia 4%
0
2002 2004 2006 2008 2010
93
Table 9 - Silver Fabrication: Silverware Including the Use of Scrap (tons) © Thomson Reuters / The Silver Institute
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Europe
Italy 315 298 283 250 225 204 172 143 123 87
Germany 142 128 110 95 91 83 71 51 51 46
Greece 59 60 54 48 44 38 32 24 18 15
Norway 34 35 31 27 29 20 21 14 15 14
Sweden 12 14 15 15 14 12 12 10 10 9
Denmark 12 11 10 10 10 10 10 9 9 9
Other Countries 77 72 67 61 56 50 49 37 36 34
Total Europe 650 617 570 505 469 417 367 289 262 214
North America
United States 60 55 51 47 45 42 32 28 26 24
Mexico 79 83 81 77 62 43 36 28 21 17
Canada 8 8 8 8 6 6 4 4 3 3
Total North America 147 146 140 132 113 91 72 60 51 45
Latin America
Colombia 10 10 10 10 10 10 8 7 7 6
Peru 16 10 9 8 8 8 7 6 6 5
Other Countries 17 17 19 21 22 23 22 17 15 13
Middle East
Turkey 83 91 87 82 74 67 68 55 48 39
Israel 44 43 44 46 48 45 42 34 30 22
Egypt 10 10 10 9 8 7 6 6 5 2
Other Countries 44 46 48 50 49 49 48 43 42 37
India 1,114 1,118 600 660 509 452 482 732 549 520
Other Countries 30 30 32 33 33 33 32 28 25 22
Total Indian Sub-Cont. 1,231 1,229 704 753 601 542 571 812 623 585
East Asia
China 102 122 151 162 189 204 196 147 163 179
Thailand 121 129 136 140 134 141 133 115 77 60
Indonesia 21 21 23 23 21 20 20 21 22 18
South Korea 22 23 22 25 23 23 22 20 19 17
Other Countries 24 24 23 24 22 22 21 19 18 16
Total East Asia 290 319 355 374 389 410 391 321 300 290
Africa
Africa 9 9 9 9 9 10 9 9 8 7
Appendices
Total Africa 9 9 9 9 9 10 9 9 8 7
Oceania
Oceania 1 1 1 1 1 1 1 1 1 1
Total Oceania 1 1 1 1 1 1 1 1 1 1
CIS
Russia 36 53 73 91 93 134 162 171 187 156
Total CIS 41 58 79 96 99 141 169 176 192 161
World Total 2,596 2,610 2,089 2,101 1,904 1,824 1,785 1,839 1,592 1,430
94
World Silverware Fabrication World Silverware Fabrication, 2011
3 Other
Other
14% Europe
North America 15%
Middle East
East Asia North America
3%
Tons (thousands)
Middle East
Indian Sub- 7%
Continent
41%
1 Europe
East Asia
Indian Sub-Continent 20%
0
2002 2004 2006 2008 2010
Table 1a - Supply & Demand with Bar Investment
(tons) 2009 2010 2011
Supply
Mine Production 22,272 23,370 23,689
Net Government Sales 485 1,375 357
Old Silver Scrap 6,221 7,113 7,985
Producer Hedging - 1,568 334
Physical Bar Disinvestment 480 - -
Implied Net Disinvestment - - -
Total Supply 29,458 33,426 32,365
Demand
Total Fabrication 24,324 27,684 27,265
Producer De-Hedging 541 - -
Physical Bar Investment - 1,785 2,975
Implied Net Investment 4,592 3,957 2,124
Total Demand 29,458 33,426 32,365
Appendices
95
Appendix 2
Nominal Silver Prices in Various Currencies
Prices are calculated from the London price and the average exchange rate for the year.
In the case of India, the price shown is the one actually quoted in the Mumbai market.
London India Thai Japan Korea China Eurozone* Mexico

