And down it goes.... (silver)

Thanks for the clarification, hey I am learning all these new ancronyms!!!
I just learned what IMHO was!!!

POS POG
who would of thought... I am sure you can imagine what I thought POS meant!

 

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Oicu812

 

This may be a silly question but here goes...If the price of silver has doubled in give or take a year,why has there not been any new mining.I have heard some people on this site talk about how if silver went up companies would then have reason to reopen mines.Well it was up and nothing about new mining.If theu couldnt make money at $5-6 dollars you would think they could at $12.

 

Great question! There are some new mines in the works, but they were in the works before the price rise. But the answer to your question is a combination of the following:

1. Most siver is produced as a byproduct of copper and zinc mining. There are few primary silver mines.
2. The time from obtaining funding for exploration to opening a new mine is about 8 years.
3. Environmental regulations and permitting problems delay most projects.
4. Mining costs are rising almost as quickly as bullion prices, so it still isn't a terribly profitable industry.
5. Reopening a mine is an expensive and complex engineering process that will only be undertaken once the owner is convinced that prices will stay high [e.g., $12] for years, and can find the financing. Watch the progress in reopening the Sunshine mine in Idaho. They've been trying for years, and that's one of the good ones. The reason most mines are closed in the first place is probably that they were uneconomic to operate, not that they ran out of silver. Many mines can't produce silver at even $10 per ounce.

So the talk about reopening mines all over the place is mostly that -- just talk.

 

I second that motion.

The rollercoaster will come diving back down soon enough.

Let's say the war in Iraq winds down, Iran straightens up an flies right (one way or the other) and other hotspots cool down a bit. Oil will come down, uncertainties and fears will subside, and we will see the hot commodities settle back.

The price of silver and gold shot up largely out of fear and uncertainty - if those conditoions go away, the price will come back down.

 

I'm certain that's a big part of it. Banks aren't going to lend money to start a project that might be uneconomical by the time it begins producing. But keep in mind that it was only a few years ago that oil companies refused to fund certain projects because they were convinced that $25 per barrel oil was unsustainably high. Expectations are frequently poor predictors of reality.

Time will tell who is right, but I think it is a pretty high probability bet that $7 per ounce silver has gone the way of $1 per gallon gasoline.

But to relate this whole thing to coins [is that still permitted? ], I've noticed that common date Morgan and Peace dollars are still selling at prices that do not reflect the drop in silver. I've also noticed that dollars from the Carson City mint seem to have skyrocketed over the past few years compared to other Morgan dollars. Have these suddenly become more popular?

 

I think that you're going to have some coin dealers who bought when silver was higher being reluctant to lower retail prices, at least for a while. Apparently there may have been a pretty big influx of material when silver was close to the peak.

 

Most definately yes!

 

This makes sense. The small dealer just can not afford to take such a big hit.

 

they really can't afford to leave them in inventory indefinately waiting for silver to go back up, either.

 

In my opinion, and I'm not an expert, silver is going to move higher and remain permanently higher. The Macroeconomic trend make silver very cheap. Industry needs it and the supply is far more ineleastic than people on this list think. One of the reasons why no new silver mines have opened is, well, because there are none. Some mining options remain in Central and South America, but they are politcally very unstable. Other mining options are extreme and need silver prices more like gold to be profitable. However, the use of Silver in industry adds little to the cost of products even when the total silver need is revativley high. That means there is a lot of upward room for silver prices to increase over the long run.

Ruben

 

ouch....

Well I just checked APMEX and Silver is now below $10.Hmmm little more of a drop and its buy time.:smile

 

wow.... I could have sold 250 face at 9.77 TIMES! Whats wrong with me!!!!
I could have sold it and then bought it back today!!!!!
I am having a very bad day...

 

Maybe $7 isn't so unrealistic.

 

really what are some of you's honest Ops about whats causing the bottom to fall? is it reverting back to its normal price? 7-10$ an Oz what is driving this metal crash? I don't understand how it is drastically changing

 

what drove it was your buddies in IRAN! no disrespect to any Iranians....
But why is it crashing so fast?

OR... It could have been those sneeky Hunt Brothers at it again!

 

It isn't unusual for something like silver to have large price moves. It is a tiny market by global standards [or even compared to gold], and it doesn't take much money to move the price. The price of silver is still quite a bit higher than it was a year ago, or even 6 months ago. I purchased a few ASE's around last Christmas for $10.50 and a Maple Leaf for $10.00; and I think the price of silver was around $9.00 at the time. I think the long term trend for silver is up, but it isn't realistic to expect it to increase 50% per year or anything approaching that rate.