Silver will go up a few dollars then the botom will drop out.

[Roadquest]

Silver will go up a few dollars. Then the bottom will drop out.
My coin shop sells to me at $3.00 over spot. I will yet buy a little.
But, will wait a couple of weeks. For the $14.00 to $15,00 dollar
range. And then buy heavy.

Roadquest

 

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[Marchas45]

Good luck Roadquest I respect your call but for me Silver is heading back up with a few little hiccups and I'm stacking as much as I can before I reach my stop buying price of $35.50 the last resistance point. But what the hell I may be wrong also but the fundamentals are telling me otherwise. Keep Stacking

 

[TreasurePirate69]

I'm one of the few guys out here who believes the price of silver should be in the $15-$16 range instead of at $100+. It will be interesting to see how this current run plays out. I wouldn't be surprised at all to see that you are correct in your prediction. However, it wouldn't surprise me either if this run lasts a little while (couple of months). There is more fear right now in the market with the whole debt debate, Fed tapering, and changing of the guard at the Fed. There has also been some noise out of China and other foreign markets. So things are starting to feel a little dicey again. There are just a lot of little things adding up right now that need to be taken care of before the price will likely come back down. If any of these fears come to fruition then it could send the price much higher.

All just my opinion of course.

 

[mytimetoshine]

I'm one of the few guys out here who believes the price of silver should be in the $15-$16 range instead of at $100+. It will be interesting to see how this current run plays out. I wouldn't be surprised at all to see that you are correct in your prediction. However, it wouldn't surprise me either if this run lasts a little while (couple of months). There is more fear right now in the market with the whole debt debate, Fed tapering, and changing of the guard at the Fed. There has also been some noise out of China and other foreign markets. So things are starting to feel a little dicey again. There are just a lot of little things adding up right now that need to be taken care of before the price will likely come back down. If any of these fears come to fruition then it could send the price much higher.

All just my opinion of course.

Why would silver end up being worth less then the cost to mine it from the earth? Doesnt make any sense to me...

 

[TreasurePirate69]

Why would silver end up being worth less then the cost to mine it from the earth? Doesnt make any sense to me...

I've covered this before but the cost to mine silver and gold is dependent upon the price of silver and gold. So when the price goes down, so does the average cost to mine it. Seems counterintuitive but that's exactly what happens. To make a long story short, the miners essentially need to be profitable so they cut costs and close questionable mines in order to achieve a balance. Nature always seems to balance out. Of course, there is a point where they simply can't cut costs anymore and this ends up being the effective selling price. But I don't think we are there yet. Some may disagree with me on where the bottom is.

Just remember, less than eight years ago the price of silver was less than $10. You can't tell me that the silver mines weren't profitable at that point. So unless the cost to mine silver has more than doubled in eight years, I think the miners would somehow figure out how to be profitable at $16. But obviously I could be very wrong. The real question is what is this bottom number? It could be $10, $16, $20, or something else. The big problem is that you can't easily use past average mining costs because those costs are dependent upon the spot price at that time.

 

[jim4silver]

I've covered this before but the cost to mine silver and gold is dependent upon the price of silver and gold. So when the price goes down, so does the average cost to mine it. Seems counterintuitive but that's exactly what happens. To make a long story short, the miners essentially need to be profitable so they cut costs and close questionable mines in order to achieve a balance. Nature always seems to balance out. Of course, there is a point where they simply can't cut costs anymore and this ends up being the effective selling price. But I don't think we are there yet. Some may disagree with me on where the bottom is.

Just remember, less than eight years ago the price of silver was less than $10. You can't tell me that the silver mines weren't profitable at that point. So unless the cost to mine silver has more than doubled in eight years, I think the miners would somehow figure out how to be profitable at $16. But obviously I could be very wrong. The real question is what is this bottom number? It could be $10, $16, $20, or something else. The big problem is that you can't easily use past average mining costs because those costs are dependent upon the spot price at that time.

