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Silver Monitoring Thread £ (GBP) only.


Message added by ChrisSilver

To discuss price action in USD instead, please see here: https://thesilverforum.com/topic/19861-silver-monitoring-thread-usd-only/

 

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On 11/05/2023 at 14:25, HonestMoneyGoldSilver said:

JPM, if you're listening - if silver goes to £16 I'm gonna cum on you. I have a very particular set of curtain wiping skills!

Ughh really 🙄

This user has a knack for offending others with their sense of humour.

Please DO NOT take seriously.

Complaints go directly to ChrisSilver.

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9 hours ago, Stacktastic said:

. . . Whats the bounce level guys? Im thinking mid £16's. 

Agreed Stack', this is the key level for me. IMO, it's highly probable that £16.00 will be tested, especially if DXY continues its rally. However, first it needs to breach the March higher swing low around £16.70. IF it does that and then falls to £16.00, then a test of last August's lows just above £15.00 is very much on the cards and, certainly, is a no brainer buying opportunity. The flip side of the coin is that if DXY stalls, then a reversal is likely, followed by a test of April's higher swing high just under £21.00. IF that happens, then an uptrend will be established and price could go 'to da moon'! See the weekly chart, below.

As an aside, does anyone know the theoretical absolute low below which price can't fall because all mining production would stop? I realise this will vary almost daily due to inflation and numerous other factors - but a ball park figure would be interesting. 

XAGGBP_2023-05-26_08-15-16.png

Edited by timsk
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13 hours ago, HonestMoneyGoldSilver said:

I find it hard to think in Old Empire tokens. In New Empire tokens it looks like we're gonna test the firm support at $22.50.

Give it a couple of years and the $ will be the new Old Empire token and the £ will be the old Old Empire token. 😄

 

Edited by EdwardTeach
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4 hours ago, timsk said:

As an aside, does anyone know the theoretical absolute low below which price can't fall because all mining production would stop? I realise this will vary almost daily due to inflation and numerous other factors - but a ball park figure would be interesting. 

Super complex question but the TL:DR figure according to my research based on AISC (All-in Sustainability Cost) is $18 and rising. Many major PM and base metal producers are in countries with high inflation - e.g. Mexico, Turkey, Peru, Russia, etc. Then other major producers like Canada, USA, Australia, Poland also have inflationary pressures. Some major mining corps would become unprofitable at $20, e.g. Endeavour Silver Corp. Others would remain profitable until $15-16. If you're asking when all mines would become unprofitable it's probably around $13 but there's only a handful in the world, mostly in 3rd-world countries like Burkina Faso, that can sustain that price. Those operations are part of larger global concerns so even if some mines may be profitable at $13, the combined AISC across all operations would make the conglomerate unprofitable. There is no such thing as "can't go below this price" as silver is a necessary commodity and could be subsidized by the state such as with energy in recent years or the financial system in 2008.

Another source of complexity is that silver-only mines account for 17-25% of total production - the other 75-83% comes from multi-faceted gold and base metal operations

https://www.thesilverforum.com/topic/368-silver-monitoring-thread-£-gbp-only/?do=findComment&comment=848171

This leads me to believe the current average AISC for the major silver mines is $18 and that this floor is currently rising. (Silver and gold usually occur together in the same deposits although it's possible to find them individually. Arguably silver is a "by-product" of many mining operations focussed on gold and base metals such as copper, zinc, lead, etc, and sometimes vice-versa, base metals are a by-product of PM mining). Here is a brief summary of the AISC figures and YoY changes I'm talking about:

  1. Pan American Silver Corp (PAAS, Canada, Latin America) - $17.97/oz (+ 10% YoY)
  2. SSR Mining Corp (SSRM, Turkey) - $15.91/oz (+29% YoY)
  3. Hecla Mining Company (HL, United States) - $14.20/oz (+11% YoY)
  4. Fortuna Silver Mines Inc (FVI, Canada, Latin America, Burkina Faso) - $14.46/oz (-8.8% YoY)
  5. Endeavour Silver Corp (EXK, Mexico) - $20.27/oz (+16% YoY)

Average AISC for those companies (Q3 2022) is $16.56. It seems obvious that as AISC goes up (which is the way it's definitely trending with inflation, energy, labour, finance, ESG, etc) or down, that this would correlate strongly with the spot price of these metals, although this relationship is perhaps not as robust as one might expect. Regardless, if the spot price goes below the AISC, the mines will reduce or stop production as you can't run a business indefinitely that is unsustainable/unprofitable. It is my hypothesis that the absolute bottom of the market for silver was/is $18/oz and that it's unlikely to remain below $20/oz never mind $18.

