I'm researching on the future silver supply situation and found something which I don't understand. Mexico produces 5600 MT of silver a year but has a mine reserves of only 37000 MT vs 120,000 MT for Peru (1st ranked), 89,000 for Australia (2nd ranked), 77,000 for Chile (3rd ranked), and 39,000 for China (4th ranked). Can't be Mexico can only produce Silver until 2025? I guess the mine reserves estimated for Mexico is not accurate. Has anyone done any research on this or any insider can share an opinion? https://minerals.usgs.gov/minerals/pubs/commodity/silver/mcs-2017-silve.pdf
Mines close all the time... the reserves is likely accurate for now, however down the ridge in an unexplored area of Mexico there might be a 100. MT Oz or there might be nada. Also the word “reserve” is not definitive in resources, haven’t looked at the linked article but likely it only includes proven reserve, maybe include probable reserve but not include inferred reserves or lower classification If the quoted numbers are proven reserves, the country might have another 100mt inferred reserve but it is uneconomical to mine at current prices, though if silver increased to $50 an ounce, the numbers would be updated to probable reserves. Etc etc. There are many many mines that has “plenty” of gold or silver but are not economical to mine for variety of reason. Plus if I’m not mistaken, the biggest silver producers are actually copper mine or other metal mines and silver or gold is a “by product”
As Ipv6Ready has mostly covered, a mining reserve figure is not static and final, it is a running total. As reserves are mined they are subtracted from the reserve amount but conversely the much larger resource is being drilled to finer definition and some of it is being 'promoted' into the reserve category. Also the resource is being grown by exploration drilling. So it's a moveable feast, not static.
Thanks, but with silver stuck at $15-$17 for so many years, would companies even bother to spend on exploration? It appears that while QE hasn't improved the real economy, it has managed to reduce the future supply of commodities from oil to metals. Mining bitcoin is much more profitable. Maybe metal miners should all layoff their workers and switch to mining cryptos?
So would i be right in assuming you may be one of those people that think the $15-$17 range is close to production cost and not worth exploration? The miners are still making plenty of money in this price range. Just think in another 8 weeks the price might be $13 and the mines will STILL BE MAKING MONEY.
As a newbie, what I know or think is gathered from this forum and various websites. I’ve only bought 1/3 of the silver I want to buy, stopped buying completely after the price started falling due to trade war talks. If silver price does fall to $13, I’m not sure I’ll be smart enough to buy (using Jim Roger’s words) because by then, I’ll be worried that it will fall to $10 and look like a fool trying to catch a falling knife. If it does crashes to $10 though, I think I’ll buy as I don’t think any silver mine can make money at that price and explore at the same time.
The cost of mining be it silver, gold, iron or btc is relative. At $15 usd silver per ounce there mines making billions in profit, and others shutting down, Case in point Stawell Gold Mine in Victoria closed in 2016 because it was uneconomical to mine gold, that year it mined 35,000 ounces of gold. It has many hundred thousand ounces of gold still in the mine but it’s not worth mining. many of the largest silver producers, wouldn’t even care if silver was $10 per ounce, as long as lead, nickel or copper that it was primarily mining made it worthwhile to mine.
The art of investing is buying low, selling high and not get emotionally attached to the investment. The key to investment success is, you dont need to buy at the absolute low nor sell at absolute high BUT you must sell to profit, than start again. To many people buy and watch their wealth go up higher and higher and than watch it come down again.
I think base metals are a big no no to buy at this moment, not with China mountain of debt collapsing. Don't think China can continue financing OBOR. If construction stops, the demand for copper and iron will plummet. At first, silver and maybe also gold might be dragged along until the Chinese realise the RMB (due to inflation) and property (due to risk of confiscation) is worst. In the worst case scenario, there's a chance that China will nationalise investment property - banks will take over apartments at a nominal price and sell/long term rent them to the millenniums who can't afford to get married otherwise and have kids. The demographics issue is an existential threat to the Chinese nation and unaffordable property is making it worst. With high inflation, a devaluing Yuan, the property rich Chinese (not the ultra rich) will scramble for gold which can be disguised as personal jewellery. If you consider that a small Shanghai apartment costs 5 million Yuan, $1m, it will take a tremendous amount of gold to exchange with all of these - of course, the price of apartments will plummet by then. Even if 500,000 investment properties in Shanghai are disposed off and exchanged with gold, it will take a half a trillion dollars or 5,500 tonnes of gold. And we're just talking about Shanghai alone. I'm not saying such a thing might happen but government acquisition of private property in a capitalist market economy has a precedence. Newly independent Singapore acquired more than half of all property in private hands at very low prices 50 years ago. Thanks. My problem had always been selling out too early, in the 2000s with gold and paper silver, selling after the price goes up by 10%-15%, which I now know is a big mistake. The same thing happening with stocks which I've sold past couple of months, they went up further. Of course, these were stocks which I've bought a couple years ago so they have already doubled or tripled.
And if they don't, they'll receive government sponsoring anyway. In the end, that people buy precious metals in the 1st place, is already for a big part due to governments gradual devaluation of fiat.
