Come Tuesday

Summer's almost over. I hope you're enjoying your weekend but get ready. Come Tuesday, it's game on.

We stand at the edge. Prices have broken out but Cartel resistance is steep. The latest CoT shows their malicious intent. In gold, The Cartel net short position grew by over 32,000 contracts last week with the gross short position growing by over 10%! A huge, desperate move which has brought The Cartel net short position to its "worst" level since 2/28/12. Yikes! In fact, over the 8/14/12 - 8/28/12 time period, the price of paper gold rallied $68 and the total Gold Cartel net short position grew by 59,000 contracts. It looks like someone would very much prefer that gold not rise much further.

Though the Cartel selling in silver is just as prevalent, it is of a different stripe. For the reporting week, to supply the paper necessary to keep price in check, instead of adding shorts The Silver Cartel dumped longs. Of course the question is: Why? Are they selling into strength and booking profits? I suppose. But are they also remiss to add new shorts? Of course, it's impossible to say. What is possible to say though is that the CoT situation has only "deteriorated" in the days since, particularly Friday.

Finally, it is curious to see so much of the fresh shorting and selling that is coming from the smaller banks. Uncle Ted calls these banks the "raptors". The raptors treat the paper markets as their virtual jungle where they prey upon the specs by collusively following the moves of the bigger banks. In gold, the selling last week was almost evenly split between the big banks and the smaller banks. In silver, though, 90% of the selling came from the smaller banks, not JPM. Again, why? Is this just a one-week trend?

So next week is set up for some significant volatility.

  • All market participants are back from holiday.
  • The charts are undeniably bullish, meaning spec money should continue to roll in.
  • Prices are reaching into areas where I would expect some major Cartel short selling/resistance, i.e. $1725 and $33
  • After a week of rising prices, we get the August BLSBS on Friday. It's hard to imagine anything but a negative print being met with a major attempt to rig prices lower.

For now, here's where we sit.

And do you recall this chart from last week? Notice that gold spent 17 weeks above the range in 2011 and now it has completed 17 weeks below the range in 2012. Next week, does gold finally move back within the range?

Silver is at a similar crossroads.

So, get ready for a crazy and wild week. Though I certainly wouldn't fault a trader for booking a few profits, everyone else just needs to prepare for some volatility. Prices are truly headed much, much higher but not without the usual shenanigans.

See you Tuesday.

TF

454 Comments

WhyMeLord's picture

If Interest Rates Go Negative

This mebbe could happen, but the consequences would be VERY interesting:

The United States has slid into eight recessions in the last fifty years. Each time, the Federal Reserve sought to revive economic activity by reducing interest rates (see chart below). However, since the end of the last recession in June 2009, the economy has continued to sputter even though short-term rates have remained near zero. The weak recovery has led some commentators to suggest that the Fed should push short-term rates even lower—below zero—so that borrowers receive, and creditors pay, interest.

...

    As interest rates go more negative, market participants will have increasing incentives to make payments quickly and to receive payments in forms that can be collected slowly. This is exactly the opposite of what happened when short-term interest rates skyrocketed in the late 1970s: people then wanted to delay making payments as long as possible and to collect payments as quickly as possible. Some corporations chose to write checks on remote banks (to delay collection as long as possible), and consumers learned to cash checks quickly, even if that meant more trips to the bank, and to demand direct deposits. However, if interest rates go negative, the incentives reverse: people receiving payments will prefer checks (which can be held back from collection) to electronic transfers. Such a reversal could impose novel burdens on payment systems that have evolved in an environment of positive interest rates.

Conclusion
The take-away from this post is that if interest rates go negative, we may see an epochal outburst of socially unproductive—even if individually beneficial—financial innovation. Financial service providers are likely to find their products and services being used in volumes and ways not previously anticipated, and regulators may find that private sector responses to negative interest rates have spawned new risks that are not fully priced by market participants.

Link

WhyMeLord's picture

@XTY - Who Needs An Army

Black fly prevention:

1. Good Cigar

2. 100% DEET

3. Flamethrower

4. Just don't go there.

treefrog's picture

el gordo,

i like your program of living suggestions to convince others that you are nuts...

