Total Eagle Sales FEB MAR 2010  to 2014The U.S. Mint sold more Silver Eagles in the past two months than it has ever in the same time-period in previous years.  February and March sales were so strong, they surpassed 2013′s by nearly 2.4 million.
According to the U.S. Mint’s most recent update, sales of Silver Eagles in March hit a record 5,354,000, which was almost 2 million higher than in March of 2013.
If we look at the chart below, we can see how much heavier the buying was this FEB-MAR compared to previous years:

From The SRSRoccoReport:

Silver Eagle Update April 1 2014

The U.S. Mint didn’t update their figures Monday (last day of the month) so I thought they were going to dump these sales in April.  As of Friday, total sales for March were 4,476,000.  However they updated the figures today showing that another 878,000 Silver Eagles were sold on Monday bringing the total for March to 5,354,000.

If we look at the chart below, we can see how much heavier the buying was this FEB-MAR compared to previous years:

Total Eagle Sales FEB MAR 2010  to 2014

2014 FEB-MAR sales were more than double than 2012, and 35% higher than 2013.  Even though sales for the first three months of 2014 at 13,879,000 are lower than 2013 at 14,223,000, this was due to the U.S. Mint restricting sales in January.

I spoke with the management at APMEX today on the subject of Silver Eagle Sales.  APMEX is one of the largest online precious metal dealers on the Internet.  I asked if they knew if Hedge Funds were buying a good percentage of these Silver Eagles (heard from another source in the industry).

He told me that they tried to sell to the hedge fund market years ago, but found that hedge funds rather purchase large silver bars at the lowest spot price.  Even though there might be some Hedge Fund buying he believes the American public and foreigners are purchasing the majority of Silver Eagles.

Industry Analysts Mislead The Public On Silver Mining Costs

Fitting for APRIL FOOLS DAY, Natixis came out with their forecast for silver in 2014 & 2015.  According to the article in Mineweb: $10/oz Silver In 2015 Among Natixis Scenarios:

Natixis analysts Nic Brown and Bernard Dahdah argue the downside to the price of silver is much worse than gold’s given the potential for a sell off in investment silver and the fact silver’s average cash costs are still quite a bit lower – $7 an ounce in Natixis’ estimation – than recent silver prices.

…Indeed they write: “At 19,700 tonnes, the amount of silver held in physically backed ETPs (exchange traded products) is equivalent to almost 80% of 2012’s mined output. If last year’s mass exit from gold ETPs was followed this year by sales from silver ETPs, this could rapidly turn into a substantial new source of supply just as happened with gold last year. Under these scenarios we could see silver prices fall to an average of $15/oz in 2014 and $10/oz in 2015.”

So, if we have a mass liquidation of the Silver ETF’s as experienced by the Gold ETF’s in 2013, Natixis believes we could see $10 silver next year.  It would seem highly unlikely that Global Silver ETF’s would liquidate their inventories unless the world ran out of gold to buy… which would be very bullish, not bearish for prices.

I don’t believe the folks at Natixis realize that the huge liquidation of Gold ETF’s in 2013 were to acquire physical metal to fill the huge demand coming from China and India.

Anyhow… I want to focus on the part where Natixis discusses the $7 an ounce cash cost for silver.  Let me start off by saying… THERE ARE NO SILVER PRODUCERS THAT CAN AFFORD TO MINE SILVER ANYWHERE NEAR $10, much less $7.

For example, Hecla recorded at $1.5 million adjusted loss for Q4 2013, while stating a CASH COST of $7.33 an ounce, net of by-product credits.  If they lost $1.5 million receiving $20.13 an ounce for their silver in Q4 2013, what kind of losses would they incur if the market price was $7 or $10?

Cash Cost accounting is an insane outdated metric that provides no real clue as to the profitability of a company.  Every mining company states in a footnote below their silly cash cost accounting figures, that CASH COSTS are not a GAAP – Generally Accepted Accounting Principle.

Hecla is a perfect example of why this is true.  Cash Cost accounting deducts the by-product revenue (not credits) from the cost of producing silver.  All it does is lower the cash cost figure…. which offers no indication of profitability.

Does anyone ever ask…. At these low metal prices, can a company be profitable without their by-product revenue?  And the answer is… FOR THE MOST PART…. NO.

I still get emails and responses from readers on my site who believe mining companies understate their real costs and have several books to hide the fact that they are ROLLING IN THE DOUGH.  Folks… that’s simply HOGWASH.

If we look at my top 12 primary silver miners Q1-Q3 2013 results, we can see that they made a PALTRY $1.4 million in adjusted income on $2.3 billion in revenue as a group selling nearly 70 million ounces of silver.  This was at an average realized price of $24.58.  Basically, the group gave away SILVER FOR FREE.

Top 12 Silver Miners Total 2013 Metrics

Because the industry still focuses on the CASH COST metric, investors are still confused as to the real cost of mining silver.  I will be explaining this in more detail in an upcoming FREE REPORT.

Natixis is a Global Financial company in France, which recorded a one Billion Euro profit in 2013 on shuffling paper.  Compare this to a dozen top primary silver miners selling an estimated 95 million ounces of silver during the entire year while stating an adjusted income loss.

Sounds fair… doesn’t it?

