And this CEO just shut the mouths/pie holes of all those pumptarts pushing their own 'book' about, 'man, there is no way these prices can remain at this level, after all production cost are like 26.00 an ounce.' LMAO. This guy just shut their mouths by saying he got production cost down to 12.00. Ha! listen at 3:00 http://m.youtube.com/watch?v=hnFk1kys5E0
Hold up. Cash cost? You can massage them down using certain tactics. They are not including corporate overhead to actually run the company. Also, they apply other metals like copper or zinc and apply their sales of those by product metals against the costs and don't report them as revenues. Tricky accounting. This company lost $279,775,000 in 2013. Show me a company that can truly cover the costs of an entire company at 12 an oz ?
its no secret the production costs have been < $18 for a very ong time now for most mines. Hence me saying silver is overpriced and it will go nowhere and do nothing for years aka <-------------------- SIDEWAYS ---------------------------->
Actual production cost is not very meaningfully important in determining the price of silver. In 2011, do we really think that production cost had a lot to do with silver kicking on the doorplate of $50? Logic tells me that it didn't. .
In a 'by-product', if it remains viable to 'produce' the main commodity (say, zinc), the cost of production of the by-product approaches zero. Edit: on top of that, any 'profit' made in selling the by-product over its effectively zero production cost goes to making the primary product even more viable to produce, further driving up the supply of the by-product...
There is a massive surplus of silver in the world, I don't worry about mining costs. Silver might be over priced at over $19/oz....just saying, and don't shoot the messenger. .
In a 'by-product', if it remains viable to 'produce' the main commodity (say, zinc), the production of the by-product will remain viable too. In a 'by-product', if it does NOT remain viable to 'produce' the main commodity (say, zinc), the production of the by-product will NOT remain viable too. Silver comes with the main product. Silver goes with the main product. If demand for zinc stays the same as before, or drops for whatever reason, then it doesn't make economical sense to use silverbased, or any profits to produce more. And likely, profit even won't be achieved at all in the first place, because a dropping price will erase them, as to punish / correct for overproduction. When mining, or recycling, processes ground, or waste, then this effectively links everything that in what is processed, together, and this link is not lost only in a specific direction, but in both. Maybe an idea to recognize that your / any equation has two sides.
I wonder if the existence of a large surplus of physical silver indicates that the current spot price is artificially high? Maybe stocks are being held in reserve, or maybe it is manipulation of the supply-side to ensure silver doesn't drop too fast? If there is a glut of silver and it were to be made available all at once, prices could crash. We have exactly this scenario in Australia with another asset.... deliberate manipulation of the market through the limited release (choking of supply) of residential land through the practice of "land banking" where large areas of government-released residential land is sold to companies who then drip feed blocks onto the market to ensure real estate prices remain high. But back to silver. The glut of silver could quickly evaporate if economic conditions resulted in people losing their faith in fiat currencies and everyone rushed to convert their paper into physical assets. Those who come late to the party in such a scenario would have tremendous difficulty swapping their cash for silver as the supply would quickly be exhausted and existing holders of physical metals would be reluctant to sell for cash during the period of economic turmoil. Maybe they'd be willing to trade for other assets such as property but certainly not for fiat.
I think with an underlying industrial use of 60%, there will always be a bottom on the price of silver. The other 40% demand is strongly linked to gold demand and the subsequent flight to safety. This line of thought tells me that my silver is worth at a minimum $12 an ounce and at that time the GSR will be 1. A most unlikely scenario. A more likely scenario is that all prices will be a derivative of gold and silver with a dollar price being meaningless. They will create a currency where the cheaper coins will be in copper, called say pennies, medium priced coins will be silver, called say shillings, and high end coins called sovereigns and guineas. There will be direct swap between the paper currencies and gold and silver with each gold sovereign worth one pound Sammy.
put the crack pipe down again sammy. we wont see a return to physical backed currency ever again, let alone circulating coins.
Hehe. Pirocco though, I think, misunderstands me. I'm not commenting on what the effective production cost of a by-product is when the primary product is not commercially viable. Clearly the situation is different then. In fact, it can switch completely and the zinc mine producing some silver on the side could even become a silver mine producing some zinc on the margins. Obviously, this depends on costs of extraction and refining relative to price. It could also become just a hole in the ground.
That's exactly what happened from 2009 to 2011. In 2011 people regained faith in fiat currencies, and the price of silver has been dropping since then. My take is that it will continue dropping for another 2-3 years, to $10/oz, as the economy improves, interest rates rise, and people will invest in interest-bearing assets (bonds, housing, etc.) which will give higher, steady, predictable returns.
I dont care what the production cost is lmao... i care about how much demand there is and in 10 years out of 8 of those year's was higher demand then supply.. if we cant even supply enough silver to meet demand in early 21st century.. then how the hell are we going to deliver say 2-5 billion ounces in the future
