14 Apr 2011 by Jim Fickett.
Note that industrial demand has regained its pre-crisis levels, while mine supply has exceeded pre-crisis levels. I.e. despite some excited talk about rapidly increasing demand, supply is ample. As in 2009, what is driving the price is investment demand – see the red line.
A technical note – the size of the whole market is up significantly in 2010. This is due to an oddity of precious metals market accounting, where scrap and other disgorgement is treated as supply. So if some old silverware is melted down and turned into new silverware (or anything else), it adds to both supply and demand. The three big additions in this vein were net government sales (up 29 million ounces in 2010), scrap (up 27 million ounces), and producer hedging (where producers sell future production at current prices; up 83 million ounces).