Gold Versus Silver: A Comparison Of The Demand Composition For The Two Metals
Gold and silver, the two metals which underlie Silver Wheaton’s precious metal streaming business, have fairly different demand compositions, which also explains the differing trends in the pricing of these metals. Broadly speaking, silver has a much larger scope in terms of industrial applications vis-a-vis gold, with industrial fabrication accounting for around half the overall demand for the metal. In contrast, gold has much wider application in the production of jewelry, with the jewelry demand for gold accounting for more than half of the overall demand for gold.
Since silver is more extensively used in industrial applications than gold, a slowdown in industrial growth impacts silver demand and prices more than those for gold. For example, the prices of gold and silver declined 8% and 18% year-over-year in 2015, respectively. Whereas a decline in the investment demand for both commodities as a result of concerns over an interest rate hike by the Fed impacted prices of both metals, concerns over weak global economic growth, particularly an economic slowdown in China, impacted the industrial fabrication demand for silver to a greater extent, resulting in a steeper decline in silver prices as compared to gold prices. Weak industrial demand for silver has also held back average silver prices so far this year. Whereas gold prices have averaged around 5% higher this year as compared to the average price for the full year 2015, average silver prices have remained flat so far this year, as compared to the full year 2015, with the impact of an increase in investment demand for silver offset by the impact of a decline in industrial demand for the metal.
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Have more questions about Silver Wheaton? See the links below.
- What Is Silver Wheaton’s Revenue And EBITDA Breakdown?
- What Is Silver Wheaton’s Fundamental Value Based On Expected 2015 Results?
- How Has Silver Wheaton’s Revenue Composition Changed Over The Last 4 Years?
- By What Percentage Did Silver Wheaton’s Revenue & EBITDA Decline In The Last 4 Years?
- By What Percentage Can Silver Wheaton’s Revenue & EBITDA Grow In The Next 3 Years?
- By What Percentage Will Silver Wheaton’s Silver Equivalent Production Increase If Production Commences At The Pascua-Lama Mine?
- How Will Silver Wheaton’s Revenue Composition Change Over The Next 5 Years?
- How Do Silver Wheaton’s Margins Compare With Those Of Traditional Precious Metal Mining Companies?
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