Silver Monitoring Thread £ (GBP) only.

[CazLikesCoins]

8 minutes ago, silversky said:

Only in as much as anything matters.  I'm simply musing on the implications for price as this development becomes clearer to investors over the coming weeks.  If shipping insurance is denied, the world's number one fertilizer hub would be taken offline.  It all depends on whether this new approach is condoned or condemned by our illustrious leaders.  If our ally is allowed (or even quietly encouraged) to continue this new course of action, inflation (and by extension further rate rises) is the most likely outcome.  Perhaps there are some who would wish their national debts inflated away, all the while blaming others for the inflation....

As you say, most of us here are just into gold or silver as a hobby.  But the price does matter, and I see turbulence coming if this development isn't immediately halted.

I view our western governments as lovers of waterboarding the populous. They'll never quite let us drown, but love to keep us feeling like we are. I have every faith in politicians keeping their gravy trains running indefinitely. They're excellent train engineers and the rest of us are along for the ride. Perhaps in cattle class, but we're on the train nonetheless.

[timsk]

6 hours ago, CazLikesCoins said:

I view our western governments as lovers of waterboarding the populous. They'll never quite let us drown, but love to keep us feeling like we are. I have every faith in politicians keeping their gravy trains running indefinitely. They're excellent train engineers and the rest of us are along for the ride. Perhaps in cattle class, but we're on the train nonetheless.

Brilliant post CLC - a depressingly accurate assessment of the relationship between us plebs and those who rule over us. 

[CazLikesCoins]

12 minutes ago, timsk said:

Brilliant post CLC - a depressingly accurate assessment of the relationship between us plebs and those who rule over us. 

It's a co dependant relationship with a whole lot of gaslighting thrown in. 😅

[HonestMoneyGoldSilver]

Well this is probably it - our last summer dip

I heard several prominent YouTubers putting a floor of $23/£18 on silver and I hope they're right but we've dipped below $23 today and are still trending down

Depending how markets react and what the Fed/ECB/BoE and BRICS get up to, I see potential for another 5% dip to $21 and change or around £17.10 ish. For me that is the new bottom for silver based on AISC and TA but it's possible we could go all the way back to $20. I think that's unlikely but $20 is a very solid floor for silver, it literally can't go much lower or miners will be losing money. I think $21/£17.10 is a realistic shout for the bottom of this current cycle, if we're not already at or near the bottom today

Takes a brave person (or an idiot) to catch falling knives but it's not such a risk if you've got a good look at the floor and believe it to be fundamental

We definitely could see another few % scrubbed off the spot price but IMHO anything below $22 is a good buy, $21 (a bit above £17) I will be buying a lot and $20 (<£17) I will back up the truck

We might get close to these lows again this time next year but there's a compelling argument this could be the low point for a decade or longer

[silversky]

@HonestMoneyGoldSilver I certainly agree with your longer term outlook and even think there's a good chance of this price being revisited next year.  The mining floor is the cost of energy, and it's a serious floor on a number of metals including Silver.  After the markets opened this week, the price of oil briefly rose before tracing out an abc pattern to the bottom of the recent trendline.  It has since rebounded sharply today, back to last weeks close.  Given the tensions and sanctions at the moment, I just can't see energy getting any cheaper in the short term.  

It seems kind of strange that the threat of inflation and rate rises seems to have a negative impact on Silver, but it might not last for long if the inflation is caused by expensive energy which reduces production.  When the cost of mining becomes prohibitive, it doesn't really matter how bad the world economy is, inflation causes prices to rise.  The question is though, will they rise in real terms?  I suspect not.  For a real terms rise in Silver, the economy needs to be healthy, and inflation needs to be under control.  I'm not a proponent of financial stress causing massive rises in the price of Silver.  Gold maybe, but not Silver.

As I've said before, I'm pretty ambivalent on the near term price for Silver, longer term I think it's a pretty safe bet, but it might not be until after a big crash before the next cycle begins properly.  This little correction we've been having recently has actually been really mild by most standards, and I think we're going to need to see some big mining failures before a real fire gets under Silver again.  A rising oil price may just do that...

