Submitted by SD Contributor SRSrocco:
The world doesn’t yet realize it, but the forces coming down on the gold and silver markets are truly unbelievable. These forces can’t be comprehended by any type of charting.
Presently, much of the focus in the gold and silver community is in the MANIPULATION & FINANCIAL SYSTEM. However the physical forces coming down on the market are MUCH GREATER!!
NO ONE HAS A CLUE HOW TO PRICE GOLD AND SILVER IN A PEAK ENERGY ENVIRONMENT….ZIP…NADA….ZILCH!
According to the 2012 World Silver Survey, primary silver production declined compared to 2010:
Here we can see that primary silver production fell from 30% in 2010 to only 29% in 2011…this was due to a few big primary silver mines ore grades fallen substantially. According to the 2012 World Silver Survey:
Another significant factor pushing up costs upwards in 2011 was the lower grade of ore processed. Among the larger mines, grades fell significantly at Arcata (-29%), Alamo Dorado (-29%), Fresnillo (-16%) and Pallancata (-13%)
These FOUR mines belong to Hochschild Mining in Peru, Pan American Silver and Fresnillo. I have taken their data from their annual reports to show how much this primary silver decline has come from just these 4 mines:
And here is Fresnillo shown in a 7 year chart:
This turns out to be an average 5% annual decline of silver ore grades at Fresnillo. Furthermore, in the first half of 2012, silver production at Fresnillo has done the following:
Fresnillo 1H 2011 = 16.9 million oz
Fresnillo 1H 2012 = 13.7 million oz
This is a staggering 21% decline in silver production in just 1 year. Again, this is just from Fresnillo Plc’s Fresnillo mine and not its new Saucito mine. This would probably put Frenillo’s overall ore grade in 2012 to somewhere between 8-9 oz per tonne.
FOLKS… no one in the mining community is really paying attention to this stuff. Let me tell you, these physical forces coming down on the future silver supply are really going to make the price of silver head up to levels no one can imagine.
The analysts think we are going to see much higher silver production in the next 10 years…. I believe we will peak here very shortly. As I stated in my previous post, silver ore grades are falling faster than the top gold miners.
THIS HAS NOTHING TO DO WITH THE SUPPOSED NOTION THAT SILVER MINERS ARE MINING DIFFERENT ORE GRADES FOR PROFITABILITY….that is complete rubbish when we look at the facts.
I am currently working on another article to prove my position in this matter. For miners to change mining ore grades for profitability…. they must mine HIGH ORE GRADES when the price of silver is low, and mine LOW ORE GRADES when the price of silver is high. I can assure you all, this is not taking place.
Lastly, 71% of silver came as a by-product of base metal and gold mining in 2011. If we are going to rely on future base metal production for the lions share of silver production… we are in a world of hurt. If you think gold and silver ore grades are falling…. base metal mines are falling just as well.
I just can’t tell you enough just how much these PHYSICAL FORCES coming down on the market are going to make the price of gold and silver today look really silly compared to the prices or values in the future
BY THE WAY….DID ANYONE READ THIS FROM JIM WILLIE’S NEWEST ARTICLE:
The Jackass forecast is that from the global mine output factor alone, the physical precious metal prices will rise, while the mining stock share prices will fall. Output risk joins jurisdiction risk and dilution risk for the mining companies. For every mining stock winner, expect 20 to 30 losers.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_silv.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_gold.gif)
Thanks for yet another great post SRSR.
The silver price is not only ridiculous, it is some kind of mass delusion or mass insanity. It just goes to show you the power of propaganda.
Ruh-roh. FB is tanking, down 5% today. LOL
WE WERE READY! AND THAT HAD TO HURT! WE GOT THE CARTELS NUMBER!
The cartel getting all weewee’d up cuz they have to eat their peas.
I hope next week they have to eat their carrots, too.
I will repeat my past position. The manipulation does not end until the silver prices rises in dollars per day instead of cents. Ever since 1980 there has NEVER been a $2.00 gain in the silver price in a 24 hour period.
4 LARGE SILVER MINERS ORE GRADES FALL 21% 2011
Do you remember I stated that silver ore grades were falling more than gold? In 2011, the top 8 gold miners ore grades fell about 5%. Here we see that these large 4 silver miners fell 21%. This is not a weighted average as I did not go through all the effort to figure it out but here are the stats from precious post:
Arcata = -29%
Alamo Dorado = -29%
Fresnillo = -16%
Pallanacata = -13%
STANDARD AVERAGE = 21%
If I did take the time to do a weighted average, Fresnillo would pull the overall average down due to the fact that it produced 38 million oz in 2011. That being said, we can safely estimate that the average would be 17-18% at least.