This explanation may seem "counter intuitive" because it is not logical. Yes, companies have ways to fire employees and shutter mines (like many did throughout the 90s and some have started doing recently) when PM prices decline. But that doesn't change the fact that many of the necessary business expenses like fuel and such have gone up over the past 10 years. I know that some like to quote the CPI number and say that means we have low inflation, but what goes into making that number has changed over the years to exclude such items that see the highest rise in prices, like fuel and food, etc.

On top of that many countries where the mines are found are forcing their way in to mine ownership and demanding higher percentages, partially due to said countries seeing PM prices going up each year for a long time and wanting their cut so to speak (in my opinion). When prices drop these countries don't give back that percentage. A somewhat similar but not exact analogy is how counties jacked up property tax rates when the market was going up, but when prices fall back good luck trying to get those tax rates lowered anytime soon.

Most people into PMs don't have any understanding of how the mining business works. They assume that every mining company is the most perfectly run company that does not waste money in any way and always makes the right choices. But in reality a mining company is like any other company with respect to being subject to bad business calls, bad investments, poor management, etc. Thus, even when the market price is higher than the cost to produce the metal a profit is not necessarily guaranteed. And when the cost to produce an ounce of metal goes higher than market price, something will have to "give" pretty quickly. One company (I can't remember which) actually announced it will hold back several hundred thousand ounces of silver until the price goes up (I think they said they will sell it in the 3rd quarter?).

I don't see TreasurePirate how you can say fuel, labor, and equipment costs are directly tied to the price of the PMs? Maybe you can say they jack up lease rates when prices go up thinking that more money can be made off the mining companies, but everything else has no connection to whether metal prices are up or down.

Just my opinion.

Jim

 

[Marchas45]

This explanation may seem "counter intuitive" because it is not logical. Yes, companies have ways to fire employees and shutter mines (like many did throughout the 90s and some have started doing recently) when PM prices decline. But that doesn't change the fact that many of the necessary business expenses like fuel and such have gone up over the past 10 years. I know that some like to quote the CPI number and say that means we have low inflation, but what goes into making that number has changed over the years to exclude such items that see the highest rise in prices, like fuel and food, etc.

On top of that many countries where the mines are found are forcing their way in to mine ownership and demanding higher percentages, partially due to said countries seeing PM prices going up each year for a long time and wanting their cut so to speak (in my opinion). When prices drop these countries don't give back that percentage. A somewhat similar but not exact analogy is how counties jacked up property tax rates when the market was going up, but when prices fall back good luck trying to get those tax rates lowered anytime soon.

Most people into PMs don't have any understanding of how the mining business works. They assume that every mining company is the most perfectly run company that does not waste money in any way and always makes the right choices. But in reality a mining company is like any other company with respect to being subject to bad business calls, bad investments, poor management, etc. Thus, even when the market price is higher than the cost to produce the metal a profit is not necessarily guaranteed. And when the cost to produce an ounce of metal goes higher than market price, something will have to "give" pretty quickly. One company (I can't remember which) actually announced it will hold back several hundred thousand ounces of silver until the price goes up (I think they said they will sell it in the 3rd quarter?).

I don't see TreasurePirate how you can say fuel, labor, and equipment costs are directly tied to the price of the PMs? Maybe you can say they jack up lease rates when prices go up thinking that more money can be made off the mining companies, but everything else has no connection to whether metal prices are up or down.

Just my opinion.

Jim

This link is perfect for what you are talking about. Energy and PM's, co down a little bit on the thread and ssrocco talks about Energy his favorite subject and how it effects the PM's and Mines. TreasurePirate, please read this article maybe just maybe I'll win you over just a little bit. Lol Charlie
SRSrocco: Blunt on Gold, Silver, Energy, Analysts & the Economic Collapse | SilverDoctors.com

 

[jim4silver]

Since TreasurePirate thinks silver will be going for 16 by the end of the year, I don't think anything is going to help him get his mind right. LOL! But we can still try to convert him from the "dark side".