"Never miss an opportunity to make people think your are crazy.  I don't mean sitting on your rooftop with an AK, but a little more subdued such as in casual conversation, mention some of the stuff that Jim Willie talks about... "

i have a technique that i call "burglar repellent."  i don't use the rooftop, but i believe that if i maintain a reputation for random and frequent use of large caliber firepower, any rascals in the neighborhood will go elsewhere when they're looking for mischief. 

ripping through a thirty round clip with the ak47 at dusk makes a nice statement, but my favorite is a hakim 7.9  - an infantry rifle from the egyptian army circa mid '60s.  it's a mechanical nightmare.  a telescoping, reciprocating, triangular slide action.  it weighs about 15 lb. enough to keep the egyptians from going very far.  it only has a ten round clip, but it's the loudest thing i've ever heard that doesn't come with wheels under it. 

don't forget your hearing protection.

Bollocks's picture

They got the message across, which was the point...

Marikana mine strike: South Africa to drop murder charges

South African prosecutors have provisionally dropped murder charges against 270 miners whose colleagues were shot dead by police.

The charges cannot be dismissed formally until the end of the inquiry, but prosecutors said all detained miners would be freed.

Local authorities used a controversial apartheid-era law to accuse the miners of provoking police to open fire.

Miners were demanding a huge pay rise and recognition of a new union.

The killings, at the Marikana mine, owned by Lonmin, shocked the nation.

State prosecutors charged 270 miners with murder under the "common purpose" doctrine.

http://www.bbc.co.uk/news/world-africa-19457502

The message being: If you protest the police will shoot and they won't be held accountable. If you aren't shot, you may be locked up and charged with murder.

So, don't you dare protest about ANYTHING. Learn who your masters are and don't you forget they always will be.

Dr Jerome's picture

Thanks Roark

There is so much to learn...

Admiral Ag Bar's picture

for all your gun-nerdy needs...

...almost no modern semi-autos use clips.  They are magazines.  No disrespect intended treefrog.

http://thegunzone.com/clips-mags.html

I am a MSAR man myself...

¤'s picture

In Italy, world’s oldest bank faces uncertain future

In Italy, world’s oldest bank faces uncertain future

By Michael Birnbaum, Published:

September 1

SIENA, Italy — Tucked away in this Tuscan city, the oldest bank in the world has survived the Borgias, pestilence and too many wars to count. Now, a mundane foe has proved far more dangerous: Italian government debt.

The 540-year-old Monte dei Paschi Bank, Italy’s third-largest, is on the ropes as it struggles to deal with holdings of Italian bonds, once considered a prudent place to tuck cash.

The euro crisis upset that calculation. Across Europe, banks are confronting the same problem as seemingly safe bets that governments would repay their debts turned out to have been major gambles.

At the heart of the crisis, the tangled relationship between governments and the financial sector amplifies the financial problems on both sides. And in Siena, bountiful profits that once poured from Monte dei Paschi’s treasure-filled Gothic palazzo have dried up. Last week, the bank announced that it had lost $2 billion in the first half of 2012.

Analysts and the bank’s current management say a long-

prudent institution — based in the same building since 1472 — got caught up in the froth of the cheap-credit years before the crash and then made....

http://www.washingtonpost.com/world/europe/worlds-oldest-bank-meets-a-formidable-foe/2012/09/01/c42e85b6-f1dd-11e1-adc6-87dfa8eff430_story.html?hpid=z3

Jake.at.SSH's picture

The De-Evolution Of Our Currency

TRANSITIONAL CURRENCY SUCH AS WERE ISSUED IN 1929, COULD PROVIDE A DE-EVOLUTION OF OUR FEDERAL RESERVE NOTES

http://www.silverstackerhaven.com/index.php?/topic/560-de-evolution-of-our-currency/#entry3746

Contemplating The Idea That Integrating A Gold Standard Into Our Monetary Policy Could Somehow Be Accomplished, I've Stated That The Use Of CURRENCY Side-By-Side With A Gold Standard Is Essential As Long As The Word Currency Is Taken To Mean What It Was Originally Intended For As Described By The Constitution.

