Missed the boat on 15 dollar silver

[Holdfast]

Not directed at anybody in particular, but I've been finding the doom & gloom here & elsewhere all a bit comical.


It's like the *inverse* of just a few years ago.

But instead of "to da moon!" -- it's now "to da depths of hell!"


If you think about it, there's really no difference between the two groups...

Years back, there's Folk who purchased just bullion bars.

There's folk who purchased bullion coins.

There's folk who purchased bullion coins and bullion bars.

There's folk who purchased a large amount of modern numismatic coins - "Flippers"

There's folk who purchased every release of Perth's bullion coins in quantity.

There's folk who purchased with borrowed money.

There's folk who dumped silver and gold a year or so ago.

There's folk who stack and forget.

There's folk who watch spot prices tens of times per day.

There's folk who truly wish for higher spot prices.

There's realists and there's pumpers and of course dealers.

There's folk who have always bought and sold silver.

There's folk who just want to be part of the action.

And there's folk who think they know which way the silver price goes.

 

[SpacePete]

Seems like I waited to long and 15 dollar silver is gone. I guess 16 dollar silver will have to do

 

[sterling-nz]

Not directed at anybody in particular, but I've been finding the doom & gloom here & elsewhere all a bit comical.


It's like the *inverse* of just a few years ago.

But instead of "to da moon!" -- it's now "to da depths of hell!"


If you think about it, there's really no difference between the two groups...

The difference between the two groups is simple..............The "to da mooners" DO NOT have history (or knowledge) on their side and those of us that have been saying wait for the last couple of years have history and KNOWLEDGE on our side.
BIG DIFFERENCE.
20 years down the line anything under $25 USD will have been a safe bet though

 

[Gatito Bandito]

The difference between the two groups is simple..............The "to da mooners" DO NOT have history (or knowledge) on their side and those of us that have been saying wait for the last couple of years have history and KNOWLEDGE on our side.
BIG DIFFERENCE.
20 years down the line anything under $25 USD will have been a safe bet though

Eh, I see enough incomplete knowledge (whether intentional or not) coming from the bear camp, too.


Anyway, doesn't really matter, as it's certainly possible to make $$ on physical, regardless of what paper spot might be doing at any given time..

 

[mmissinglink]

Agreed 100% Gatito.

There's hysteria and ignorance on both extreme sides.

I'm as anti permabear as I am anti permabull. The truth always lies inbetween the extremes.

Reminds me of the far Left and the far Right in the U.S. Both camps are full of crap and suffer from the same kind of ignorance....just different flavors of ignorance is the difference.



.

 

[leon1998]

YOU DIDN'T MISS THE BOAT.

We're going to see US$11 Silver in the next few years. The BOAT will crash the deck, stay away from it and be safe

 

[Skyrocket]

YOU DIDN'T MISS THE BOAT.

We're going to see US$11 Silver in the next few years. The BOAT will crash the deck, stay away from it and be safe

Not if there is another GFC soon. If so, people will look back and think now was a golden time to buy PMs.

I will keep buying silver because I can see the world is financially rooted and something gotta give soon.

 

[phrenzy]

Not directed at anybody in particular, but I've been finding the doom & gloom here & elsewhere all a bit comical.


It's like the *inverse* of just a few years ago.

But instead of "to da moon!" -- it's now "to da depths of hell!"


If you think about it, there's really no difference between the two groups...

The difference between the two groups is simple..............The "to da mooners" DO NOT have history (or knowledge) on their side and those of us that have been saying wait for the last couple of years have history and KNOWLEDGE on our side.
BIG DIFFERENCE.
20 years down the line anything under $25 USD will have been a safe bet though

Depends on what you classify to da moon. At the moment with current exchange rates having the spot move to $26usd/$35.5aud would seem like a launch worthy of Cape Canaveral. If you look back much earlier on the thread you'll see I picked up a 100oz perth mint bar for $1800 this time last year, might be the cheapest silver I'll ever buy, it was a bargain even in the halcyon days of. 90usd to the aussie. Today everyone is saying that the sky is falling, but at $570 a kilo that 100oz bar is sitting pretty even now and it will feel prety moon-ey even with q modest rise.

If nothing else it proves that the savvy buyer buying and holding physical can do a hell of a lot better than bank interest on even the most long term high capital term deposit or beat pretty much any world index, even in an environment where silver has been crushed.

