Silver supply side trouble brewing....

[pennypicker]

Informative article on mounting trouble with silver supply:

http://www.bloomberg.com/news/articles/ ... s-building

[deacon]

I enjoyed the article, but it didn't touch on why silver mining is falling. I think it has fallen because of the low prices, but now that prices are rising the miners will bring back up production. Also, I think people will start selling as the price rises which will reduce the need for new production.

[joee5]

Ima keep hoarding

[Recyclersteve]

I enjoyed the article, but it didn't touch on why silver mining is falling. I think it has fallen because of the low prices, but now that prices are rising the miners will bring back up production. Also, I think people will start selling as the price rises which will reduce the need for new production.

It isn't always that easy to bring back production once it has been turned off. There can be a new round of permits, environmental protests, workers to hire, etc. Sometimes it can take years to reopen a mine that has been shut down.

[68Camaro]

Related mining issue is that the mines have been cherry picking their best veins for the past 2-3 years to keep the mines open; in the process they are exhausting their lower-mining-cost ore which is usually mixed in with higher cost ore to keep yields up. As they exhaust the low-hanging fruit the remaining silver becomes more and more biased toward the harder to get ore. As a result, prices won't be going down any time soon, if ever. There is a great belief that we're at peak silver - at least with silver at double-digit prices.

Sure, if silver went to $1000/oz there would be a different paradigm and alternate sources and methods would become viable for profit. When the market allows true price discovery - which has been absent for years - it would come to a balance that would allow correct analysis of what the actual supply at the correct price should be.

[knibloe]

I enjoyed the article, but it didn't touch on why silver mining is falling. I think it has fallen because of the low prices, but now that prices are rising the miners will bring back up production. Also, I think people will start selling as the price rises which will reduce the need for new production.

My thoughts exactly.

[beauanderos]

The "supply" produced by people selling at higher prices will only produce incremental supply, which will rapidly be absorbed (plus much more) by
new buyers attracted to silver as an investment... due to higher prices.

Those who feel they will be able to buy and replace again, at lower prices,
and thus sell/flip for quick profits, will someday learn that you can't return to that well perpetually, because it will run dry at some point.

My thinking, as provocative as it might sound now... is that, before we run out of metals, we will run out of the ability of the present silver and
gold stackers to continue to purchase precious metals... because the prices will become multiples higher than they are now. Constancy bias will
sideline buyers from the group we have now, as they watch spot climb in astonishment... but will then draw in BIG money, once the parabolic spot
rocket launch draws their attention, who will only (at that time) understand the necessity/value of converting increasingly worthless fiat paper
to worthwhile silver and gold.

You really think you'll be gloating over selling something you purchased for $15, and getting $19... when spot soars to $70? $130? $600?

Don't sell too soon.

[68Camaro]

Except for the very astute (most of whom have already gotten involved by now - but a few new stragglers get awakened every year) that's exactly what will eventually happen. Whether this is the "big" one or just an intermediate cycle remains to be seen, but the approach will start the same way. Many of the very rich will get richer over this because most sheep (as well as many of the "intermediate rich") - while they could have jumped in even to buy an ounce or two - have no discernment and so they may lose everything they have left as a result.

Civil unrest will result - already is. The wife and I have been discussing this with our friends. All over the news is the complete lack of tolerance by the left to an opposing (and traditional) view, to the point where they will physically attack out of fury that they aren't agreed with. Generally speaking Neil's advice starts to play here - OPSEC is critical. Be careful who overhears you discussing any related topics, avoid overt displays of comfort (even in the vehicle you drive - older and scratched is better) - though that itself is relative.

As far as PM prices, we're definitely on another near-term bull run but at least part of it is due to the USD dropping, so other factors will have to come into play for this to be sustained. Lacking other factors I would only count on another 15% drop in the USD and gold movement of perhaps 2x that, with silver leading gold by 2x. So a peak change (due to USD-only) to maybe $27 silver and $1700 gold. However, the overall global economy is multiples worse than it was in 2008 - with the only counter being that all resistance by central banks to print has been removed all over the world. Eventually something will bubble over or a bubble will burst - and eventually they will be unable to contain it. We are living in interesting times.

(minor wordsmithing edits done for clarity)

[beauanderos]

Except for the very astute (most of whom have already gotten involved by now - but a few new stragglers get awakened every year) that's exactly what will eventually happen. Whether this is the "big" one or just an intermediate cycle remains to be seen, but the approach will start the same way. Many of the very rich will get richer over this because most sheep (as well as many of the "intermediate rich") - while they could have jumped in even to buy an ounce or two - have no discernment and so they may lose everything they have left as a result.

Civil unrest will result - already is. The wife and I have been discussing this with our friends. All over the news is the complete lack of tolerance by the left to an opposing (and traditional) view, to the point where they will physically attack out of fury that they aren't agreed with. Generally speaking Neil's advice starts to play here - OPSEC is critical. Be careful who overhears you discussing any related topics, avoid overt displays of comfort (even in the vehicle you drive - older and scratched is better) - though that itself is relative.