THUS…..THIS IS 3 TIMES HIGHER THAN THE TOP GOLD MINERS
Furthermore, if these miners were changing their mining operations to take advantage of the “SO-CALLED PROFITABILITY ORE GRADE TECHNIQUE”, they would have mined higher ore grades this first half of 2012 when the price of silver is at least $10 lower than it was in the first half of 2011. Folks… all of these mines have shown even lower ore grades the first 6 months of 2012.
For the few who still want to stick to this belief due to the fact their are a handful of small miners attempting this on a tiny scale… IT IS ONLY A PATHETIC FRACTION OF THE OVERALL MARKET. Have I made my point??
@SRSrocco Your commentary is far better than someone predicting that silver is going to hit $1,000/oz soon. You are giving the solid facts that everyone needs to know so we can sleep at night understanding we are doing the right thing by stacking metals. I personally very much appreciate intuitive insight like this in the metals market. This tells me those ASEs are going to get very expensive very soon.
My understanding is we import all the silver to make the ASEs and physical pricing is going to overrun paper pricing in the not to distant future. We also have to expect the Silver to Gold ratio to become much more realistic because of the true scarcity of silver. That ratio is key in achieving the true value of silver bullion and other silver coinage. We are all waiting patiently for the truth to arrive but I sure would like to skip that Biblical Suffering part if that is possible.
The first government to institute a fair and real currency is going to be a big winner if they do it soon. They will have to shut down the printing presses and allow the non-manipulated market determine fair value. I can only hope it happens sooner rather than later. I also wouldn’t mind seeing those who have helped smash the middle class of all countries answer for their actions. Everyone needs a good dose of the truth to get their thoughts in a proper perspective.
Thank you SRSrocco!
This aspect does not take into account the imaginary silver backing the SLV ETF, and supposedly held in allocated accounts, and the “reported” inventory at the bullion houses. Add these discoveries to the reduced supply from the mines, and the price of physical silver from the dealers will spike in hours.
Gina From the realiable sources like Harvey O, Willie and Sinclair, the con:wis is that the SLV is largely depleted of silver. Owners will get a really nasty surprise when they call for their silver. Ditto for GLD. Paulson and Soros probably know something about this situation and may already be looting GLD It would be a real laugher if these two mega investors were snookered when GLD goes bust.
A dream would come true if those 2 billionaire investors lost any chance to get their physical. I shouldn’t say that but they have hurt so many people you cannot even begin to put a number on their damage. If you don’t hold it you don’t own it.
i don’t think we’ve seen peak silver, but I do think we’ve seen peak undervaluation. As the value is realized the demand will rise to a truly unbelieveable level, at which point we may see all environmental protections cast aside. If silver reached it’s true value, you may see mom and pop silver miners reappear. Even in places like the U.S. which may cause production to rise above where we are now, but it won’t be nearly as cheap in dollar terms.
Very informative article SRSrocco, 2 thumbs up! :D
“NO ONE HAS A CLUE HOW TO PRICE GOLD AND SILVER IN A PEAK ENERGY ENVIRONMENT….ZIP…NADA….ZILCH!.
Great point @SRSrocco. Most silver is mined as a byproduct metal. There are very few pure silver mines. As rising fuel prices cause the economy to slow that drives down the need of base metals and thus drives down the amount mined silver in an environment where all the low hanging silver fruit has already been picked.
The value of the silver in an iPhone is negligible. Apple will be a buyer of silver at any price because they have to have it. Even a 10X move in silver does not appreciably affect the price of a phone. Same is true for most electronics. There will always be a buyer of silver at any price. That’s unique to silver(and uranium). Usually, rising prices dampen demand. Silver is not as sensitive as other commodities to the typical supply/demand economics. And that doesn’t even take into account the monetary component of silver.
Silver in the $30′s will be proven to be the buy of a lifetime.
Savesilver…. Yes, it is true that PEAK SILVER is not yet here… but I believe we are not far from it. Furthermore, the Net Oil Exports have already peaked and will start heading down exponentially in the next several years.
I believe we are going to see PEAK TOTAL OIL LIQUIDS BY 2013-2014, but the decline in net oil exports will make the ramifications of peak oil much greater
UGLYDOG….exactly. I wrote about this in my recent article WHY IS THE FUTURE SUPPLY OF SILVER MORE AT RISK THAN GOLD. The mining industry consumes approximately 10% of the worlds energy. If ore grades continue to decline, mining companies are going to have to consume more diesel-fuel to produce the same amount of metal… forget about growing production. When liquid energy supplies start declining, so will the GLOBAL GDP… and the need for base metals.
