PRIMARY SILVER MINERS: Losing Nearly $3.00 For Every Ounce Of Production

by SRSrocco on November 12, 2014 

With more than half of the primary silver miners financial results for the third quarter finally out, the group is now losing nearly $3.00 an ounce at the current market price of silver.  We can thank the Fed and Bullion Banks for rigging the paper silver price well below the estimated average break-even for the primary silver miners.

Before I provide my data from the silver miners in my group, I want to discuss the debate on PRECIOUS METALS MANIPULATION.  There seems to be a demarcation now between those who are more traders and the group that adheres to fundamentals.  While I admire anyone who can make a profit paper trading the precious metals, I find it quite interesting how several of the well-known names find it amusing to BASH those in the fundamental BUY & HOLD CAMP.

I look forward to hearing if either Doug Casey or Dan Norcini finally admit that MANIPULATION has and is taking place in the precious metal markets as evidence is now surfacing.  According to the Zerohedge article, A Clear Attempt To Manipulate Fixes In The Precious Metal Market:

Swiss regulator FINMA said on Wednesday that it found a “clear attempt” to manipulate precious metals benchmarks during its investigation into precious metals and foreign exchange trading at UBS.

“The behaviour patterns in precious metals were somewhat similar to the behaviour patterns in foreign exchange,” FINMA director Mark Branson said in a conference call with journalists.

He said that as UBS has precious metals and foreign exchange desks under combined leadership, it was not surprising to find similar behaviour.

“But we have also seen a clear attempt to manipulate fixes in the precious metal markets.”

PRIMARY SILVER MINERS: Losing Nearly $3.00 For Every Ounce Of Production : SRSrocco Report.

And then we had this just a few days ago also from ZeroHedge, Another “Conspiracy Theory” Bites The Dust: UBS Settles Over Gold Rigging, Many More Banks To Follow:

Sadly this too conspiracy theory just was crushed into the reality of conspiracy fact, when moments ago the FT reported that alongside admissions of rigging every other market, UBS – always the proverbial first rat in the coalmine, to mix and match metaphors- is about to “settle” allegations of gold and silver rigging. In other words: it admits it had rigged the gold and silver markets, without of course “admitting or denying” it did so.

Even though these banks are starting to provide evidence of precious metals manipulation, the real market rigging is the funneling of American’s funds into the paper retirement market that reached $24 trillion in Q2 2014, according to the Investment Company Institute.

I spoke about this in an interview found here, The Coming Collapse of The Global Paper Ponzi Scheme:

Americans continue to funnel a percentage of their income into the biggest Financial Ponzi Scheme in history. The manipulation of the metals on the exchanges is a very small part of controlling Americans into staying into this system. Because, as you know, a Ponzi System continues to need further income, further inflows, for it to sustain itself. It’s in the best interest for the Fed to keep that system going. That to me is where the majority of this bamboozling or brain-washing is taking place.

So, I highly doubt Mr. Casey or Mr Norcini will admit that MANIPULATION is taking place in the precious metals markets, even though evidence is now coming out.  However, it doesn’t need to be proven.  Why?  Because the peak and decline of unconventional oil production, will destroy the valuations of most paper assets.

When investors realize they are holding onto increasingly worthless paper assets in a falling peak oil environment, they will be forced to move in physical assets such as gold and silver to protect wealth.  If we just had a fraction of the $trillions sitting on the sidelines head into the precious metals or the mining shares, we could see values higher than any imagined.  What would happen to the values if the PUBLIC finally got PRECIOUS METAL RELIGION??

Primary Silver Miners Now Losing Nearly $3.00 For Every Ounce Of Production

If we look at the chart below, 7 of the 12 primary silver miners in my group had an estimated break-even of $18.50 in Q3 2014.  With the current price of silver at $15.70, this would be a net loss of $2.80 an ounce… on average.

7 of 12 Top Primary SIlver Miners Estimated Breakeven

However, we must remember, these seven miners are some of the lower cost producers.  Once we factor in the results for the remaining companies that are the more marginal producers (higher cost), this $2.80 loss per ounce will probably be higher than $3.00.

Furthermore, you will notice that only one primary silver miner is making money at the current price of silver.  This is Tahoe Resources.  Tahoe is an exception because it is mining 5+ million ounces of silver a quarter at a staggering 550+ grams per ton.  There isn’t another primary silver mining company on the planet producing silver in this fashion.  Thus, Tahoe is an exception to the rule and can produce silver at a much lower cost than any company in the group.

As I mentioned above, when the remaining primary silver companies release their Q3 2014 results, I believe the estimated break-even will rise towards $19.00 (higher than the $18.50 preliminary figure from the first seven in the group).

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