We'll be seeing you real soon guys :

 

[SpacePete]

The boat has sailed.

 

[Ipv6Ready]

Give the Bulls and Bears a break without them how can a trader make money?

 

[kutylin]

The boat has sailed.

http://i.imgur.com/oDu341h.jpg

I always smile when I see that picture lol Is there another one for the period when silver price is down?

PS Just noticed those blind mice!

 

[kutylin]

Just post a funny video on this topic. Think it will amuse you a little lol

[youtube]http://www.youtube.com/watch?v=CAZS0lTYjCM[/youtube]

 

[mmissinglink]

It appears as if the new bottom for silver is around USD $20.



.

 

[Pirocco]

It appears as if the new bottom for silver is around USD $20.
.

Look at this:
http://finviz.com/futures_charts.ashx?t=SI&p=m1

That green trend line below, is a reflection of the amount silver on futures contracts.
It now sits on a 2 decade record high (a net total amount of about 100000 x 5000 ounces)
Now, the goal of a futures contract is to increase the price in an artificial way.
The existence of the contracts adds a forward component to the cash market price, so the spot price holds this component.
Why is it artificial: that "ordered" silver nearly never gets delivered as silver, instead as dollars.
The goal of a futures position is not silver, but dollars. To hedge and/or to lock in prices (including profit) on planned cash market orders / existing cash market positions.
So, that forward component is bound to vanish again. The owners of the futures positions will cancel them (allowing expiration or give opposite (so net zero exposure) orders.
It's now 100000.
A common bottom is 20000.
The difference is 80000.
80000 x 5000 = 400 Moz silver.
In the past, using price/position change data, I calculated an average 70 Moz per price dollar.
400/70=5.7.
So about 6 price dollars of the current spot price, is due to future orders that will be cancelled.
So actually, in the real, cash market, things didn't change that much since the $14 we saw.
Because $20 - $6 = $14.
Look at the chart, the green trend line. A futures position peak tends to correlate with a price peak, not a price bottom.
The period 2009-2011 was an exception. But there is a clear explanation for it: Exchange Traded Funds then loaded up big time.
Since some years though, they ceased adding. The biggest one, Ishares Silver Trust, has now 340 Moz. An amount that was common (occurred quite alot times) 2011-2015.
A 400 Moz - sized futures position, is certainly a major price trend determinator, especially when other sides (mint sales, industrial, ...) are fairly stable.

That's my opinion on the current price, based on quite some data. Not all, but quite some.

 

[Jim4silver]

YOU DIDN'T MISS THE BOAT.

We're going to see US$11 Silver in the next few years. The BOAT will crash the deck, stay away from it and be safe

Leon,

What do you think will be the reason(s) for a drop to those levels? I am not doubting it per se but have a hard time believing silver will be that much below cost of production, at least for an extended time.

I have a friend who is quite knowledgeable with respect to the mining biz (has biz dealings with a few guys who are in the industry) and he called to a T that silver would not drop much below $14 over the past year or so due to what he saw in the industry vis a vis price of production, etc.

To get to $11 it would require much cheaper fuel prices than we have now.

Just my opinion.

Jim

 

[Gullintanni]

YOU DIDN'T MISS THE BOAT.

We're going to see US$11 Silver in the next few years. The BOAT will crash the deck, stay away from it and be safe

Leon,

What do you think will be the reason(s) for a drop to those levels? I am not doubting it per se but have a hard time believing silver will be that much below cost of production, at least for an extended time.

I have a friend who is quite knowledgeable with respect to the mining biz (has biz dealings with a few guys who are in the industry) and he called to a T that silver would not drop much below $14 over the past year or so due to what he saw in the industry vis a vis price of production, etc.

To get to $11 it would require much cheaper fuel prices than we have now.

Just my opinion.

