What's the future of silver look like to you?

Discussion in 'Silver' started by Coins A-Z, Nov 23, 2017.

  1. Slimey

    Slimey Active Member

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    It's all about time really......all things come to fruition. The problem is we don't always live long enough to witness it. My Weet Bix card collection from the 1970's will eventually be worth something....I just hope my great, great, great grandchildren spend their windfall wisely.
     
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  2. JOHNLGALT

    JOHNLGALT Well-Known Member

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    YAWN, wake me when it gets 1 : 1 with gold. _JOHNLGALT.
     
  3. TreasureHunter

    TreasureHunter Well-Known Member

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    I don't think you'd want to have an eternal sleep. No-one will be alive to wake you up when that happens.

    You could also wait until Andorra beats Argentina 9-0 at the World Cup and gets the cup!
     
  4. Court Jester

    Court Jester Well-Known Member Silver Stacker

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    You will be sleeping permantly and your bones long turned to dust before it gets even close to that
     
  5. STKR

    STKR Well-Known Member

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    If you're willing to ignore the deficits in global mining supply vs global demand, the declining ore grades over the past few decades, the reduction in the mining ratio of silver to gold from 10:1 in 2015 to 8:1 in 2019, the deminishing above ground available stockpiles and influence a small amount of money (relative to other markets) can make on the silver market, then yeah, a 1:1 silver to gold price ratio won't happen in our lifetimes....
    but...

    Considering Only 30% of mines that produce silver specifically target silver in their operations, then who do we turn to when we require additional global supply? Are Gold, Copper, lead and zinc miners going to increase output to add to the global silver supply? Possibly, but the most likely places we will get an increase in silver supply is through the primary silver mines and scrap metal refiners.

    Understanding the above point, one must ask: what is the annual production capacity of silver refiners and primary silver mines? If we have a 200 million oz increase in investor demand, where would that silver come from in a yearly deficit environment?

    Because silver is such a small market and we have yearly mining deficits + an estimated 4x less available above ground silver when compared to gold, even the smallest amount of money going into the silver market could see the price ratio between silver and gold tank to record lows.

    I believe we could see a 1:1 silver to gold price ratio in most of our lifetimes, just by continuing the current trend of increased industrial demand and stagnant/decreasing mining supply. Even more likely if you factor in the potential financial crisis and/or global currency crisis.

    Additionally, the Comex manipulation only works if you can feed the markets with the physical metal in time of deficit. How long this can continue is anyone's guess, but this doesn't mean we can't make calculated estimates:

    In 2018 it has been estimated that we have approx. 530,000 Metric Tonnes (MT) of known global below ground silver reserves and approx. 50,000 MT of global above ground silver reserves and a further estimated 64,000 MT of investment grade silver.

    There are 32,154 Troy ounces in 1 MT of silver.

    530,000 MT = 17 billion Oz's below ground.
    50,000 MT = 1.6 billion Oz's above ground.
    64,000 MT = 2 billion Oz's of investor grade silver above ground.

    This equates to 20.6 billion Oz's of potential silver supply for our future, or potentially 20 years at current demand.

    One very important factor to consider is Scrap metal refining. Currently we rely on scrap metal refining to make up the shortfall of Global mine supply vs global demand (20%). Eventually, the price of silver will reach a level where scrap metal refining will be economical to meet a significant % of global demand, but just like the below ground silver stockpiles, the above ground available silver scrap for recycling is also a finite supply.

    I haven't even scratched the surface on how Silvers price could explode to levels which match gold. I believe that anyone intending to hold silver for 15-20 years will be rewarded handsomely for their patience.

    I think many veteran stackers have seen the cycles and understand the level of control and manipulation within the silver market. They also understand the hype and the narrow-sighted 'optimism' regurgitated by the speculators. But I think the longer you've been in the Silver game, the more susceptible you are to the "Once bitten, twice shy" conditioning, which can result in ignorance towards the core fundamentals of the silver market.
     
  6. JOHNLGALT

    JOHNLGALT Well-Known Member

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    Thanks for having an open mind. (STKR)
    You, and many others will be rewarded handsomely for your forethought.
    A lifetime study on everything I can get my hands on with silver & gold over the last 50 years encourages me to believe I am in a happy place. 1 : 1 is my position. _JOHNLGALT.
     
  7. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    But can that deficit come from somewhere other than land based mines?