Backing Up A Bit, I've Also Stated That I Don't Believe We Can Adopt A Gold Standard Without First Abolishing The Federal Reserve Along With All Of It's Evil Influences On Our Money And Society. Thus, Although This Becomes A Study In Monetary Theory, Rather Than A Practical Solution To Our Monetary Problems, Let' Wade Into This To See If It's Worth Discussing:

My "Contemplation" Regarding This Lead Me To The Notion That If We Had To Live With A Gradual Shut-Down Of The Federal Reserve, A "Semi-Federal Reserve Note" Could Be Issued. This CURRENCY Would Contain Both Elements Of The Present Influences Of Federal Reserve And The REAL ELEMENTS OF A NATIONAL CURRENCY As Was The Case Before The Banksters Took Control Of Our Money.

Searching Through Our Money, I Came Across This "National Currency" That Actually Was Issued As A Gradual Transition AWAY from Real Currency And Into The Slavery Of Pure Federal Reserve Notes That We Know Today:

AND HERE IT IS:

Notice That It Says, "NATIONAL CURRENCY" At The Top, But Contains The Bankster Influence, (Federal Reserve Bank Of Cleveland), That Would Eventually Dominate The Debt Slavery Of Our Currency Today.

Thus, I Could Envision A Currency Doing A Kind-of "Reverse Federal Reserve Evolution" Were More Elements Of Real Currency Would Be Incorporated Into It, Such As "Redeemable For Gold Coin" And Payable To The Bearer On Demand", So That It Could Take It's Rightful Place Along Side Of A Real Gold Standard.  What A Concept!---Let's "De-Evolve" Our Currency!

agNau's picture

128th!

Edit:
Almost
Oh well, nice charts Turd. Looking forward to a good fight.
Bring it!

S Roche's picture

The Tipping Point for Gold...

A lot of work has been done on the transmission mechanism for ideas, beliefs and behavior and this forms a large part of behavioral finance, anticipating crowd behavior...one key element is that when 10% of a population group believe something then before long 100% will also as the transmission process goes parabolic.

Where are we in relation to an understanding of gold's re-entry to the center of the financial system?

I have been providing to all and sundry this link (http://www.bis.org/publ/bcbs128b.pdf P26, Footnote 32)* to the BIS Basel III paper showing the footnote entry that states: "at national discretion, gold bullion held in own vaults or on an allocated basis to the extent backed by bullion liabilities can be treated as cash and therefore risk-weighted at 0%". ​The date for introduction is January 1st, 2013.

Alasdair McLeod was grateful as he had searched in vain for it; Bron Suchezki thinks it is no particular biggie; Gillian Tett, amongst others who have written in the MSM about gold, has not yet replied.

I also provided it to a very active private trader I know who used to own an international brokerage firm which he sold to a large European bank active in the gold market. He ran it by a head of trading for that bank, responsible for several areas including gold.

The response was "whoever told you this is certifiable". He did not provide, nor was asked for, the link.

My take away is that gold has a very long way to go, and I mean that in a good way....a really​ good way.

*h/t Washington's Blog

Kcap's picture

Pay close attention

Gold celebs do their deed.  China Buys now.

American economy implodes.  Some form of Gold Standard.  USA must purchase more Gold at much higher prices to back the new currency. (either in a literal or de facto sense, either way, the end result is the same)

And China sells at the highs near 2015 when gold is over 20,000 oz.  USA buys at high.

All part of the plan.

Doubters beware.

Kcap

Larry's picture

Zip on the fruit trees

This year we got roughly 1/4 of the figs we always (always) harvest. The plums were a complete bust... nothing. Not one. Our pear tree was a bust. The limbs are usually bent down with the weight of so many. Every year. Not this year. We got two pears. But we did get a gigantic crop of hickory nuts. We don't eat those (good but way too much work for such little meat). The squirrels have been well fed.

