Did I post this before?...hmmm...oh well
topstuf
Posts: 14,803 ✭✭✭✭✭
I'm beginning to think that silver is never coming back against gold, or even the flimsy old fiat dollar
for that matter. On the investor side, people have stubbornly stayed away from stacking silver and probably
due the nasty fingerburning received in 2010. On the industrial side, no prizes for guessing what happens
to demand in our new Covid-19 world.
But it's the supply side that has changed the market. No matter what the idiot permabull silverbugs may claim,
there is an glut of silver and the physical oversupply is from the big base metals miners, e.g those with
massive skarn or porphyry copper deposits in the Andes who suddenly started paying attention to their rather
minor by-product credit a few years ago when the streamer companies offered serious money for something they'd
taken for granted until then. Take for example the stream deal between Teck and Franco-Nevada on Teck's
attributable 22.5% of silver production from the massive Antamina mine in Peru. FNV paid $610m upfront and
then pays 5% of spot for Teck's part of silver production. In 2019, Antamina produced 15,849,298 oz silver
(not equivalent, nothing to do with the other metals in produces in very large quantities, only silver),
so FNV got 3,566,092oz of silver and paid an average of 81c per ounce.
Not a bad business and to keep to one year and one country, Southern Copper produced 5.63m oz silver from its
copper operations in Peru (Cuajone and Toquepala) and Chinalco produced 6.65m oz silver from Toromocho in Peru.
There you have millions of ounces of silver that would not have come out the ground if it weren't for the main
base metals targets of each mine and as the cost basis for the big miners is basically zero, they were
naturally interested when other businesses came knock on the door three or five years ago offering very large
cheques for that silver (in fact, 2/3rds of all silver produced now comes as a by-product credit to another
metal, normally copper, gold or zinc). In other words, the irony is that Wheaton Precious Metals has poisoned
its own chalice, but who was to know back then, right Randy?
The Gold/Silver Ratio has absolutely refused to bend to the will of the half-brained "it's always been like that"
calls from those with feet of clay and is now edging 100X (in fact it touched the number on Monday evening).
Silver is not gold and we know through experience that it will now sell off hard into an industrial downturn
(and gold will not). If your silver exposure is via juniors that struggle to turn a profit at $17/oz Ag or
is an exploreco with a thin looking treasury, it's time to run away now. Silver is for speculative risk trades,
not for times when you batten down the hatches.
reportedly from the IKN blog. ??????
Comments
Great synopsis. So you're downgrading silver to "semi-precious" metal.
Ah, I remember the old days when the chorus was something like, "there isn't enough silver to be used as money".
I guess that maybe now there is.
I knew it would happen.
Plus still more gobbledegook about the mystical gsr
Metal coins of any metal or denominated are less and less useful or desirable as circulating currency with each passing day.
Liberty: Parent of Science & Industry
Metal coins of any metal or denominated are less and less useful or desirable as circulating currency with each passing day.
Yes, until the currency assumes its intrinsic value and gets destroyed.
I knew it would happen.
Short answer: Next to cash, gold is king. Silver is mostly an industrial by-product. Last check global industry is shut down.
Miners are operating at reduced capacity.
Supply & demand. Infinity QE supply.
Everyone looking for a safe haven. Gold.
Eventually silver will come back, it will be a while.. Gold will probably hit $3000 before silver hits $25
JMHO.
Well...with all these projected theories (some with more evidentiary information), someone is going to be right... Then will claim 'authority' for five or ten years to come....
Cheers, RickO