    Some companies have been looking at sea bed mining. Refer link.

    https://www.kunc.org/post/seafloor-becomes-next-frontier-gold-diggers

    Putting aside questions that arise re environmental damage to the sea floor and sea life, if this method of mining proves up from both a tech feasibility perspective and also from a financial perspective....and they are expecting to mine up sliver and gold among other minerals...then what does that do to supply and global prices....Until someone starts bring up those minerals cheaply and they can prove up the reserves, then it's a "hurry up and wait" scenario but one aspect of mining to keep your eyes on.

    The UN has set up a global body to regulate such and are now trying to finalise the UN protocols / rules for same.

    https://www.un.org/en/chronicle/article/international-seabed-authority-and-deep-seabed-mining

    https://www.theatlantic.com/magazine/archive/2020/01/20000-feet-under-the-sea/603040/

    Worth keeping an eye.
     
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  8. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    https://www.visualcapitalist.com/forecast-when-well-run-out-of-each-metal/

    Yep, about 15-20 years left. That's why I say - do not sell your silver...

    Also, most of the silver is in a few countries in the Americas, if they start playing with supply like Russia is playing with Palladium, the spike could come quicker.
     
    Last edited: Dec 24, 2019
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  9. STKR

    STKR Well-Known Member

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    That's an interesting development indeed. Thanks for sharing, Oddjob.

    What's most fascinating to me, is that these developments appear to rely on high metal prices to be economically feasible. I would be very interested in seeing how this all unfolds, how long it takes these companies to get from the planning stages to production stages and what the cost per oz of production will be.

    I'd almost bet my stack on the fact that none of these mining operations would be primary silver mines, although they would add to the global mining production of silver none-the-less....but would it be enough?

    In the short term (5-10 years) I can't see the silver price getting to a 1:1 ratio with gold unless mass fear and hysteria kick in and the 'mainstreamians' flock to safe haven assets...like Bitcoin :)D Just messin').

    I think the biggest threat to Silvers demand is potential alternatives to its industrial uses in electronics. Graphene is not a threat to Silver in this area today, but it could be in 20+ years time, especially if the silver price spikes to levels that force manufacturers to consider alternatives...
     
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  10. Court Jester

    Court Jester Well-Known Member Silver Stacker

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    according to that chart you should be buying gold and lead not silver
     
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  11. Court Jester

    Court Jester Well-Known Member Silver Stacker

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    your aware that the MAJORTY of silver is mined as a bi-product and NOT the primary metal
     
  12. alor

    alor Well-Known Member Silver Stacker

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    don't believe on those shortage nonsense, Iran found their biggest oil...these would be repeated on all things on earth...humans being lazy just scratching small areas
     
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  13. STKR

    STKR Well-Known Member

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    There's a lot more to supply shortages than just looking at reserves. Each mine has its own capacity to supply the market with silver. Not many would come close to reaching a 40 million oz p.a turn-over in silver, therefore, It doesn't matter how much silver we discover in a single deposit, if the deposit is limited by the mines capacity to produce.

    I would actually call yearly deficits a shortage already.

    Merry Christmas!
     
  14. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Appreciate your analysis, but it is all too simplistic and optimistic - a very familiar characteristic of analysis from the bulls.
    Let me play devil's advocate with some important points not considered by yourself, or the likes of Seeking Brains, Zeroidea, Spin Doctors, or resident expert John Gault.

    Firstly, your additional remark regarding Comex silver price manipulation will be ignored, and regarded as a mere jump on the bandwagon, with no evidence to suggest the medium or long-term silver price is in fact suppressed by futures traders. Fact is that the opposite has been shown on this forum before: Silver Market In Disarray After Benchmark Price Fix Manipulation

    Following from that, it must be realised that your quoted volumes of global below-ground silver reserves are in fact nothing of the sort. What you have quoted is the number representing current mine reserves. While the semantics may seem indistinguishable to some, they are actually world's apart.

    As is well known, underground reserve measurements are based on mining feasibility of ore at minimum concentrations currently under lease. Thus, this number is far from under-ground reserve totals, but merely totals that mining companies are currently sitting on which are feasible to mine at today's silver price.

