learn why the costs are closer to $28/oz rather than $8/oz... http://srsroccoreport.com/silver-co...e/silver-costs-much-higher-than-most-realize/
MINING SILVER COSTS: Much Higher Than Most Realize
- Thread starter valuecreator
- Start date
learn why the costs are closer to $28/oz rather than $8/oz... http://srsroccoreport.com/silver-co...e/silver-costs-much-higher-than-most-realize/
Exploration, drill & Blast, milling and refining, Govt licencing, EPA, Mines Regulation, Administrative overheads, Fuel, Wages, Water, accommodation, transport & maintenance....etc etc etc
I have no idea how they can do it for $280/oz...let alone $28/0z...at $2800/oz it might be a worthwhile investment but
I have no idea how they can do it for $280/oz...let alone $28/0z...at $2800/oz it might be a worthwhile investment but
morning,
at least the cost of producing silver is reasonably easy if one explores the subject thoroughly enough. For the future the only real outliers are some giant deposit that comes up unforeseen.
Demand is another matter -------------- if some technology comes out of the woodwork to replace silver in solar panels (and there are some possibles) then demand will be greatly effected.
However, the unknowns in future will have potentially even greater effects ------------------- nations returning to silver as coinage --------- if history repeats then it will happen somewhere sooner or later ---------- and coins use up one hell of a lot of silver.
New technologies - not even thought of - that might require silver - could send demand through the roof ----------- we just don't know.
the only thing we do know is that at many times through history - including now, silver is irrecoverably consumed and digging it up isn't getting any cheaper - yet.
So, if I were to punt - I would say the 'price' of silver has probably more upside than down - at least in the foreseeable future - as long as one looks beyond the short term.
The other thing of course is that it is incredibly beautiful -------- almost justification alone for owning some
have a great day all
gazza
at least the cost of producing silver is reasonably easy if one explores the subject thoroughly enough. For the future the only real outliers are some giant deposit that comes up unforeseen.
Demand is another matter -------------- if some technology comes out of the woodwork to replace silver in solar panels (and there are some possibles) then demand will be greatly effected.
However, the unknowns in future will have potentially even greater effects ------------------- nations returning to silver as coinage --------- if history repeats then it will happen somewhere sooner or later ---------- and coins use up one hell of a lot of silver.
New technologies - not even thought of - that might require silver - could send demand through the roof ----------- we just don't know.
the only thing we do know is that at many times through history - including now, silver is irrecoverably consumed and digging it up isn't getting any cheaper - yet.
So, if I were to punt - I would say the 'price' of silver has probably more upside than down - at least in the foreseeable future - as long as one looks beyond the short term.
The other thing of course is that it is incredibly beautiful -------- almost justification alone for owning some
have a great day all
gazza
silvercomments
New Member
"I think you will find that the all in costs for some miners will be $8/oz and for others, closer to $30/oz."
Uhm.... NO.
Only the biggest copper miners have a low silver content production cost.
And that depends how you calculate. So no - the total costs are not even near that figure.
If you want to have a good reference point for total cost - or so called all-in - look at PAAS.
That is in my opinion a good representation of cost in the industry.
You can have that in range of 25 dollars per oz:
http://seekingalpha.com/article/120...-cost-what-does-it-really-cost-to-mine-silver
Last year you could find the all in to be well over 20 dollars per oz on average:
http://seekingalpha.com/article/1303691-the-true-cost-to-mine-silver-complete-2012-figures
Anyway - if I hear anyone say it is less than $10 I say total BS.
BOTTOM LINE: THE CURRENT PRICES ARE BELLOW ALL IN COST FOR MOST SILVER PRODUCERS. PERIOD.
Uhm.... NO.
Only the biggest copper miners have a low silver content production cost.
And that depends how you calculate. So no - the total costs are not even near that figure.
If you want to have a good reference point for total cost - or so called all-in - look at PAAS.
That is in my opinion a good representation of cost in the industry.
You can have that in range of 25 dollars per oz:
http://seekingalpha.com/article/120...-cost-what-does-it-really-cost-to-mine-silver
Last year you could find the all in to be well over 20 dollars per oz on average:
http://seekingalpha.com/article/1303691-the-true-cost-to-mine-silver-complete-2012-figures
Anyway - if I hear anyone say it is less than $10 I say total BS.