This is a very rewarding scenario for silver.
Steve I think it was you who posted the chart showing the production curve of silver, its demand curve and the deficit—a curve that is rising at a double digit rate. Somewhere silver is being hauled out of vaults, taken from storage or stolen from SLV.
There was a post late last year that asked the question. What will happen to the price of silver when the last ounce is sold. It would be like the last Beanie Baby sold at WalMart.
If there were 1,000 of these toys, imagine the price someone wold pay if they were the 1,001 buyer and the inventory was gone. You Tube videos of WalMart riot and flash mobs kind of outlines what can happen when the store runs out of cheap Chinese junk—uh I mean silver.
FB price down today. FACIABOOK
“From the realiable sources like Harvey O, Willie and Sinclair, the con:wis is that the SLV is largely depleted of silver. Owners will get a really nasty surprise when they call for their silver. Ditto for GLD.”
Well, that’s just it, AG. If you read the prospectus docs for SLV and GLD, tangled and obfuscated as they are, you discover that the really big investors CAN get silver from the SLV and gold from the GLD. You and I cannot, however. When we sell shares, we MUST settle in cash. BIG share owners (think in terms of millions of shares) can get the metals, if they so choose. IMHO, both the SLV and the GLD are scams for all but the very richest of investors, like Soros or Paulson. In a financial crash situation, the small investors will be banging on the front doors to get in while the BIG BOYS will be at the loading docks in back trucking away every last grain of PMs from the vaults of these ETFs. Like locusts descending upon fertile fields, they will leave nothing of value in their wake. :-(
Knowing that the prospectus states that small retail investors do not have access to the real metal, just its cash equivalent, I’d say that the retail investor will be banging on the door to get out.
Ed, That was what I was trying to remember about SLV and GLD. If you own certain amount, read large numbers of shares, you can call for the physical metal.
You know something Ed? It just occured to me—I think QE3 is a lot of hooey. We are waiting for it like some FIAT Godot. QE 3 is like a chimera. While we all wait for QE 3 to boost the stock market, pump up gold and silver and pick the GDP off the floor of the boxing ring, Bernanke knows it’s false hope. He’s playing a nasty waiting game knowing he doesn’t have the mojo any more. Out of ammo and ideas, he can talk a line of BS that wold make Nixon blush. It’s much more likely today that the basic laws of supply and demand will come in from right field and deal a hay maker to the prices of gold and silver, knocking them to moon, Alice.
An article recently noted that every dollar of Keynesian stimulus resulted in 6 cents of GDP growth. QE 3 won’t bail out anything. QE 2 did nothing but give the Middle East a nasty rash of inflation, a bounce in the equities and the ECB about 2-3 trillion to recapitalize the central and private banks. That was like watering the desert and expecting corn.
The problem as I see is it’s the velocity of money. It’s at a 100 year low, even lower that in the Great Depression. Frankly, I am not sure what will boost that velocity as my faint recollection of economics and the velocity of money involved the price of beer and smokes, blurred by same. Banks and corporations, individuals and pension plans have trillions in cash, earning ZIRP and afraid to move, worried that the next investment will go bust or the funds be stolen ala MFG while they try to tell everyone that everything is fine.
I’ve taken everything out of the casino FYI. The velocity of my money is zero. The Fourth Law of Thermodynamics states precious metals are inert and cannot move without application of an external force equal to the squared sum of their inertial resistance. Silver and gold have no speed of their own except that which I give it if I decide to take my phyzz for a country ride on a Sunday afternoon. And with that I think I’ll have a tall glass of single malt and watch that new monkey movie. I need some intelligent discourse after having watched the RNC love fest.
1. Soros 2. Paulson 3. Sprott 4. China 5. 3/4 of 1% who own or purchased Precious Metals.
You better believe me when, I state this?! Investors and or savers are requesting physical delivery of their precious metals and Jp Morgan and HSBC are getting hammered!
Now my contact at one of the bullion dealers, i have dealt with in the past before coming to SD page. When I requested physical delivery of my metals. The individual, I have always dealt with started to stutter. Now I have purchased from this business for a long time and never had this individual stutter when we speaking telephonically.
Speaking to an individual at one of many Metals dealers, I deal with and he stated the following. “I don’t blame you for asking for your metals. You are not the only one asking for metals. It seems that everyone is asking or inquiring about physical delivery of their metals and there is a panic by the banks.