As far as PM prices, we're definitely on another near-term bull run but at least part of it is due to the USD dropping, so other factors will have to come into play for this to be sustained. Lacking other factors I would only count on another 15% drop in the USD and gold movement of perhaps 2x that, with silver leading gold by 2x. So a peak change (due to USD-only) to maybe $27 silver and $1700 gold. However, the overall global economy is multiples worse than it was in 2008 - with the only counter being that all resistance by central banks to print has been removed all over the world. Eventually something will bubble over or a bubble will burst - and eventually they will be unable to contain it. We are living in interesting times.

(minor wordsmithing edits done for clarity)

what he said

Ok, so here's a thought. I've been seeing more and more articles lately, some from those respected for their knowledge/opinion relating to precious metals, regarding "resetting"
the value of gold to a much higher number than we're used to. I meant to say normalcy bias, btw, in my previous post. So if, as they allude to, we woke up Monday to anywhere
from $10,000 to $50,000 an ounce gold... with silver swiftly to be pulled much higher in its wake... how many here would be able to continue to buy at those higher levels?
I doubt many... if any. And, among you fellow members, once we have been vindicated for having been "right" all along, and having our day in the sun, that silver and gold were
indeed "priceless"... how many of you will quickly leap upon an opportunity to sell at wildly higher prices (of increasingly worthless fiat)? Just some things to think about.

[68Camaro]

If there is a 10x price rise I believe the main thing we will see is a reset in quantity. Suddenly dimes and 1 and 5 gram bars and 40% halves will be the common man's everyday trading item.

[Thogey]

If there is a 10x price rise I believe the main thing we will see is a reset in quantity. Suddenly dimes and 1 and 5 gram bars and 40% halves will be the common man's everyday trading item.

why

[68Camaro]

If there is a 10x price rise I believe the main thing we will see is a reset in quantity. Suddenly dimes and 1 and 5 gram bars and 40% halves will be the common man's everyday trading item.

why

Presuming the reset didn't occur solely due to massive hyperinflation, people will have no more FRNs than they do now. The majority of the US can't now put together $5000 in savings (and that is getting worse). How many will therefore buy a $10,000 gold ounce, or at $500 silver ounce?

None.

But they will see silver grams at $16 (or dimes at $36, or 5 gram bars at $80) as affordable and a chance to hold on to something permanent in the midst of chaos.

[68Camaro]

Primary small "denomination" silver items and their troy ounce content:

1 gram .999 bar
2.25 gram (90% dime)
4.6 gram (40% half)
5 gram .999 bar
5.625 gram (90% quarter)

[pennypicker]

Presuming the reset didn't occur solely due to massive hyperinflation, people will have no more FRNs than they do now. The majority of the US can't now put together $5000 in savings (and that is getting worse). How many will therefore buy a $10,000 gold ounce, or at $500 silver ounce?

None.

But they will see silver grams at $16 (or dimes at $36, or 5 gram bars at $80) as affordable and a chance to hold on to something permanent in the midst of chaos.

Excellent point and the very reason why I feel the mercury dime will be a great trading tool in such a scenario.

[beauanderos]

A few of those Valcambi 100 gram 10 x 10 breakaway bars (if they can be had at bargain prices) might be worth having on hand.

Someday.

[Chief]

... how many of you will quickly leap upon an opportunity to sell at wildly higher prices (of increasingly worthless fiat)? Just some things to think about.

I would. I'd sell a minority of my stack to pay off my only debt, my mortgage. If the US economic indicators were so fu*ked up, maybe not.
Debt is good in high inflation scenarios, right?

[Recyclersteve]

I can just imagine hearing someone say "I'll give you 10 silver American Eagles for that kidney of yours." To which the other person says "Deal."

[silverflake]

The Mercury dime has always been my favorite U.S. coin. It's beautiful first and foremost but for reasons mentioned above, it has, or will have utility due to its size. As far as trading in or selling any of my silver stack, I have mentioned before in some other thread that the only thing I would trade/sell my silver for (barring a shtf scenario) would be to buy land or pay off debt/mortgage. And even then it would be at a much higher price level than we are at right now.

Interesting observation here...with recent uptick in price of silver, when I go to Provident or APMEX, still plenty of product available at reasonable prices. I only see tight availability when theres a big move down. Makes me believe those who say that bullion dealers pull product from stock in order to wait for higher prices. Oh well. While its available, continue to trade FRNs for silver. Stack.

[pennypicker]

The Mercury dime has always been my favorite U.S. coin. It's beautiful first and foremost but for reasons mentioned above, it has, or will have utility due to its size.

[johnbrickner]

I have found it interesting several upstate NY politicians (running for office) mentioning the desire for gold backed currency similar to the reset describe above. So are they telling us what we want to hear for votes or are they sincere?

