Surge in silver production reported by miners

SpacePete

SpacePete

Well-Known Member
Silver Stacker
Not much upside for silver in this news. But at least the increased industrial demand should provide a floor on the price.

Silver miners First Majestic Silver, Hecla Mining, and Fortuna Silver Mines reported a sharp increase in production for the second quarter. The surge in production comes at a time when silver prices are expected to remain rangebound. However, silver miners can take heart from the fact that industrial demand is continuing to pick up. While a pick-up in industrial demand will not lead to a significant upside in silver prices, it will certainly provide a floor. Indeed, if silver miners can bring down their costs, they can capitalize on the pick-up in industrial demand.
...
The surge in silver production, however, is coming at a time when prices are expected remain rangebound due to lower investment demand (except for ETF holdings and coins demand), chances of stronger dollar in the backdrop of tapering of the asset-purchases by the Federal Reserve, and the fact the market is expected to remain fundamentally imbalanced.

http://www.fool.com/investing/general/2014/07/23/could-this-trend-send-silver-stocks-higher.aspx
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More in the linked article, including how many ounces are mined and where the industrial growth is coming from.
 
Also claims of a supply glut:
Earlier this year, Barclays forecasted that the total silver supply (mines, scrap-sales, and official sales) this year will exceed the demand by 6,482 tons, which was one of the reasons why I was little cautious on miners. However, the pick-up in industrial demand should help ease some of the supply glut.
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Old Codger said:
Do they have the cost of production under control?

OC
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Good question. The article doesn't cover it in any detail but does mention:
Miners still have to lower costs
...The key then for miners will be to bring down costs in order to ease margin pressure. If miners can lower costs, they will certainly be worth a look, especially in the wake of improving industrial demand.
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Some more detail from a referenced article:

Factors which could cap prices
The U.S. economy is gaining momentum. Indeed, the latest non-farm payrolls data reflects the ongoing recovery. The unemployment has also fallen to multi-year lows. The Federal Reserve has already tapered its bond purchase program to a monthly pace of $35 billion and chances are that it will further narrow these purchases in the coming months and end the bond purchases before the end of this year.

A tighter monetary policy from the Fed will boost the U.S. dollar vis--vis other currencies, making dollar-priced commodities more expensive in the international market, which could affect physical-side demand.

As I noted in a previous article on silver, the silver market is still in surplus as the overall inventory level is high enough to cover any shortfall despite last year's jump in physical-side demand. And remember major miners are increasing their output. Therefore, it looks unlikely that prices will gain further, notwithstanding higher industrial demand. Barclays estimates that the total silver supply (mines, scrap-sales and official sales) will outstrip the demand by 6,482 tons in 2014.

Indeed, these two factors mean that silver's gains are likely to be capped notwithstanding last month's rally. As a result, miners will continue to face margin pressure.
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SP,

Downward pressure on costs is a day to day task of all in a company from the Board of Directors, all the way down to low level Management. There is NO magic wand that shaves 10% off costs.

Sacking staff is the easiest and often most inefficient way of doing so.


JMO

OC
 
A) Industrial demand is up now because for past 2 years silver prices are low (lots of excess silver), yes?

B) The rosy picture of the U.S. economy painted by some may not be all that accurate a picture...same perhaps for some other major industrialized countries. Also because the U.S. consumer is not doing as well as suggested by many economists, this will negatively impact production in countries that rely significantly on U.S. purchasing

C) Industrial demand may slow in spite of lower silver prices; that coupled with significant silver surpluses could drop silver to new post 2011 lows

D) I'm pulling out of silver....






....not! :)





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Old Codger said:
G & S looking VERY attractive at the moment.


OC
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no its not

it is a wasted opportunity buying G & S now

There is an over supply and increasing production will mean prices will remain flat or drop

There are better investment opportunities out there where you will actually see a return on your investment.
 
I was thinking of getting some more Silver soon but now that I'm hearing all this I don't know whether I should just wait.

Any other peoples opinion on this would be greatly appreciated.
 
@ Skyrocket, welcome to the Silver Stacker forum!

The truth is, none of us knows for sure what the future holds for a commodity like physical silver. What we do know is that there's not much it does or that you can do with blobs (common, non-denominational, bullion bars) of silver when they just sit in a SDB (safe deposit box). They just sit there and tarnish is basically all.

Who knows if and when silver will ever be in a bull run; if it does get there (which is very likely at some point down the road) it will invariably head south again into consolidation (bear market) because that's just the natural cycle of a commodity like silver.

Whether to buy and what to buy depends on what you believe and other factors like where you live, how much debt you have, what's your age and health, etc, etc, etc.

I am a relative new comer to buying bullion / precious metals coins so while I have figured some things out, I am still learning and there's still a lot for me to learn.

So, if you don't mind answering, what is the reason that you became interested in purchasing silver?




.
 
I think that what appears high on a 5 y chart is a better-to-avoid.
And that what appears low on a 5 y chart a better-to-buy.
 
Hi mmissinglink,

Thanks for the welcome!

Thanks also for your opinion on the matter!

If and when the US dollar crashes as well as also some other world currencies do too, would that not send Silver and Gold prices skyrocketing? (pardon the pun :))

I became interested in purchasing silver after losing some money in high risk shares. I want to put my money in something that will be a good investment for a 5-10 year term.

Also all the turmoil currently happening around the world does not make me feel safe investing in anything that does not have intrinsic value, like real estate, precious metals, ect.
 
Skyrocket said:
Hi mmissinglink,

Thanks for the welcome!

Thanks also for your opinion on the matter!

If and when the US dollar crashes as well as also some other world currencies do too, would that not send Silver and Gold prices skyrocketing? (pardon the pun :))

I became interested in purchasing silver after losing some money in high risk shares. I want to put my money in something that will be a good investment for a 5-10 year term.

Also all the turmoil currently happening around the world does not make me feel safe investing in anything that does not have intrinsic value, like real estate, precious metals, ect.
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Then buy property t least you are generating a return on it from rent.
 
Court Jester said:
Skyrocket said:
Hi mmissinglink,

Thanks for the welcome!

Thanks also for your opinion on the matter!

If and when the US dollar crashes as well as also some other world currencies do too, would that not send Silver and Gold prices skyrocketing? (pardon the pun :))

I became interested in purchasing silver after losing some money in high risk shares. I want to put my money in something that will be a good investment for a 5-10 year term.

Also all the turmoil currently happening around the world does not make me feel safe investing in anything that does not have intrinsic value, like real estate, precious metals, ect.
Click to expand...

Then buy property t least you are generating a return on it from rent.
Click to expand...

I heard many say that now is not a good time to buy a house because Australia is currently in a housing bubble.

I wish I had enough money to buy a rental property! :)
 
Skyrocket said:
Court Jester said:
Skyrocket said:
Hi mmissinglink,

Thanks for the welcome!

Thanks also for your opinion on the matter!

If and when the US dollar crashes as well as also some other world currencies do too, would that not send Silver and Gold prices skyrocketing? (pardon the pun :))

I became interested in purchasing silver after losing some money in high risk shares. I want to put my money in something that will be a good investment for a 5-10 year term.

Also all the turmoil currently happening around the world does not make me feel safe investing in anything that does not have intrinsic value, like real estate, precious metals, ect.
Click to expand...

Then buy property t least you are generating a return on it from rent.
Click to expand...

I heard many say that now is not a good time to buy a house because Australia is currently in a housing bubble.

I wish I had enough money to buy a rental property! :)
Click to expand...

They ahve been saying that for 30 years, they may get it right one day but I dont think that is in the near future (20+ years)
 
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