Average Production Cost of Silver

[gunDriller]

The first time I did a search, I got 3 web pages with costs in the $21 to $22 range.

However, that was not enough. I was talking to a coin dealer last night and he said he had been talking to one of his friends, and some of the prices were lower (he mentioned $3 an ounce), and so I took a second look.


https://www.google.com/#q=average+production+cost+silver

e.g. GoldCorp sells Silver to Silver Wheaton for about $4 an ounce. but SW has a unique cost structure, they help finance mines and then they get 'royalties' in the form of physical for a very low cost.

It depends on the mine.

After taking a second look, I would say that Silver costs, for the miners, are more in the $9 to $18 range.

But it's a complex subject and there is no short answer.


What have the rest of youse guys (and gals) found out about Silver production costs ?

[mamboni]

In the retail sales world, the general rule of thumb is that a product must retail for three times it's cost of production to be profitable enough to support continuous marketing and sales. By this measure, silver should retail for about $60 per ounce.

[ximmy]

I though I read silver was a byproduct of other types of mining, thus the lower cost.

[gunDriller]

I though I read silver was a byproduct of other types of mining, thus the lower cost.

it is frequently a by-product.

but when you look at the cost sheets & cost analyses, HOLEY MOLEY !

it's almost more complicated than a straight gold cost-per-ounce calculation.

there's a lot of assumptions that are made in the process of calculating the cost of Silver, when it's a by-product instead of the primary product.


however, one of the easily predictable results of lowering the price is already occurring - mining companies are shuttering silver mining operations.


one website i found ~

http://www.miningfeeds.com/

[mamboni]

I though I read silver was a byproduct of other types of mining, thus the lower cost.

30% of silver comes from primary producers. The remainder is byproduct of gold, lead, copper and other mining. This is why cost of production of silver is at best a guess - byproduct is generally dumped on the market by the miner who cares mainly about the primary metal price. Silver price is determined by demand versus supply at the margins. Presently, world economy is teetering on edge of recession - this depresses silver industrial demand and creates a surplus, depressing price. Monetary policy is creating energy and materials cost inflation and demand for silver by retailers, which pushs price higher. These opposing forces are relatively balanced at this time. And we have the paper market keeping silver price suppressed. Hence silver price is stuck in the doldrum for now. Some day, cost of production and declining ore grades will catch up with small silver supply and robust demand and there will be a short squeeze and big price move up - it is absolutely inevitable. Patience is the watch word. How long? Five years tops.

Silver is a superb long term investment - a Malthusian metal - a hedge against inflationary destruction of the currency - a hard asset in ever diminishing supply and depleting reserves - and hands down the most important industrial commodity after oil. But because of the aforementioned forces, silver price is mercurial. Only the well-informed and patient investor can hold silver for the big gains. The quick-buck artists need not apply.

[gunDriller]

Silver is a superb long term investment - a Malthusian metal - a hedge against inflationary destruction of the currency - a hard asset in ever diminishing supply and depleting reserves - and hands down the most important industrial commodity after oil.

Malthusian ? i thought that related to, for example, the Ehrlich's saying that Earth can only support 2 Billion people consuming like Americans - which may have some truth.

how does Malthus relate to Silver & Silver production & Silver prices ?

[mamboni]

Malthusian ? i thought that related to, for example, the Ehrlich's saying that Earth can only support 2 Billion people consuming like Americans - which may have some truth.

how does Malthus relate to Silver & Silver production & Silver prices ?

Here's how: world population continues to increase beyond seven billion. Yet silver reserves are shrinking. And ore grades are declining. The cost of energy is rising as the ROI decreases and total demand for energy (increasing population) grows while the world struggles just to keep total energy production flat. The emerging world is industrializing and modernizing. That means that they will need lots of silver for TVs, PCs, cell phones, solar panels, electrical grid and on and on. Ergo, some time real soon silver production is going to peak. For all these reasons, silver is more a Malthusian commodity that even oil is.

[Jewboo]

Malthusian ?




http://www.slimdownwithsara.com/wp-content/uploads/2012/11/happy-black-friday.jpg


Nobody gonna be buying shiny silver trinkets or expensive silver electronic gizmos wtshtf.





:rolleyes: Billions of useless eaters worldwide are about to get Malthusianized. Silver is a loser investment...lol

[mamboni]

http://www.slimdownwithsara.com/wp-content/uploads/2012/11/happy-black-friday.jpg


Nobody gonna be buying shiny silver trinkets or expensive silver electronic gizmos wtshtf.





:rolleyes: Billions of useless eaters worldwide are about to get Malthusianized. Silver is a loser investment...lol

OK Trayvon. I take it from whom it comes.

[Jewboo]

Here's how: world population continues to increase beyond seven billion...





http://gradpost.ucsb.edu/storage/journal-image/phdfreefood.gif?__SQUARESPACE_CACHEVERSION=1358891 389623




http://anewcolordocumentary.com/wp-content/uploads/2013/04/Lifelong-Medical-Care.jpg




:rolleyes: Oh...the Mamboni Clinic has free food and empty beds for even more Earthlings...

[mamboni]

http://gradpost.ucsb.edu/storage/journal-image/phdfreefood.gif?__SQUARESPACE_CACHEVERSION=1358891 389623



http://anewcolordocumentary.com/wp-content/uploads/2013/04/Lifelong-Medical-Care.jpg




:rolleyes: Oh...the Mamboni Clinic has free food and empty beds for even more Earthlings...

Did you find a job yet?

[Jewboo]

Did you find a job yet?





http://graphics8.nytimes.com/images/2012/09/26/arts/26WAITING/26WAITING-articleLarge.jpg



Did you find that transplant patient's organ yet?



:D maybe its in the GSUS Silver Bullion section...

[gunDriller]

Here's how: world population continues to increase beyond seven billion. Yet silver reserves are shrinking. And ore grades are declining. The cost of energy is rising as the ROI decreases and total demand for energy (increasing population) grows while the world struggles just to keep total energy production flat.

Now i understand.


it also means, any miners that are able to reduce their energy consumption per ounce gain a competitive advantage.

e.g. if they use a heated nitric acid to extract the silver at some point, they can use a solar oven to heat the nitric acid solution.