[silversky]

Just to add to my last post,  I actually think that energy will come down in price again next year.  My reasons are based on the impossibility of the West to actually win or achieve its goals in Ukraine.  Even CNN is now talking about the progress being "sobering"...  The cost is simply too much for the US, so a settlement is likely to be reached before this time next year.  Such a settlement would likely bring down the cost of energy, reducing inflationary pressures and the threat of any further rate rises.  If that scenario pans out, I see it as being positive for Silver next year.

[HonestMoneyGoldSilver]

1 hour ago, silversky said:

Just to add to my last post,  I actually think that energy will come down in price again next year.  My reasons are based on the impossibility of the West to actually win or achieve its goals in Ukraine.  Even CNN is now talking about the progress being "sobering"...  The cost is simply too much for the US, so a settlement is likely to be reached before this time next year.  Such a settlement would likely bring down the cost of energy, reducing inflationary pressures and the threat of any further rate rises.  If that scenario pans out, I see it as being positive for Silver next year.

Having listened to Colonel Macgregor I've been pessimistic about Ukraine's chances for a while. The only side playing for victory is Russia. Both sides are playing for a positional advantage when negotiations finally materialise. Russia wants Crimea and Sevastopol, with that being non-negotiable for them. Ukraine wants back the east of its territory and also wants Crimea. Whoever "wins the war" will get control over Crimea and that's looking like Russia

With regards energy of course it's a vital component of inflation and one of the important factors in mining overheads but NOT the most important factor. 

The percentages provided below are approximate and can vary depending on the specific circumstances of the mining operation. However, here is a generalized breakdown:

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 labour 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 centres. 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.

Obviously higher energy costs result in higher mining costs but it's a complex relationship. The most important factors are labour, equipment and machinery. The labour component is not governed by the spot price of oil. When increases in wages take effect it's more difficult/impossible to roll back these increases. If overall inflation including energy drops or turns negative, those current wages are going nowhere and agreed future increases still apply

The above list captures some of the costs of finance and ESG but not all of them. Environmental compliance in extreme cases can be equivalent to the total cost of energy. Overhead and administrative costs can spiral due to WACC/cost of finance:

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

Have WACCs changed for December 2022 financial year ends? (pwc.com)

What is driving the increase in inputs to observable WACCs?

 

We have observed a notable increase in the market’s current expectation of long-term risk-free rates in a number of countries. While the risk-free rate is by no means the only variable that has changed or is changing, it is arguably the variable in the WACC calculation showing the largest relative change over the last year in many instances.

Below is an extract of the yields on 20-year government bonds (often assumed to represent the long-term risk-free rate):

 

Country	Government bond	30 Nov 2020	29 Nov 2021	28 Nov 2022
Australia	20-yr	1.67%	2.19%	3.97%
Canada	20-yr	1.00%	1.77%	3.09%
Germany	20-yr	-0.33%	-0.29%	1.93%
United Kingdom	20-yr	0.86%	0.98%	3.46%
United States	20-yr	1.48%	1.82%	3.97%

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

The WACC does not correlate 1-1 with risk-free rates although increases in the risk-free rates will increase the WACC. The cost of finance at all levels of every business are increasing but this is particularly concerning for enterprises like mining - which tend to struggle on ESG scores and thus capacity to raise finance on capital markets at competitive rates or secure long-term finance at preferable rates. 

That's my TL:DR way of saying the cost of energy is not the most important factor in the AISC for the precious metals and mining industries

Recession means a reduction in demand and the velocity of money but it's not immediately obvious that a recession would cause a reduction in demand for silver. Due to ESG and planetary development, under recessionary conditions the demand for silver may not rise as fast as previously anticipated but it's still on an inextricable march upwards. If governments are stupid enough to make it law that ICE vehicles can't be sold after 2030 or 2035, that will put an enormous burden on silver and other supplies when added to the demand for solar panels, electronics more generally, photography and yes, even stackers! The silver market as a whole is growing and industrial uses are growing but stacking (bullion) is growing at an even faster rate than industrial uses

Silver might not make us rich but it's a good bet it won't make us poor over the next decade

 

[silversky]

I certainly consider it to be a safe long term bet.  I have almost no doubts about that, and agree with your logic about a strong floor.  But it's a bit like copper in a way, which even though it too is absolutely vital, goes through some real downturns when economic demand falls off.  The question really is, "do you think the economy is going to pick up any time soon and roar like the 80's?"  Personally I feel that some nasty corrections overall are required before a better mood (certainly in the west) grips people around the world again.  I think there is a "just getting by" mood at the moment.  A surviving hard times attitude.  Probably when that is at its darkest will be the time to get in big into resources such as Silver.