Jim

 

[TreasurePirate69]

Since TreasurePirate thinks silver will be going for 16 by the end of the year, I don't think anything is going to help him get his mind right. LOL! But we can still try to convert him from the "dark side".


Jim

When did I say that silver was going to $16 by the end of the year?

 

[TreasurePirate69]

This explanation may seem "counter intuitive" because it is not logical. Yes, companies have ways to fire employees and shutter mines (like many did throughout the 90s and some have started doing recently) when PM prices decline. But that doesn't change the fact that many of the necessary business expenses like fuel and such have gone up over the past 10 years. I know that some like to quote the CPI number and say that means we have low inflation, but what goes into making that number has changed over the years to exclude such items that see the highest rise in prices, like fuel and food, etc.

On top of that many countries where the mines are found are forcing their way in to mine ownership and demanding higher percentages, partially due to said countries seeing PM prices going up each year for a long time and wanting their cut so to speak (in my opinion). When prices drop these countries don't give back that percentage. A somewhat similar but not exact analogy is how counties jacked up property tax rates when the market was going up, but when prices fall back good luck trying to get those tax rates lowered anytime soon.

Most people into PMs don't have any understanding of how the mining business works. They assume that every mining company is the most perfectly run company that does not waste money in any way and always makes the right choices. But in reality a mining company is like any other company with respect to being subject to bad business calls, bad investments, poor management, etc. Thus, even when the market price is higher than the cost to produce the metal a profit is not necessarily guaranteed. And when the cost to produce an ounce of metal goes higher than market price, something will have to "give" pretty quickly. One company (I can't remember which) actually announced it will hold back several hundred thousand ounces of silver until the price goes up (I think they said they will sell it in the 3rd quarter?).

I don't see TreasurePirate how you can say fuel, labor, and equipment costs are directly tied to the price of the PMs? Maybe you can say they jack up lease rates when prices go up thinking that more money can be made off the mining companies, but everything else has no connection to whether metal prices are up or down.

Just my opinion.

Jim

Jim, I understand all of that. I also understand that ore grades are declining which increases costs. At no point did I say that fuel and other costs haven't gone up in 10 years.

You are falling victim to the common practice of assuming that the world is black and white. Sure, costs have gone up. But by how much? THAT is the real question here. To assume that today's average mining costs are indicative of what tomorrow's will be is really not realistic. It is not realistic to assume that because it costs $20 an ounce to mine silver this year that it is impossible for the price to go down to $16. Why? Because things change. As you said, businesses are not perfect. Nor are they consistent.

As the price of silver and gold go up, the tendency is to start playing "accounting tricks" that skew the average costs of mining. For example, a silver mining company that has been struggling with low profitabitlity for many years might take the chance to make capital improvements and purchase additional equipment when the price of silver goes up leaving them with more profits than usual. Basically, their mindset changes and they no longer worry as much about cutting each little penny in order to save costs. When the gettin' is good, people throw caution to the wind. When the gettin' is bad, people hunker down. This same mentality is true of the mining companies as well. It has to be. It is human nature.

The bottom line is that if the price goes to $16 as I expect, the miners will have no choice but to adjust their processes in order to be profitable. If they can do that, then $16 is a realistic price (for now). If not, then we will not make it to $16. But saying that it can't possibly go to $16 because the current average cost to mine is $20 is illogical in my opinion. It assumes that miners are currently opperating at top efficiency and can't possibly make any additional improvements. And as you said yourself, these mining companies are not perfect.

Time will tell. On January 1st, 2015 we will see if my prediction of $16 has come to pass. If it does, how many of you will look back and admit that your world view has been wrong?

 

[jim4silver]

When did I say that silver was going to $16 by the end of the year?

I thought you said that before, sorry if I am wrong don't want to misquote.

