# Byproduct Silver Problem 71% of mined silver comes as byproduct from copper, lead, zinc, and gold mines. This means silver supply cannot respond to silver prices alone. ## The Chicken Farm Analogy You run a chicken farm selling eggs (primary product) and feathers (byproduct). If feather prices triple, you're not raising more chickens unless egg prices also support it. Feathers are bonus revenue, but eggs drive decisions. Same with silver. BHP runs copper mines in Chile that produce silver as byproduct. If silver goes from $70 to $200, BHP doesn't expand the mine. They only expand if copper prices justify it. Silver is bonus revenue, not the decision driver. ## The Numbers Mine production: Primary silver mines 29% (~240M oz), Byproduct silver 71% (~595M oz). Only the 29% can respond to silver prices. The 71% is locked to base metal economics. ## Why This Creates Structural Shortage Current [[Silver Structural Supply Deficit|annual deficit]]: 230M oz. Primary mine response if silver doubles: Maybe +30M oz (10-15% increase). Time to develop new mine: 8-12 years. Even with silver at $150/oz, you only get 60-70M oz additional supply. This covers only 26-30% of the 230M oz deficit. Price must go much higher to destroy demand, not just increase supply. ## The Supply Inelasticity Problem Most commodities: Higher price → More supply. Oil: drill more wells. Copper: open new mines. Wheat: plant more acres. Silver: Higher price → Minimal supply increase. Can't force copper miners to produce more silver. New primary mines take 8+ years. Recycling helps but limited. This is why [[Silver Swap Rates and Forward Curve|swap rates are -7.9%]]. The market knows future supply cannot materially increase regardless of price. Industrial users must lock in delivery now at any cost. Links: [[Silver MOC]] | [[Why Silver Supply Cannot Respond to Price]] | [[Silver Mining Production]] --- #silver #firstprinciple #economics