Jim

The good old "below production cost" THEORY.
Tell us Jim what exactly is the "production cost" of most of the worlds silver?
As you (or your friend) must clearly know as you state it as a reason not to drop.
Please enlighten us.
And please do not use some obscure mine that only produces thousands of oz's, give us some numbers for THE BIG BOYS that produce millions and millions of oz's.
Thanks in advance

 

[Pirocco]

There are 2 considerations regarding production cost versus product price.
1) What is silvers production cost? Over the years I've seen several figures claimed, ranging from $5 till $20.
Some claimed that the cash cost was a do-we-produce-it-or-not determining element.
Others claimed that the full cost should be used.
And, silver is mostly mined as a byproduct, making judgements even harder.
Because, there is ore, it contains various elements, and those that mainly go for zinc, won't throw away the silver, and extracting a second metal from the ore, won't add much to the initial cost to extract the zinc. It's just 13 years ago that silver was $5, being 1/4 of todays price. And it was mined/recycled too then.
2) What is the silver stockpile out there? There are some figures, the past 13 years, about 2000 Moz as coins&bars and ETF's.
What data shows is that the other demand classes (industrial, jewelry, photography, ...) undid eachother, leaving "stockpiling" as the key driver for the price trend over this period. And it still goes on.
The bigger a stockpile is, the less influence mining / recycling cost gets in the price.
Gold is a very good example for this:

Year / Mining / Recycling (tonnes) / Price (USD)
1997 2527 631 $330.98
1998 2574 1108 $294.24
1999 2602 620 $278.88
2000 2618 619 $279.11
2001 2645 749 $271.04
2002 2618 872 $309.73
2003 2621 985 $363.38
2004 2493 878 $409.72
2005 2548 897 $444.74
2006 2486 1126 $603.46
2007 2476 956 $695.39
2008 2409 1217 $871.96
2009 2584 1672 $972.35
2010 2659 1653 $1224.53
201997 2527 631 $330.98
1998 2574 1108 $294.24
1999 2602 620 $278.88
2000 2618 619 $279.11
2001 2645 749 $271.04
2002 2618 872 $309.73
2003 2621 985 $363.38
2004 2493 878 $409.72
2005 2548 897 $444.74
2006 2486 1126 $603.46
2007 2476 956 $695.39
2008 2409 1217 $871.96
2009 2584 1672 $972.35
Without governments switching from net selling to net buying, the gold price would never have seen those sub $300 and $1
2010 2659 1653 $1224.53
2011 2839 1611.9 $1571.52
Without governments switching from net selling to net buying, the gold price would never have seen those sub $300 and $1
2012 2864.1 1590.8 $1668.98
2013 3060.3 1254.6 $1411.23
2014 3135.0 1175.9 $1211.7111 2839 1611.9 $1571.52
2012 2864.1 1590.8 $1668.98
2013 3060.3 1254.6 $1411.23
Without governments switching from net selling to net buying, the gold price would never have seen those sub $300 and $1
2014 3135.0 1175.9 $1211.71

Compare the price trend with the mining trend. The price went from $300 to $1700 while mining change was close to nil.
And look at how recycling went up with the price. Apparently, the higher gold price brought alot gold stock back to the market for sale.
Apparently (2) golds price trend was all about stockpiling / destockpiling, not about production / recycling cost.
Without governments switching from net selling to net buying, the gold price would never have seen those $270 and $1900 extremes.
And the peak would probably barely have crossed $1000.
The same applies to silver, only in a somewhat lower degree, due to the higher consumption (not recycleable) share of the demand.

 

[Jim4silver]

YOU DIDN'T MISS THE BOAT.

We're going to see US$11 Silver in the next few years. The BOAT will crash the deck, stay away from it and be safe

Leon,

What do you think will be the reason(s) for a drop to those levels? I am not doubting it per se but have a hard time believing silver will be that much below cost of production, at least for an extended time.

I have a friend who is quite knowledgeable with respect to the mining biz (has biz dealings with a few guys who are in the industry) and he called to a T that silver would not drop much below $14 over the past year or so due to what he saw in the industry vis a vis price of production, etc.

To get to $11 it would require much cheaper fuel prices than we have now.

Just my opinion.

Jim

The good old "below production cost" THEORY.
Tell us Jim what exactly is the "production cost" of most of the worlds silver?
As you (or your friend) must clearly know as you state it as a reason not to drop.
Please enlighten us.
And please do not use some obscure mine that only produces thousands of oz's, give us some numbers for THE BIG BOYS that produce millions and millions of oz's.
Thanks in advance

Is it a "theory" that something has a cost to produce? PMs are not just laying around on top of the ground for the miners to pick up. In "reality" everything has a cost. Pulling a metal out of the ground takes employees, fuel, equipment, land rights, fees, etc etc. If you are an employee someplace you might not have a full understanding of how this works but that is understandable.

