I'm a minor stacker and big consumer of alternative media material on finances, and as we all know, the people there say silver is the most undervalued tangible asset out there, price manipulation is now mainstream, silver is being sold at below production costs, miners withholding production until bigger prices etc. However I'm wondering how did the industry survive all the years when silver was $5 ? I've looked at 20 year chart and saw it was about $5 from 1995 to 2003. I know we could make inflation adjustments, but I feel the adjustments won't cover all the increases in price. Did the mining cost change? Explain please.
In 1991 I visited NY city and could buy a slice of Pizza in the Village for $1 and coming from Australia I thought that was really cheap, This year 2014 I visited NY city and pizza in the village was still $1 a slice?
I dont believe the whole rant that its being sold for less than production costs. Maybe for a few miners, but not most. There are a couple things I have read about this. First like gold, when the price jumps they open up mines that are harder and more expensive to mine. For exmaple, there could be 10 different mines that cost from $5-$30 an ouce to mine, as the price of silver increase, you open up new and old mines because you can still make a profit. As silver falls, you close the ones that cost the most to mine. 2nd I have heard that you dont mine for silver, it is mearly a by product of other minerals they are targeting. Not sure if this is true, but if so, it might make since. If you are mining for something else, and making a profit on it, I could see getting the silver as well and selling it for a less than the cost cause you are already digging out the dirt and sending it through your factory.
There are a few answers, first that inflation means that $5 in '95 is almost $8 in current dollars second you have much higher fuel costs and much higher labour costs in places like south America where a lot of primary silver mines are. Third you have the point observed above that the easy stuff has and is being eaten first, they certainly aren't mining much silver at the comstock lode any more. The fourth point though is that in many, if not most cases, mines are NOT operating below production cost. They certainly aren't making as much money as they were but plenty are still producing below even the fairly low prices of the last months. However, and this seems to get lost in the endless debates about whether we are our aren't under the cost of production, each mine has its own cost of production. I believe most are under current prices BUT you only have to have the top 5-10% most expensive producers have all in costs over spot to end up with a pretty serious shortage situation come up fairly quickly. I don't know the figures but I think it's completely plausible that at least a few percent of the least efficient mines won't be profitable at these prices and that with every dollar lower your likely dropping a few more operations into the un-economical bracket. Given the high prices of the last few years in sure there were plenty of mines that were green lit with he idea that silver could bank on $20 spot for a while to come. Throw in the fact that at these prices a lot of commercial and retail recycling of electronics/industrial/jewellery dries up and you can throw a couple million more Ounces out of the supply chain. Even commerzbank is predicting a 3 million oz supply shortfall next year from this year's oversupply and it's hard to see that getting better given that it will be hard to get financing for new silver mines in this climate. Even secondary production will get squeezed as across the board low commodities prices likely hold up many projects that would produce silver as a byproduct. If you took 5-10% of yearly supply out of the equation in a year of already predicted shortfall and you could be looking at something that could really influence prices in a real and significant way, even if the great majority of producers aren't producing at a loss at today's levels.
New York Style pizza is the best in the world. The secret to the unique taste is the Fennel Seed. If it is not already in the sausage, just crack some fennel seed and sprinkle it on top of your pizza. Don't tell anyone else - as most people can not identify that peculiar flavor, and they will think you are a genius. Next to Silver, this secret knowledge will be the most valuable thing you own, when the SHTF !!!
I'm pretty sure when it went from $5 to $20+ there was a lost of new of silver mines opened (e.g. in Australia CCU & AYN. Both now broke). So my guess is at $5 miners were mining the easy stuff. Only time will tell. See if many miners go under if prices stay where they are.
Maloo utes were around $20K back in the 1990s. That means they should be over $60K now. Shouldn't they still be selling for $20K adjusted for inflation?
I remember reading somewhere about how things like cars always threw off price indexes and consumer purchasing power figures because they were getting more expensive at a rate greater than inflation, but there was no way to say that despite this they offered greater value because they included much more than they used too like air bags and fancy stereos. They were counted the same as any other consumer necessity like a can of corn or a kwh of electricity which don't really change their function or makeup, just their price. Government economists didn't like products r that being included because it made it look like people were earning less in terms of purchasing power than they really were.
They can. $80,000 in 1993 is now around $135,000 due to the wonders of inflation, so that's the apples-for-apples baseline. The houses we build now are about 50% bigger than they were 20 years ago, so that's $200,000. Add 10% for GST on new builds = $220,000. That's about what a typical project home costs if you pick one out of a catalogue. The cost of the land however...
