1, QE has negative effects on PM prices, but just the mention stopping or tappering QE and the price go's down even more ! (Can't get my head round that one) 2, How can silver and gold spot prices be below production/mining costs? ( surley the mines would just stop mining and take a holiday and wait on it rather than sell it for a loss ) 3, In my humble opinion a tapper on QE would be good for us as it'd have negative impact on the stock market (causing PM to go up in price) 4, Seeing as silver is NEEDED for so many industrial uses, Why has no billionare just bought up all the remaining silver and mines, as I read it'd only cost a few hundred million dollar. ( then create a supply shortage by hording it for a few months, drive the price right up then sell out again for a massive profit) 5, Am I the only person that can see that Bitcoin is just an old fasioned Pyramid scheme wrapped up to look new ? ( when it pops all that money should come back into silver & gold ) My head hurts just thinking about it !
2. I think the production costs are not as high as sometimes stated (sometimes one hear $20-25, but some people also say $10). Since price was between 5 and 10 dollars for a really long time, and silver was still mined, it seem totally unreasonable that it would have rised to 20+ in the last five years. Of course high prices means more money for the mining companies and more money spent on research, devleopment and such things, which could increase the costs. Still, it would be possible to decrease mining costs in the future if needed. 4. Well people tried it before and it failed, so a guess nobody dare to try again...(might also be some regulations today that makes it impossible?) 5. I have discussed the similarities with bitcoin investors (I think there a some similarities indeed). If not a Pyramid scheme (difficult to know what is happening "behind" the currency), I think it is at least a huge bubble (definitely not a good investment in my opinion).
1. Try loosen the tie of USD to PMs 2. Ag is largely found as a bi-product. 3. That would be nice. 4. Silver is just not that rare. 5. I'm very far from trusting any crypto currency.
1. WHen QE started, prices of everything (stocks, commodities, PMs, risky assets) should go up (that's the point), when QE stops, interest rates go up and prices of assets drop (relative to safe assets) 2. By product, and its just not that simple to shut down a mine and restart it later. 3. Dont forget silvers demand in industrial applications will drop significantly in this scenario too. and cost of margin lending will rise so de-leveraging will occur, outweighing additional safe haven demand (most likaly) 4. Google Hunt brothers 5. Not quite pyramid, but quite risky until it has an established record (of course we are in the 'big risk/return' period) once its mainstream you aint going to make squillions anymore
1, incorrect - QE has a positive effect on commodities.. a rising tide floats all boats. 2, Because a lot of the gold and heaps of the silver has already be mined... and futures contracts buy and sell paper gold and silver that is yet to exist or may never exist or couldn't possibly exist do to the share volume of fictional paper trades. 3, Incorrect - a taper would be bad for metals as its a signal to the market inflation will be decreased.. gold and silver are a hedge against inflation and a means of preserving purchasing power.. there is no need for gold and silver when a government spends less than it earns.. so we actually like a irresponsible govt going further into debt. 4, Most silver is mined as a by-product ie: iron ore from BHP.. as you correctly summised in your key points.. right now mines are not particularly profitable.. as an investor looks for profit maximization its not a wise move to buy out the silver mines when the cost of bringing them out of the ground is close to break-even point.. also a smart man would understand how the demand supply fundamentals are meaningless when banks like Lloyds TSB, Goldman Sachs and JP Morgan can create infinite future ounces of gold and silver and dump them onto the market whenever they see fit using money conjured out of a hat as debt they can lend to each-other In other words.. its investment suicide to go all in on silver when the market is rigged and it may take decades for the demand supply equilibrium to unravel! 1for1
Suggest you stop thinking about it then. Your head hurts because you are trying to apply logic in an illogical market.