BOTTOM LINE: THE CURRENT PRICES ARE BELLOW ALL IN COST FOR MOST SILVER PRODUCERS. PERIOD.
Pirocco
Well-Known Member
That srsrocco already wrote this in 2011. So it's republishing.
What I think about it?
I don't think it's wrong.
I just think it's a selective bias and also mostly irrelevant.
Of course general cost is more than cash cost.
But how much more?
In the case of a pure silver miner the difference is highest.
Yet, pure silver mining is according to what I read less than 25% of total silver mining production.
Also to take into account is that recycling, which is near to never only silver, already represents 25% of the total production, or 1/3 of the mining.
So if we put the two together, pure silver mining would be 25/133 = less than 20% of total production.
That means that if pure silver mining would cease to exist today, at the same demand the average price would increase just 20%. We have seen much bigger price moves (+400% in less than 3 years) due to demand changes.
What does this leave: silver mining as byproduct.
And there a company divides the part above cash cost, over everything that is mined. Linking that total cost to only silver is placing a bias, it doesn't reflect reality. If a mining/recycling company would produce 10 different metals, the total-cash cost would be divided over all 10 metals, it doesnt even matter how it is divided. Even IF they would need some special/supplemental equipment for specifically silver, that would cost the same as the cash cost for specifically silver (thus doubling the cost, very unlikely but let's take it anyway) it's still just doubling the silver specific cost, and that is then still well below the spot price ($15).
So I would say that production cost of silver was neglectable in the silver story of the past decade. The price trend had quite little to do with production cost trend.
And if there would be general inflation, and production cost doubles, and hura $45 silver, so what, it won't be only silvers price that doubled. This element seems to be ignored with great Care, lol.
What I think about it?
I don't think it's wrong.
I just think it's a selective bias and also mostly irrelevant.
Of course general cost is more than cash cost.
But how much more?
In the case of a pure silver miner the difference is highest.
Yet, pure silver mining is according to what I read less than 25% of total silver mining production.
Also to take into account is that recycling, which is near to never only silver, already represents 25% of the total production, or 1/3 of the mining.
So if we put the two together, pure silver mining would be 25/133 = less than 20% of total production.
That means that if pure silver mining would cease to exist today, at the same demand the average price would increase just 20%. We have seen much bigger price moves (+400% in less than 3 years) due to demand changes.
What does this leave: silver mining as byproduct.
And there a company divides the part above cash cost, over everything that is mined. Linking that total cost to only silver is placing a bias, it doesn't reflect reality. If a mining/recycling company would produce 10 different metals, the total-cash cost would be divided over all 10 metals, it doesnt even matter how it is divided. Even IF they would need some special/supplemental equipment for specifically silver, that would cost the same as the cash cost for specifically silver (thus doubling the cost, very unlikely but let's take it anyway) it's still just doubling the silver specific cost, and that is then still well below the spot price ($15).
So I would say that production cost of silver was neglectable in the silver story of the past decade. The price trend had quite little to do with production cost trend.
And if there would be general inflation, and production cost doubles, and hura $45 silver, so what, it won't be only silvers price that doubled. This element seems to be ignored with great Care, lol.
silvercomments
New Member
"pure silver mining is according to what I read less than 25% of total silver mining production."
Uhm... NO.
Silver Mine Supply by Source
Primary 30%
Gold 12%
Lead/Zinc 35%
Copper 23%
Source: GFMS
World Silver Survey 2010
You can easily combine primary with the gold situation - and the 42% of mining is a major force in the market.
Anyway - however you look at it - it was a lousy investment for the past 3 years - I am myself puzzled by that - but I do not recommend anyone to back off from it - because it is the only true way of hedging against the dollar devaluation.
Maybe you will find some time to look at the import/local production figures and I am sure you will come to a right conclusion.
Just spend some time on it - don't just believe someone telling you 25% is mining. Check yourself.
Uhm... NO.
Silver Mine Supply by Source
Primary 30%
Gold 12%
Lead/Zinc 35%
Copper 23%
Source: GFMS
World Silver Survey 2010
You can easily combine primary with the gold situation - and the 42% of mining is a major force in the market.
