Monday, August 15, 2016

Exposing Silver Mythology, Part III

January 31, 2012 by · Leave a Comment 

By Jeff Nielson, Bullion Bulls Canada

In Parts I and II, we were presented with a shocking perspective on the silver market. The principal record-keepers for the silver sector, and the largest single regulator of the silver market both display not only an abysmal level of ignorance concerning the silver market, but the seeming incapacity to even understand basic arithmetic operations.

The result of this display of ineptitude is that the mainstream data and analysis which reaches the market from these official and quasi-official sources has absolutely no basis in reality. It is precisely this sort of vacuous nonsense which is relied upon by mainstream silver bears when they spew their negative drivel.

And one cannot say the words “negative drivel” in connection with precious metals without immediately thinking of Kitco’s Jon Nadler – the man who has gone through a 10+ year bull market for gold without ever once stating that today was a good day to buy it. Apparently his banker biases simply run too deep. Speaking of Nadler’s biases, they were clearly on display in a recent hatchet-job on silver by the Globe & Mail which was so shoddy that it didn’t even rank as good fiction. First the context:

Some market watchers are warning that silver faces a vicious bear market that could eventually take the price to the mid-teens…

Well, we know what the silver-hater who wrote this piece thinks about the silver market. What we don’t know is what planet he is writing about, because it obviously has nothing to do with the planet Earth. The near-total depletion of inventories, and the imminent default-event which that portends, suggest nothing other than that the upward move in the price of silver has just begun.

What clearly identifies this as propaganda, and not even an attempt at journalism is the following passage:

the problem with the bullish case for silver, at least over the near term, is the threat of growing supplies.

A key industry figure highlights the problem. According to the trade association the Silver Institute, the average cash costs at silver mines…worked out to a mere $5.27 an ounce in 2010…

Note that this sleazy shill talks about “the threat of growing supplies” without being able to muster even the tiniest kernel of data about actual growing supplies. The implication that the current profitability of silver mining will thus flood the market with silver “over the near term” is the precise opposite of reality.

1) Despite a ten-fold increase in the price of silver off of its 600-year low (spread over a 10+ year period) we have seen no more than a 1% to 2% annual increase in silver production throughout that period. This means there is absolutely zero empirical evidence to support the fraudulent assertion of this writer.

2) The approximate time to bring a new mine into production typically falls into the range of 5 – 10 years. Thus the profitability of silver mining today couldn’t possibly have a significant impact on silver production until (at least) the middle of this decade. This means that the ridiculous assertion of a surge in supply “over the near term” isn’t even theoretically possible.

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