Ming-
The CPM Group addresses just this issue in a recent
report of their's:
"Secondary supply of silver could rise to meet some
of the shortfall, as higher levels of fabrication
demand continue to feed a steady supply of metal to
scrap recycling plants. Most of this recycled
silver comes from old photographic materials, which
can be recycled at a relatively low cost. The
supply of silver from this source is thus not so
much linked to the price of silver, but rather to
the level of photographic use of silver.
Indeed, the degree to which silver supplies will
not quickly rise in response to price increases is
one of several factors pointing to higher silver
prices.
Fabrication demand similarly has a low price
elasticity: It will take sharply higher prices
before most fabricators reduce their unit silver
requirements or seek substitutes. Even in jewelry
and silverware, the most price sensitive demand
sectors, it will take prices over $8 to $10 before
demand is significantly dampened. One erroneous
assumption about silver is that demand for silver
items in India will dry up at prices above $5. This is not the case. Similarly, concerns that Indian
buyers will re-sell their silver over $5 are
misplaced, overlooking the 23% premium Indians pay for bullion over the international market price,
due to various import fees, taxes, and commissions, which they do not recoup on the sale of their silver. This premium significantly raises the target prices these silverware holders have before they will sell any of their metal."
CPM Group: cpmgroup.com
PR |