[HonestMoneyGoldSilver]

On 28/07/2023 at 13:50, HonestMoneyGoldSilver said:

As for the article you quoted I'm shocked they can call 0.03% a cut while keeping a straight face. Let's see if UK lenders cut or hike the week of August 3rd

How did that work out?

Average mortgage rates in the UK are up this week. The best rate a couple of weeks ago was 4.90% initial term (75% LTV, £70K deposit on £280K, 25 years, 2 year fixed)

Today the best initial rate (2 year fixed) is 4.93% initial with a 7.6% APRC (Annual Percentage Rate of Charge)

The best overall deal, or close to it, is from Nationwide with 5.04% initial and 6.1% APRC with a 10-year fixed

The average 5-year fixed (6.44%) costs less than a 2-year fixed (6.79%), indicating lenders expect monetary conditions to loosen over the next 5 years (rates will fall)

Still though the cost of mortgages is on the rise, there is at least one more rate hike to come from the BoE and it will be 3 years before people get significant relief. It will also be a year at least before the entire mortgage market catches up with these rates - i.e. the average rate today in the UK is around 3% while the best rates available today are 4.93% initial and 6.1% APRC, respectively. That 3% figure is going to tend towards 6% as time goes on, meaning the economy has not yet felt the full consequences of BoE rate hikes

Compare Mortgages: best mortgage rates & deals UK | Uswitch

This isn't a mortgage thread but it's relevant to silver in a roundabout way. How is the USA getting on if our best deal is 6.1% APRC?

https://www.kitco.com/news/2023-08-09/U-S-mortgage-rates-spike-to-highest-since-November-approach-22-year-high.html

The average 30-year mortgage rate shot up to 7.09% for the week ending Aug. 4, a 16 basis point increase from the previous week's 6.93% rate, according to a weekly report released by the Mortgage Bankers Association. Rates have not been that high since November 2022, which were then the highest levels since 2001. Potential borrowers adjusted promptly to the surging cost of borrowing: the mortgage applications index - a measure of total mortgage application volume - fell 3.1% to a six-month low of 194.5.

The above situation is mirrored in the EU and this is likely to equal recession or stagnation for the next 2 years. How we've avoided a recession thus far is a minor miracle, it's actually called that by some - "the miracle of how the Fed raised rates without causing a recession" - but our luck is due to run out

Most people lean towards a recession being negative for silver and it probably will be in isolation over the short-term. In the long-term though it's positive for silver. The biggest bull runs in gold have occurred while the stock market has been break-even or dropping (gold and stocks are negatively correlated). A prolonged recession as indicated by the S&P would thus be expected to boost gold, with silver having roughly a 0.80 Pearson's coefficient with gold (when gold goes up, so does silver). I've also discussed silver's recession-resistant industrial and stacking properties in other comments

[Stacktastic]

On 08/08/2023 at 18:06, HonestMoneyGoldSilver said:

Well this is probably it - our last summer dip

I heard several prominent YouTubers putting a floor of $23/£18 on silver and I hope they're right but we've dipped below $23 today and are still trending down

I have $22 if the CPI is not great tomorrow. 
I am a buyer at this level on paper anyway. 

Palladium also setting up nicely. 

Energy up good & the markets wobbling slightly so its an interesting set up we are moving into. 
I am hoping for some decent drops in the mining stocks - looking like that might be a possibility. 