    To depict this point more clearly, here is a graph of the current global silver ore concentrations, past and present, that have been considered reserves: This data can easily be obtained online, from links such as here:

    aaasilver1.jpg
    Note that the average Silver grade currently being milled is in excess of Ag 300g/t. This is in comparison to the average Gold ore being milled of around 1.2 g/t (5 years ago, but I couldn't be bothered googling a more recent graph):

    aaasilver2.jpg

    So, why the discrepancy in ore grades?
    One is being mined at 300g/t, and one at around 1g/t?
    There is only one answer - availability, supply, and price.
    In other words, there is so much silver in the ground that we haven't even thought to dig up, because it isn't financially feasible yet.
    There is shyte-loads of it...... so much so that we don't even bother calling most of it "reserves".
    And as our technological extraction methods improve yield efficiency of silver-ore refining (as has already been happening over the last few decades), there will be even less incentive to go find poorer quality ores to dig up.
    No doubt it will eventually happen, but how long will it take for people to even contemplate digging up silver ore at a grade of 1g/t?
    The likes of Zeroidea and John Gault can burp-the-worm all they like about an impending silver-supply squeeze, but realistically there is no way it is happening any time soon.
    In fact, the mined-ore grade ratio of about 300:1 is about what the bookies odds should be of any of us seeing a gold:silver ratio of 1:1 in our lifetime.

    Regards
     
    Last edited: Dec 24, 2019
  15. STKR

    STKR Well-Known Member

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    You're right, the global reserves are of the current known financially viable reserves. But how long does it take to setup a mine? Sometimes over 10 years. The fact that they aren't being mined now reveals the size, yield and other factors making it uneconomical to mine in the current climate.
    The largest deposit being mined right now is in Penasquito Mexico, and it has an approx. reserve of under 900 million Oz's. The mines annual output is less than 20 million Oz's.

    You've posted a graph which shows a significant decline in "global" average Silver ore grades. Around 30% in 10 years, declining hastily from 2008.

    It is widely accepted that we have a gold to silver mining ratio of between 8 and 10:1 . Ore grades are one part to the story, and the evidence is clear that they are declining, but mining output is the important factor to be considering. Mines are not producing silver to gold at a 300:1 ratio - period! Not even close.

    I did find this article interesting on ore grades, just to give a more in-depth view:
    https://independentspeculator.com/what-is-high-grade/

    I'm gonna let you have the silver manipulation debate. I don't wish to go there.

    You're welcome to criticise me, label me and cross-associate me, but it doesn't assist your argument. The mining industry cannot keep up with global demand at these levels. Imagine if only a small amount of currency went into acquiring the physical metal. Just Australias retail spending over Christmas would equal 2 Bullion Oz's of increased demand. It wouldn't take much at all in this environment to send silver into bubble territory.
     
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  16. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    That is my point.
    If silver ore grades continue to decline at the same rate of 30% per decade, it will be exactly 150 years from now before we are seeing targeted silver mining of ore bodies of the grade of current gold mines at around 1g/t.
    Even with mine set up lead times of 10 years, there is plenty of time. And by that time, how low will the gold ore grades be? And what will that do to the gold price?
    It seems the silver price will always be chasing that of gold. Not sure how this can realistically translate to a price ratio of 1:1?

    I never suggested mines were producing at a 300:1 ratio?
    Merely that at ore grades of 300:1, production is still only being maintained at around 9:1.
    This is significant in both the suggested comparatively low demand of silver (quantitatively measured by price), and the realistic potential longevity of being able to maintain silver supply going forward.

    My intention was not so much to criticise you, but point out the typically cherry-picked evidence that continually supports this line of argument.
    My intention is to criticise the likes of Seekingbrains and Zeroidea, as nothing they have purported over the last decade has really come to fruition.
    It is my belief that the mining industry can keep up with current demand - they will just start digging more silver out of the ground. Reserves will be maintained for the foreseeable future as price makes the lower-grade ore bodies financially feasible to mine, and constantly being added to "reserves".

    We could dream about a hypothetical demand spike for any commodity in existence, especially one that would benefit us financially. Fark, I'd love the Australian public to throw $50 Billion into Vans Old Skool shoes, because with the number of pairs my teenage daughter owns, I'd be a fkn instant multi-millionaire..... but it ain't going to happen.
    As is the case with any commodity, a demand bubble will create a short-term price bubble, until the producers catch up with supply - nothing new there.
    But the real question is why isn't that happening? Because real demand is not there.

