Mining operations have long delivery times, and the increases in production that occurred in response to the rise in silver prices from 1979 to 1980 did not appear until the mid-1980s. When silver prices rose sharply in 1973-1974, manufacturers began looking for ways to reduce their need to use silver. The combination of greater secondary recovery and lower manufacturing demand abruptly ended the eight-year supply deficit in the silver market. Interactive chart with historical data on the real (inflation-adjusted) prices of gold and silver per ounce up to 1915, as well as the current gold and silver price today.
By 1979, investors and other market participants were firmly convinced that the silver market was facing an acute shortage of metals and that prices were likely to rise significantly at some point. The simplistic silver market retrospectives of late 1979 tend to focus on major purchases of large quantities of silver and silver futures by several wealthy individuals; in reality, investors around the world were in a tremendously widespread rush to buy silver by investors from all over the world at that time. The silver recovery of old coins, those held by investors during the 1960s, went from 21 million ounces in 1978 to 45 million ounces the following year and then to 94 million ounces in 1980. World economic and political events were also having an impact on the silver market, mainly in the form of a significant cyclical upward increase in inflation throughout the industrialized world. The archived data is released with the permission of the ICE Reference Securities Administration and the London Bullion Market Association for prices from 1968 to 1988 and from NFusion, which supplies FOREX prices from 1989 to the present.
The hostage crisis in Iran and the Soviet invasion of Afghanistan motivated investment demand and helped keep silver prices high and volatile during 1980. In 1980, this surplus reached 207.1 million ounces, almost as high as the 228.9 million-ounce surplus that had resulted from rising silver prices in 1968 and from Treasury sales programs. Prices had risen since the beginning of the decade, but there were serious doubts about how much longer investors would be willing and able to continue supplying manufacturers with silver, at least at the prices observed in the mid-1970s.
