Where all those predictors of silver price?

If you don't agree, then cite something meaningful to explain why you believe we're wrong. Maybe we didn't write our thoughts clearly enough, maybe we're wrong, but either way, I'd like to hear your opinion on what affects the price, where you think it's headed, and why. Not just that we're "ridiculous"...

 

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This is just a very simple version of the law of supply and demand. It's a hard and fast economic principle. If supply increases, the marginal price decreases so that the market clears all of the product.

 

So, you just stated that the cost of production has nothing to do with the selling price. Market value is what controls the price, no more and no less.

I never once stated that the producers were selling the commodity at spot market, so don't try to put those words in my mouth. Obviously they're going to sell based on cash needs, etc., and get as close to the market as they can to fulfill their cash needs.

Cost of production is only one part of the equation, to say that price will somehow revert to that is flat out wrong,

 

nevermind, meant to quote

 

You're 100% correct. The facts are supply and demand will control the price, not just the cost to produce.

 

Correct, but think of it this way. If producers can produce at $10 per ounce and the market price is $30 and demand is 1,000 ounces at that price, producers will produce 1,000 ounces and sell it at $30, and since it is still profitable they will continue to produce more than the market can absorb at $30 so that the price will continue to drop to $25, then $20, then $15, and they will only stop producing when it isn't profitable anymore.

I think the mistake you are making is to assume that demand is unlimited at the current market price when, in fact, it will take lower prices to attract additional buyers.

 

And to clarify, it takes a lot of time for silver producers to increase supply since there are a lot of production constraints. And they may not be able to produce more at all [debatable]. And at the same time demand isn't static. One year [or decade] silver collectors and stackers may be anxious to buy. At other times not so much. So there are a lot of moving parts, but rest assured, miners cannot sell unlimited amounts of silver at the current market price.

 

I don't need some elementary education on supply and demand. The only business that I'm aware of that supply more when the demand is low is the American farmer, and they've done it for decades.

If you look at some of the silver producers now, they're getting smarter. They withhold some of their supply when the price drops because why should they sell their goods for deflated prices when they're of the belief the price will rise again and they don't need the cash. Why sell at a depressed price when they can withhold the supply.

 

If you still don't think it's possible, then please explain to me why companies were extracting and selling silver when it was $5/Oz when the cost of extraction certainly hasn't increased by a factor of 7.

 

Then you don't fully understand supply and demand.

When the price of a commodity is significantly higher than the cost of production, then existing producers ramp up production, producers that were closed because of low prices re-open, new producers enter the market, etc. ...and what happens in a supply and demand equation when supply increases?

 

Hmmm, that is very interesting. The last time you argued Silver Market Manipulation, it was on the side of keeping it too low. If I remember correctly, you said the manipulation started in 1964. In addition, you stated, it would not continue because the younger generation was much smarter then the old folks, so it was a good deal.

Now it seems you are arguing in favor that the price of Silver is being manipulated on the high side by the silver producers. Now if your opinions have changed and you believe the later, I would say it is time to sell your Silver, because eventually equilibrium is met as it always has and always will.

 

There's a key assumption on your part. What if they are not of the belief that prices will rise again? What if they believe the price will fall?

 

Is this not a better case of buying the mining company's stock instead of the bullion? You can be on the "smart" side of the trade.

 

Before I answer, I want you to know that you're trying to put words in my mouth, again. I didn't say it wasn't possible. I will state that it isn't happening any time soon, given the current market and economic conditions.

The reason for that is quite simple, it was and still is in many cases produced as a byproduct of mining for other metals that were profitable. If it's just sitting there and can be produced and sold for break even and fulfill a cash flow requirement, why not refine it and sell it. Selling dead inventory at cost for cash to fulfill cash flow requirements is a big win.

 

It just might be. I forget which company it is that did this. I do recall it was a Canadian company that did this on the advice of Sprott. (I'm not going there, don't ask)

 

And yet you aren't ready to accept the premise that over time, the market price will tend to converge with the cost of production.

 

You're wrong. I can accept that, what I cannot accept is that blaubert mentions that his prediction of $20 an ounce silver is based on cost of production, as if it's something that is just around the corner. I have a very hard time with that. He goes on the explain that historically it will revert to that, and I don't doubt that it will play out that way over time, but that isn't happening near term.

 

That's not my assumption, so again, stop trying to put words in my mouth. Maybe captain obvious will check in and supply you with the obvious answers to your questions.

 

Neither Blaubart or anyone has put a time frame on it. This is a long term game. As Chris stated earlier, in the short term, it is anybody's guess.

 

My prediction was a steady decline over the course of a decade. Naturally there will be bumps and fissures within the trend, but I still believe that is the way it will go. History will repeat, as always.