    Regards
     
    Last edited: Dec 24, 2019
  17. STKR

    STKR Well-Known Member

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    My point is that ore grades aren't as important as mining output. That article I posted talked about how other metals are essentially sacrificed in the refining process.

    Gold is also used as a monetary hedge by central banks and wealthy entities, it sits around in vaults. Silver is mainly an industrial metal, consumed to make a new Apple watch or water filter. Gold is moved around a lot, is loaned and is up to 4x more available in above ground form than silver.
    10 years for a mine to start up is plenty of time to send silvers price into a bubble. If silver enters into a strong bull market (likely due to industrial demand and production costs increasing and mining supply remaining steady or decreasing), then we will naturally see investors sending money to the Silver market. We all know it's a very small market compared to gold or other markets.

    Comparing Vans shoes, which have how many uses? To Silver which has over 10,000 uses...it's a bit far-fetched.
    How many Venuzualians were scrambling for Vans to replace their failing currency? Silver is still seen and still behaves as a monetary hedge. It's not unreasonable to expect even a small amount of money to flow into silver, especially as faith in the fiat system begins to erode.
    My example of Australia's Christmas spending was to indicate the influence a small population like Australia's could have on the silver market.


    In 2018 there was a 20% deficit between mining supply and global demand. A total of over 200 million Oz's. This isn't a small number and is equal to 5 of the largest silver mines in the world at maximum capacity. There is more evidence to suggest that this deficit is growing rather than subsiding. This factor alone squashes your belief that mining supply alone can keep up with global demand. It isn't now and It doesn't look likely to be doing so in the near or distant future.

    I'm not holding my breath for Silver to reach a 1:1 price ratio with gold, but to say it's not possible in our lifetimes or even not likely is a bit narrow-sighted. I never would've thought Bitcoin would reach the price levels it did, but it shows you what a small amount of money going into a small market can do to the price. The difference is we depend on silver, it has over 10,000 uses and a 5000 year history of being used as a monetary metal and is abundant with amazing natural and useful qualities, yet we'd do just fine without Bitcoin.

    I do like to keep an open mind and greatly appreciate conversations like these. If you have any other factors that I may not have considered, I'd like to hear them...but for now, I stand firm on the belief that silver could very easily reach a price ratio of 1:1 to gold.

    If we have a mining ratio of 9:1 and silver is relied upon for industry, yet we have yearly mining deficits and the price ratio has blown so far out of proportion to the rate it's mined that it's up to 10x more undervalued when compared to gold, then I can easily see how the price could revert to it's mining ratio of 9:1. Seeing a significant move in silver would cause investors to jump in and could easily push the price of silver to a 1:1 ratio to gold.

    I think the biggest threat to this "idea" of a 1:1 price ratio is the scrap metal industry and the billions of Oz's unaccounted for In Silverware, jewellery and Bullion. This would flood the market instantly and help contain the price and could even result in years or decades of lower price levels.

    The other threat is a potential reduction in industrial demand. Although, I can't see this being a major threat in the short to mid-term.
     
  18. Davros10

    Davros10 Active Member Silver Stacker

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    I watch the whole argument and it just strengthens my belief that Fundamental factors are almost irrelevant. The technical reading has a 5th wave just started at $16.51 to head up to $20+ to finish the B Wave of an ABC started at the peak in 2011, and then a roughly 4 year drop in Wave C to around $5-7. I won't be spending a lot of time and angst getting upset because the amount of reserves and mines doesn't match up with where I expect the silver price SHOULD be.
     
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  19. STKR

    STKR Well-Known Member

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    Well I'm into PMs as a hedge and a store of value with the added benefit of a strong upside potential.
    Fundamentals are always important.
     
  20. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Agree 100%.
    And mining output is driven by demand, which is measured by price.
    My point was the potential to greatly expand output if it becomes financially feasible.

    Is that really all you took from the Vans analogy? Or are you deliberately skirting the point?
    Then you make the same comparison with bitcoin? WTF?

    BS. I disagree, and explained why current supply can be so easily ramped up. Looks like you only need to open another 5 mines, according to your numbers?
    Mining supply can keep up by opening more mines, or digging more ore. But price needs to move first, and in the absence of that, then a supply deficit is but a mere fallacy. Price measures everything.
    I guess you didn't read my post, or don't want to see my point?

    I like to keep an open mind too.
    You are correct in that both our views are mere beliefs, nothing more.

    Have a great Xmas.
     

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