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Important Factors Impacting The Gold & Silver Supply And Price

Important Factors Impacting The Gold & Silver Supply And Price

The majority of analysts still don’t understand that gold and silver are based on two different price or value functions.  To understand the future forecasts for precious metals, investors need to the difference between the two value functions.

In my newest video update, Important Factors Impacting Gold & Silver Price And Supply, I discuss in detail the two different price functions and why the current commodity-based mechanism differs from the precious metals “Store of Value.”

In the video, I explain why the “commodity-priced mechanism” is important as a floor for the gold and silver prices.  Unfortunately, because Harry Dent doesn’t understand this mechanism, he continues to put out faulty and incorrect analysis on the gold price.  Dent stated in his April 13th video update that during the next deflationary collapse of the markets, gold would head back down to $900-$1,000 or the lows of 2008 at $700.

Dent’s gold forecasts continue to be wrong because he fails to incorporate the impact of “ENERGY” and the “COST OF PRODUCTION” on the gold mining industry.

I updated Barrick and Newmont’s combined total production cost versus the gold price for Q1 2020, and was quite surprised.  Again, I explain why I don’t see gold heading anywhere near $700 due to the significant increase in cost to produce the yellow metal since 2006 when gold was the same price.

This video took longer to publish then I had planned due to the research.  I was quite surprised to see Barrick and Newmont’s total production cost rise to nearly $1,400 an ounce for Q1 2020 versus the $1,272 average for 2012, when oil prices were over $100 a barrel.

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

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…

How The Investor Fundamentally Changed The Silver Market

How The Investor Fundamentally Changed The Silver Market

While silver investors continue to be discouraged about the low price, the market has experienced a fundamental change that needs to be understood.  Ever since governments removed silver from official coinage, over 50 years ago, the market has been supplemented by several billion ounces of silver.  The majority of that supply has been depleted.

The reason the United States and other countries stopped producing official silver coinage wasn’t due to any monetary conspiracy; rather it was based on a straightforward problem; supply versus demand.  Because industrial silver consumption had skyrocketed after World War 2, the silver market would have suffered deficits if the U.S. Treasury didn’t sell silver into the market.

It was quite simple; there just wasn’t enough silver to go around.  So, governments started to reduce, then eliminate silver from their coinage in the 1960’s.  A lot of this silver, known as “junk silver,” was either purchased by investors or remelted and sold back as supply into the market.  While there is no way of knowing how much of the older official junk silver remains in the market, the majority of it was recycled for much-needed supply.

We can see the dwindling down of government stocks and older official silver coinage in the following chart:

The BLUE bars represent silver scrap supply, and the OLIVE colored bars show the amount of net government silver sales.  From 2000 to 2013, governments sold 636 million oz (Moz) of silver into the market.  Net government sales were from stockpiled silver and older official coins.  However, in 2014, this supply totally dried up.  For the past four years, there haven’t been any government silver sales.

Another interesting aspect of this chart is the declining amount of silver scrap supply.  Even though the price of silver during the 2015-2017 period was much higher than from 2000-2007, scrap supply is considerably less.

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

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