A very interesting read conceding peak silver and other related fundamentals such as energy, gold, depression etc. In the end I think this just reinforces the case for long term bullish silver prices
Peak silver from ZH
Was a really interesting read. Recommended highly! Makes you wonder about the long term viability of mining in an energy deficient world.
The same thought trajectory could be imposed on just about anything that we will need going forward. The movie 'Collapse' certainly comes to mind. Very sombre stuff...
The article was great in showing the effects of peak oil on mining and how we are basically watching Silver grade ores degrading thru time and at an increasing rate. Just recently First Majestic announced a decrease in silver production on a quarterly basis (-4%) and on YoY (-6%). So even with rising silver prices, miners are having a hard time getting more of the stuff. Great Panther (no small miner mind you) just recently reported that YoY silver production is down 10% but ore processed is up 16%! So the "Peak Silver" theory is happening before our very eyes.
These days we've witnessed several downgrades of expected GDP growth for US, Europe and China. Several economists (as useless as their predications can be...) know think there are 60% chances we are heading into a recession (even we all know we didn't even get out of the last one!). But what matters is the price of Crude, more specifically the price of Brent (the oil benchmark for the rest of the world), off its $125 high, but still above $97 all year long, today it's at $111 a barrel. Even with an underperforming stock market, banking crisis, euro debt, US downgrade, broken consumer confidence, growth slowdown and rumors of a China hard-landing (look at the price of copper falling from 4.50 to 3.00); the hard fact is that this year Brent crude will have a record average price for the year beating 2008. So even if we're going into recession, those crude prices aren't going much lower, proving that EROI is just going to get worse.
What I'd like to see is a study correlating the price of silver with grade ore and EORI. Even with manipulated prices by the CRIMEX, I'm sure we'll get some interesting results.
The "Peak Silver" article gives a nice clue on what we can expect for future supply side in silver mining, now we need a more comprehensive view of the global supply and demand picture. The best reference I have on that subject is from the SIlver Institute ( http://www.silverinstitute.org/supply_demand.php ), but it is far from detailed and doesn't even drill down on each item of either side of the balance. Still on the supply side it would be worthwhile studying the impact and evolution of silver scrap (old silver stocks, recycling or just people exchanging old silver wear and jewelry for fiat). On the supply side a detailed drill down on the industrial use of silver is of the most importance to understand the fundamentals of what will drive the price of silver. For example, even with an economic slowdown and several jobs still being scrapped, the Solar industry is adding more jobs ( http://247wallst.com/2011/10/18/solar-adding-more-jobs-fslr-spwra-stp/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+247wallst%2Ftweets+%2824%2F7+Wall+St.+%28Tweets%29%29 ). The use of silver in solar panels is an important factor due to its unique electric conductive properties and the solar industry is usually named as the largest contributor to the increasing use of silver as an industrial metal as it has been growing exponentially. Could it be that even in a recession and growth slow down the solar industry will keep on growing? If so, what are the impacts on the demand side of silver?
very good article, what I lacked was an understanding(from a geological(?)) POW, why are ore grades
declining, the components of the world, and how finite the metals in the world are.
alexdgn, good post. In reference to scrap silver, I doubt there is any more supply coming from there. Recycling silver will be just as uneconomical at 10x the silver price as it is today. Silver is just used in too small quantities to make recycling worthwhile. Add in the fact that recycling costs energy too and the probable rise in energy prices (see topic), and the result is that we don't need to worry about the market overflowing with scrap silver, scrap supply will probably remain steady.
On topic, I have read multiple articles that silver mine supply will virtually cease to exist somewhere between 10 and 30 years into the future. Seeing how everyone is currently strapping their mines as fast as they can and much higher prices have failed to spark any new demand in the last years, I do not doubt that one bit. Silver may be the first resource that's essential for our way of life that will become extinct forever.
a decent article.
ZH is required reading for those interested in financial news (as is the turd)
When it comes to current silver availability I continue to channel David Morgan who says that there are no significant shortages of silver.
Given enough time all finite things go to zero so eventually peak everything should predate upon the market, which will simply yield returns for those of us who are positioned to take advantage of that occurring.
I think the question is "WHEN" will it occur ?
Clearly nobody knows the answer to that question.
Chris Martenson has a great way of viewing this issue as well.
I tend to view claims about how much PM remain in the ground with a high degree of skepticism due mainly to the plethora of accounting practices in the mining sector, underlying resource conclusions based upon science v creationism, improved engineering solutions and a variety of other forces which are beyond human control.
For example PM to the moon conclusions based upon "probable" mining reports with an underlying creationist divisor simply aren't worth my time in considering.
30-50 years of silver left in the ground ? perhaps. maybe.
I am still stacking on a dollar cost average basis so knowing a forecast such as X years of silver doesn't really change my modus vivendi. Its simply a confirming indicator which in turn leads to more skepticism.
I mean if its SO OBVIOUS why doesn't everyone know it
keep stacking ya'll
I remember reading this while I was at the gyno with my wife. During our visit while I was reading my wife asked me "what are you reading?". I told her it was an article about the dwindling amounts of pure ores mined out of the ground. Basically I told her that it was good for silver based solely on supply/demand dynamics(which she knows nothing about sadly but hell she can't miss dancing with the stars).
I can tell you from an engineer's view that the analysist hit the nail right on the head. There comes a time where every process loses its profitability either by age of the process or through rising energy costs to run said process. There also exists a break even point with increased production volumes due to sheer mass quantity profits offsetting the losses of the process. When you have taken all of the good grade ore out it becomes impossible to increase production volumes by massive quantity because of the finite nature of the feedstock concentration of silver.