The biggest trade of a lifetime will occur when the value of silver switches from a mere commodity to a high-quality store of value. Actually, it’s not really a trade of a lifetime, but rather a fundamental repricing of real assets verses supposed assets. According to the Investment Company Institute, the supposed value of the…
SILVER INVESTMENT: Switching From A Commodity To High Quality Store Of Value
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19 responses to “SILVER INVESTMENT: Switching From A Commodity To High Quality Store Of Value”
It’s all about Availability. Everything is coming down to Availability.
It’s always been about availability. The paper blizzard has snowed over the truth for awhile. That’s about to melt away soon until it starts to burn at a rapid rate.
Which side are you on ?
Steve,
Off subject, when might the Canadian Royal Mint release the 2015 Maple numbers?
Good Cheer,
Normally at the end of March is when they release their 2015 Annual Report.
steve
Gullibility, it comes down to that and it’s supply is shrinking. TPTB are already running for cover, soon they’ll be running to whatever foreign sanctuary they’ve prepared for themselves.
There isn’t a unlimited supply of new fools or new gullible people to put ever-more capital into the system. A few more percent each year with with no more left for excessive consumerism and paper investment…a few more that are wising up and leaving the party…without ever more coming from people it has to come from the central banks and governments. The monster has to be fed…and they are running out of feed. The food is unbacked currency creation out of thin air, and debt.
Steve, you do a good job at demonstrating the skyrocketing demand for coins and bars, even as the price of silver has been falling. I believe this will be the primary reason we see MUCH higher silver prices.
Mike
And with investor demand increasing as the price in fiat stagnates or drops, imagine the increase in demand when the price goes up. I guess TPTB are hoping they can keep prices down.
How issuing debt undervalues precious resources and what that means for the future price, simply stated:
1. Society requires, say, 10 units of oil per year.
2. Production of oil requires, say, 2 units. All other activity makes up the other 8 units.
3. If oil production becomes more difficult and requires 1 additional unit of oil to maintain a constant level of production, then 1 unit of energy must be taken from other activity.
4. But in the 1970s, after the US peaked in oil production, this is not what happened. Instead, the planners issued more debt to get more expensive oil, thereby essentially undervaluing oil. (Should be worth 30% of total wealth instead of the pretense of 20%.)
5. Therefore when debt is written down and currencies realigned, the true, much higher value of oil (and other precious commodities) relative to other things as expressed in money (price) will be realized.
Given oil must be secured before it’s drilled, the cost of oil production should factor in the maintenance costs of a military in which case I’m sure you’re looking at more like 4/10 for energy production.
this assumes the debt will be written down; the holders of the debt don’t want a haircut-look at Greece.
we have municipalities in USA paying 11% on debt….the holders don’t want that written down either
I am still waiting to find out exactly how anyone believes that the TPTB will relinquish control, they have no reason to do so; in fact the opposite is true. they can and will do (and have done) ….*anything*….. to keep control….Gahddafi’s gold dinar for instance…..
Congratulations Steve on this article making to a banner piece on ZeroHedge again!
Some news for all; The BP Prudhoe Bay Royalty Trust (BPT) operated by the Alaskan division of oil giant British Petroleum, just announced a 65% drop in it’s economic oil reserves.
This will foretell the tightening of the credit strings to the entire energy sector, by all concerned who have a stake in loans to the sector. Watch for shale fracking companies to start dropping like flies!
Some background.
According to the U.S. Energy Information Administration (EIA) the Prudhoe Bay North Slope oil field produced nearly 2 million barrels per day by 1988 – almost as much oil as the entire state of Texas.
In 2013 the rate of production had fallen to a little more than 479,000 barrels per day – just 5% of U.S. production. With the rapid failing of shale oil production plays, the cost of future energy needs will skyrocket. In the mean time, many small and mid sized oil companies will end up in bankruptcy, weighed under by their heavily leveraged loan obligations.
Very positive for not only the price of silver, but for gold also.
OutLookingIn,
Thanks for the Kudos. Took a while to get on Zerohedge, but now more of my articles will be published on there. Very interesting about the BP Prudhoe Bay Trust. I gather the low oil price is not good for reserves. I see many shale oil companies doing the same thing 2H 2016.
steve
21% temporary drop of silver production in 2016 in KGHM
http://biznes.onet.pl/gielda/wiadomosci/kghm-mial-5-01-mld-zl-skonsolidowanej-straty-netto-w-2015-r/26z449
“[…] W związku z planowanym, czteromiesięcznym postojem w HM Głogów I związanym ze zmianą technologii z pieca szybowego na piec zawiesinowy, spółka zakłada zmniejszenie produkcji miedzi elektrolitycznej w 2016 r. o 9 proc. (tj. do poziomu 525,4 tys. t) i srebra o 21 proc. (tj. do poziomu 1010 t). […]”
SilverSeeker,
Thanks… I was just looking at KGHM Polska’s Annual Report and saw the reduction. They actually had growth of silver production in 2015 over 2014… but a tad, but yes, 2016 will be down 21% from 1,283 mt in 2015. Will put out an article on this. Thanks again.
steve
For KGHM due to general overhaul of furnaces every few years look at copper and silver concentrate production, as it is continous process and comparable between periods, not like casting bars interupted every few years for better part of the year. Nonetheless concetrations of copper and silver in the ore are falling for them too, which means more ore shuffled to produce the same (or less) amount of copper and silver.
Steve, are you able to present data also for other top mining companies in your next article? To compare predictions in silver output for those companies that produce a lot of silver. It will be very interesting to see such figures.
Silverseeker,
One more thing. KGHM Polska will be down 21% in metallic silver production, but this is due to the shutting down of one of their smelters for upgrade. Their actual silver production from concentrate will not be down all that much. Now, if copper prices continue to decline… then yes, we could see a fall in their silver production.
steve
Regarding Bakken production and proposed additional pipeline capacity, consider this:
Dakota Access Pipeline – capacity 450kb/d t0 570kb/d – Target operational in 2017?
http://dakotaaccessfacts.com/
Sandpiper Pipeline – capacity 230kb/d – Target operational in 2019
http://www.enbridge.com/projects-and-infrastructure/projects/sandpiper-pipeline-project
Both Energy Transfer and Enbridge have already bought the pipe and pumps and are awaiting regulatory approval.
Will there be sufficient crude to transport once these pipelines are built?
This could be a historical repeat. The North Dakota Portal Pipeline was built in the 1970s but operated below capacity for 30 to 40 years until the last 10 years.