What is Production Silver?
Collectors in the market have several choices to make when selecting Silver bullion. In determining what type of product to buy, they have a choice between government-issued and production Silver. Each collector and investor is different in their goals and interests, and the two types of Silver each have their pros and cons. It helps to also understand the production cost of Silver and world Silver production in relation to other metals.
What is Production Silver?
Two types of Silver bullion exist. The first is government minted and the other is production Silver, also known as private-mint Silver. Understanding both will save you money and headaches.
Government Silver Bullion
Produced by national mints around the world, government Silver bullion coins are legal tender and are often struck with national memorials, icons, and historically significant people or events. Below are some examples offered at APMEX. The artistic value and collectibility features of these bullion products naturally place a premium on the price. While this may be a disadvantage to new collectors, or those looking for the cheapest way to build their Silver collection, many are willing to accept the small premium. Many see this as an investment advantage to be able to later sell with that additional premium. Some simply like the security and presence of government-backing in their purchase.
The clear advantage of production Silver, or private-mint Silver, is cost. There is no collectibility premium on this type of Silver, allowing buyers to get more Silver for their money. The absence of government security behind production may deter buyers who are willing to pay for that security. While cost is a big advantage of production Silver, inaccuracies in purity and weight are more common. It is important to purchase production Silver products from a trusted source in the industry, such as APMEX.
Production Cost of Silver
The process of determining Silver’s production cost differs from other metals. Two-thirds of world Silver production is a byproduct of other metal mines. This means cost cannot be determined as an all-in-one process, but rather on a cash-revenue basis. The World Gold Council forecasts for 2016, according to Gold mining byproduct standards, label production costs of Silver at $12-$13 per oz.
World Silver Production
A fact that is often overlooked is the fact that mine types are not derived from tonnage, but rather by the greatest revenue source. For example, say there is an operation that mines Copper and also Gold. The quantity of Copper may be double that of Gold, yet Gold produces 95 percent of the mine's revenues. Gold and other Precious Metals have much higher prices in comparison to more common metals like Copper, but they have significantly higher process than Silver too. Considering this fact, there are very few primarily Silver mines compared to Gold mines because the high prices of Gold. This leads to two-thirds of the world’s Silver being considered a byproduct of alternately classified mines. World Silver production increased by 2.1 percent in 2015, according to the chart below.
Source: Sharps Pixley