The Pearson's r coefficient between silver and gold ranges between 0.7-0.9 depending on observation period, which is strong to very strong - broadly speaking their price action is mirrored. The coefficients (which vary depending on observation period) between gold, silver and base metals are also positively correlated although in the moderate to strong range as opposed to very strong. For reference the coefficient between BTC and ETH is around 0.89 depending on observation period. We observe that virtually every time BTC or ETH go up or down, the other (and the entire market in the case of BTC) will follow this price action. The relationships between precious metals and base metals are well understood. A massive drop in silver would in all probability coincide with a large drop in gold and also a significant drop in base metals prices, which may affect the AISC (All-in Sustainability Cost) dramatically

 

 

Mind is primary and mass-energy is derivative

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1 hour ago, HonestMoneyGoldSilver said:

Super complex question but the TL:DR figure according to my research based on AISC (All-in Sustainability Cost) is $18 and rising. . . 

Thanks for the comprehensive answer, HMGS.

Interestingly, this roughly equates to the lows of last August. If price does drop back down to these levels again, I'll be tempted to take out a massive loan or mortgage and back up the truck to Atkinsons, Chards and Tavex etc. !

😁

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3 hours ago, timsk said:

Thanks for the comprehensive answer, HMGS.

Interestingly, this roughly equates to the lows of last August. If price does drop back down to these levels again, I'll be tempted to take out a massive loan or mortgage and back up the truck to Atkinsons, Chards and Tavex etc. !

😁

That's roughly what I did, minus the loan/mortgage 😂. I backed up the truck when it dipped below $20 and bought again at $20 and $21. I saw it as a freeroll on silver with a max downside of 10% to $18 but the upside has a realistic chance to provide asymmetric returns

Mind is primary and mass-energy is derivative

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Most of the silver coming to market is a byproduct of other metal production - mainly copper and zinc. Silver is an added bonus to the profit line in their production. If these metals are produced then there will be silver. The AISC of the pure silver mining plays isn't that important b/c if copper and zinc are mined and refined there will be silver. If all the silver mines closed, the average AISC would drop very low - not to zero but not $18. During the electrolytic copper refining process, sludge drops to the bottom of the refining tanks - this contains silver and some other precious metals. It is there for further processing without any mining required.

The main cost in mining is energy. Mining is very heavy on energy. Digging millions of tonnes of rock out of the ground, crushing and processing it needs a lot of energy. So the cost of all metals including silver is directly linked to the oil price. 

There are some who claim we have passed peak oil and the oil price in the next few years will start climbing which would innevitably feed into metals prices. i remember hearing about peak oil 20 years ago and it never happened. The idea of peak oil is that oil is a fossil fuel - the product of decomposed vegetation cooked inside the Earth. Then once an oil field runs dry that's it - it's all gone. This is a faulty theory when you consider oil has been drilled for over 12km down by both the Russians and Qataris. Plant matter was never growing that far down. Oil and gas are produced inside the Earth in a chemical reaction - as far as we are concerned there is unlimited oil and gas. Oil fields can 'run dry' but given time they fill up again. This happens but of course Big Oil isn't about to broadcast ideas like oil is the second most plentiful liquid on the planet isn't good for business.

Always cast your vote - Spoil your ballot slip. Put 'Spoilt Ballot - I do not consent.' These votes are counted. If you do not do this you are consenting to the tyranny. None of them are fit for purpose. 
A tyranny relies on propaganda and force. Once the propaganda fails all that's left is force.

COVID-19 is a cover story for the collapsing economy. Green Energy isn't Green and it isn't Renewable.

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Oh a conspiracy theory about silver and oil now

Silver is a by-product of gold and base metal mines (75-83%, as I said) but that doesn't mean that silver is optional or a bonus. Silver has unique properties. It is the most electrically and thermally conductive metal and the most reflective/lustrous of any metal. It is a vital component in electronics and is the prime solution for mating components due to being malleable as well as the best conductor. We know it's used in solar and EVs. Without silver these technologies wouldn't be viable, silver is a much more important industrial metal than gold. It is entirely inaccurate to assert that silver is just a happy coincidence from other mining activities. There is 10 times more silver than gold in an iPhone (0.34g vs 0.034g). Silver plays a vital role in the largest companies on the planet. 