Officially the explanation is that QE $'s heads straight for risky investments that others can leverage off to create more debt (The multiplier effect). PM's are the opposite of risky investments.. thus they're in less demand and their price falls. Unofficially this is total baloney, falling PM prices are direct result of price suppression by central banks and their commercial crony-banks releasing their holdings and using ETF's. You're correct, it can't. Most "forward hedge" their production prices. They miss out on high prices but are insulated from the lows. (but they only hedge for a short term...a few years otherwise both parties miss out) Shutting down mines is an expensive process, the cost of redundancies and benefits payouts is horrendous. Then there's the cost of mothballing equipment, much of which can be damaged with prolonged stoppage. eg. ball mill drive shafts need to be kept turning or they'll permanently bend under the weight of the mill. It's cheaper to downsize & run at a loss for a little while rather than mothball an operation. I share your opinion... but we live in a world that elected Obama, Cameron, Gillard/Abbott, Putin etc Hunt Bros. Tried it... there was a caveat created to stop anyone risk trying it again. Google; COMEX "Silver Rule 7" No, you're not the only one... but here's a new generation of investors that don't know the difference between a Ponzi Scheme and Pyramid Scheme Irony intended
1 - In hindsight, QE seems to have less impact on pm prices than many stackers and analysts might believe. I have read / heard plenty of these "experts" claim that the more that the Fed continues QE, the higher pm prices will be. Other "experts" claim just the opposite. Perhaps this opinion may be closest to the reality of QE on pm prices: http://seekingalpha.com/article/189...metals?source=email_mac_gol_pre_met_2_8&ifp=0 2 - I believe that mining costs might be exaggerated but the calculus on this is not as easy as it may seen at first because most mined silver is not from primary silver mines. 3 - For me, the jury is still out on where investors would take their money...good arguments could be made for a boost, a decline, and little affect on pm prices. 4 - Hunt Bros may be a quick, but perhaps most telling answer 5 - BitCoin definitely comes off as a pyramid fraud to me. I won't come near it with a 10-foot pole. For all those who have made a good deal of money with it, there will be 10 times that amount who will be hurt very badly by their poor decision to buy into it at the wrong time.
Very interesting reading about the hunt brothers, I'd never heard of them before. Thanks for the replys it's nice to get other people's take on things, but at this moment in time I just wish I wasn't sat on so much silver & gold as I'm very nervous, but not much i can other than ride it out as I'm not prepared to cash out at a loss, so it looks like I'm in it for the long haul !
lol to the people thinking silver mining is un profitable currently. it is still currently profitable with the average mine costing about 14 USD / oz to mine. While Qe exists and the BTC bubble has not popped silver / gold wont do anywhere.
I wouldn't say that's an accurate average if we're talking about primary Silver, it's been steadily increasing in recent years. A good chunk are not making anything, some top primary silver miners have an average well over $20 this year.
Supply avenues (mines) shutting down while Asia is sucking any available supply on the market... gold is headed for a massive break-out. There's never been a better time to hold as much gold as you can; [youtube]http://www.youtube.com/watch?v=CM9UUJojzN4[/youtube]
Q.E. has not had an effect for a few good reasons..............the money created is being held as reserves and is not being lent out as they hoped...therefore it has not been inflationary. Asset prices have also collapsed which have counteracted inflation also. Tapering in reality will have no impact in the long term on the gold price. There might be a few small movements anytime news breaks concerning changes in attitude towards it....but do not look for tapering to change the trend. It is bit a small factor in a trend. The reason that gold can be below production cost is based on the decisions to mine resources with the gold price far higher. It is either at or below production cost now...this would be average....some big companies would have access to lower price production. This is important in the sense that this will take production away from the market ( many goldminers will go bust) and create the conditions required for the next bull run. Stock market down, gold up.....don't get fooled into casual relationships.....gold can move up with a booming stockmarket also..........no relationship is written in stone..........big mistake. You have too high a regard for gold and silver.........treat it like any other market.........at the moment it is quite obvious that very few people in the world think like you, that is why prices are falling and will continue to do so for a while yet. Don't believe all this hype about the hordes rushing into gold and silver..........there will be a time for a parabolic blow off but it is still a long way off. As for bitcoins.....only invest in what you understand.......
This puzzled me a lot, there have been countless mentions of silver & gold's uses but not a lot of where it actually comes from. I had the impression gold came from a few gold mines scattered about the world and hard to find, but it's everywhere, it seems just about every mining company finds some gold. even if there digging for something completely different. I think there's like 10 times more gold produced a year then the graphs show. even more. Funny that the largest producing gold mine in the world (grasberg) is actually a copper mine, the 3rd biggest copper mine. so what about the 2nd & 1st biggest copper mines? are they not telling us something? Grasberg Mine..
Watch this video America gold vault ... so you wont get headache http://www.youtube.com/watch?v=86kVqEZnwwU