Even if you have your metals in a vault! Get it out! SD revealed not to long ago that we are able to hold onto our IRA Metals. Just store them separately from your other assets and mark it IRA. Keep your metals with the correct invoice and if your asked to file a 1099. We are holding our IRA in fear of corporate theft and show the info from the Doc!! Clearly in Red text!
Lastly lets not forget Buffet releasing his exposure to 8 trillion or billion dollars in derivatives insurance to the banks! Clearly the Big Boys know some serious sh*t is going down! Especially Morgan Stanley!
it’s already been noted by several sources that QE3, QE4, etc. have less and less effect on the economy. Usually the first 2 QE’s historically have the most affect and chances of pulling the economy out of the recession / depression.
However, time grows short for the FED to announce QE3 if they plan to help out Obama’s re-election campaign. Unless they really don’t care or the insider polls show he’s in safe territory for a 2nd term.
Oh, that darn October Surprise continues to get closer and closer and closer.
Until then, get yourself some Phyzzzzzzzz!!
My respect for your work, a great post. All The best to you.
I’m wondering if it’s related to the thorium problem. If it is, then LFTRs may be a solution.
10-4 Swissie we are all on the same team. I have no completely no knowledge of thorium as it related to nuclear power.
tell us more.
Net Ranger Self Directer IRA’s work and I have done the due diligence on them. Doc has the intel to set it up and remove your IRA from the casino
AGX already done. Mahalo!
Mahalo! Doc for the very informative postings and or readings.
AGXIIK
I came across this and just started my research into the topic
The thing about thorium is that it is very plentiful and it’s how the earth generates its energy.
As it pertains to mining, thorium is always found with heavy earth metals. Specifically the neodymium used in the huge wind turbines. The reason why we don’t mine neodimium in the states is because there’s too much thorium to deal with. But just 5000 tons of it can power the globe for a year.
LFTR infographic http://www.wellhome.com/blog/wp-content/uploads/2010/12/Final-Thorium.png
Currently, silver is a byproduct, and so is thorium. They are both very undervalued. Thorium decay also has 2 very specific and valuable isotypes. 1) bismuth 213 which is an alpha decay that when attached to an antibody, can target and kill leukemia and pancreatic cancer. 2) plutonium 238 which is used in radioactive thermoelectric generators. This is important because this is the ONLY space fuel that can reach beyond our solar system. And we’re out. NASA is dying to get more.
The more I read about it, the more it’s a no brainer. If oil and nat gas becomes too expensive and/or rare, the only option then is to go nuclear via LFTR.
The LFTR is not under pressure, therefore cannot explode and is a dynamically static system. ie, homeostatic. The main take away is that LFTR inherently has passive safety, not active safety which requires coolant to be continually supplied. LFTR doesn’t need any of that.
Also, LFTR is 100 time smaller. Regular nuclear power is 200,000 – 300,000 square feet. LFTR is 2000-3000 sqft. It’s only a size of an average house AND the radioactive levels are really small. Building a LFTR at a mining site is very possible.
There are just so many good thing about LFTR that it’s practically a no brainer.
The reason why it’s not being employed in the US now is of course, the politics. China is building one RIGHT NOW.
Just as a comparison, current nuclear reactors are 0.7% – 0.5% efficient. LFTR is 99% efficient.
The more I read about it, the more I see the tech as inevitable and as a realistic replacement to oil/natgas/coal. The end of war. This is a tech for freedom, if I ever saw one.
I’m also new to LFTR, but I strongly recommend people to look into it.
Durentu That was some good information on Thorium If it wasnt for the nuclear arms race we would probably be doing some good things with Thorium reactors. Of course, that would be too simple since war is very profitable for TPTB. Fortunately these systems are pretty easy for the average person to understand. If someone, an NGO, a Bill Gates sort could do the world some good by promoting this reactor technology in lesser developed countries. Cheap power advances people faster than anything I can think of. There was an article I read recently that outlined the benefits to the average person when incandescent lights replaced gas that replaced oil that replaced whale oil that replaced candles. Candles were really expensive for the average person. Taking the price of a light bulb and the cost to operate it in watts, candles cost about 6 orders of magnitude more than the cost of electricity or a million times as much per candle power over an average 100 watt light bulb. Let there be light
AGXIIK
Yeah. Currently, the energy lobby is making way too much money just the way it is. Actually no, it’s essentially political power, not money. Any attempt to change it is met with huge opposition at the suffering of the average person. No free market in energy.
