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Another Big Month For The Silver Price?

Another Big Month For The Silver Price?

Precious metals investors are wondering if the Silver Rally will continue in September.  After the silver price reached nearly $30 in August, it has been consolidating lower over the past few weeks.  However, silver tried to surpass the $29 level but fell last week along with the broader markets.  So, the trend for silver in September may rely upon the broader markets.

I discussed this in my newest YouTube video update, Another Big Month For The Silver Price?  In the video, I explain some of the forces that will impact the silver price in September.

Furthermore, the $26 level on silver’s weekly chart is a significant support level going back ten years.  As you can see, once silver broke above the $26 level in late 2010, it remained above it until 2013.

We need to keep an eye on the broader markets as they will be one of the larger drivers of the gold and silver prices in September.  However, at some point, I believe the precious metals will DISCONNECT from the broader markets as investors move into gold and silver to protect wealth.

If you have not seen this article, it’s worth a read as Peru’s silver production declined in July, suggesting that the virus is still impacting the mining industry in the country.

With Peru’s silver production declining in July, this could cause more issues in the silver market as investors continue to move into the shiny metal.

CHART OF THE WEEK: Mexico & Peru Silver Production Big Declines Again In May

CHART OF THE WEEK: Mexico & Peru Silver Production Big Declines Again In May

According to the data released by Mexico and Peru’s governmental mining data, domestic silver production continued to be depressed in May.  Interestingly, the production data just released from Mexico’s INEGI shows that the country’s silver production in May was even less than what they reported for April.

I first wrote about this in my article, World’s Two Largest Silver Producers Mine Supply Cut Drastically In April.  The combined silver production loss from Mexico and Peru in April was 432 metric tons or 53% versus the same month last year.  Peru accounted for the largest of the decline in April at 237 metric tons (mt) compared to 195 mt for Mexico.

However, Mexico’s silver production in May dropped to 298 mt compared to 301 mt in April.  Here is the combined silver production by Mexico and Peru from April 2019 to May 2020:

The net loss of silver production from Mexico and Peru over the last three month period (March to May) is 770 mt, or 32% less than it was during the same period last year.  Thus, just these two countries have lost nearly 25 million oz of silver production.  I imagine once we factor in losses of silver production from other countries, we could see upwards of 35-40+ million oz decline so far.

But, this is only PHASE ONE of the collapse in global silver production.  I stated that as the U.S. and the global economy begin to roll-over in the second half of 2020, and onwards, we are going to see a reduction in base metal demand.   With so many people becoming unemployed, the global recession-depression will cause a significant decrease in copper, zinc, and lead demand.  Thus, in PHASE TWO, demand for base metals will decline, and with it, the curtailment of copper, zinc, and lead production.

…click on the above link to read the rest of the article…

The Global Contagion Impacted Silver Production The Most

The Global Contagion Impacted Silver Production The Most

According to a new report released by GlobalData, the global contagion impacted silver production the most while gold mine supply fared the best.  The two largest silver producing countries, Mexico and Peru, have issued temporary shutdowns lasting nearly two months.

Peru, which started its lockdown on March 15th, extended it last week to end on May 10th.  The Mexican Government issued their temporary shutdown on March 30th and have also extended it to May 30th.  With Mexico and Peru on lockdown, a considerable amount of silver mine supply has been curtailed.

I came across this data from the Kitco.com article by Anna Golubova, COVID-19 mining shutdowns hurt silver production the most, gold the least – report:

The latest report from GlobalData looked at different mining sectors and how they have been affected across the globe. Silver fared the worst, while gold was hurt the least out of all the major mining sectors the report looked at. 

There were temporary shutdowns introduced by more than 1,600 mines across 32 countries as of April 3, the report stated. Since then, the total mine shutdown have already dropped to 729, GlobalData added.

… At the end of the day, silver production was hit the most by temporary shutdowns. As of April 27, there were an equivalent of 65.8% of yearly global silver production still on hold, GlobalData identified.

As the GlobalData reports, nearly two-thirds of current global silver mine supply was still on hold. So, it depends on how long these primary and by-product silver mines have been offline.

Here is a chart using the data from the article linked above:

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GLOBAL SILVER SUPPLY COLLAPSE ON ITS WAY: Mexico mining suspension to hit silver supply

GLOBAL SILVER SUPPLY COLLAPSE ON ITS WAY: Mexico mining suspension to hit silver supply

Due to Mexico’s Ministry of Health issuing an Executive Order for the immediate suspension of non-essential activities until April 30th, the mining industry in the country has now come to an abrupt halt.  The mining industry was hoping for an exemption to the Executive Order, but was not granted one.  So, companies are now suspending production and putting their mines on care and maintenance.

According to the article on the Mining Journal website, Mexico mining suspension to hit silver supply:

Under the government decree, non-essential activities are to be suspended immediately until April 30.

The decision is expected to have a significant impact on the supply of silver at a time when demand for silver coins is high. Mexico is the world’s largest silver producer at some 23% of world production and produced more than 200 million ounces in 2019, up from 196.6 million ounces in 2018.

With Mexico shutting down its mines, including the continued closure of Peru’s Mining Industry announced on March 15th, nearly 40% of global silver production is offline. Peru’s government stated that the national quarantine would last 15 days.  However, we have passed that point, and there is no announcement of a return back to work.