US$/oz Rupee/kg Baht/oz Yen/10g Won/10g Yuan/kg Euro/kg Peso/oz
1978 5.422 1,393 110.26 367 844 N/a 179 0.12
1979 11.068 1,896 225.99 780 1,722 N/a 333 0.25
1980 20.984 2,783 429.67 1,530 4,098 1,011 628 0.48
1981 10.487 2,650 228.83 744 2,296 575 390 0.26
1982 7.922 2,675 182.21 634 1,862 482 316 0.45
1983 11.430 3,435 262.89 873 2,851 726 479 1.37
1984 8.145 3,514 192.53 622 2,111 608 382 1.37
1985 6.132 3,880 166.54 470 1,715 579 296 1.58
1986 5.465 4,105 143.71 296 1,549 607 195 3.34
1987 7.016 5,124 180.46 326 1,855 840 208 9.67
1988 6.532 6,231 165.23 269 1,536 782 189 14.85
1989 5.500 6,803 141.36 244 1,187 666 170 13.54
1990 4.832 6,779 123.62 225 1,099 743 129 13.59
1991 4.057 6,993 103.51 176 956 694 111 12.24
1992 3.946 7,580 100.24 161 991 700 101 12.21
1993 4.313 6,163 109.20 154 1,113 799 117 13.44
1994 5.285 6,846 132.92 174 1,365 1,465 141 17.84
1995 5.197 6,864 129.49 157 1,289 1,395 122 33.36
1996 5.199 7,291 131.77 182 1,345 1,390 128 39.51
1997 4.897 7,009 153.60 191 1,498 1,305 139 38.78
1998 5.544 8,016 229.30 233 2,498 1,476 160 50.65
1999 5.218 8,022 197.38 191 1,994 1,389 158 49.90
2000 4.951 8,002 198.61 172 1,800 1,318 172 46.82
2001 4.370 7,420 194.15 171 1,814 1,163 157 40.82
2002 4.599 7,934 197.57 185 1,850 1,224 156 44.41
2003 4.879 8,138 202.39 182 1,869 1,298 139 52.64
2004 6.658 10,606 267.79 232 2,452 1,772 172 75.14
2005 7.312 11,083 294.07 259 2,407 1,926 189 79.68
2006 11.549 17,843 437.51 432 3,545 2,958 296 125.88
2007 13.384 18,794 461.98 507 3,999 3,273 314 146.26
2008 14.989 21,620 499.34 498 5,311 3,349 328 166.82
2009 14.674 23,815 503.12 441 6,024 3,223 339 198.30
2010 20.193 32,007 640.59 570 7,507 4,393 489 255.16
2011 35.119 55,638 1,069.25 900 12,508 7,296 811 436.30
* From 1977-1998, the DM/kg price is expressed in Euro/kg at the of¿cial conversion rate of 1.95583
Appendices
96
Appendix 3
5HDO6LOYHU3ULFHVLQ9DULRXV&XUUHQFLHV &3,GHÀDWHGFRQVWDQWPRQH\WHUPV
Prices are calculated from the London price and the average exchange rate for the year.
In the case of India, the price shown is the one actually quoted in the Mumbai market.
London India* Thai Japan Korea China Eurozone** Mexico

