Tuesday, January 15, 2013
Silverbugs and Sprottlings: 'splain to me 'bout silver
Saw some loon on Stockhouse nattering on today about how silver's definitely going to $100, guaranteed. I guess he must have recently come down with the Sprottvirus.
OK, explain something, all you silverbugs and Sprottlings.
The marginal gold producer mines gold at something like $1200/oz all-in costs. Thus gold is trading for $1200 plus a decent-sized speculative premium to take into account developing-markets investment demand.
The marginal silver producer mines silver at something like $24/oz all-in costs. The majority of demand is industrial production.
So how, then, will silver manage to go up to $100/oz, $200/oz, or even higher?
If silver goes to $100/oz, won't that cause demand destruction in the industrial market?
If silver goes to $100/oz, won't that bring a lot of new production onstream?
When does a speculative premium ever get to 3x the cost of production?
Is "supply and demand" just another piece of communist/Joo/socialist/Lizard People/statist/New World Order propaganda, no more valid than climate modelling or evolution?
I'll be patient. 'Splain away.