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  1. Well in an odd stroke of luck I have some dry powder and if we get a beatdown I’ll be buying 300 or so ounces.

    What is remarkable is the Mint conducting funny business in January to retard sales. They’ve almost caught up now. Talk about blowing up in their faces.

  2. Anyone out there want to explain how I’m ‘all wet’ suggesting that PM miners … auction … their metals in collaboration with a fabrication center (smelt, assay, (pour), roll, stamp, mint operation) in an ‘E-Bay’ type of set-up, where they can offer consumer bars and rounds directly to the public starting at their production cost minimum bid?

    The bullion bank skanks and phony ‘exchanges’ do NOTHING for the miners but screw them … and as far as I can tell, always have! The miners produce real money! It’s long past time they learn how to deploy it with a little more smarts!

    Oh and BTW … I noticed the Mineweb site has no ‘comment’ section. I guess their skin is too thin and delicate to withstand the flame-throwing they’d have to suffer featuring such idiotic tomes.

  3. Well if the cartel decide to knock it down that far, I’ll back up the truck. If you look at other commodities such as oil, in the year 2000, oil was roughly $20-$30 a barrel, oil is roughly $100- $115 today so if you apply the same inflation to silver it is trading at true value in this price range. Now when people start looking at a safe heaven to conserve their wealth it may have greater value. Thus an increase in value. It is quite possible that oil as well has been cap. It’s hard to have true value discovery in these markets. If miners were subsidized as are oil companies and farms, then I could see silver sub $15.

  4. I am amazed at the patience you people demonstrate. To look at sub-$20 silver, miners making fat losses, and just keep on watching it unfold, sitting on you toxic paper. More afraid to miss out on $15 silver than to have to pay $25?
    My perspective : I lost all my money in silver long in the 2011 smash down. My first physical was around $33. Only been buying below that since. $20 to me is a steal. It certainly is a steal to someone, if the mining cost is higher than what I pay for a round!
    I am buying this $20 silver, and buying it smartly as I can. While you guys sit on the sidelines, my Peregrine Falcons will soon accumulate soe nice premium. In a year we may still not have seen that $15-17 silver, but I’ll have made profits, and reinvestments from my current purchases to get my effective price down to that. It may be a bit labor-intensive, but MAN do I sleep well being broke and owning the silver that’s working and growing for me.

    • Who said miners are losing money, SRS? First Majestic is post larger profits each quarter.  Don’t believe everything you read, SRS also called for $100 silver in 2013.

      FM also published their cost per ounce.
      •Total cash cost of $9.66 per payable silver ounce in Q4 2013; Full-year cash cost of $9.35 per payable silver ounce

      Don’t worry, lower prices are coming to those looking to “back up the truck.”

      “I’m proud to say First Majestic’s team took quick action to reduce capital costs and delivered one of its best performances over the Company’s 10-year history,” said Keith Neumeyer, President and CEO of First Majestic. “Having successfully commissioned the new Del Toro operation in 2013, which became our fifth producing silver mine in Mexico, First Majestic delivered record annual production and achieved the milestone of producing over 10 million ounces of pure silver in a single year all while maintaining our low cost profile.”

  5. BTW, I will be that broken record and call this metric the Dumbo Index.
    Who’s buying these Eagles? And why are they paying such a high premium over Maples? And who are Maples buying paying such a premium of generic rounds? No real prospect for numismatic value growth, bogus calls of being well-recognized. It’s well-counterfeit is what it is.
    Growing Eagles sales tell me the DUMB money is being tricked into buying silver.
    WTH would hedge funds burn their hands on Eagles? They’re supposed to be the smart money, right? And if they buy, certainly too much to dream of exercising any numismatic plays. They’re basically forced to get 100oz bars or bigger.

    Buy a pretty low-premium round. Get more silver for your buck, and a chance of value growth beyond the 40-million-mintage Eagle. Especially when you’re not investing hedge fund like money.

    • I understand the new maple design with the anti counterfeiting design is apparently quite popular. With respect to premium the local place here a maple costs 1.25 more than a generic round and I get a dollar of that back when I sell it so that isn’t a big deal.
      With respect to waiting for a price drop I agree. My only point is that I’m buying at these levels, but if we get a smashola than I’ll just allocate more currenct than I otherwise would have.

    • That’s a really low spread om Maples you got there! The slightest of price swing is enough for you to trade then.
      I am all-in, with no montly purchase power. I flip some silver to try and get ahead, but I have no cash to sit on and wait for lower prices. I go a bit deeper all-in around these (in Euro very close to bottom) levels perhaps, but that doesn’t make a real difference. 

      While I really like the new Maple, I wonder what the counterfeiters will do about it. Will they try? Or stick to 2013 and prior to try and scam us into buying?
      At Provident I see OPM Rounds for $20.65 and Eagles $23.20-22.40 depending on volume. That’s a crazy premium to pay if you have the choice. Let’s say a serious staccker tries to get a tube per month. They’re $22.80 then, you get 9.5% less bullion for your money ith about the highest possible guarantee of NO collector value. Mintage circa 50 million.

      And foreigners buying Eagles? I’d like to know in which country the Eagle is still super popular. USA, you hear this pretty much everywhere, has risen to being the least loved country in the world. Pay such a premium for the privilegde to buy their mintage? 

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