US$/oz Rupee/kg Baht/oz Yen/10g Won/10g Yuan/kg Euro/kg Peso/oz
1978 18.696 18,417 464.88 530 5,505 N/a 350 264.26
1979 34.301 23,597 867.07 1,086 9,503 N/a 624 405.27
1980 57.291 31,097 1,377.13 1,977 17,570 5,362 1,117 618.61
1981 25.955 26,188 650.98 916 8,114 2,972 652 275.19
1982 18.469 24,496 492.45 761 6,138 2,443 503 286.96
1983 25.818 28,112 684.99 1,027 9,087 3,608 737 440.80
1984 17.636 26,552 497.36 716 6,577 2,938 573 266.03
1985 12.821 27,768 419.99 530 5,216 2,503 436 194.54
1986 11.217 27,027 355.87 332 4,583 2,451 287 222.49
1987 13.882 31,011 435.99 365 5,329 3,164 305 276.60
1988 12.427 34,308 384.56 299 4,118 2,481 274 198.48
1989 9.981 35,284 312.27 265 3,011 1,786 240 150.82
1990 8.319 32,266 257.95 237 2,568 1,934 177 119.56
1991 6.701 29,230 204.33 179 2,044 1,745 161 87.82
1992 6.327 28,346 190.01 161 1,991 1,654 140 75.83
1993 6.717 21,665 200.36 153 2,136 1,648 155 76.00
1994 8.022 21,839 232.16 171 2,466 2,432 182 94.33
1995 7.673 19,865 213.72 155 2,228 1,982 155 130.69
1996 7.458 19,363 205.56 179 2,216 1,822 161 115.19
1997 6.864 17,370 226.85 184 2,363 1,665 171 93.72
1998 7.652 17,542 313.59 224 3,665 1,898 195 105.60
1999 7.047 16,774 269.17 184 2,903 1,812 191 89.24
2000 6.469 16,085 266.59 167 2,562 1,715 206 76.46
2001 5.552 14,387 256.44 167 2,480 1,502 184 62.69
2002 5.752 14,736 259.15 183 2,462 1,593 181 64.92
2003 5.966 14,562 260.77 180 2,403 1,671 158 73.60
2004 7.930 18,287 335.77 229 3,043 2,195 194 100.36
2005 8.423 18,331 352.70 257 2,908 2,344 209 102.35
2006 12.892 27,816 501.48 428 4,190 3,547 322 156.03
2007 14.518 27,533 517.74 502 4,608 3,747 334 174.37
2008 15.669 29,239 530.94 486 5,846 3,621 340 189.20
2009 15.382 29,049 539.58 437 6,451 3,510 351 213.58
2010 20.826 34,851 664.99 568 7,810 4,631 500 263.85
2011 35.119 55,638 1,069.25 900 12,508 7,296 811 436.30
* From 1977-1998, the DM/kg price is expressed in Euro/kg at the of¿cial conversion rate of 1.95583
Appendices
97
Appendix 4
Silver Prices in US$ per ounce
London Silver Market - Spot Comex Spot Settlement

High Low Average High Low Average
1986 6.3100 4.8530 5.4645 6.2850 4.8540 5.4653
1987 10.9250 5.3600 7.0156 9.6600 5.3790 7.0198
1988 7.8215 6.0500 6.5324 7.8270 5.9980 6.5335
1989 6.2100 5.0450 5.4999 6.1940 5.0300 5.4931
1990 5.3560 3.9500 4.8316 5.3320 3.9370 4.8174
1991 4.5710 3.5475 4.0566 4.5450 3.5080 4.0355
1992 4.3350 3.6475 3.9464 4.3180 3.6400 3.9348
1993 5.4200 3.5600 4.3130 5.4430 3.5230 4.3082
1994 5.7475 4.6400 5.2851 5.7810 4.5730 5.2803
1995 6.0375 4.4160 5.1971 6.1020 4.3750 5.1871
1996 5.8275 4.7100 5.1995 5.8190 4.6760 5.1777
1997 6.2675 4.2235 4.8972 6.3070 4.1550 4.8773
1998 7.8100 4.6900 5.5398 7.2600 4.6180 5.4914
1999 5.7900 4.8800 5.2188 5.7600 4.8720 5.2149
2000 5.4475 4.5700 4.9526 5.5470 4.5630 4.9662
2001 4.8200 4.0500 4.3702 4.8570 4.0280 4.3603
2002 5.0975 4.2350 4.5990 5.1250 4.2230 4.5967
2003 5.9650 4.3700 4.8787 5.9930 4.3460 4.8806
2004 8.2900 5.4950 6.6578 8.2110 5.5140 6.6927
2005 9.2250 6.3900 7.3115 9.0000 6.4270 7.3220
2006 14.9400 8.8300 11.5492 14.8460 8.8090 11.5473
2007 15.8200 11.6700 13.3835 15.4990 11.4650 13.3762
2008 20.9200 8.8800 14.9891 20.6850 8.7900 14.9471
2009 19.1800 10.5100 14.6743 19.2950 10.4200 14.6961
2010 30.7000 15.1400 20.1929 30.9100 14.8230 20.3127
2011 48.7000 26.1600 35.1192 48.5840 26.8110 35.1961
US Prices in 2011 Leasing Rates in 2011
Comex Settlement Monthly Averages
US$ per ounce High Low Average Average 3-month 6-month 12-month
January 31.096 26.811 28.497 January 0.02% 0.13% 0.41%
February 33.804 28.299 30.861 February 0.51% 0.65% 0.98%
March 37.872 34.116 35.849 March 0.28% 0.50% 0.94%
April 48.584 37.737 42.586 April 0.09% 0.28% 0.68%
Appendices
May 46.078 33.488 36.920 May 0.47% 0.62% 0.97%