Here is a generalised breakdown of the costs involved with mining operations. Note that energy (5-15%) is not the primary driver of cost:

  1. Exploration Costs: Exploration expenses typically range from 1% to 5% of the total mining project costs, depending on the complexity and scale of the project.
  2. Land Acquisition and Permitting: These costs can vary significantly based on location and regulatory requirements but generally range from 1% to 10% of the total project costs.
  3. Infrastructure Development: Infrastructure expenses typically range from 5% to 15% of the total project costs, depending on the scale and complexity of the operation.
  4. Labour Costs: Labour expenses can be a significant portion of the overall costs and often range from 20% to 40% of the total project costs, depending on the labor market, skill requirements, and local regulations.
  5. Equipment and Machinery: Equipment costs can vary widely depending on the size and type of the operation, but they typically range from 20% to 40% of the total project costs.
  6. Energy Costs: Energy expenses can range from 5% to 15% of the total project costs, depending on the energy efficiency of the equipment used and the local energy prices.
  7. Materials and Supplies: Material costs usually account for around 5% to 15% of the total project costs, depending on the type and scale of the mining operation.
  8. Environmental Compliance: Costs associated with environmental compliance can range from 1% to 10% of the total project costs, depending on the environmental impact and regulatory requirements.
  9. Transportation and Logistics: Transportation costs can vary based on the distance to processing facilities or distribution centers. They typically range from 5% to 15% of the total project costs.
  10. Overhead and Administrative Costs: Overhead and administrative expenses can vary but are generally estimated to be around 5% to 10% of the total project costs.

Note also the breakdown within the energy component:

miningenergy.thumb.png.8199b1557e95fa2956b793fc902a8131.png

 

Stop talking smack about my silver 😂. At one time silver was considered more valuable than gold:

According to the Metropolitan Museum of Art, silver was used to fashion beads as early as the Predynastic Period (ca. 4400–3100 B.C.) and remained important for personal ornaments and cult objects in Egypt through Roman times. Temple inscriptions suggest that for much of Egypt’s history, silver was valued more highly than gold.

Similarly, Tour Egypt states that when silver was finally introduced into Egypt, it probably was more valuable than gold. It continued to be rare, and on lists of valuables, items of silver were listed above those of gold during the Old Kingdom.

Egyptians valued silver more than gold because they thought that while the skin of the gods was gold, the bones of the gods were silver

I'm not even touching that nonsense about oil. I wonder if some people do their research by reading Twitter and watching Alex Jones podcasts. 

Mind is primary and mass-energy is derivative

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@HonestMoneyGoldSilver

'Oh a conspiracy theory about silver and oil now'

What conspiracy is that?
Conspiracy: 'An agreement to perform together an illegal, wrongful, or subversive act.'

So what illegal, wrongful or subversive act did i theorise about?

You said 'Silver is a by-product of gold and base metal mines (75-83%, as I said) but that doesn't mean that silver is optional or a bonus.'

This is true and when you are mining copper and zinc for example if you can make a bit of alpha by also getting some 'Silver  -  is an added bonus to the profit line in their production.'

You say 'Silver is a by-product of gold and base metal mines (75-83%' - so that implies 17 - 25% of silver comes from primary silver mines - the rest is a byproduct of non-silver mines. The zinc, copper, lead and gold mines were developed to mine zinc, copper, lead and gold - not silver. If there were only silver quite likely no-one would have bothered.

So the money spent to develop the mine, run the mine, pay miners and so on is done to extract and refine zinc, copper, lead and gold - not silver. Silver is a byproduct. If it is worth anything that is a bonus. So when it comes to non-silver mines the silver could be viewed as a 'freebie' - well not quite b/c there are energy expenses to further refine the waste from for example copper electrolysis.

Now you might well not see it like i do but not everyone sees the world through my eyes.

Edited by sixgun

Always cast your vote - Spoil your ballot slip. Put 'Spoilt Ballot - I do not consent.' These votes are counted. If you do not do this you are consenting to the tyranny. None of them are fit for purpose. 
A tyranny relies on propaganda and force. Once the propaganda fails all that's left is force.

COVID-19 is a cover story for the collapsing economy. Green Energy isn't Green and it isn't Renewable.

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Col Fletcher Prouty, former Chief of Special Operations for the Joint Chiefs of Staff under President John F. Kennedy, explains how oil was falsely classified a "fossil fuel" in 1892. The deception was advanced further in the 1970's by Kissinger and Rockefeller. Prouty also explains that Nixon/Kissinger/Rockefeller were seeking a 'world oil price'.  (8min video).

As the saying goes, just follow the money ! 

Meanwhile, there is still no mention of "Peak Silver" 🤔

 

Edited by Happypanda88
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2 hours ago, Happypanda88 said:

 . . . Meanwhile, there is still no mention of "Peak Silver" 🤔

Thanks Happypanda - really interesting.

 

Just Stop Oil

WHAT IS JUST STOP OIL?

Just Stop Oil is a coalition of groups working together to ensure that the government commits to ending all new licenses and consents for the exploration, development and production of fossil fuels in the UK.

WHAT DOES JUST STOP OIL WANT?

We demand that the UK government makes a statement that it will immediately halt all future licensing and consents for the exploration, development and production of fossil fuels in the UK.