The trees all got plenty of water. Nothing changed with the weather per se... although there were more Chemtrails this year than I've ever seen before. Go figure.

Well, if TSHTF, guess I can always eat squirrels :)

Dr Jerome's picture

AG on the rise

What? did Asia just start trading at 9pm? Up .25 in 5 minutes

¤'s picture

Interactive Gold Eye Candy

Gold Through the Ages—Civilization’s Love Affair with the Yellow Metal

As long as there have been people, there’s been an attraction to gold. From pharaohs to hedge funds, gold has been an important tool of building and protecting wealth.

This interactive gold timeline carries you through gold’s enduring path as a universal symbol of wealth.

To navigate the timeline, click and drag the gold nugget across the screen/timeline.

You can also click on the pictures.

http://www.usfunds.com/interactive/gold-through-the-ages/?CFID=1364769&CFTOKEN=19990972

El Gordo's picture

OOps

Just sitting here minding my own business and thinking that if that silver price were to trickle down a little in Asia tonight I might just sneak an order in on the internet and lock in a little better price since I sat around with my thumb up my nose (or somewhere) and didn't get anything last Friday.  Seeing the price drift down a few cents would seem logical after the recent gains, but all of a sudden, out of nowhere, here comes a surge.  Now what's that all about?

thesandbox's picture

Apples...

Our two trees have 1 apple! Pear tree lost all the flowers too.
How'duya like them apples?

¤'s picture

Does the history of gold tell the future?

gold-history.jpg

Following is a timeline on gold's use as medium of exchange.

2010: World Bank head Robert Zoellick proposes return to a gold standard, arguing that a replacement is needed for the current system of floating exchange rates that has been in place since 1971 breakdown of the post-war Bretton Woods System, in which the dollar and other currencies were tied to the value of gold.
2002: The Gold Institute Board of Directors votes to dissolve.
1999: The euro, a pan-European currency is introduced, backed by a new European Central Bank holding 15 percent of its reserves in gold.
1990: United States became the world's second largest gold producing nation
1987: World stock markets suffer sharp reversal on October 19; volatile investment markets increase gold trading activity. The World Gold Council is established to sustain and develop demand from endusers of gold
1981: Treasury Secretary Donald Regan announces the formation of a Gold Commission "to access and make recommendations with regard to the policy of the U.S. government concerning the role of gold in domestic and international monetary systems"
1980: Gold reaches intra-day historic high of $870 on January 21 in New York and by year end closes at $591.
1978: The weak U.S. dollar propels interest in gold. By act of Congress, the U.S. abolishes the official price of gold. Member governments are free to buy and sell gold in private markets.
1975: Trading in gold for future delivery begins on New York's Commodity Exchange and on Chicago's International Monetary Market and Board of Trade.
1974: Americans permitted to own gold, other than just jewellery.
1973: On February 13, the United States, devalues the dollar again and announces it will raise the official dollar price of gold to $42.22 per fine troy ounce. Dollar-selling continues and finally all currencies are allowed to "float" freely without regard to the price of gold.
By June, the market price for gold in London has risen to more than $120 per ounce. Japan lifts prohibition on imports of gold.
1971: "Nixon Shock" U.S. President Nixon ends dollar's link to gold established under Bretton Woods Agreement. Dollar became the sole backing of currencies and a reserve currency for the member states.
On Aug 15, U.S. terminates all gold sales or purchases, thereby ending conversion of foreign officially held dollars into gold.
In December, under the Smithsonian Agreement signed in Washington, U.S. devalues the dollar by raising the official dollar price of gold to $38 per fine troy ounce.

