INTERVIEW: The Inevitable Rise in Silver, It’s the Energy Cost

I sat down with Dan at to discuss the silver market and how energy will impact the precious metals and the overall economy.  There is a big misconception in the media that shale oil & gas will be the new savior and long term energy supply that will make the U.S. energy independent.

Even though shale oil from the Bakken and other fields in the U.S. has brought on a lot of supply in the past several years, it’s not sustainable in the long term.  Energy is the key to understanding why the precious metals will be some of the best “Stores of Wealth” and investments in the future.

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16 Comments on "INTERVIEW: The Inevitable Rise in Silver, It’s the Energy Cost"

  1. Adolf Hitler | July 29, 2013 at 5:27 pm |

    As far as I know, labour is still the biggest component of mining gold and silver. Focusing on energy cost is a bit too “long-term” in my opinion.

    • Adolf… actually that is not the case when you consider the “whole energy matrix”. Energy is the number one cost for the majority gold miners. For instance GFMS stated that the largest increase in cash cost from 2011 to 2012 was declining ore grades… which comes from increased energy costs.

      While it is true that the increase in labour is higher than the increase in energy according to the cash cost chart, I am not just talking about oil, natural gas or coal for instance.

      Furthermore, if you listened to the interview you would have heard where I say:


      Human labor is energy… it’s just in the form of human energy rather than horsepower from a machine. Also, when gold ore grades were 25-30 g/t back in the 1880’s, all you needed was human and animal labor to extract that high-quality gold. Now that the average yields are now below 2 g/t, you can’t go back to mining with human and animal labor… its not cost effective and it would take a great deal of human labor to produce only a tenth of what earth moving machines could do.

      In addition, any material that a mining company consumes such as lime, grinding material, cyanide and etc receives its value in price from all the stages and forms of energy its is production and distribution. The majority cost of producing lime comes from all the energy that it took to extract, transport and deliver it to the mine.

      Hardly anyone understands the TOTAL ENERGY MATRIX.

      Lastly, the energy situation will become more severe much quikcer than most realize. So, in my view… energy is the most important factor…. in all forms and in all stages.


  2. Alasdair Macleod’s claim that boe leased out 1300 tons of gold is interesting. his surmise is based on discrepancy in the numbers of 400 oz gold bars in BOE’s custody reported for 2012 and june 2013.
    more than 100,000 400-oz gold bars went missing.

    so BOE has sold its own gold under Brown and now has started to sell other ppl’s gold.

    if they do have 400,000 remaining 400-oz gold bars in custody, i’d guess that includes PBOC’s gold.

  3. there’s no indication/rumor anywhere in china that china has a secret gold vault that stores 4000-5000 tons of gold.

  4. Very informative interview, thanks SRS!

  5. silver inventory at shanghai futures exchange is down to 554 tons.

    • judejin… wow, I checked it yesterday and it was down to 570+, looks like another big withdrawal on the 30th.


  6. solar installation worldwide this year is 35GW, that’s 3000 tons of silver demand.

    i believe we’ll see lower and lower silver inventory at shanghai futures exchange.

    the only thing that’s puzzling me is SLV inventory is not going down.

    a lot of funds reduced commodities exposure. but the manipulators are not taking advantage of this to deplete SLV inventory like what they do with GLD. this means physical silver is not as tight as physical gold. but this is contrary to what we see at shanghai futures exchange.

    really strange.

  7. Peak silver is an interesting concept. Between higher energy prices & less available energy, low physical prices, massive increases in industrial use [solar panels in China, Japan, etc.], and increasing investment purchases into strong hands, available supply going forward will be interesting to watch.

    Imagine if a computer giant like Apple [or other electronics manufacturers] doesn’t get their regular silver shipment they expected and decides to access their massive cash reserves to buy up a huge quantity for their future needs.

  8. Great interview Steve I’ve been waiting several years for you to take that next step in media.. I’ve been looking at thorium reactor tech and companies that are involved in that field but my feelings are mixed.. Just wondering if you had any opinion on that subject?? Because no matter what I tell myself or think that little EROEI voice says “no” it’s to late or not enough.. I would appreciate any insight thanks

    • Adam…. thanks for the reply. Yeah, I have received a lot of emails telling me about how thorium will save the day. However, there are still problems with thorium. According to this article:

      Although thorium has been advocated as a potential ‘magic bullet’ due to wide availability and potentially higher EROI, according to the Institute for Energy and Environmental Research in Washington DC thorium still requires uranium to “kick-start” a nuclear chain reaction. Additionally, despite decades of research, no one has yet developed a commercially-viable thorium breeder fuel cycle, not even in India. The other problem is simply that the mining, transporting, refining, milling, waste reprocessing and construction processes of nuclear power are still heavily dependent on fossil fuels. Indeed, an extensive study published in the International Journal of Nuclear Governance, Economy and Ecology finds that nuclear power is simply not efficient enough to replace fossil fuels in any case, requiring nuclear production to increase by 10.5 per cent every year from 2010 to 2050 – an “unsustainable prospect.”

      Nuclear power is a disaster. Fukushmia in Japan is disaster to this day and is still spewing large amounts of radiation. Furthermore, James Dines is still a uranium bug. He saids that Nuclear can be safe, its just humans that make the mistakes. Isn’t it always?

      Adam, unfortunately we have past the point of no return. That is why I believe the precious metals will be an excellent store of value compared to most everything else.


      • Thank you for your insight I was basically having the same thoughts.. The problem is I have a kid on the way and the in-laws really don’t understand any of this material or really don’t fathom what it means in the years and decades to come.. I’m a stacker but they believe in buying stocks so I’ve been trying to find a sector or specific stock for them to invest in instead of cheap chinese crap.. I was thinking railroads or something that would maybe do ok in this period.. What do you think??

  9. silver inventory at shanghai futures exchange is down to 536 tons! amazing. another half million ounces gone!

    next week under 500 tons?

  10. comex gold dec contract is already lower than spot.
    comex gold oct contract’s offer is lower than aug contract’s offer and oct’s bid is lower than aug’s big.

  11. The impending financial collapse is unfortunately (or fortunately) nothing more than a precursor to the real collapse. Ultimately life is nothing more than a competition for energy. Whether it be in the form of food or clothing or oil. It all requires energy or delivers net energy. The real collapse will start will oil. At this point terms like financial collape and great depression will seem quaint and comical. Think of it this way. When you boil down the “capitalist” economic model to it’s essence you are left with a simple formula. Infinite growth with finite resources. A clear understanding of this should help you realise that all this crap you see in the media abouit US economic policy and shale oil and renewable energy and Fannie Mae and QE blah blah blah is all well, crap. The impending economic collapse is just the sneeze. What’s coming behind it is the Black death. Think system reset back to the stone age and you are on the right track. Our Governments have no solutions because in a world of 7 Billion people, there are no solutions! Shale oil and renewables etc. serve only one purpose. To help you sleep at night.

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