When do you think refineries will resume purchasing silver?

DisneyFan

Refineries have pulled back on their purchasing because of the huge quantities of silver presented as the result of the recent significant price jumps. How much more silver and sterling is out there to be melted?

softparade

@DisneyFan said:
Refineries have pulled back on their purchasing because of the huge quantities of silver presented as the result of the recent significant price jumps. How much more silver and sterling is out there to be melted?

There is mountains of it out there when you factor in all the genres that is under the silver umbrella. But that still doesn't explain the woefully inadequate private sector smelting capacity in the US. It's usually not the best thing to happen when government gets involved. Like with "US Smelter" down the pipeline to refine LATAM metals. Nevertheless, this capacity is greatly needed.

Overdate

Are any new refineries being built in the U.S.?

softparade

@Overdate said:
Are any new refineries being built in the U.S.?

As I alluded to in my previous post .....

The U.S. Department of War and the U.S. Department of Commerce are involved in a significant project to construct a large-scale non-ferrous metals smelter in Clarksville, Tennessee. This project, known as the "U.S. Smelter," is expected to require approximately $6.6 billion in capital expenditures, with total investment reaching $7.4 billion including financing costs. The smelter will produce 13 non-ferrous metals and is being developed in coordination with the U.S. Department of War and the U.S. Department of Commerce. The facility will be the first zinc refinery built in the United States in more than 50 years and will create 750 American jobs. The U.S. government is providing substantial backing, including $1.4 billion from the Department of War and $210 million under the CHIPS Act from the Department of Commerce. The project aims to expand domestic critical minerals processing capacity and strengthen supply chain security.

derryb

It's all about lease rate, and little about capacity to smelt.

ms71

Guess we may have to Take the Last Train to Clarksville. Don't be slow. Oh no, no, no.

(Apologies to Micky Dolenz)

dcarr

@Overdate said:
Are any new refineries being built in the U.S.?

Golden Analytical ("GA") is a small refiner that is coming back on line after many years dormant.

TwoSides2aCoin

I’d rather guess when refiners are going to refine, if ever. Anybody can melt pure silver. Few can refine.

jmski52

I’d rather guess when refiners are going to refine, if ever. Anybody can melt pure silver. Few can refine.

When the supply of .999 silver starts to dry up, I can see the discounts on 90% silver turning into premiums, which amounts to a fast game of "catch up".

TwoSides2aCoin

@jmski52 said:
I’d rather guess when refiners are going to refine, if ever. Anybody can melt pure silver. Few can refine.

When the supply of .999 silver starts to dry up, I can see the discounts on 90% silver turning into premiums, which amounts to a fast game of "catch up".

Starting to see premiums for sovereign silver drop on the buy side too. Who can blame profit takers ?

nags

@jmski52 said:
I’d rather guess when refiners are going to refine, if ever. Anybody can melt pure silver. Few can refine.

When the supply of .999 silver starts to dry up, I can see the discounts on 90% silver turning into premiums, which amounts to a fast game of "catch up".

There will only be premiums if the net purchasers are stackers/collectors, not refiners. To have premiums over spot will either take a LONG time at these levels, or a dramatic drop in price. For now, the market makers are the refiners.

jmski52

For now, the market makers are the refiners.

And when the quantity of .999 silver tapers off, they will start taking 90% silver again. If demand continues strong, and I think that it will, demand will drive up premiums for 90%. It hasn't been about retail sellers this time around. Buyers on Comex and Shanghi are driving the market now. Retail doesn't even enter into the equation at this time.

MsMorrisine

@DisneyFan said:
Refineries have pulled back on their purchasing because of the huge quantities of silver presented as the result of the recent significant price jumps. How much more silver and sterling is out there to be melted?

apparently 10s of millions of ounces

Texas77

@DisneyFan said:
Refineries have pulled back on their purchasing because of the huge quantities of silver presented as the result of the recent significant price jumps. How much more silver and sterling is out there to be melted?

Your comment is only partially correct. The critical piece that you are missing is that the refiners hedge their inventory including what is in work to protect their profits. So with the run up in silver over $100 and the large quantity of metal being refined ,there has been margin calls on the hedge which has cash strapped the refiners. Thus, when the refiners move enough product to stabelize their cash position they can begin buying from wholesalers and /or retailers again.

DisneyFan

@AUHawk said:

@DisneyFan said:
Refineries have pulled back on their purchasing because of the huge quantities of silver presented as the result of the recent significant price jumps. How much more silver and sterling is out there to be melted?

Your comment is only partially correct. The critical piece that you are missing is that the refiners hedge their inventory including what is in work to protect their profits. So with the run up in silver over $100 and the large quantity of metal being refined ,there has been margin calls on the hedge which has cash strapped the refiners. Thus, when the refiners move enough product to stabelize their cash position they can begin buying from wholesalers and /or retailers again.

If I am understanding you correctly, normally refiners are willing to accumulate more silver than they can refine. Is that the case?