 

1968: London Gold Market closes for two weeks after a sudden surge in the demand for gold. The governors in the gold pool announce they will no longer buy and sell gold in the private market.
A two-tier pricing system emerges: official transactions between monetary authorities are to be conducted at an unchanged price of $35 per fine troy ounce and other transactions are to be conducted at a fluctuating free-market price.
U.S. Mint terminates policy of buying gold from and selling gold to those licensed by the U.S. Treasury to hold gold.
Gold backing of Federal Reserve Notes is eliminated.
1961: Americans are forbidden to own gold abroad as well as at home.
The central banks of Belgium, France, Italy, the Netherlands, Switzerland, West Germany, the United Kingdom and the United States form the London Gold Pool and agree to buy and sell at $35.0875 per ounce.
1954: London gold market, closed early in World War Two, reopens.
1945: Gold backing of Federal Reserve Notes is reduced by 25.5 percent.
1944: The Bretton Woods agreement, ratified by the U.S. Congress in 1945, establishes a gold exchange standard and two new international organizations, the International Monetary Fund (IMF) and the World Bank.
The new standard involves setting par values for currencies in terms of gold and the obligation of member countries to convert foreign official holdings of their currencies into gold at those par values.
The system was set up to help rebuild the international economy as World War Two still raged. The main features were for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value (plus or minus one percent in terms of gold).
1942: President Franklin D. Roosevelt issues a presidential edict closing all U.S. gold mines.
1934: The Gold Reserve Act of 1934 gives the government the permanent title to all monetary gold and halts the minting of gold coins.
It also allows gold certificates to be held only by the Federal Reserve Banks, putting the U.S. on a limited gold bullion standard, under which redemption in gold is restricted to dollars held by foreign central banks and licensed private users.
President Roosevelt devalues the dollar by increasing the price of gold to $35 per ounce.
1933: To alleviate the banking panic, President Franklin D. Roosevelt prohibits private holdings of all gold coins, bullion and certificates.

1931: Great Britain abandons the gold bullion standard.
1929: Great Depression, Wall Street Crash.
1925: Great Britain returns to a gold bullion standard, with currency redeemable for 400-ounce gold bullion bars but no circulation of gold coins.
1914-1919: A strict gold standard is suspended by several countries, including United States and Great Britain during World War I.
1913: Federal Reserve Act specifies that Federal Reserve Notes be backed 40 percent in gold.
1900: The Gold Standard Act places the United States officially on the gold standard, committing the United States to maintain a fixed exchange rate in relation to other countries on the gold standard. This lasted till 1919, when World War I forced both the United States and Britain to suspend it.
1873: As a result of ongoing revisions to minting and coinage laws, silver is eliminated as a standard of value and the United States goes on an unofficial gold standard.
1848: California Gold Rush triggered when John Marshall found flakes of gold while building a sawmill.
1837: The weight of gold in the U.S. dollar is lessened to 23.22 grains so that one fine troy ounce of gold is valued at $20.67.
1817: Great Britain introduces the sovereign, a small gold coin valued at one pound sterling
1816: Great Britain officially ties the pound to a specific quantity of gold at which British currency is convertible.
1804-1828: North Carolina supplied all the domestic gold coined by the U.S Mint in Philadelphia for currency.
1803: Gold is discovered at Little Meadow Creek, North Carolina, sparking the first U.S gold rush.

1799: A 17-pound gold nugget is found in Cabarrus County, North Carolina, the first documented gold discovery in United States.
1792: The Coinage Act places the United States on a bimetallic silver-gold standard and defines the U.S. dollar as equivalent to 24.75 grains of fine gold and 371.25 grains of fine silver.

1787: First U.S gold coin is struck by Ephraim Brasher, a goldsmith
1700: Gold was discovered in Brazil, which became the largest producer of gold by 1720, with nearly two-thirds of the world's output.
Isaac Newton, as Master of the Mint, fixes the price of gold in England at 84 shillings, 11.5 pence per troy ounce. The Royal Commission, comprising of Newton, John Locke and Lord Somers recommends a recall of all old currency, issuance of new specie with gold/silver ratio of 16-to-1.
The gold price thus established for over 200 years
1377: England shifts to a monetary system based on gold and silver
1284: England issues its first major gold coin, the florin. This was followed shortly by the noble and later by the angel, crown and guinea.
Venice introduces the gold ducat, which soon becomes the most popular coin in the world and remains so for more than five centuries.
1066 A.D: With the Norman Conquest, a metallic currency standard is finally re-established in England with the introduction of a system of pounds, shillings and pence. The pound is literally a pound of sterling silver.
50 BCE: Romans began issuing a gold coin called the aureus.
560: The first coins made purely from gold are minted in Lydia, a kingdom of Asia Minor.
1091: Little squares of gold are legalized in China as a form of money
1500: Gold became recognized as a standard medium of exchange for international trade as the immense gold-bearing regions of Nubia made Egypt a wealthy nation. Ancient Egypt left behind a rich legacy of gold.


