So... I was having a look at the supply fundamentals and : "Contribution to supply" dynamics.
Silvers mined as a byproduct most often, so on the supply side, the profitability of mining operation related inputs DIRECTLY from the price of silver is NOT 1:1.
I have just fumbled some metrics together here as an experiment but:
Silver production itself comes from Copper, Lead, Zinc and Gold mines (in addition to pure silver mines obviously).
So the production impact to silver production is directly related to the price the of : Copper, Lead, Zinc, Gold *and Silver itself.
Fundamental Sentiment from speculation aside: Since I think most people intuitively correlate gold price as a leading indicator of silver prices. or at least corelate a big picture relationship with some relative GSR dynamics.
So.. lets say: current price dominance in GSR direction (relative to gold, to consider silver specific sentiment bullishness) is related less to financial global considerations (where both rise and fall in tandem as "money") and focuses mostly on the supply and demand factors (or lag / lead switching... potentially).
Where the Supply part, is my focus here.
Lets also consider a ration of production related to primary mines being Copper: 25%, Zinc: 25%, Lead: 12.5% and Gold 12.5%
(in fact, silver from gold is more like 8%... but im making it more ROUND and giving gold an edge as is still feel gold demand price impacts to silver price and have higher correlation, lets consider that as a recycling factor on the supply side)
ok... so. then what.
Well.
If primary mines base metals prices drop, then the mines produce less and it would impact silver production. (Duh Fred.. thats obvious...)
If silver goes up. and the base metal of the mine is still not producing.. Then the silver price increase isn't going to affect inputs at a suitable rate... the demand shows. but the productions not gonna just appear out of nowhere...
Bear with me: If I make a trade symbol for an alloy at that relative percentage:
Then the massive drop in copper price in August: from ~5.70 > 4:40 shows up as a relative "production driver impact" where copper mining would be concerned.
(Mind you - the copper DROP, was from recent all time copper high, and its bottom was too-and-did-not-breach the bottom of its rising channel...)
I cant go back very far due to tick data but id love to see if this is rangebound or its dynamics, because changes for silver production ARE affected by the other metals price. and a "more optimized" chart based on live price action may produce a better indicator (in this case. of a top in a "silver production driving force" where one of Copper / Zinc, Silver, Gold or Lead, may suitably drop, suppressing total OUTPUT)
Or.. If one of them POPS. then a sizable production increase of silver may come from primary mines of said base metal mining as by product.
Its just a mixed signal here:
("Zinc.a"*0.0025+"Copper.a"*2.5+"Lead.a"*0.00125+"XAUUSD.a"*0.00125 + "XAGUSD.a" *0.25) so that each metal is contributing to the chat in a meaningful way.
Its by no means accurate to any real market production metric, but what its saying is:
Coppers drop recently would have negatively and meaningful mitigated supply driving force relative to the overall mining supply of silver negating the effect that the current rise in both gold and silver has had in the last 2 months.
While consumption would have continued.
Thoughts?
(Mine: A decision making whale, that had to choose what of the 4 "markets" price would drop, where silver production would be affected, perhaps all 5 metals were equally valid for a fall, where upon selection a target silver output quantity would be "maintained" and chose to sell of copper, specifically, at that time, and the time may be up again... and the revolver spinning... )