June 37.689 33.580 35.759 June 0.20% 0.37% 0.80%
July 40.691 33.694 38.126 July 0.10% 0.34% 0.75%
August 43.321 37.877 40.300 August 0.01% 0.26% 0.72%
September 43.020 29.927 37.722 September -0.17% 0.15% 0.68%
October 35.270 29.795 32.055 October 0.10% 0.31% 0.71%
November 35.137 31.012 33.245 November 0.02% 0.25% 0.62%
December 32.695 27.192 30.140 December 0.06% 0.28% 0.60%
Source: Comex Source: LBMA
98
Appendix 5
Leading Primary Silver Mines © Thomson Reuters / The Silver Institute
Rank Mine Name Country Company 2010 2011

Moz Moz
1 Cannington1 Australia BHP Billiton plc. 38.60 32.17
2 Fresnillo Mexico Fresnillo plc. 35.91 30.30
3 Dukat2 Russia Polymetal International plc. 11.10 13.60
4 Uchucchacua Peru Compañia de Minas Buenaventura S.A.A. 9.27 10.09
5 Palmarejo Mexico Coeur d’Alene Mines Corp. 5.89 9.04
6 Pallancata Peru Hochschild Mining plc. / International Minerals Corp. 10.14 8.77
7 Gümüsköy Turkey Eti Gümüú A.ù. 11.46 8.37
8 San Bartolomé Bolivia Coeur d’Alene Mines Corp. 6.71 7.50
9 Pirquitas Argentina Silver Standard Resource Inc. 6.30 7.06
10 Greens Creek United States Hecla Mining Company 7.21 6.50
11 Arcata Peru Hochschild Mining plc. 8.10 6.08
12 Saucito Mexico Fresnillo plc. 1.22 5.90
13 San José Argentina Hochschild Mining plc. / McEwen Mining Inc. 5.32 5.87
14 Imiter3 Morocco Société Métallurgique d’Imiter 7.81 5.48
15 Alamo Dorado Mexico Pan American Silver Corp. 6.72 5.30
1 reported payable metal in concentrate; 2 including Goltsovoye; 3 estimate
Silver Mine Production by Source Metal Silver Mine Production by Main Region and Source Metal
(million ounces) (million ounces)

2008 2009 2010 2011 2008 2009 2010 2011
Primary North America
Mexico 53.7 59.8 68.7 73.2 primary 68.7 75.3 83.6 88.6
Australia 35.4 33.8 38.6 32.5 lead/zinc 47.6 48.5 64.3 61.1
Peru 39.5 41.6 36.4 32.4 copper 17.4 19.2 18.9 19.2
Other 65.7 77.3 81.2 81.6 gold 26.1 30.1 32.6 37.0
Total 194.3 212.5 224.9 219.7 other 1.8 0.9 1.3 2.0
Gold Total 161.6 174.0 200.7 208.0
Mexico 15.4 18.6 21.1 25.3 Central & South America
Chile 12.3 15.8 14.3 13.9 primary 54.9 65.3 63.4 61.6
Russia 8.1 11.4 11.5 11.9 lead/zinc 82.1 81.0 81.0 81.6
Other 38.2 41.0 45.8 49.5 copper 49.0 50.8 50.7 45.8
Total 74.1 86.8 92.7 100.6 gold 30.5 36.9 37.5 37.4
Copper other 0.0 0.0 0.0 0.0
Poland 38.4 38.7 37.3 40.5 Total 216.5 233.9 232.7 226.3
Chile 27.9 25.8 26.6 26.8 Asia & CIS
China 16.5 16.2 17.3 18.4 primary 29.1 31.5 31.4 31.5
Other 78.6 85.2 79.6 72.9 lead/zinc 83.7 89.9 92.4 103.8
Total 161.4 165.9 160.9 158.7 copper 49.2 51.0 47.3 45.3
Lead/Zinc gold 14.9 17.8 19.9 22.7
Appendices
China 60.0 61.5 66.7 75.6 other 1.6 1.6 1.6 1.6
Peru 49.1 47.3 48.4 51.8 Total 178.5 191.8 192.5 204.9
Mexico 31.3 32.0 48.4 48.7 Rest of the World
Other 110.1 107.5 106.6 102.9 primary 41.7 40.5 46.4 38.0
Total 250.4 248.3 270.1 279.0 lead/zinc 37.0 28.9 32.4 32.6
Other 3.4 2.5 2.9 3.7 copper 45.8 44.9 44.0 48.3
World Total 683.6 716.1 751.4 761.6 gold 2.6 2.0 2.6 3.5
other 0.0 0.0 0.0 0.0
Total 127.1 116.4 125.4 122.4
Source: Thomson Reuters GFMS World Total 683.6 716.1 751.4 761.6
99
Appendix 6
Comex Futures and Options Turnover and Open Interest, and London Bullion Market (LBM) Turnover
Comex LBM Clearing Turnover3

