A recently completed study by Capital
Economics suggests that the increase in silver prices over the
past several months will likely recede as the price of zinc and lead
surges. Silver is a by-product of zinc and lead mining, and as rising
prices for those metals encourage their mining, the supply of silver will also increase.
Capital Economics projects a year-ending silver price for 2017 at
$14.50 per troy ounce, a 20 percent reduction from current levels. The
economic forecasting team predicts a year’s end price in 2018 at
$17.50 per troy ounce.
Silver closed on the London market Feb. 21 at $18 per troy ounce.
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The price of zinc is up 94 percent over 2016 and lead 45 percent
over the same period, according to the study. The study notes that
only 30 percent of the annual mining production of silver comes from
mines strictly extracting silver, while more than a third is generated
as a by-product of lead and zinc mining, and another 20 percent as a
by-product of copper mine output.
According to Mining.com, “Zinc’s rally from multi-year lows
were on the back of major mine shutdowns with total production going
offline since 2013 of more than one million tonnes. BHP Billiton,
Nyrstar also lowered output at base metal
operations last year which coupled with disruption of production at
primary silver mines translated into the first fall in annual mine
supply in nearly a decade, down 2 percent in 2016, according to
Capitol Economics estimates.”
Zinc is the primary composition used in the production of planchets
for Lincoln cents, which are composed of zinc plated with pure copper.