Anyway - however you look at it - it was a lousy investment for the past 3 years - I am myself puzzled by that - but I do not recommend anyone to back off from it - because it is the only true way of hedging against the dollar devaluation.
Maybe you will find some time to look at the import/local production figures and I am sure you will come to a right conclusion.
Just spend some time on it - don't just believe someone telling you 25% is mining. Check yourself.
PeacePeople
Member
Pirocco
Well-Known Member
Nobody told me, as I said, I've read it:silvercomments said:
http://www.silverinstitute.org/site/supply-demand/silver-production/
I thought it was abit less than 25% but maybe I've read it first in an older article, in 2012 it would have been 28%
The figures you give (no link to source though) say 30% in 2010.
That's not much different from the 28% in 2012, isn't it?
Actually, your post is hard to follow. It appears as a denial of what I've said, but it just confirms?
No. 95% of the time silver doesn't come out of the ground ready to pour into bars. Copper mines still have to smelt and refine, or contract this process out. There's also transportation of ore, etc. The traditional method of factoring cost per ounce removes smelting, refining, and other associated costs. One of the larger reasons why this is the case is many mining operations outsource this, or sell raw ore (obviously at a reduced price). Taking this cost out of the equation helps to be more inclusive of all mines when factoring the cost per ounce (even though it makes this cost artificially low), thus giving you a larger number to average. Link below for further explanation (similar but different article than previously linked).
http://seekingalpha.com/article/149...-industry-figures-unsustainable-silver-prices
That article places the "real" cost per ounce around $25.00. I suspect the costs for bonus silver retrieved from a copper or zinc mine would be much lower, but I cannot attest to or provide proof of this. Still, a sound argument could be made that taking silver specific mines off-line would decrease supply enough to increase demand.
The solar industry only accounts for 5% of the demand. That's a good chunk, but nothing earth shattering. They've already reduced their use of silver (as most here likely know) significantly because of the price spike, but they still use it. We are in an electronic age, and that's where the future of demand is going. There is silver in your iphone, tablets, pcs... etc. The solar industry is icing on the cake, especially if it continues to grow.
Pirocco
Well-Known Member
Is there even 5% that doesn't need any processing? Pure silver 'nugget'?
And even in that case, a silver 'nugget' still needs to be located, both geographically and inbetween X ton ground material.
And aside of this, it's not solar / industrial that drove the price trend in the last decade and especially since 2008. It was due to people buying silver as storage of value. Solar as ice on cake is a good wording for it.
Primary silver mining accounts for only 28% of mining, and considering 25% of the total silver production is recycling, in 2012 primary silver mines produced 220 Moz, while total production was 1040 Moz. So byproduct nature is by far dominant.
One thing could be stated too: price won't go through the roof due to industrial usage. Because supply and demand interact in both ways, a higher price would cause a shrinking demand and a lower price a rising demand.
So if you see a price going through the roof, it's some investment stupidity and others will soon take advantage of it.
Maybe the mid april price drop was the last fluctuation, and now some years stability, around $20 or so. In 2011 someone claimed this, and most reactions (including mine) were unbelievers. But considering the general price trend, it may be well possible.
And even in that case, a silver 'nugget' still needs to be located, both geographically and inbetween X ton ground material.
And aside of this, it's not solar / industrial that drove the price trend in the last decade and especially since 2008. It was due to people buying silver as storage of value. Solar as ice on cake is a good wording for it.
Primary silver mining accounts for only 28% of mining, and considering 25% of the total silver production is recycling, in 2012 primary silver mines produced 220 Moz, while total production was 1040 Moz. So byproduct nature is by far dominant.
One thing could be stated too: price won't go through the roof due to industrial usage. Because supply and demand interact in both ways, a higher price would cause a shrinking demand and a lower price a rising demand.
So if you see a price going through the roof, it's some investment stupidity and others will soon take advantage of it.
Maybe the mid april price drop was the last fluctuation, and now some years stability, around $20 or so. In 2011 someone claimed this, and most reactions (including mine) were unbelievers. But considering the general price trend, it may be well possible.
silvercomments
New Member
After today's session everyone is underwater. All producers are bellow the cost. New projects are not feasible.
It looks we are nearing a bottom here because I'd really expect a halt in deliveries in this price region.
