ORTHODOX SILVER ANALYSIS IS USELESS IN DETERMINING FUTURE SILVER INVESTMENT DEMAND

SRS3By SD Contributor SRSrocco:

The problem today with the typical analysis coming from the BULLS & BEARS concerning future silver investment demand and price is that it is based upon an ENERGY SYSTEM that is more than 1,000 years old.  You cannot understand silver if you DO NOT UNDERSTAND ENERGY.

Most of the investing public and the folks from FOFOA have no clue how energy will impact the future silver investment demand as well as its price.  They FAIL TO THINK OUTSIDE THE BOX.

SILVER INVESTMENT DEMAND WILL BE HOTTER THAN GOLD.

…mark my words!

 

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The problem today with the typical analysis coming from the BULLS & BEARS concerning future silver investment demand and price is that it is based upon an ENERGY SYSTEM that is more than 1,000 years old.  You cannot understand silver if you DO NOT UNDERSTAND ENERGY.

This is my biggest BEEF with the folks in which I have a lot of respect in the precious metal community… as well as the NITWITS in which I hold very little.  As I stated before, I was writing about DECLINING ORE GRADES 4-5 years ago when most were talking about how great the gold and silver stocks were going to perform.

Well, we found out in the past several years just how bad the mining stocks have performed and how fast the ORE GRADES HAVE FALLEN.  I also believe today, that the same ANALYSTS are missing the important fundamental when making their forecasts…. and that is ENERGY.

For example… this was Endeavour Silver’s newest Press Release;

Endeavour Silver Delivers 8th Consecutive Year of Production Growth in 2012; Silver Production Up 20% to 4,485,426 oz, Gold Output up 77% to 38,687 oz

This was great news from Endeavour as they are increasing reserves as well as production.  However, this is what they failed to mention to the investing public:

ENDEAVOUR SILVER PRODUCTION DATA

2007 silver production = 2,135,484 oz

2007 tonnes milled = 291,561

2007 average silver yield = 7.3 oz per tonne

2012 silver production = 4,485,426 oz

2012 tonnes milled = 1,065,689

2012 average silver yield = 4.2 oz per tonne

Q4 2012 silver production = 1,235,026 oz

Q4 2012 tonnes milled = 362,799

Q4 average silver yield = 3.4 oz per tonne

———————

So, Endeavour has doubled its annual silver production since 2007, but has done so as its average silver yield has declined in HALF.  Thus, Endeavour is consuming more energy to produce the same oz of silver than it did 5 years ago.

Most of the investing public and the folks from FOFOA have no clue how energy will impact the future silver investment demand as well as its price.  They FAIL TO THINK OUTSIDE THE BOX.

SILVER INVESTMENT DEMAND WILL BE HOTTER THAN GOLD.

…mark my words.

 

SD Bullion

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Comments

  1. Any thoughts on how energy costs will change the base metal mining from which the majority of silver is obtained?

  2. exactly! so more energy to produce and you can not make energy without silver unless you have water…I heard like 180 million oz of silver a year just for one year of Chinese solar production….more energy to make silver, more silver to make energy

  3. The info presented in this article is clear and easily understandable.  I do not know how reasonably intelligent people can’t be picking up on it when they are evaluating silver companies as potential investments.  Mining is an energy intensive endeavor.  Digging, hauling, crushing, grinding, and refining silver and gold from their ores takes LOTS of diesel fuel.  This is what seems to be raising the floor under silver and gold prices, which is why I believe that we will not see $20 an oz. silver again unless by some miracle diesel fuel suddenly becomes much cheaper… and just how likely is that?  Not very, IMO.
     

  4. SGT Reports used to have a chart showing the PMs mining production numbers. It’s not there anymore. It was handy to see the ratios of metals coming out of the ground.

  5. SRS:  BEE-U-TEE-FUL piece (as usual).  There are always gonna be those that just don’t get it.  Fortunately, most of the posters here DO!  Thanks for sharing!

  6. Yes i would also like to thank you for your research into this fundamental.

  7. Human energy must also factor into the extraction cost equation.  14,000 Platinum miners were laid off after their strike with a main Pt miner shutting down 5 mines in response to labor costs which made these mines unprofitable.  Pt is up well over $150 an oz in the last month or so.

  8. Doc should have an interview with SRSRocco.  He is virtually the only one on this site who makes sense to me.  SRS breaks down the facts and digs deeper than many people who rant and rave over at KWN (for example)
    SRSRocoo often posts here, however I really think your messages could have wider communicative potential via interviews and podcasts:  the message is spread even further via Youtube
    Thank you again SRSRocco for an excellent evaluation of the “True cost of silver production”
    I always look forward to your posts

  9. Stay on message, Steve! At some point, you’ll become the ‘Dr. Doom’ of mining stocks and we’ll lose you to constant requests from the MSM for interviews worldwide. For the moment though, some of us here at cozy, humble little SD, relish your unique contributions to our consciousness. That we largely have your reflections to ourselves is a gift!

  10. A FEW WORDS OF APPRECIATION
    I just want to thank everyone for the replies and comments.  Of course it is always nice to get positive feedback… but I do appreciate those who offer differing opinions.

    Furthermore, its great that DOC posts my work at SILVERDOCTORS.  You would be surprised at how far and wide his readership has become on the Internet.

    It would be great to do an interview with the DOC at some point in time.
     
    ABOUT THE MINERS
    Even though I have put out information that shows the miners “AS THEY ARE” and not the hype put forth by some in the precious metal community that say they are “UNDERVALUED”… I believe we will see a big change in stock prices within the next several years.  The current negative sentiment reminds me of how everyone felt about the miners back in late 2008, early 2009 when you could pick up SLW for $2.50 a share.

    We must remember, the best and safest place to put ones money is in physical bullion.  However, as the price of GOLD & SILVER reset to much higher prices as the FIAT MONETARY SYSTEMS really break-down (and we have a gold-backed trade settlement system), there will be a rush into the mining stocks that will surprise the current worst skeptic.

    This is not something that I “HOPE” to happen… but rather, a PRAGMATIC SHIFT of investors from more RISKY STOCKS, to those with the least amount of risk. Of course, nationalization is still a risk, but I would say, Mining stocks on average will be a better bet in the future than Bank & Financial Stocks.
     

    • If anyone truly wants to know the real Gold and Silver fundamentals, look up SRSrocco articles. In my opinion, he is those very few good men who offer facts and figures.
      You want to compare Jim Sinclair, David Morgan and SRSrocco? I take SRSrocco anytime.
       

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