 
Cottonbelt21's picture

The Tipping Point ...

... indeed, as we slowly move toward a 'freegold' transition supported by all the necessary foundations

http://fofoa.blogspot.com/2011/01/freegold-foundations.html

Dagney Taggart's picture

First by Inflation, then by Deflation...

Didn't somebody important give us this warning once upon a time? Watch the bankers try to reissue a "gold-backed" currency and say it has the same value against current debts as the current counterfeit currency. In other words, they will try to convince people that debts they took on with today's counterfeit currency must be re-paid with their new "gold-backed" currency.

Just repeating the warning. I sincerely hope the bankers will run out of suckers soon.

Colonel Angus's picture

Dagney

That quote cannot be verified. The words inflation and deflation don't appear in the common lexicon until way after my man TJ was already gone. But it does sound like something he would say. Or maybe Andrew Jackson.

Never forget the famous Abe Lincoln quote, "You can't believe everything you read on the Internet."

Ferd Torgerson's picture

I'd be remiss . . .

. . . if I didn't once again thank Turd for setting up this great site and if I didn't wish myself a Happy Birthday today.  Missed out on being FIRST!! as I spent the afternoon with the wife, kids and grandkids.  In a room full of people, it's pretty difficult to continuously refresh the page on an IPAD in hopes of being first but I was with you guys in spirit.  Great burgers, chicken, cake and ice cream so I'm not too disappointed.

Got to spend some time talking with a son-in-law and commiserate that some of our mining shares are still under water.  Checked out the Provident page and still  believe the premiums on 90% and one ounce gold coins are reasonable.  Haven't bought anything lately and have no plans on selling anything either. 

In for the long haul.  I'm sure we are right.

Since this is my birthday and tomorrow is Labor Day, was wondering if one of the moderators would mind cutting and pasting the following at the beginning of Turd's next new thread:

Ferd is FIRST!!

(this will save me considerable time spent repeatedly refreshing my screen).

Many thanks.

Ferd

Dagney Taggart's picture

Re: Coward #1,322

When is this POS coward going to fight his own wars? Who else is sick of these psychos dictating to others when and how they should do war? If Ben is such a man, he would be out leading the troops. Instead he's jawboning to others to take the bullet for him. What's honestly new?

If these are the acts of the "Chosen", what freak chose?

On a side note, this is some good popcorn. I'm going to be a trillionaire with this canoe-full of July13 popcorn calls. Don't worry though. I'll use it to settle your silly debt, Americans. You can keep your gold and silver.

Dagney Taggart's picture

@Colonel

Whether or not it's verified means nothing. It's a valid saying.

Dagney Taggart's picture

Kitco prints 32.00

Just a heads up.

vonburpenstein's picture

Second!....

....to wish Ferd a happy birthday!

benque's picture

Dagney - $32???

El Gordo's picture

The good old days

Woodrow Call: [riding in San Antonio] Things sure have changed since the last time I was here. It's all growed up.
Gus McCrae: Of course it's growed up, Woodrow. He killed all the Indians and bandits so the bankers could move in.
Woodrow Call: Only a fool would want the Indians back.
Gus McCrae: Has it ever occurred to you, Woodrow; that all the work we done was for the bankers? Hell, we killed off everybody made this country interestin'!
Share this quote
treefrog's picture

fruit trees

my pear trees have so much fruit, some of the limbs have broken from the weight.  peaches, zip.  go figure.

pear butter next week.

benque's picture

Texas law repealed in 1904

Several years ago, if memory serves me right, I believe I read of the repeal of a law in Texas which had made it legal to shoot bankers on sight.  I think it was originally enacted in response to the crash and depression of the 1870s, which was somewhat similar to the events leading to our present economic dilemma.

