# Why Silver Supply Cannot Respond to Price Even if silver hits $200/oz, supply will only marginally increase. This is why the [[Silver Structural Supply Deficit]] cannot resolve quickly. ## The Supply Breakdown Total mine production: 835M oz/year. 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 Byproduct Silver Is Fixed [[Byproduct Silver Problem|71% of silver comes from copper, zinc, lead, gold mines]]. These mines make production decisions based on copper price, zinc price, lead price, gold price. Silver is bonus revenue, not the decision driver. Example: BHP copper mine in Chile produces 10M oz silver/year as byproduct. Silver goes from $70 to $200 (+186%). BHP revenue from silver: +$1.3B. BHP revenue from copper: $15B. Does BHP expand for the silver? No. Only if copper justifies it. ## Primary Mine Response (Limited) If silver goes to $150/oz, primary mines might increase: Existing mines expand output 10-15% = +24-36M oz. New mines start development (8-12 years to production). Restart closed mines: Maybe +10M oz. Total realistic increase by 2028: +30-50M oz. This covers only 13-22% of the 230M oz annual deficit. ## Recycling Response (Modest) Higher prices incentivize recycling. Current: 175M oz/year. At $150/oz: Maybe 210-220M oz/year (+35-45M oz). Sources: jewelry, silverware, industrial scrap, photography. Recycling already elevated. Limited additional supply unless you melt down every family's silverware globally. ## Why Development Takes 8-12 Years New mine timeline: Year 0-2 exploration/drilling. Year 2-4 feasibility studies/financing. Year 4-6 permitting. Year 6-10 construction. Year 10-12 ramp to production. Even fast-tracked, you cannot get new primary mines producing before 2032-2034. ## The Math Annual deficit: 230M oz. Potential supply increases by 2028: Primary mines +40M oz. Byproduct mines 0M oz (copper prices unchanged). Recycling +40M oz. Total: +80M oz. Still short: 150M oz/year. To close 150M oz gap: Destroy marginal demand via price, substitution where possible, time to develop new mines. Price must do heavy lifting because supply cannot respond quickly enough. ## Why This Supports Higher Prices The only way to balance market in next 2-3 years is destroy marginal demand via price. Silver must reach $100-150 to make solar, electronics, medical applications reconsider silver content. Some applications will pay $200/oz rather than lose efficiency. This is supply inelasticity. Unlike oil (drill more wells) or copper (open more mines), silver supply is structurally constrained by [[Byproduct Silver Problem|byproduct economics]], long development timelines, limited recycling upside. When you combine supply inelasticity with [[China Silver Export Restrictions 2026|60-70% of refining removed]], you get structural shortage that can only resolve at much higher prices. The [[Silver Lease Rates|8.5% lease rates]], [[Silver Swap Rates and Forward Curve|-7.9% swap rates]], and [[Shanghai Silver Premium|12% Shanghai premium]] are the market screaming this reality. Links: [[Silver MOC]] | [[Byproduct Silver Problem]] | [[Silver Structural Supply Deficit]] --- #silver #economics #firstprinciple