Time will tell.

[Cu Penny Hoarder]

If there is a 10x price rise I believe the main thing we will see is a reset in quantity. Suddenly dimes and 1 and 5 gram bars and 40% halves will be the common man's everyday trading item.

I totally agree about pre-'65 dimes being the main trading/bartering item (and possibly war nickels), but I can't see Ag gram bars being used... the public is too ignorant and ill-informed.

[Thogey]

If there is a 10x price rise I believe the main thing we will see is a reset in quantity. Suddenly dimes and 1 and 5 gram bars and 40% halves will be the common man's everyday trading item.

I hope I'm not here to see this.
Do you guys really believe this? Do you think you will be able to survive if this type of scenario develops.
When were little chips of metal the common man's trading item? It was so long ago, life was pretty $hitty.
This Scenario will not happen, and if it does, very few will have the skills to survive it. Even we, the geniuses of RC.
Even the biggest money crises (barring the rocket scientists who run Africa) were solved by a new banking system, new currency, or war.
Storing these pennies was the goddamn dumbest thing I've ever done. They are useless and will remain useless. like every other obsolete coin in human history.

Copper is becoming less important every day.

I still will save with silver and gold. But I intended to die like everyone else in a economic breakdown of this magnitude. I'll be an old man soon and my guns and metal will not save me.

[68Camaro]

If there is a 10x price rise I believe the main thing we will see is a reset in quantity. Suddenly dimes and 1 and 5 gram bars and 40% halves will be the common man's everyday trading item.

I hope I'm not here to see this.
Do you guys really believe this? Do you think you will be able to survive if this type of scenario develops.
When were little chips of metal the common man's trading item? It was so long ago, life was pretty $hitty.
This Scenario will not happen, and if it does, very few will have the skills to survive it. Even we, the geniuses of RC.
Even the biggest money crises (barring the rocket scientists who run Africa) were solved by a new banking system, new currency, or war.
Storing these pennies was the goddamn dumbest thing I've ever done. They are useless and will remain useless. like every other obsolete coin in human history.

Copper is becoming less important every day.

I still will save with silver and gold. But I intended to die like everyone else in a economic breakdown of this magnitude. I'll be an old man soon and my guns and metal will not save me.

There are some negative scenarios that I know I wouldn't survive - others that might be dicey at best even with prepping. But gold and silver don't need to experience any of those to climb 10x within the next 10 years (or maybe even 5). They've already gone up 10x while I've been an adult (even including the recent suppression). Another 10x is easily visible.

As to penny sorting, yeah - in quantity, all in all not the best investment of my time and capital - on the surface. But... it brought me to RC, and led me on to greater and more important connections and knowledge of the markets overall and PMs in general. So in the end I'm happy for it, and even in the cents there have been some valuable lessons learned and some fun had. So no regrets at all as I'm not sure I would have gotten to this place without it.

[68Camaro]

If there is a 10x price rise I believe the main thing we will see is a reset in quantity. Suddenly dimes and 1 and 5 gram bars and 40% halves will be the common man's everyday trading item.

I totally agree about pre-'65 dimes being the main trading/bartering item (and possibly war nickels), but I can't see Ag gram bars being used... the public is too ignorant and ill-informed.

They definitively are that way now. The weird thing about the general population is that they love their comfort and ignorance, but given motivation they can learn a new skill relatively quickly. I would bet they learn the basics within a couple weeks of that need being critical.

[Cu Penny Hoarder]

If there is a 10x price rise I believe the main thing we will see is a reset in quantity. Suddenly dimes and 1 and 5 gram bars and 40% halves will be the common man's everyday trading item.

I hope I'm not here to see this.
Do you guys really believe this? Do you think you will be able to survive if this type of scenario develops.
When were little chips of metal the common man's trading item? It was so long ago, life was pretty $hitty.
This Scenario will not happen, and if it does, very few will have the skills to survive it. Even we, the geniuses of RC.
Even the biggest money crises (barring the rocket scientists who run Africa) were solved by a new banking system, new currency, or war.
Storing these pennies was the goddamn dumbest thing I've ever done. They are useless and will remain useless. like every other obsolete coin in human history.

Copper is becoming less important every day.

I still will save with silver and gold. But I intended to die like everyone else in a economic breakdown of this magnitude. I'll be an old man soon and my guns and metal will not save me.

Good post. I think most people here are PM myopic and don't like to think about a Mad Max scenario. Like you I simply save in Au and Ag and hope for the best. I imagine that the majority of us here are hoping the financial system stays together just enough so PM prices go to the moon, but an apocalyptic economic collapse does not bring us back to the stone age. If Ag ever did reach $500oz, that would probably be a very dangerous world to live in. Like you say, most people are not going to survive, no matter how prepped they are.

Although I don't do it anymore, I don't regret the time I spent mining Cu and searching through a few million pennies to find a few gems. It was fun and I had nothing better to do at the time.