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.

Connect with Coin World:

Sign up for our free eNewsletter
Like us on Facebook  
Follow us on Twitter

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, Glencore and 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.