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.

Posted by at
Labels: , , ,

4 comments:

  1. There are studies that show that lead in the environment has/had a causal relationship with violent crime. When gas was gradually de-leaded from the late 1970's onward, a corresponding drop in violent crime occurred over the next generation.

    So I want to know what is now in the environment that has unleashed a spate of loonies all over the internet, nattering about money and gold and debt all day long, being utterly ignorant about almost everything, and threatening to blow up the USA (house repubs) if the don't get what they want.

    ReplyDelete
    Replies

    1. Negro in the White House.

      Srsly watch the news once in a while

      Delete

  2. So the premium on top of $1200 is ALL developing market investment demand? I agree with you on the importance of Chindia but its not ALL them and the rest of the developing world, why do you refuse to ackowledge western markets investment demand (GLD etc) or expectations of inflation? The catalyst for a huge upward move in Gold (and Silver) would be western populations piling into the metals as inflation does finally kick in, and in that unsavoury scenario Silver does go to $100, but that $100 is not todays $100, but its still a hundred bucks and you lose the argument!

    ReplyDelete
    Replies

    1. No, the premium is not developing market investment demand. That's the fundamental demand. Some of the price premium will be EXPECTATION OF GROWTH in emerging market demand, though, hopefully.

      Sure, GLD is part of gold's demand, but GLD demand can go negative if Americans sell it. And they will sell if they operate under the theory that the Trasury curve has anything to do with gold. So it's part of the speculative premium.

      The problem with expectations of inflation is the same. Once western traders stop expecting inflation they can sell gold down. So it's also part of the speculative premium.

      Your silver comment is fishy. If silver goes to $100, BECAUSE OF INFLATION, that means that the cost of mining silver has gone up to $80-$90. And also, it must mean that gold goes up to $5000 - because the cost of mining gold should go up the same as the cost of mining silver.

      And in that case, you may as well invest in lead or zinc or copper, cos their price will act exactly the same way.

      Delete

Don't bother commenting unless you have some useful information or valuable commentary to provide.

If you're a fucking tool, please go to Yahoo News for all your commenting needs.

Subscribe to: Post Comments (Atom)