Silver madness!

[devil21]

I fully expect to see silver above $40/oz in my lifetime, although I am only 24.

It was over $40/oz in your lifetime already, like a couple years ago. Weak hands being shaken....

 

[oyarde]

Yesterday I picked up a small gold coin , tomorrow , going to look at some silver .

 

[Dforkus]

with overall softness in other commodities (they tend to move in packs) , and QE tapering pushing up bond yields, it could be an ugly few months for metals...

I let myself get fooled in a value trap around 22, not letting that happen again.

I'm holding out for sub 15$ silver before I make any re-balancing moves, we are not that far.

 

[Shane Harris]

It was over $40/oz in your lifetime already, like a couple years ago. Weak hands being shaken....

Yeah I meant again. Unfortunately I bought some in the mid 30s in 2011 when I should have been buying bitcoin when it was under 5 dollars. Hindsight

 

[Jim Casey]

Silver madness is scary.

 

[cubical]

Silver madness is scary.

"you have to buy now"

This salesman has been saying that since it was around $30. I find the PM community, especially the silver guys in particular, very entertaining.

 

[DFF]

Silver's in a hardcore bear market, no doubt about it...the bottom though may not be too much farther off at $13.

 

[Carson]

Silver's in a hardcore bear market, no doubt about it...the bottom though may not be too much farther off at $13.

It's almost as if we are in a time when a lot of money on the books is crashing off of the books through default but the stock market is being artificially held up to hide the bubble burst.

Some of the bubbles bursting and the dollar getting some value restored can be seen here if I'm not sadly mistaken.

Latest Dow Candlestick

http://www.barchart.com/chart.php?sym=%24DOWI&style=technical&template=&p=MO&d=X&sd=&ed=11%2F03%2F2014&size=L&log=0&t=CANDLE&v=0&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=11%2F03%2F2014#jump

Could be time to sell stocks short.

 

[devil21]

Silver's in a hardcore bear market, no doubt about it...the bottom though may not be too much farther off at $13.

Anybody know what the cost to extract an oz of silver is? What happens when the spot price is lower than the cost to extract?

 

[Zippyjuan]

That might force some producers out of business. Some will continue to produce hoping the price goes back above their production costs and recoup losses in the future. (mines don't usually produce just one metal- many for example also extract gold and copper from the same ores) so even that might not force them out of business. Supplies would go down which could drive the price back up again making them sustainable again. Supplies certainly won't go to zero nor would production.

 

[DFF]

Anybody know what the cost to extract an oz of silver is? What happens when the spot price is lower than the cost to extract?

I believe it's around $20 an ounce. Unhedged, the silver miners are losing tons of money.

 

[Zippyjuan]

This mine says they produce at $4.42 an ounce. http://www.hecla-mining.com/operations/

operations

In 2013, Hecla's Greens Creek mine produced 7.4 million ounces of silver at an average cash cost per ounce of $4.42(1). Hecla currently produces silver from two silver mines, Greens Creek and Lucky Friday. The Lucky Friday mine resumed operations and production in early 2013 and produced 1.5 million ounces of silver. In June 2013, Hecla's acquisition of Aurizon Mines Ltd., brought Hecla the Casa Berardi gold mine located in Quebec, Canada, which produced 62,532 ounces of gold during the last seven months of 2013.

 

[devil21]

^^^^^^
An interesting data point but on the very low end for a single mine. Looking into the average cost to extract silver brings much confusion. $10/oz average is the generally accepted cash cost figure according to some 2013 surveys of miners.

This article examines why, then, are miners still losing money on silver extraction? Interesting topic.
http://silverseek.com/commentary/20...primary-miners-real-cost-produce-silver-13222

Let me tell you why the Cash Cost metric is so insane. When a mining company calculates its cash cost, it takes total production costs and subtracts various items including what they call, "By-product credits." All silver mining companies produce additional metals (included in the ore) such as copper, lead, zinc and gold.

For example, Endeavour Silver recorded a $7.92 cash cost an ounce in 2013. To get this low cash cost figure, Endeavour subtracted $111.5 million of by-product credits. This is a big amount when we consider that its total revenue for the year was $276.7 million. Thus, their by-product credits accounted for 40% of their total revenues.