There is no way that a mining company can claim a low cost of production for silver (well below spot) and at the same time not be a profitable enterprise, ie post a loss, have a negative P/E ratio. When I say cost to produce I mean all in sustaining costs. ANY mining company that is not profitable in a given year cannot have a true all in sustaining cost of production below spot otherwise they would not have lost $$$ that year. So to get a true cost of production you have to factor in everything a company is paying out even settling lawsuits, etc. Whether a company has been profitable in a given year is easy to see if you look at their stock info (for a public company).

Each company's individual cost of production will vary. Some will have a lower cost than others. What matters is at some point the price drops to a level where the higher cost of production mines drop off. Then if price continues to drop, companies with lower costs than the last group will start to taper production, mothball mines, etc. Some companies can keep going even if they are operating below the cost of production through the use of sales of shares, loans, etc, but that can only go on for so long.

My friend had estimated from what he was seeing in his industry the "average" all in sustaining cost of production was around $14 for silver and he thought that cost would remain stable over the near to mid term (this was when spot was higher than $14 and it had not dropped that low yet). When I asked him how low silver would go he said to the cost of production. This guy is not a trader or pundit but works in the jewelry and precious metal sector. He actually has interaction with mining companies for his own business.

Just my opinion.

Jim

 

[Gullintanni]

Leon,

What do you think will be the reason(s) for a drop to those levels? I am not doubting it per se but have a hard time believing silver will be that much below cost of production, at least for an extended time.

I have a friend who is quite knowledgeable with respect to the mining biz (has biz dealings with a few guys who are in the industry) and he called to a T that silver would not drop much below $14 over the past year or so due to what he saw in the industry vis a vis price of production, etc.

To get to $11 it would require much cheaper fuel prices than we have now.

Just my opinion.

Jim

The good old "below production cost" THEORY.
Tell us Jim what exactly is the "production cost" of most of the worlds silver?
As you (or your friend) must clearly know as you state it as a reason not to drop.
Please enlighten us.
And please do not use some obscure mine that only produces thousands of oz's, give us some numbers for THE BIG BOYS that produce millions and millions of oz's.
Thanks in advance

Is it a "theory" that something has a cost to produce? PMs are not just laying around on top of the ground for the miners to pick up. In "reality" everything has a cost. Pulling a metal out of the ground takes employees, fuel, equipment, land rights, fees, etc etc. If you are an employee someplace you might not have a full understanding of how this works but that is understandable.

There is no way that a mining company can claim a low cost of production for silver (well below spot) and at the same time not be a profitable enterprise, ie post a loss, have a negative P/E ratio. When I say cost to produce I mean all in sustaining costs. ANY mining company that is not profitable in a given year cannot have a true all in sustaining cost of production below spot otherwise they would not have lost $$$ that year. So to get a true cost of production you have to factor in everything a company is paying out even settling lawsuits, etc. Whether a company has been profitable in a given year is easy to see if you look at their stock info (for a public company).

Each company's individual cost of production will vary. Some will have a lower cost than others. What matters is at some point the price drops to a level where the higher cost of production mines drop off. Then if price continues to drop, companies with lower costs than the last group will start to taper production, mothball mines, etc. Some companies can keep going even if they are operating below the cost of production through the use of sales of shares, loans, etc, but that can only go on for so long.

My friend had estimated from what he was seeing in his industry the "average" all in sustaining cost of production was around $14 for silver and he thought that cost would remain stable over the near to mid term (this was when spot was higher than $14 and it had not dropped that low yet). When I asked him how low silver would go he said to the cost of production. This guy is not a trader or pundit but works in the jewelry and precious metal sector. He actually has interaction with mining companies for his own business.

Just my opinion.

Jim

Thanks for the speedy response Jim.
I have heard so very often that spot can not drop below the cost of production yet in reality this happens in EVERY OTHER COMMODITY, so why not silver?
I find it very very difficult to swallow that production costs have tripled in the last 15 or so years.
When spot was $30 PC (production cost )was espoused as around $25, when silver dropped to $25 PC were said to be $20 and so on and so on.
I do not doubt what your friend says , i doubt the whole concept.

 

[SpacePete]

I find it very very difficult to swallow that production costs have tripled in the last 15 or so years.
... i doubt the whole concept.

You are overlooking the decline in ore yields for a start.