Number of Contracts
Futures Options Ounces Value Number of
transferred (US$bn) transfers
Turnover1 Open Interest2 Turnover1 Open Interest2 (millions)
Jan-10 755,863 123,393 111,272 121,204 70.4 1.2 298
Feb 1,065,168 109,182 112,118 111,805 89.0 1.4 351
Mar 750,170 115,505 83,903 121,188 94.0 1.6 307
Apr 994,814 127,083 78,096 104,351 92.7 1.7 300
May 936,865 120,952 150,964 132,556 104.3 1.9 410
Jun 1,079,348 127,990 96,579 102,174 85.0 1.6 333
Jul 642,826 122,473 73,280 113,410 57.2 1.0 290
Aug 978,609 130,813 99,446 108,960 65.5 1.2 318
Sep 757,106 152,540 135,170 133,290 88.5 1.8 389
Oct 1,314,164 154,866 263,619 174,948 92.2 2.2 441
Nov 2,268,927 133,139 269,993 134,770 108.6 2.9 560
Dec 1,279,578 135,970 154,995 156,502 99.7 2.9 570
Jan-11 1,429,772 123,380 152,350 117,577 119.7 3.4 597

Feb 1,674,711 136,214 147,299 126,487 141.2 4.3 591
Mar 1,685,667 140,109 122,882 134,586 145.7 5.2 685
Apr 3,014,624 132,200 197,267 162,738 179.2 7.5 799
May 2,461,117 120,853 253,353 226,336 259.3 9.5 1,227
Jun 1,768,866 110,978 176,767 181,409 172.9 6.2 708
Jul 1,325,030 119,517 127,518 197,458 160.0 6.1 756
Aug 1,982,811 112,243 162,750 180,510 171.7 6.9 884
Sep 1,220,315 101,170 187,548 211,588 175.6 6.7 919
Oct 952,614 109,017 131,004 218,159 197.4 6.3 879
Nov 1,327,376 98,068 123,326 132,028 164.8 5.5 718
Dec 765,580 105,669 92,461 156,511 197.1 6.0 811
1 Monthly total; 2 Month-end; 3 Daily average; Source: LBMA, Comex
Silver ETF Holdings
(Moz, end-period) iShares ETF ZKB Sprott Other** Total Value

Silver Trust Securities* Silver Trust US$ Bn***
2010 Q1 296.3 34.0 64.9 - 75.5 470.8 8.24
Q2 294.4 36.8 71.0 - 87.0 489.2 9.17
Appendices
Q3 314.6 41.4 77.4 - 92.9 526.3 11.61

Q4 351.1 51.4 76.5 22.3 98.9 600.3 18.39
2011 Q1 366.8 53.2 76.1 22.3 99.8 618.2 23.41
Q2 306.6 49.6 68.4 22.3 106.1 553.0 19.37
Q3 321.4 52.1 72.7 22.3 109.4 577.9 17.60
Q4 308.8 53.3 81.0 22.3 110.6 576.1 16.23
*Includes ETF Securities LSE, Australia, NYSE, GLTR and WITE **Other: includes Julius Bär, DB Physical Silver, Claymore, Silver Bullion Trust,
Mitsubishi UFJ Tokyo, iShares Physical Silver ETC, Central Fund of Canada ***Using the quarter-end London price
Source: Respective issuers, Thomson Reuters GFMS
100
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The Silver Institute

(major funding companies)

Barrick Gold Corporation

Cia. de Minas Buenaventura, S.A.A.