 

Edited August 9, 2023 by Stacktastic

[Stacktastic]

1 hour ago, HonestMoneyGoldSilver said:

The best overall deal, or close to it, is from Nationwide with 5.04% initial and 6.1% APRC with a 10-year fixed

Flipping hell I am so grateful that I fixed for 10 years at 2% now!! I was lucky my 5 year ran out in 2021!! 
I wanted to fix it at a lot less in 2020, but not sure the penalties would have been worth it?? 

Thanks to @MancunianStacker btw. my mortgage man.  

Edited August 9, 2023 by Stacktastic

[silversky]

It certainly is an interesting setup.  Oil is currently just sneaking a new high for 2023.  If it does breakout due to further threats to supply, I can see this blasting through resistance and reimposing inflationary pressures.  There was some hope that inflation had been tamed to some degree, and that rates might stabilise, but a forceful oil price could well kick that into touch.  The US numbers will be interesting, and I think it's a near certainty that Silver will touch the trendline.  A drop all the way back to the low in March could also be on the cards.  Such a drop would be a pretty solid entry for buy and forget.

[MancunianStacker]

7 hours ago, Stacktastic said:

Flipping hell I am so grateful that I fixed for 10 years at 2% now!! I was lucky my 5 year ran out in 2021!! 
I wanted to fix it at a lot less in 2020, but not sure the penalties would have been worth it?? 

Thanks to @MancunianStacker btw. my mortgage man.  

You’re welcome mate! I still have 6 years left at 2.89% 😮‍💨 

I have a feeling even when I come out of my fix it could well be 4%, so overpaying now, if I can is my aim.

[MBTPSilver]

I did a small top-up yesterday at £17.87-ish, but if US inflation comes in hot today I think we'll see it drop towards £17.50. If we drop below £17 I'll be topping up a bit further as well.

[Joshp]

1 hour ago, MancunianStacker said:

You’re welcome mate! I still have 6 years left at 2.89% 😮‍💨 

I have a feeling even when I come out of my fix it could well be 4%, so overpaying now, if I can is my aim.

I'm currently looking for a mortgage broker, (a good one). Are you able to offer any guidance? 🙂

[katyc]

As we know, low interest rates are not good for an economy as they encourage too many trash zombie companies and cocky chancers. It's unfair competition for legit, decent grafters who've worked hard to build up a business. And it means that customers receive a higher risk of poor quality goods and services.

But I can't help think that when it hits the fan, they'll just crash rates down again. It will be the only way to get the economy back up and running. Japan has had practically zero rates for decades and decades. God knows how they've got away with it (it probably helps that they're polite, hard working people and not rent-a-sparkle social media whores - nor do they create Tik Toks that encourage stealing).

We all know that low rates are not sustainable for a good econony. But if we crash hard, I just feel that will be their answer (especially if a general election is due).

Perhaps this time, they have learned (insert sarcastic laugh here) and they edge rates back up a little quicker than they did with the ridiculous post-covid free ride. So, hopefully, they will sustain a little more realistically higher long term. But, sadly, they will want the social media show-offs to distract people and encourage them to buy more c**p (on low cost finance) to get the economy up and running again because they want our taxes and they don't care how. Repulsive isn't it!

Edited August 10, 2023 by katyc

[EdwardTeach]

1 hour ago, katyc said:

rent-a-sparkle social media whores

Such an apt description! Much better than the ‘bougie broke’ hashtag doing the rounds on social media at the moment.

(The Urban Dictionary website defines ‘bougie broke’ as the state of being in “constant danger of maxing out cards or being broke for real” but being so spoiled “you cannot tell yourself no” – especially for “little treats”)

Edited August 10, 2023 by EdwardTeach

[silversky]

From the bbc website

Not great rates obviously, but perhaps there is some internal messaging going on.  I suspect that they're trying to lock in as many customers as possible over the next year before an anticipated return to zero rates when things turn south...

[Petra]

Up to 0.7%? I suppose every little helps😮🤔

[Stacktastic]

2 hours ago, silversky said:

I suspect that they're trying to lock in as many customers as possible over the next year before an anticipated return to zero rates when things turn south...

exactly what i was thinking. Or locking them in on a safe deal while the economy falls apart. 
Ie make a slight loss on the competition but have more stability to offset thier more iffy lending!! 

