Silver Prices Fail to Trigger Supply Response Amid Output Shortfalls

Despite silver prices reaching $68.70 per ounce in August, three major silver-producing countries reported output shortfalls due to unrelated events. Mexico's Terronera mine was suspended for twelve days by a community blockade over road maintenance and other issues, resulting in an estimated production loss of 0.08 million ounces. In Peru, lower zinc grades led to a 9% decline in silver production, with most silver produced as a by-product of zinc, lead, and copper. Meanwhile, Chile's Antofagasta mine was forced to shut down due to severe rain and snow, cutting its 2026 copper guidance by 5.2%. These events highlight that the silver price does not determine how much silver is mined.

The World Silver Survey 2026 records that primary silver mines fell to a new low of 26% of global supply in 2025, with non-primary output reaching 625.5 million ounces. The combined effect of these three events is about 1.1 million ounces, against the 46.3 million ounce deficit forecast for 2026. This is 2.3% of the shortfall, and the Mexican part is deferred rather than lost.

The mechanism behind this phenomenon is clear: when silver prices rise, they reach the revenue line of companies not mining silver for its own sake and the cost line of companies mining other metals, but they do not influence decisions about how much rock to move. For holders, an inelastic supply base is the structural half of the longer-term case.