Lengthy, but thorough account of the silver supply.
The idea of peak everything has made a comeback over the last ten years, and it may not be a coincidence that this discussion has paralleled the rising prices of many commodities since 2000. However, thinking about resource scarcity is nothing new. Many alive in the 1970s will remember the book Limits to Growth, which is still debated decades after its initial publication.
Whether or not you agree with all aspects of that book’s arguments, you would have to concede that ever-increasing growth rates eventually lead to exponential (and therefore unsustainable) demand. Also, to say that something has “peaked” does not mean that we are going to run out of a certain resource. In many cases it simply means that the growth rate in resource production cannot keep up with population or economic growth.
In terms of precious metals, there has been significant discussion of peak gold, at least judging from the frequency of the term on google (for what this is worth). The term “peak gold” registers a far higher count than “peak silver,” and for good reason. Gold production- at least over the last decade- has failed to post the same 2-4% growth rates which occurred in the late 20th century. Silver mine production, on the other hand, has continued to grow at roughly the same rate (2-4%) as it did in the mid to late 20th centuries. So, at the most literal level, we will have to wait for peak silver. And it is not entirely clear that peak gold is a permanent phenomenon either, at least from a historical perspective. I say this because gold production has gone through periods of stagnation in the past, most recently from the 1930s through the 1950s. At that time, gold production stalled out around the 1000-1400 ton per year area, before resuming an upward move in the late 1950s. (This is according to USGS Gold Statistics).
So even though we can't say if gold has peaked, we may be at peak production for quite some time- perhaps a very long time. For example, in the case of silver, estimates are that for most of seventeenth and eighteenth centuries, silver production stagnated, and at many points actually declined (Green, The Millenium in Silver, p.25). Yes, eventually, silver production turned up again, but only after several generations of Europeans had to live with no growth in silver mining. Those people, during the course of their lives, experienced peak silver.
There are several reasons to be concerned about the possibility of some sort of peak or decline in silver production in the future. Here are just a few of the areas of concern, whether or not these factors will turn out to produce “peak” silver.
The Energy Return on Investment and Declining Ore Grades
In 2009, Dr. A.M. Diederen produced an excellent presentation, “Metal Minerals Scarcity and the Elements of Hope” for The Oil Drum: Europe in which he explained how at some point it is no longer profitable for any company to expend more energy to extract smaller and smaller amounts of minerals. Additionally, if you believe in peak oil, it will be challenging to gain access to the requisite amount of oil to do everything from hauling rocks to pulverizing them in search of ever-smaller amounts of precious metal. Finally, Dr. Diederen relates how the percentage of certain minerals in rock has declined for many in-demand elements. Similarly, Steve St. Angelo has compiled examples from the US and Australia revealing how silver ores as a percentage of geologic formations have declined by over 80% since the early 1900s. It is getting harder and harder to extract silver from the earth’s crust, and one has to wonder when output reaches some sort of plateau. (See Angelo, Peak Silver and Peak Mining, silverseek.com)
Lack of New Mine Discoveries
According to Diederen, new mine deposit discoveries peaked at some point in the mid-1980s, with average annual discoveries, in his estimation, having declined over 60% since then.
Diederen believes that large new discoveries of metals are unlikely. (See Diederen, “Metal Minerals Scarcity”, slide 12) This is a situation similar to oil, where the world has failed to find another Saudi Arabia in terms of reserves. The lack of new mine deposits leads people to question for how much longer silver mine production can increase if we are simply trying to extract more silver from the same locations that have produced silver, in some cases, for nearly 500 years (such as Mexico and Bolivia).