14 hours ago, MancunianStacker said:

You’re welcome mate! I still have 6 years left at 2.89% 😮‍💨 

I have a feeling even when I come out of my fix it could well be 4%, so overpaying now, if I can is my aim.

Is this advisable then? I might do that than fanny about with my rum and my stocks and stuff. 
I think i set it for 17 years with 10 years fixed. having a house in 10 years might make more sense,

but not if its worth half the value - thats a real issue to me as they are so over valued. 

Or why bother if I will own nothing and be happy??  

Edited August 10, 2023 by Stacktastic

[silversky]

13 hours ago, Stacktastic said:

but not if its worth half the value - thats a real issue to me as they are so over valued. 

It's value in toilet paper is not really relevant.    Demographic forces are unlikely to reverse for several decades in the UK, and freeing yourself from having to pay ever increasing amounts of toilet paper rent is valuable to you.  The only way the supply of renters and potential owners is ever going down, is if a forceful government retroactively cancels a load of new British citizens, and starts deporting them.  Such a move is virtually impossible in the modern global world.  The last time someone tried that sort of thing, the global community railed against them, and a world war ensued.  We'd have far worse problems to worry about if such a situation developed again.  Basically, housing pressure is here to stay.  It'll be bickered about as always, and tinkered around with ineffectually from time to time, but ultimately it is here to stay certainly until the boomers and gen x die off in large numbers.  It's good to relieve yourself early... of any requirement to pay toilet paper charges every month. 

 

[theman73]

34 minutes ago, silversky said:

Demographic forces are unlikely to reverse for several decades in the UK

Nah, can happen overnight, 1mil east Europeans went back home because of Brexit.

Our beloved government, to compensate the less presure on housing, issues last year 700k (record year ever) visa for non Europeans, in the same time they show live the flight to Rwanda or the floating hotel... those 45k dinghy guys are just a small number compared with the 700k visa but they show them everyday on the TV to looks like an invasion. The real invasion is happening at Heathrow, Gatwick and Stansted but its an approved invasion by our government .

Don't be fooled, the government make the pressure on the housing market, without those immigrants the whole housing market will collapse throwing UK 30 years back.

They can simply cut the free housing for immigrants (like every country do it) cut the £100/week pocket money and I will guarantee that the number of immigrants will have a minus before it.

If they do this the UK will collapse so we will still watching the dinghy guys arriving on British offshore many years from now. They have no choice but to accept them, with open arms I'm afraid.

Edited August 11, 2023 by theman73

[silversky]

2 minutes ago, theman73 said:

Nah, can happen overnight, 1mil east Europeans went back home because of Brexit.

Our beloved government, to compensate the less presure on housing, issues last year 700k (record year ever) visa for non Europeans, in the same time they show live the flight to Rwanda or the floating hotel... those 45k dinghy guys are just a small number compared with the 700k visa but they show them everyday on the TV to looks like an invasion.

Don't be fooled, the government make the pressure on the housing market, without those immigrants the whole housing market will collapse throwing UK 30 years back.

They can simply cut the free housing for immigrants (like every country do it) cut the £100/week pocket money and I will guarantee that the number of immigrants will have a minus before it.

If they do this the UK will collapse so we will still watching the dinghy guys arriving on British offshore many years from now. They have no choice but to accept them, with open arms I'm afraid.

Do you realistically see any government coming to power who will not continue this policy?  I don't.  

[theman73]

3 minutes ago, silversky said:

Do you realistically see any government coming to power who will not continue this policy?  I don't.  

You are right, they have no choice. 

 

[silversky]

11 minutes ago, theman73 said:

You are right, they have no choice. 

 

It would take massive negative flows to change significantly the demand floor on housing.  Many of the recently imported care workers are living four to a room in shared accommodation.  Even if many were to leave, there would still be enormous demand for better living conditions amongst those who remained.  Add to that the near 100% increase in certain building materials, and the idea of building houses to make them cheaper is simply off the table.

I would be interested to see a long term chart of house prices vs ounces of Silver if anyone has one?  I'm aware that one exists somewhere for gold, but I'm curious to see one based on Silver.