There is simply no point in producing silver if you are not a copper miner.
Only copper mines are still profitable selling silver now.
Today copper is at 3.08 per pound, graph looks horrible and should soon see levels bellow $3.
China starting an interbank freeze @ 13% annually that will surely impact the copper market:
http://www.reuters.com/article/2013/06/20/china-bond-idUSB9E8LG02920130620
If we are to repeat 2008 then copper will drop to ~$1.5 and that will effectively close ALL SILVER PRODUCTION AROUND THE WORLD.
Go figure.
It looks we are nearing a bottom here because I'd really expect a halt in deliveries in this price region.
There is simply no point in producing silver if you are not a copper miner.
Only copper mines are still profitable selling silver now.
Today copper is at 3.08 per pound, graph looks horrible and should soon see levels bellow $3.
China starting an interbank freeze @ 13% annually that will surely impact the copper market:
http://www.reuters.com/article/2013/06/20/china-bond-idUSB9E8LG02920130620
If we are to repeat 2008 then copper will drop to ~$1.5 and that will effectively close ALL SILVER PRODUCTION AROUND THE WORLD.
Go figure.
donpaulo
New Member
very interesting thread
clearly there is a difference between paper and physical markets but there is no denying the physical cost to grind the stuff out of the ground.
We may agree or disagree on the end cost to market however.
I think we are going to see the less profitable producers starting to realize that long term hedging will not provide enough profit to continue operating their mines and will now start the process of mothballing.
If we see supply tapering off that is going to have an affect upon the silver market. Hello volatility
clearly there is a difference between paper and physical markets but there is no denying the physical cost to grind the stuff out of the ground.
We may agree or disagree on the end cost to market however.
I think we are going to see the less profitable producers starting to realize that long term hedging will not provide enough profit to continue operating their mines and will now start the process of mothballing.
If we see supply tapering off that is going to have an affect upon the silver market. Hello volatility
silvercomments
New Member
I'd agree about the lack of shortage. On the other hand though they can't keep up with those prices.
They are gonna have to scale down. I can't imagine current prices and the same level of production going forward.
That is simply not possible. Those miners don't have that much cash to burn for longer than few months maybe.
They are gonna have to scale down. I can't imagine current prices and the same level of production going forward.
That is simply not possible. Those miners don't have that much cash to burn for longer than few months maybe.
Silverlicious
Member
gazzahere said:morning,
at least the cost of producing silver is reasonably easy if one explores the subject thoroughly enough. For the future the only real outliers are some giant deposit that comes up unforeseen.
Demand is another matter -------------- if some technology comes out of the woodwork to replace silver in solar panels (and there are some possibles) then demand will be greatly effected.
However, the unknowns in future will have potentially even greater effects ------------------- nations returning to silver as coinage --------- if history repeats then it will happen somewhere sooner or later ---------- and coins use up one hell of a lot of silver.
New technologies - not even thought of - that might require silver - could send demand through the roof ----------- we just don't know.
the only thing we do know is that at many times through history - including now, silver is irrecoverably consumed and digging it up isn't getting any cheaper - yet.
So, if I were to punt - I would say the 'price' of silver has probably more upside than down - at least in the foreseeable future - as long as one looks beyond the short term.
The other thing of course is that it is incredibly beautiful -------- almost justification alone for owning some
have a great day all
gazza
+1 valid
Silverlicious
Member
AGmagic said:
It's not rocket science mate. Many of the miners are publicly traded so you can go and view their P&L's online. Or, you can ring them up as a concerned investor. How do you know there's no shortage? Have you found some but are keeping it all to yourself?
worldbubble
Active Member
hundreds if not thousands of people posting words like " MINING SILVER COSTS: Much Higher Than Most Realize" from one place to another
anyone care to make analysis of the most productive mines?
NO!
silverseek, silverdoctor, silvershit_hole, you name it, will post the messages like "costs are high -bottom is near"
give people some proof, worthy analysis if you want them read it
deleted from bookmarks all these web sites since I've switched to numis
anyone care to make analysis of the most productive mines?
NO!
silverseek, silverdoctor, silvershit_hole, you name it, will post the messages like "costs are high -bottom is near"
give people some proof, worthy analysis if you want them read it
deleted from bookmarks all these web sites since I've switched to numis