We were predominantly mining with by-product producers and where drawing down stockpiles, it's a completely different scenario now Even a dedicated Silver producer will mine their own by-product such as lead, zinc, copper etc. if these base metals are also lower and mining costs such as oil, diesel, energy, labor, plant etc. are higher then it all adds to the Net difference. When they used to mine high grade reserves it may have only cost them $3 per ounce but now mining lower grade may be $20 given all stated above. If Silver spiked to $300 an ounce next year all the producers would mine it as fast as they could but say the year after it went to $20 again but it cost them $25 an ounce to mine they are not going to shut down they are just going to slow down production and mine at a loss that year.
In 1970 silver was $1.6, and miners also survived. Why? Because the equation for economical survival contains more than "$". Major elements were scientific, technological and industrial progress. Compare equipment now with equipment then. And then there is another element: stocks. The bigger the stock of a product out there is, the less dependent on new production that the price becomes. Compare the sales figures that occurred during your 20 years, with those now. A good choice for an indicating element may be the gold Krugerrand, simply because it's about the longest existing coin. These are the sales figures in ounces / coins: 1970 211,018 1971 550,200 1972 543,700 1973 859,300 1974 3,203,675 1975 4,803,925 1976 3,004,945 1977 3,331,344 1978 6,012,293 1979 4,940,755 1980 2,845,872 1981 3,108,968 1982 2,179,120 1983 3,169,200 1984 2,305,128 1985 609,837 1986 698,600 1987 312,177 1988 307,612 1989 308,923 1990 286,808 1991 42,334 1992 50,630 1993 163,909 1994 278,815 1995 8,285 1996 17,163 1997 12,199 1998 12,703 1999 21,845 2000 6,657 2001 33,406 2002 85,841 2003 41,995 2004 87,794 2005 27,570 2006 50,790 2007 194,451 2008 256,288 2009 731,262 2010 613,870 2011 722,938 2012 716,295 2013 833,261 Or another coin: the gold Maple Leaf: 1979 1,000,000 1980 1,215,000 1981 863,000 1982 962,900 1983 749,900 1984 1,209,400 1985 1,947,400 1986 1,554,800 1987 1,284,500 1988 1,197,500 1989 1,121,700 1990 1,013,200 1991 411,900 1992 510,200 1993 437,489 1994 305,196 1995 325,994 1996 219,840 1997 556,254 1998 680,162 1999 758,342 2000 113,360 2001 168,326 2002 375,330 2003 215,061.5 2004 268,974 2005 301,659 2006 232,060 2007 203,476 2008 738,339 2009 1,079,973 2010 1,075,956 2011 1,141,877 2012 760,000 (chart based estimation) 2013 1,120,000 (chart based estimation) Now compare these sales trend with the general / average price trend of gold, and think about stockpiling/destockpiling. The answer will pop up there: cycles of stockpiling > destockpiling. And there is a simple expectable behaviour behind it: people use money, including gold and silver. They don't throw it away. Multiply every figure above with the average gold price of that year, and you'll have the amount dollars people swapped for gold, serving as an accurate measurement of stockpiling money. So basically, one should stockpile when least others stockpile. The truth, in every market, including the dollar, and including a basket of all currencies. That's the story of money itself. Money is a dead thing, it's just production (1 dollar and 1 gold Krugerrand are products like any other) kept away from the market. FOR SOME TIME. It's like Arnold: I'll Be Back. The real question thus is, which product has the biggest stockpile out there? Gold? Silver? Dollar? Euro? Central planner's key concern is the continuation of the acceptance of their currencies as money in all its roles. It's the reason why if the amount dollars on peoples accounts goes beyond what fits in their theft scheme, that they intervene (cause concerns/crises) to make people lose it. To also give a figure example of this, the United States Dollar, amount circulating (currency component, bottom of money stocks piramid): 1975-01-06 67.2 1980-08-11 111.4 -> avg5year +8.84 billion per year. 1985-08-12 164.0 -> avg5year +10.52 billion per year. 1990-08-06 236.8 -> avg5year +14.56 billion per year. 1995-08-07 368.6 -> avg5year +26.36 billion per year. 2000-08-07 522.4 -> avg5year +30.76 billion per year. 2005-08-08 712.3 -> avg5year +37.98 billion per year. 2010-08-09 890.9 -> avg5year +35.72 billion per year. 2014-08-18 1223.4 -> avg4year +83.125 billion per year. One can clearly recognize last 4 years stockpiling degree. And it's the bottom-of-the-piramid reason for the current high dollar level. If one wonders what's next: check history. Can be done on any other product. Suckers buy high. Suckers sell low. Overvalued. Undervalued.
