United States silver ore mining market: $13.9 billion industry by 2017

LONDON (Aug 4)  In 2011, production in the United States silver ore mining market and mined gold industry reached its lowest point in almost 20 years; however, the Gold and Silver Ore Mining industry still achieved its second-highest revenue in more than a decade. This apparent contradiction reflects the power that precious metal prices, which are traded on world financial markets, have on the Gold and Silver Ore Mining industry's performance. In the five years to 2013, industry revenue is expected to climb at an annualized rate of 11.3%, while gold prices rise at an annualized rate of 12.9%.    Expanding global demand from investors seeking a safe investment after the recent economic downturn has driven growth.In 2013, however, revenue is expected to drop 5.7% to $13.2 billion as prices drop due to slowly receding uncertainty regarding the Euro debt crisis. As advanced economies shake off the recession, investors will diversify their investments, injecting cash in equities and bonds at the expense of gold and silver. Consequently, investment demand will grow slowly in 2013.     Meanwhile, demand from jewelry manufacturing, the industry's primary domestic market segment, has mostly declined in recent years because of increasing gold prices and falling consumer demand. In fact, jewelry's domestic share of industry revenue is currently 56.1%, down from 69.0% in 2008.        In 2013, however, demand from this downstream industry is anticipated to rebound 2.3% due to the expected drop in the prices of gold inputs.        As demand for silver and gold grows domestically and internationally, prices are expected to follow, albeit not as rapidly as after the recession.      Meanwhile, a lack of investment in exploration and mine development in the 1990s and early 2000s has made it difficult for industry operators to boost production to meet current demand levels. Gold production dropped consistently from 2001 to 2009, but increased during 2010, 2011 and 2012 because of the recent surge in investment. In 2013, US gold production is expected to only grow marginally, discouraged by falling prices.Meanwhile, the four largest industry firms, which account for more than 70.0% of industry revenue, have invested in mine-expansion projects to reap the benefits of high gold and silver prices. As US economic growth ramps up in the five years to 2018, upward pressure on gold and silver prices will ease. As a result, industry growth is projected to slow to an average annual rate of 1.1% to $13.9 billion.