Overdate

@AUHawk said:
So with the run up in silver over $100 and the large quantity of metal being refined ,there has been margin calls on the hedge which has cash strapped the refiners.

>
I wonder how many margin calls are going out for others who have shorted silver.

Texas77

@DisneyFan I don't have enough knowledge to answer your comment; in general what I can tell you is that the refiners have a set profit on their operation and protect themselves against downward moves in silver by hedging to lock in their profit, as silver has gone up parabolically they have had huge margin calls putting the refiners in a short term liquidity issue because it takes weeks to refine the silver to a finished product. So under these conditions they don't have the cash to take more work until they refine and move out enough product to stabilize their cash. I'm surmising under normal circumstances when silver is not making huge moves by the hour/day, and there is a return to normalcy, I expect that they like having the backlog of unrefined silver to keep their production running smoothly without stops and starts. Edited: So in summary yes I am agreeing with your last comment.

MsMorrisine

@AUHawk said:
@DisneyFan I don't have enough knowledge to answer your comment; in general what I can tell you is that the refiners have a set profit on their operation and protect themselves against downward moves in silver by hedging to lock in their profit, as silver has gone up parabolically they have had huge margin calls putting the refiners in a short term liquidity issue because it takes weeks to refine the silver to a finished product. So under these conditions they don't have the cash to take more work until they refine and move out enough product to stabilize their cash. I'm surmising under normal circumstances when silver is not making huge moves by the hour/day, and there is a return to normalcy, I expect that they like having the backlog of unrefined silver to keep their production running smoothly without stops and starts.

refiners are citing volume

Texas77

@MsMorrisine said:

@AUHawk said:
@DisneyFan I don't have enough knowledge to answer your comment; in general what I can tell you is that the refiners have a set profit on their operation and protect themselves against downward moves in silver by hedging to lock in their profit, as silver has gone up parabolically they have had huge margin calls putting the refiners in a short term liquidity issue because it takes weeks to refine the silver to a finished product. So under these conditions they don't have the cash to take more work until they refine and move out enough product to stabilize their cash. I'm surmising under normal circumstances when silver is not making huge moves by the hour/day, and there is a return to normalcy, I expect that they like having the backlog of unrefined silver to keep their production running smoothly without stops and starts.

refiners are citing volume

I think it's both issues... volume and liquidity. Edited: I doubt any company likes to publicize that they are having cash issues, even if it's temporary situation.

jmski52

Bill Holter reports that some of the Mint's distributors are getting margin calls on their hedging positions and can't meet them because of the higher prices of the metals. Not good.

MsMorrisine

@jmski52 said:
Bill Holter reports that some of the Mint's distributors are getting margin calls on their hedging positions and can't meet them because of the higher prices of the metals. Not good.

if the metal is not selling, they can stop buying from the mint

if the metal is selling, they have the cash flow to pay for losing hedge positions

TwoSides2aCoin

Well I tapped out, today.

MsMorrisine

@TwoSides2aCoin said:
Well I tapped out, today.

expound!

dcarr

Imagine being a buyer of 90% silver coin in China.
2/3 or more of the coins would be fake (not silver).
DOH !

jmski52

if the metal is not selling, they can stop buying from the mint

Holter explains that they have signed contracts that obligate them to buy a certain amount, and the numbers to hedge their positions have become bigger than their cash reserves, so they may be looking at default. Not good. Unlike the banks, they can't just poof it into existence. On the flip side, India, China and the US gov't can buy with unlimited new money.

blitzdude

@jmski52 said:
For now, the market makers are the refiners.

And when the quantity of .999 silver tapers off, they will start taking 90% silver again. If demand continues strong, and I think that it will, demand will drive up premiums for 90%. It hasn't been about retail sellers this time around. Buyers on Comex and Shanghi are driving the market now. Retail doesn't even enter into the equation at this time.

LOL wake up bro. They don't even want the .999 at this point. The only demand is paper gutter. THKS!

jmski52

LOL wake up bro. They don't even want the .999 at this point. The only demand is paper gutter. THKS!

In JPM you trust. lol, lol, lol

jmski52

The premium in Shanghai is now $17/oz. Where do you think all of the 1000 oz. .999 bars are going?

coastaljerseyguy

And for the refiners to move out the product quickly they only want .999 since it's only melting into bars for a quick turnaround and no refining per se.

TwoSides2aCoin

@MsMorrisine said:

@TwoSides2aCoin said:
Well I tapped out, today.

expound!

Put the brakes on buying.
To expound : delivery times are stretched to five weeks. That’s money locked up for over a month. The refiner is putting metal I sell them into a pool , delaying final settlement for already delivered metals, back 4-6 weeks. That puts a crimp on liquidity at both ends. Call it the great “squeeze”, but i had to stop buying at these levels and conditions.

blitzdude

Who will buy our gutter? THKS!

taxmad

@blitzdude said:
Who will buy our gutter? THKS!

There are FOMOers out the blitz - not as many as the sellers, but when you can use your credit card to obtain guaranteed riches, it's all-aboard