Does Silver Production Matter for Silver Price?

The recent developments in the financial markets including a weaker U.S. dollar and lower interest kept the price of iShares Silver Trust (SLV) up. But as the silver market remains soft, do silver producers matter when it comes to the direction of SLV?

Major silver producers have made great strides in cutting down their all-in sustaining cost and capex in order to adjust for the relatively low price environment.  Some of them still have a long way to go until they reach a wide enough margin that will bring their profit margins to the high levels recorded in previous years.

Despite these adjustments, silver production kept rising in the past few years, albeit the price of silver came down.

The chart above presents the change in silver production over the past decade. For 2014, this is an early estimate taken from this source. As you can see, even though the silver market has softened in the last few years, silver production kept climbing. This year gold and silver producers seem to keep increasing their output, albeit in some cases at a slower pace. Fresnillo, which is among the leading silver producers worldwide, increased its silver production by nearly 5% to 45 million ounces of silver back in 2014.

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