Silver Price Explosion Could Harm Copper

[beauanderos]

We all hear that there are very few pure silver mining companies in the world, that 70% of production of silver is mainly as a by-product to miners extracting lead, zinc, or copper. We hear that, regardless of much higher prices for silver, that mining would be impossible to ramp up because it takes up to seven years to develop a new mine, from initial exploration to production. And we hear that the existing miners, that produce silver as a byproduct, would not increase production to extract more silver because that would lead to an excess of the lead, zinc, or copper that they primarily produce. I'm listening to this... but I think that I may be reconsidering my conclusion to such hearsay as... "Hogwash!" I think there's a very real possibility that, if silver prices go high enough, these mines that in the past were primary producers of base metals will become primary producers of silver , and a goodly percentage of their base metals production will be stockpiled, to avoid selling it into an over-supplied market of zinc, lead, copper, and nickel... causing prices for those commodities to plummet

[Lemon Thrower]

i think you are part right and part wrong.

as silver goes up, a mine that was not economic to operate now might become economic. so i agree with you that say a lead plant will be operated for the purpose of mining the silver. they'll really mine both, and they'll get primarily lead, but the lead mining would not be economic without the silver.

yes, higher prices begets more mining. but where i disagree with you is that i don't think you'll see miners storning their own metal.

one thing miners do do is a sort of self hedging. they know the metal prices are volatile. so when prices are high, they often start processing the lower grade parts of their mine. these produce less metal, but often the same revenue since metal prices are higher. this keeps the mine in business longer. so analysts closely watch the grade of ore that passes through the processing plant, and do not panic when ore grade declines when metal prices are high.

[beauanderos]

one thing miners do do is a sort of self hedging. they know the metal prices are volatile. so when prices are high, they often start processing the lower grade parts of their mine.

You make a good point.

[dakota1955]

I think that you both may be right.