Pirocco, where did you get those figures on US dollars circulating? They are wrong if you are including the QE stimulus in those figures. The QE stimulus is not circulating dollars. Here's the official figure of ALL US currency in circulation including notes and coinage: http://www.federalreserve.gov/faqs/currency_12773.htm .
re- AYN. it would be nice to know where all the money from the $40/oz days of 2011 have gone. the board's pockets i'm guessing.
The Silver Mining Cartel http://www.silverdoctors.com/the-silver-mining-cartel/ Posted on December 15, 2014 by The Doc If you look close enough, you can see the shadow of the matrix. You can smell the stench of boiling frogs. Submitted by Dr. Jeffrey Lewis, Silver Coin Investor: The silence of the precious metals producers in the face of blatant, ongoing, illegal, and seemingly never ending price suppression has been deafening. How could the primary gold and silver producers sit by and watch as the price of their product is fixed by an illegal pricing mechanism? But just when it seemed it couldn't be any darker, we got a glimpse of the dawn. Last month Keith Neumeyer, the celebrated CEO of First Majestic, changed the game. He made a shocking and graceful statement that should cause shock waves to reverberate across the sector. I've always assumed the following rationalizations for why the miners collectively remain silent while going out of business. Many of us have asked the question over the years. Why have they sat by in silence all these years? Perhaps they are not traders. Maybe they get it? Those are the ones who view the COT's the sole area that leaves a footprint for what really determines price. Most traders accept it for what it is rationalizing the decline with the rest of the spec commentary and thereby missing the point all together. They, like the specs themselves, are mainly concerned with the movement of price, that is, price performance not actual price discovery. Many technical traders make money despite themselves. They profit by price direction up or down. The pervasive belief is that despite evidence or conspiracy that may say otherwise, the market 'is what is' and that is the "market". Maybe the miners believe price determination arises somewhere more central than the COMEX? To truly understand price discovery would require digging through the Commitment of Traders data with a rare world view. Very few approach the Commitment of Traders reports through the prism of manipulation; Ted Butler being the prolific and consistent over the decades. Very few have this skill, or the view toward that end. Clearly, not even the regulators themselves as we've seen over the years and four 'investigations'. Many traders use the data (but very few in any systematic way) under the premise that it's a scam. Adding to the murkiness, many who believe the price is directly managed will not look at the COT numbers for the fact that they are essentially government-generated. Like all data reported by the government. Government reported numbers are suspect by definition. One finds it hard to envision primary silver mining company CEO's taking the time to trudge through the COT or Ted Butler's reports. By definition, mining companies are operation intensive. It may seem obvious to us that the price of their product is declining, but valuations are complicated. They need access to and to employ financing, lines of credit. Financial operations are huge parts of any operation, and the bigger the company, the larger the role. Dependence on the credit and the hallowed halls of finance create "dis-incentive" to investigate price discovery formation that hinges on positions held by mining company masters of finance. It is an unintended yet predictable consequence of a modern, high tech, service based economy. Therefore, it makes it easy to act if pockets are deep enough (illegally without upsetting enough observers, participants, investors, traders, users, or producers to matter much). They may actually get the financing they need to stay alive and most likely give up large portions of their future production as a result. This would benefit the very same cartels that control the price to begin with. Everything flows from price discovery mech and yet very few make the effort to take a closer look. Lastly, because two thirds of world silver production is mined as a byproduct, silver prices are an afterthought, a cash account with very little leverage. For a primary silver miner, it is a lonely effort required to investigate the truth of the matter. Therefore, First Majestic's Keith Neumeyer's urging his colleagues to hold back production was a pleasant and unexpected surprise. A small shot across the bow, but a physical one nonetheless. A challenge to the confidence underlying the system. A well articulated portrait of the physical paper dichotomy from the largest 'primary' silver producer in the world. He specifically mentioned the formation of silver cartel. Would a production cartel be large enough to take on the users? And how soon would revolving door regulators suddenly awaken? That remains to be seen. Whether or not hope is merely fear gone badly is another story. Perhaps the a few good weeks of rain will solve the drought issues. Likewise, perhaps a price rally to the upside will make it a moot point eventually. But the Neumeyer's revelation was a welcome sign in these tired and broken markets.
I think that most of the silver produced in the period you state was for industrial use and was obtained as a by-product of other mineral mining. The shop where I buy most of my silver from and who has been in the game of silver and gold since 1986 has told me that no one was interested in silver for spot...Coin collectors were the order of the day. It would be interesting to find out how many silver eagles were minted in the USA in 95 to 03. Regards Errol 43