Also, the uranium that is being used in reactors is almost as rare as platinum. Metaphorically, we are burning platinum for our nuclear energy. Just bizarre.
Any truth, any honesty, any form of reason that enters the current system will threaten to collapse it. Just as silver will bring down the banks, thorium will collapse the energy cartel. And you know what?… china is after both silver and thorium. What hope does america have if not to wipe away the bullshit?… idk …
“You know something Ed? It just occured to me—I think QE3 is a lot of hooey. We are waiting for it like some FIAT Godot. QE 3 is like a chimera. While we all wait for QE 3 to boost the stock market, pump up gold and silver and pick the GDP off the floor of the boxing ring, Bernanke knows it’s false hope.”
Agreed, AG. None of the QEs did anything for the economy. Stock prices were inflated, the Fed’s balance sheet was enlarged, but not much else happened. Bernanke is like a magician who waves one hand to distract the audience while actually doing something with his other hand. When QE is failing just jawbone it to create some interest in the economy that really isn’t there. :-/
“Out of ammo and ideas, he can talk a line of BS that wold make Nixon blush.”
Indeed he can. It is no accident of fate that Bernanke’s 1st two initials are B.S.
“An article recently noted that every dollar of Keynesian stimulus resulted in 6 cents of GDP growth.”
None of us here are a bit surprised by this. Keynesian economics is an utter failure. A sane person would look at its cost vs. its value, shudder, and move on. There is no need to continue to perform these failed socialistic experiments. We KNOW that they do not work and that it is not a function of who, what, when, or where. It’s a plain old lousy idea.
“The problem as I see is it’s the velocity of money. It’s at a 100 year low, even lower that in the Great Depression.”
Between the Fed and the gov, an economic environment has been created wherein everyone with sense is ducking and covering. We simply do not know what other screw-ups are coming our way, so people are not spending any money that they do not have to spend. It is no wonder whatever that businesses concerned with surviving are not hiring.
“Banks and corporations, individuals and pension plans have trillions in cash, earning ZIRP and afraid to move, worried that the next investment will go bust or the funds be stolen ala MFG while they try to tell everyone that everything is fine.”
The US and much of the rest of the world as well is awash in cheap / nearly free money. This was supposed to have caused lots of spending, investing, and economic activity. That, in turn, was to create a lot of new jobs. Well, it has not and the reason why it has not is that people are afraid of the future. Things seem to be going downhill and optimism is at a long-time low. It is not that we do not have money. It is that no one wants to spend with so many possible disasters impending. Until the gov can find a way to inspire people, get the crushing weight of regulations off of us, and allow people to use their inherent creativity, we won’t be seeing any improvement in the US economy, no matter how many lies are told that all is well, that we are recovering from the 2008-09 recession, that inflation is low, and that unemployment is only 8.x%. Many of us are not geniuses but then neither are we fools. The Fed and the gov are treating us as if we were idiots and it was old soon after they started doing it.
“I’ve taken everything out of the casino FYI.”
Yes, I know. I read all of your posts. Kudos for having the guts to take control of your IRA and getting it into PMs that you hold.
I’d like to do this as well but am probably going to go about it in a different way. I will use a series of withdrawals that help minimize taxes while still cutting the cord between me and the gov via my IRA.
“And with that I think I’ll have a tall glass of single malt and watch that new monkey movie. I need some intelligent discourse after having watched the RNC love fest.”
CLINK! I’ll drink to that. Might even crack open the bottle of Tamdhu hiding in the back of my bar cupboard. :-)
The COMEX will announce “force majeure” and default after market close. SLV, GLD and COMEX futures holders will receive that day’s closing metals prices before this announcement. The next trading day, gold and silver will skyrocket at the open and may close multilples higher and the world will be at awe at their stratospheric ascent. 99.5% of SLV and GLD holders will celebrate about how much money they have made and how rich they are now but will have not idea that they will be holding SLV and GLD shares that have been locked in at closing market prices right before the COMEX default. The only people that will benefit from this are the massive swarm of lawyers that will descend on this tragedy like locusts in a plague and of course The Morgue who never had any physical metals to back SLV and relied on looted allocated and rehypothecated metals from the Bank of England and London Bullion Market Association. Image this nightmare turning into reality in the near future.
I almost never hear information about copper. It’s nice to know for a copper stacker that copper’s global production is also going down like silver. The real price of silver will appear again because it is getting harder for the cartel to crush silver’s price and it takes them more paper silver to do it.