The mining industry would like the investors to believe that by-product credits are a nice BONUS for mining silver.... which is why they only advertise that useless Cash Cost figure in their publications.

Again, using my formula, Endeavour Silver made an estimated $0.93 adjusted silver profit per ounce in 2013. Their average realized price for silver was $23.10 resulting in an estimated break-even of $22.17 last year. If we subtract their cash cost of $7.92 from their average realized price of $23.10, we would arrive at a hefty $15.18 cash profit.

That's right... $15.18 an ounce cash profit. Unfortunately, Endeavour Silver only stated a $11.1 million adjusted income gain for the year after selling 7.1 million oz of silver. If we multiply $15.18 million by 7.1 million oz, Endeavour should have enjoyed a $107.7 million cash profit in 2013..... they didn't.

Why? Because every primary silver mining company NEEDS ALL OF ITS BY-PRODUCT REVENUE to fortify its balance sheet. Can you imagine the losses Endeavour Silver would suffer if it excluded its by-product revenue??

more at link

For long term holders of PMs, don't forget that deflation comes first before any hints of hyperinflation. I think we're starting to see that deflation taking hold right now. Weak hands are being shaken out by this dive.

 

[helmuth_hubener]

don't forget that deflation comes first before any hints of hyperinflation.

Umm, can you give any historical examples of this we're supposedly forgetting? Refresh our memories.

 

[TheCount]

For long term holders of PMs, don't forget that deflation comes first before any hints of hyperinflation. I think we're starting to see that deflation taking hold right now. Weak hands are being shaken out by this dive.

In the last 90 days, silver has dropped 16%. How much have food prices deflated in that same time period?

 

[devil21]

Umm, can you give any historical examples of this we're supposedly forgetting? Refresh our memories.

Nothing historical as far as hyperinflation is concerned, just the natural progression and end result of inflationary Keynesian economics. There's always deflation that leads to inflation (see: 1999/2007/2008) and eventually the helicopter will come out to combat terminal deflation with terminal inflation, under the guise that a few bankers can control it. It's a predictable cycle that always comes to an end. We're seeing the end stages now before the USD is dropped as global reserve, imo.

In the last 90 days, silver has dropped 16%. How much have food prices deflated in that same time period?

Prices? Who said anything about prices? Oh you mean that Keynesian measure of inflation. I don't follow that faulty metric.

 

[Danke]

Prices? Who said anything about prices? Oh you mean that Keynesian measure of inflation. I don't follow that faulty metric.

I wish more people would understand this important point.

Productivity should have led to a decrease in prices over the last 100 years. We have only seen that in some sectors, and I'd bet even those prices would be much lower if the FED didn't keep creating more and more currency.

 

[oyarde]

I wish more people would understand this important point.

Productivity should have led to a decrease in prices over the last 100 years. We have only seen that in some sectors, and I'd bet even those prices would be much lower if the FED didn't keep creating more and more currency.

Oyarde disapproves of printing paper money .

 

[helmuth_hubener]

Nothing historical as far as hyperinflation is concerned,

There are many historical episodes of hyperinflation, actually, just none (that I can think of offhand) where a period of deflation immediately preceded the hyperinflation.

I think that it could happen (deflation and then hyperinflation). But I do not think that there's any reason to think that deflation always comes first and then hyperinflation. There is no immutable causal link.

There's always deflation that leads to inflation (see: 1999/2007/2008)

I don't really understand what pattern you think you're seeing in those three dates.

In any case, we could see a deflationary depression the next few or several years (good for long-term bonds!), or we could see high inflation or even hyperinflation (good for gold!). Or we could see prosperity (good for stocks!), or we could see a recession (good time for cash!). Since this thread is about silver: the inflationary scenario would be the one that would probably be good for silver. Although, consider: silver is much more of an industrial metal than gold, and so the monetary link is not as strong for it as it is for gold.

 

[helmuth_hubener]

I'd bet even those prices would be much lower if the FED didn't keep creating more and more currency.

No betting required. They would definitely be lower.