That's a self fullfilling profecy, its precisely that selling for profit and start again, that makes it come down and up again. The key to preserving purchasing power (I don't see pm's as investment) is to buy at/near decades-lows, then hold till whenever the power is needed. That dampens the cycles, brings stability, trust, and happy shiny people singing under the sun with flowers and bees bzzzzing 'round. And the central planning & buddies whoms frontrun finds entry nor exit, so dark and sad faces.
For what it's worth ... here's my experience of mining and mining and mineral processing. Mines can only tell the market about PROVEN ore reserves, therefore the difference between the forecast production and actual metal produced can be substantial with production typically being higher than prediction. Miners who continuously over predict production typically have issues with their bottom line proffits, they quickly loose credibility and their share prices suffer. It's in their best interests to be conservative with their forecast production numbers. Most silver mined is actually a byproduct of mining other metals, there are some huge gold and silver producers out there who are not considered gold or silver Miners, they consider themselves copper miners, therefore the importance of recovery of the silver in the processing plant comes second to the recovery of the actual target metal unless they hit areas of high grade byproduct metals that outweigh the value of the target metal. In this situation the processing plant can adapt it's technique to target recovery of other metals through optimizing grind size, ph, and circuit configuration to increase the recovery of silver, gold or whatever it is that they want to maximize the recovery of. I often see people saying that silver can't be mined for $x amount, this may be true if the mine is specifically a silver mine, but due to the fact that silver is largely a byproduct of mining other metals, it can be mined for free and processed at an extremely low cost. Silver and gold is considered as a bonus for many miners. The silver market will still recieve a steady supply even when / if the price drops to all time lows. In this case, as always supply and demand will dictate value.
Yes TOTALLY agree in a macro view. But at a personal view.... I bought a lot of gold at 1550aud (when I joined SS 2016) and I’ll sell at it all about 2300aud be it in 10 days time or 10 years time. I’m not a active trader. But I’m not emotionally attached to gold or any investment. The reason I believe in this strategy is because be it gold silver, property stocks, there is always a time to buy, sell and wait for it to drop before buying again. At one stage I had 14 properties with mortgages on every single property, today I have ZERO properties and renting but cash rich, but if property dips low I’ll buy in again.... just like metals, crypto share etc, but if I change my mind on any investment and think...nah property will stagnate but increase again long term, I’ll start buying in again, even though prices haven’t tanked. (Im actively looking at Perth properties at the moment though) I think in forums like this there are many views, but one shouldn’t listen to ANY ONE ADVICE, My personal view is long term due my personality, case in point I’ve worked for one company for 22 years, and seem my company (I don’t own the company) stock go from 32c to $13. And during that time I’ve had zero shares to over few million shares multiple times.
Thanks for sharing. If there's a slowdown in the let's say the Asian property market (in particular China), think of China's high speed rails and OBOR, then a lot less copper/iron is needed. Am I right to say that the hit on iron/copper miners may actually benefit precious metals since the demand for smart phones and solar panels will nevertheless still be increasing global even in an Asian property meltdown?
Agree on the part of not emotionally attaching to any gold or investment. The question is at what price to sell. I'll sell maybe 80-90% of my gold if it hits a certain price since gold is not expended and all gold still exists, but for silver, I'll only sell half of it if the price hits US$40. For the other half, I could wait 40 years if need be.
Australian gold price could jump to $2000 Aud or drop to $1200 aud without any significant movement in Gold in US dollars, based on local economy/currency. My sell price is if I make 50% return As for silver, it might be finite, but there is enough in ground that miners will be digging it out for multiple lifetimes and will not be running out, hence $20 dollars an ounce. Very few copper/zinc/lead mines would operate if the primary metal price dropped. Escondida BHP mine in 2016 mined 30million tons of ore to produced 1,300,000 tons of copper per year at $6000 usd per ton ($8 billion copper turnover) as a byproduct 220,000 ounces of gold at $1220 usd oz ($244 million gold turnover) The operating cost for the mine is well over few billions a year in the asx report so BHP wouldn’t spend billions to mine for $244 million dollars of gold at $1200 an ounce, but if gold was $25,000 or more USD an ounce, I’m sure they would and call it primary gold mine even if copper was worth nothing and continue to mine for gold. Rough calculation, 0.0000002 grams of gold per ton of ore. It is very unlikely copper demand could drop enough to halt mining at Escondida but that would take out 6.8 tons of gold production per year. It could help gold prices especially since we will likely be in the biggest economic depression ever for the largest most efficient copper mine had to shut due to low prices. But other less efficient copper mines could shut down at $3000 a ton of copper, decreasing gold output bearing in mind that any mid to large copper mines produce significant silver/gold compared to primary silvergold mines
That as-byproduct production is 1 of the 2 big reasons I chosed silver. See, if production of those other metals drops, silver too. That, is an inflation-peg
I think the World bank or UN wrote a report that the long term price for silver is $20. I'm quite sure that this report is based on the assumption that China and Mexico will continue to have cheap labor to continue mining without regards for health costs and wages remain low. It remains to be seen if wages in Mexico (which has a relatively small population) can continue to be low as US companies shift production from the far east back to the americas over the next 10 years. Due to aging population and rising health costs, we have to assume that China is going to supply less metals from now onwards.
In ten years time cost of labour will be minor. Rio already have Pilbara mine automated and Syama gold mine in Mali will be the first large scale underground mine in operation by end of the year. Doubt labour will be a issue