Does anyone here have any knowledge of this, or is it just urban myth?  If it really existed, I might just run my Texas flag up the pole tomorrow, in tribute to the common sense they showed in enacting the law, but not for the repeal.

Thanks all in advance!!!

SRSrocco's picture

PROBLEMS BREWING IN THE KING BASE METAL....

GLOBAL COPPER INVENTORIES TO DECLINE SUBSTANTIALLY THIS YEAR - PAT MOHR

Capital cost escalation in an uncertain economic environment has triggered delays in new mine development, setting the stage for a tighter mid-decade supply, predicts Scotiabank economist Patricia Mohr.

Author: Dorothy Kosich
Posted: Friday , 31 Aug 2012
RENO (MINEWEB) -

Substantial production losses and outages at existing copper mines will cause global copper inventories this year to fall to 47 days of consumption from 52 last year, Scotiabank economist Patricia Mohr has forecast.

While refined copper stocks average 61.1 days of consumption from 2000-2009, "LME inventories have actually declined in 2012 and overall global inventories are expected to fall to 47 days of consumption from 52 last year, despite the recent increase in bonded warehouse stocks in China," said Mohr. "This reflects substantial production losses & outages at existing mines this year-Escondida (Chile -75,000 tonnes), Collahuasi (Chile), Los Bronces (Chile -60,000 tonnes), Grasberg (Indonesia -100,000 tonnes) and Lumwana (Zambia -60,000 tonnes)."

--------------------------------

Folks... just look at amount of production losses at the big copper mines.  This is nearly 300,000 metric tonnes.  Freeport's Grasberg mine was down 45% the first six months of 2012 compared to last year.  The largest percentage of the copper declines came from Chile.  As I mentioned in my previous article.... Chile is going to face serious energy shortages unless there is Billions of dollars invested in electric generating plants and infrastructure. 

If overall copper production declines in 2012, it will also impact silver production as well.  We may see another percent decline in by-product silver from copper mining in 2012.

Here is another part of the article:

"Major Canadian gold miners are also examining project expansion more critically, in part due to high capital cost inflation," she added.

Recent announcements by BHP Billiton of project delays, "reflect concern over capital-cost escalation in the face of more subdued metals prices," Mohr advised. "In copper, capital cost inflation (which normally lags metals prices) has averaged 22% per annum from 2002-2011 and is projected to increase by 15-20% this year."

-----------------------

Costs are increasing faster than the price of commodities are rising.  Even though some copper miners are making decent profits, it is not enough to supply all the FUTURE CAPEX spending that these companies have in their pipelines.  We must remember, the so-called forecasted increase of global silver production is based on these scheduled base metal mines becoming commercial.

UPCOMING POST ON SILVER ORE GRADES

I had a spirited debate on silver ore grades with Eric Original and Coach427.  They both mentioned that silver miners were utilizing lower grade ores and waste rock to maximize profits as the price of silver increased.  This is an excellent way for miners to increase profits and to mill ore that wasn't cost effective with the price of silver lower.

I have to say.... anything that makes silver miners more profitable and successful is good in my book.  That being said, it still does not change the overall fact that silver ore grades are falling greater than 5% a year on average.

This chart of the silver ore grades at SilverCorp will be included in my next article-post to describe this ongoing phenomenon:

If we consider that SilverCorps overall ore grade was 456 g/t in 2007 and is estimated (by their quarterly report) to average 245 g/t in Fiscal 2013, this turns out to be a 8% annual decline rate for the 6 years.

I will provide additional data to prove that Silvercorp has a LOM PRODUCTION PLAN until 2019 showing a continually declining average ore grade.  This is not because they are mining waste rock or selecting lower grade ores... its because of its planned declining ore reserve.

Again... we must remember the KISS --- KEEP IT SIMPLE STUPID understanding of my concerns.  The lower the ore grade... the more energy is needed to produce the same or less silver.

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