BLOOMBERG’S SILVER COSTS ARE OUTDATED As Mining Costs SKYROCKETED in 2012!

By SD Contributor SRSrocco:

GOLD COSTS RISE 23% IN 2011, BUT SILVER COST FALL 7%… SO WHAT, ITS OLD NEWS!

This was the data put in an article Restless investors tell gold CEOs to fix slump.  Maybe silver production costs may have fallen in 2011 compared to 2010 due to the huge increase in price paid for silver and base metals in 2011.  I have not looked into the data to see if it was true, but I can show you what is going on in the first nine months of 2012:

Here are some cost percentages from the top silver miners first nine months 2012 compared to 2011:

 

MINE PRODUCTION COST INCREASES FIRST NINE MONTHS Q3 2012

2011 PAN AMERICAN SILVER = 38.3%

2012 PAN AMERICAN SILVER = 51.3%

2011 COEUR D ALENE = 40.1%

2012 COEUR D ALENE = 51%

2011 HOCHSCHILD FIRST 6 MONTHS = 39.3%

2012 HOCHSCHILD FIRST 6 MONTHS = 49.2%

These percentages are just the direct cost of mining silver.  So, we can see that from the top silver miners, SILVER MINING COSTS have increased significantly since last year.  Bloomberg needs to update its information on the cost of gold and silver mining.  I know of no mining company that is calculating their earnings in 2012 on LAST YEARS COST STRUCTURE.

UNMANIPULATED PRICE = $150

Comments

  1. Makes one wonder why they don’t keep a big part of their product off the market and force a supply shortage untill they get a fair price.

    • That’s what they are doing. Whenever silver’s price goes lower than their cost of producing an ounce of silver, they slow down their productions which then drives silver’s price much higher especially with the high demands.

  2. The hard cost of any business cannot continue upward without the ability to increase the price of the end product. That price increase must be mandated by the producers, not some vagary of  paper price manipulation. When did anyone see the price of a Ford or Chevy paper traded up and down live silver and gold?
     A car manufacturer cannot continue to produce cars in an environment where costs exceed revenues. The same can be said for a car company who is unable to set a retail price when that price is manipulated by external forces.   GM proved that as did the dozens of automobile manufacturers who have failed in the last 70 years.  How many computer companies still operate at a loss for years at a time?  A private business ceases to exist when its costs exceed its revenues and they will do so usually within 1-2 years. Bankruptcy is the fate of firms that lose real cash.  A public firm can struggle along for a few more years but the truth will come out soon enough through public disclosure of their financed. 
    Lately many senior officers and presidents of publicly traded gold and silver miners have been fired due to cost overruns and poor stock performance.  Being fired for incompetence or poor results is the fate of CEOs who don’t produce. IMO The new crew won’t be able to do better. Hard costs don’t change if the organic part of the equation is swept away
    If we continue to see these static silver and gold prices, there will be many more mine failures. Many will be closed and more will be sold to the Chinese. The Chinese will figure out how to make them productive. They don’t care about the bottom line, only the extraction of phyzz.

    • That’s the main problem today when you open up a business in my opinion. Each year, businesses have to face inflation that forces them to raise the prices of their products. But by doing that, it will stop the consumers to buy up their products which lead them to bankruptcy.

  3. I would say it’s the Fiat Dollar weakening that creates the Illusion of Higher Production Costs. Lol

    • Dollar index is 79.86 so it isn’t down much at all. Price of PM’s has been disconnected from the dollar index for quite awhile.

    • Also, I would say that it is the cartel’s fault if the miners aren’t making any profits in terms of dollars due to the low price of silver thanks to their manipulation. I mean it is not economically normal if miners aren’t making any profits on silver which is a precious metal!
       

  4. Perhaps besides withholding some production and accumulating silver reserves on the balance sheet, miners should also seek to sell deliverable bars directly to investors. Make a market with international investors and think big. I’m not talking about selling 1oz rounds and 10 oz bars like some already do to small retail, I mean dealing with larger investors who wish to bypass the CRIMEX altogether and other paper chicanery. People who can stack those big ole 1000 ozer bad boys! Try picking one up and then ask yourself if 19 ozs gold is better… Knowing everything you do about silver fundamentals… DOES NOT compute! Lol

  5. It looks like QE3 is starting to take more effects on the prices and on the USA’s economy along with QE4 that was just released this week. Silver’s new low price might become 35$ per ounce soon due to QE4 or even more. Hyperinflation will skyrocket gold and silver’s prices.

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