 

I wonder how many Just Stop Oil activists and supporters realise that oil is not a fossil fuel? Judging by the text quoted above from their website - none of them!

B)

Edited by timsk
typo
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I can't stand those Eco-loons, they are useful idiots who hate Humanity.

I bet none of them could tell you how much Metal needs to be mined to build this Green Dystopia, oh and by the way the Eco-loons are also opposed to mining.

If any of them think the World is overcrowded they should lead by example and off themselves.

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53 minutes ago, FriedrichVonHayek said:

I can't stand those Eco-loons, they are useful idiots who hate Humanity.

I bet none of them could tell you how much Metal needs to be mined to build this Green Dystopia, oh and by the way the Eco-loons are also opposed to mining.

If any of them think the World is overcrowded they should lead by example and off themselves.

Ah but they're always of the mindset: 'rules are for thee not for me'.

How many of these folk want to be the planners/orchestrators of these changes but would balk at the idea of living under the conditions they would happily have the rest of us live under?

Edited by SidS
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Ohhhh, are we going to close above £19.17/$24 today?? 

If we do close above that would put silver back on track for bullish technicals (we've been in neutral territory recently)

Markets are highly irrational though like there is no reasonable explanation for these price movements. The "expert analysts" tell us the price action is due to high inflation, it's due to low inflation, it due to unemployment being too high, too low. The latest explanation for the positive movement towards £19.17/$24 is due to an expectation the Fed is going to pause on June 14th. This is questionable as the previous weeks' price action occurred within a window of higher expectation of a Fed pause on 14th June. The latest understanding is there's a higher chance the Fed will hike on 14th June (as I've been predicting all along even when the CME FedWatch gave this only 10% or 1% chance).

The current CME figures say 28.5% chance of a hike on 14th June. My latest predictions are even more bearish than last month. Not only do I think the Fed and the BoE plus the ECB will all raise rates at their next meetings, but I'm also reasonably confident they will continue to raise rates at the next meetings too. My end predictions are the Fed at 6%+ and the BoE at 5.5%+, which translates to 4 more rate hikes. I read this the other day and it has caught up with my predictions from a few weeks ago:

Pound to Euro Rate at Landmark Levels but Fresh Trials and Tribulations Ahead (poundsterlinglive.com)

https://threadreaderapp.com/thread/1661839309996195840.html 

That 2nd link, originally provided by Bully, explains how the Fed and Treasury are going to conspire to enable the Fed to keep hiking - The Fed will engage in QT (i.e. rate hikes and reduction of balance sheet) while the Treasury simultaneously engages in QE (bond buy-backs and other interventions)

Mind is primary and mass-energy is derivative

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A couple of large dojis before todays US open.  The market really isn't sure which way this is going to go.  The £ will just follow along of course.

I can see this stretching up towards 19.7 or turning south towards the mid 17's.

image.png.bb2d3fc4a713230582b3c876a8ee5ebd.png

New profile pic to support the current thing, because it's current year.

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I still think silver is going down soon - we are in market capitulation stage I think?
Lots of exuberance & denial. 

The banking crisis is also old news now. :) 
see what option expirations brings this month. 
I am waiting for a dump in mining stocks. 


 

Edited by Stacktastic
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33 minutes ago, Stacktastic said:

I still think silver is going down soon - we are in market capitulation stage I think?
Lots of exuberance & denial. 

The banking crisis is also old news now. :) 
see what option expirations brings this month. 
I am waiting for a dump in mining stocks. 

Sadly I think I agree with you. The market prematurely called the pause/pivot. There are FOUR MORE hikes on the cards at the Fed/BoE/ECB. Having said that silver should not be below £19.17/$24 regardless and certain mining stocks may well be shed if price falls as some have much higher AISCs than others

Still though the figures are very encouraging for silver 6 months from now. Silver demand is up across the board from bullion and jewellery to industrial applications, with the growth in bullion outstripping the growth in industry. A lot of silver has been swallowed up and removed from circulation on a mid-to-long-term basis. Recent stackers will not shed their PMs IMO and the old stackers are even less likely to sell during a dip

We're set for $30 by Christmas but before then it wouldn't shock me to see silver at $21, although I would be disappointed. Still markets are stupid, silver is under-priced right now and moved down when the market thought there was <10% chance the Fed would hike on 14th June and is now moving up while the market also thinks the chances of a Fed hike are increasing (currently 28.1%). None of it makes sense which I guess keeps things interesting. 

Mind is primary and mass-energy is derivative

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2 hours ago, SidS said:

In May 2024 I reckon silver will be somewhere in the £18.00-£19.99 range.

. . . But there's no way it's gonna hit £20.00, right SidS!

😆

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