Coeur d’Alene Mines Corporation

Endeavour Silver Corp.

Hecla Mining Company

Industrias Peñoles, S.A.B. de C.V.

Johnson Matthey, Inc.

Pan American Silver Corp.

Silver Standard Resources Inc.

Silvercorp Metals Inc.

Silver Wheaton Corp.

Philip Klapwijk, Global Head of Metals Analytics

Philip Newman, Research Director

Neil Meader, Research Director

Peter Ryan, Senior Consultant

William Tankard, Senior Analyst

Cameron Alexander, Senior Analyst

Rhona O’Connell, Senior Analyst

Paul Burton, Senior Analyst

Matthew Piggott, Metals Analyst

Oliver Heathman, Metals Analyst

Junlu Liang, Metals Analyst

Ayako Furuno, Metals Analyst

George Coles, Metals Analyst

Saida Litosh, Metals Analyst

Consultants & Other Contributors:

Thomson Reuters GFMS The Silver Institute

A-Mark Precious Metals, Inc.

Coeur d’Alene Mines Corporation

Industrias Peñoles, S.A.B. de C.V.

Republic Metals Corporation

Silvercorp Metals Inc.

Silver Wheaton Corp.

A-Mark Precious Metals, Inc. )UHVQLOOR3OF

Coeur d’Alene Mines Corporation

Pan American Silver Corp. ,QGXVWULDV3HxROHV6$%GH&9

Republic Metals Corporation

Silver Wheaton Corp.

Alexco %DUULFN*ROG&RUSRUDWLRQ &RPSDxLDGH0LQDV%XHQDYHQWXUD6$$

Endeavour Silver Corp. *ROGFRUS,QF +HFOD0LQLQJ&RPSDQ\

.*+03ROVND0LHGĨ6$ Scotiabank Silver Standard Resources Inc.

© Copyright April 2012. The Silver Institute and Thomson Reuters.

Thomson Reuters GFMS, London April, 2012

5. Supply from Above-ground Stocks 35

6. Silver Bullion Trade 43

1. Summary and Outlook

Table 1a - Supply & Demand with Bar Investment Supply in 2011

Summary and Outlook

Old Silver Scrap 200.0 228.7 256.7  6FUDSVXSSO\URVHIRUWKHVHFRQGVXFFHVVLYH\HDU

World Silver Supply Mobilization of Above-Ground Stocks

1200 Implied Net Disinvestment Real Silver 40 400 40

Constant 2011 US$/oz

Mine Production Scrap

contracts at end-2011 was minimal. On the other hand, Demand in 2011

producers that hedged silver output. New silver option  ,QGXVWULDORIIWDNHIHOOE\WR0R]

Photography There was also clear pressure on offtake from price-led

Summary and Outlook

Pan American Silver Corp. ,QGXVWULDV3HxROHV6$%GH&9

Alexco %DUULFN*ROG&RUSRUDWLRQ &RPSDxLDGH0LQDV%XHQDYHQWXUD6$$

Endeavour Silver Corp. *ROGFRUS,QF +HFOD0LQLQJ&RPSDQ\

.*+03ROVND0LHGĨ6$ Scotiabank Silver Standard Resources Inc.

Old Silver Scrap 200.0 228.7 256.7 6FUDSVXSSO\URVHIRUWKHVHFRQGVXFFHVVLYH\HDU

producers that hedged silver output. New silver option ,QGXVWULDORIIWDNHIHOOE\WR0R]

VDZDIXUWKHULQFUHDVHLQLQYHVWRULQWHUHVW World GDP Growth* 5.1% 3.8% n/a

LQSK\VLFDOEXOOLRQSURGXFWVZLWKFRPELQHGGHPDQG Advanced Countries CPI* 1.6% 2.6% n/a

IRUEDUVDQGFRLQVDFFRXQWLQJIRUPRUHWKDQWKUHH *Annual rates; Source: IMF World Economic Outlook; GFMS