Here are the top ten silver producing countries in the world in 2018:

In 2018, Mexico and Peru accounted for 342 million oz of silver production.  If mines in Mexico and Peru remain shut down for a month, that will cut silver production by 28 million oz.  So, each month that Mexico and Peru are offline, would reduce silver mine supply by 28 million oz.  However, I believe we are going to see more countries shut down their mines for an extended period as the global contagion continues to spread.

…click on the above link to read the rest of the article…

GLOBAL DEBT INCREASE 2018 vs. GOLD INVESTMENT: Must See Charts

GLOBAL DEBT INCREASE 2018 vs. GOLD INVESTMENT: Must See Charts

Global debt increased at the fastest rate at the beginning of 2018.  In just one quarter, total global debt jumped by more than $8 trillion.  That is quite surprising as total world debt rose by $22 trillion for the full year in 2017.  Thus, the increase in global debt last year averaged $5.5 trillion each quarter.

However, global debt according to the Institute of International Finance dropped by $1.5 trillion in the second quarter of 2018.  While mature markets saw their debt decline in Q2 2018, emerging market debt increased by $1 trillion lead by China.  In looking at the data from the Institute of International Finance (IIF), they stated that global debt jumped by over $8 trillion in the first quarter of 2018 to $247 trillion, but then declined $1.5 trillion to $247 trillion in Q2 2018.

So, the global debt must have jumped by $9.5 trillion to $248.5 trillion during the first quarter of 2018 and then dropped $1.5 trillion in Q2.  Thus, the IIF must be revising their figures each quarter.  Either way, the net increase in global debt in the first half of 2018 was $8 trillion.

If we look at the following chart below, we can see how the increase in global debt compares to the value of the total global gold investment as well as the value of world gold supply:

From my research, total world gold investment, Central bank and private investment total approximately $3 trillion.  This is based on the data from the next chart that estimates global gold investment of 2.25 billion oz valued at a $3 trillion:

Interestingly, when I did the chart above earlier this year, the market price of gold was trading at $1,330.  Today, it is $100 less.  So, if I want to be totally accurate, total Central bank and private gold holdings are presently valued at $2.8 trillion.  Regardless, global debt increased $8 trillion in the first half of 2018, more than 2.5 times than the value of all world investment gold holdings.

…click on the above link to read the rest of the article…

Two Mines Supply Half Of U.S. Silver Production & The Real Cost To Produce Silver

Two Mines Supply Half Of U.S. Silver Production & The Real Cost To Produce Silver

Just two mines supply the United States with half of its silver production, and both are located in Alaska.  It’s quite amazing that Alaska now produces half of the silver for the U.S. when only 30 years ago total mine supply from the state was less than 50,000 oz per year.  The silver produced in Alaska comes from the Greens Creek and Red Dog Mines.  One is a primary silver mine and the other a zinc-lead base metal mine.

Even though Hecla’s Greens Creek Mine is labeled as a primary silver mine, 56% of its revenues come from its gold, zinc, and lead metal sales.  However, Teck Resources, that runs the Red Dog Mine doesn’t even list its silver production in its financial reports.  Because Red Dog produces one heck of a lot of zinc and lead, their silver production doesn’t amount to much in the way of revenues.

For example, the Red Dog Mine produced 542,000 metric tons (1.1 billion pounds) of zinc and 110,000 metric tons (222 million pounds) of lead, while its estimated silver production was 6.6 million oz (Moz).  According to Teck’s 2017 Annual Report, total revenues from the Red Dog Mine were $1.75 billion.  With the estimated silver price of $17 in 2017, total revenues from 6.6 Moz of silver were $112 million, or just 6% of the total.

In addition, Hecla’s Greens Creek Mine in Alaska produced 8.4 Moz of silver this year, down from 9.2 Moz in 2016.  As I mentioned, the Greens Creek  Mine also generated a lot of gold, zinc, and lead, equaling $182 million of the total revenues of $326 million (including treatment costs).

…click on the above link to read the rest of the article…

CHILE, WORLD’S FOURTH LARGEST SILVER PRODUCER: Mine Supply Down 20%

CHILE, WORLD’S FOURTH LARGEST SILVER PRODUCER: Mine Supply Down 20%

Silver mine supply from the world’s fourth-largest silver producer fell significantly at the beginning of 2018.  According to Chile’s Ministry of Mines, domestic silver production in January declined 20% versus the same month last year.  Chile’s silver production has been falling considerably since its recent peak in 2014.

In just three years, Chile’s domestic silver mine supply fell 10 million oz (Moz) from 50.1 Moz in 2014 to 40.4 Moz last year.  Interestingly, Chile’s silver production is down 20% since 2014 while the country’s copper mine supply is only down 5%.  Because most of Chile’s silver supply comes as a by-product of copper mining, it’s surprising to see such a significant decline in their silver production.

If we look at three of the top four silver producers in the world, Mexico’s silver mine supply in January increased 7% while Peru declined 6%:

According to the official data, Mexico’ silver production increased 29 metric tons (mt), Peru fell 20 mt and Chile dropped by nearly 21 mt.  Thus, overall silver mine supply from these top three producers fell 13 mt in January versus the same month last year.  Even though Mexico will likely experience an increase in silver mine supply in 2018, declining production from other leading countries may curtail overall world supply.

If we look at total silver production from these three countries, the peak took place in 2015 at 373 million oz:

In just two years, the combined silver output from Mexico, Peru, and Chile is down 21 Moz.  Now, what’s even more interesting is the growing disparity in production figures released by the official governments and those collected by Thomson Reuters GFMS and published in the World Silver Surveys.

…click on the above link to read the rest of the article…

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