 

[SilverForBrains]

This link is perfect for what you are talking about. Energy and PM's, co down a little bit on the thread and ssrocco talks about Energy his favorite subject and how it effects the PM's and Mines. TreasurePirate, please read this article maybe just maybe I'll win you over just a little bit. Lol Charlie
SRSrocco: Blunt on Gold, Silver, Energy, Analysts & the Economic Collapse | SilverDoctors.com

Hey man I love the video, but as far as the link, I never take any advice from a website that has a vested interested selling silver

 

[jim4silver]

Hey man I love the video, but as far as the link, I never take any advice from a website that has a vested interested selling silver

On the surface I agree with your statement as would most anyone. I mean, who wants to take advice from someone who will profit in some way if you act on said advice?

But you might not be aware that such behavior goes on all the time, and in many instances does not mean the person giving the advice is wrong. So you have to ask yourself, do you care if the person giving the advice is somehow making a profit by your actions as long as said advice proves useful to you, the buyer. If the advice turns out wrong does it matter if you paid someone for it or if it was free?

Everyone has to earn a living somehow. Most people have jobs and are employees and thus don't have any concept of how people who are not employees (those who own businesses or are otherwise self employed) make a living (I am not referring to you Silverforbrains, I mean people in general in the population).

So anyone who runs a site has to get paid somehow if they are spending all their time on it and thus cannot get a "job" on the side to pay their bills. So someone who is a PM bug and wants to work in that field will have to earn his keep somehow. So he decides to sell PMs on his PM site which discusses PMs and has all free material, and is visited by mostly PM bulls. Owner decides to sell bullion (at very reasonable premiums compared to PM online stores who don't feature free commentary and content). Does this mean the site owner is a shill and full of BS? I say it does not. Anyone who buys PMs because of online "advice" and not their own due diligence probably isn't too careful anyway and will get swindled down the road one way or the other by somebody.

By the way, do you take prescriptions? I have read that doctors in many cases get financial incentives from pharmaceutical companies when said doctors prescribe certain drugs. Do you take your doctor's advice in that instance and take the drugs? I'll bet many reading this never even heard of this behavior taking place.

PS I go to the PM bug sites for info then decide for myself what is to be believed and not. Some of the online PM bug sites like Silverdoctors provides a free service by compiling info from many different sources. Whether that material is accurate and factual should be decided by those who read it and should not be assumed to be gospel no matter what site it comes from.

All just my opinion.

Jim

 

[Marchas45]

Time will tell. On January 1st, 2015 we will see if my prediction of $16 has come to pass. If it does, how many of you will look back and admit that your world view has been wrong?

@TreasurePirate69 Bloody hell I may not be around that long. Lol

 

[Dman]

Time will tell. On January 1st, 2015 we will see if my prediction of $16 has come to pass. If it does, how many of you will look back and admit that your world view has been wrong?

@TreasurePirate69 Bloody hell I may not be around that long. Lol

I agree with your prediction. I have been saying silver will be $16 when silver was going over $40. I am not an expert but I did stay at a Holiday Inn Express last night.LOL

 

[Marchas45]

Good for you and I bet you still don't own any silver and your still waiting for it to drop to $16 after it went over $40 and I'm sure you didn't buy any then either. Lol Keep Stacking for Survival not Profit.

 

[jim4silver]

Would seem like a good time to short silver if a person really believed it was going to 16. Maybe they mean it will go to 16 after it hits 50 again?

Jim

 

[Marchas45]

If it was really going down then why are all the big Bansters going Long? Keep Stacking

 

[Dman]

Good for you and I bet you still don't own any silver and your still waiting for it to drop to $16 after it went over $40 and I'm sure you didn't buy any then either. Lol Keep Stacking for Survival not Profit.

You are so right about me not owning silver. LOL I only buy paper silver so I can short it on the flip side and back into a profit or maybe a loss. You have converted me. I will start stacking for survival. Is there anything special I need to stack?LOL

 

[TreasurePirate69]

Would seem like a good time to short silver if a person really believed it was going to 16. Maybe they mean it will go to 16 after it hits 50 again?

Jim

If it hits $50 again you best believe I'm selling this time. I missed that train last time and I've been kicking myself.