Rare Earth Silver
Dr. Jeffrey Lewis
June 25, 2012 - 12:13pm
The last years of mining silver could well be compared to studies that indicate the world is approaching the last years of pumping oil.
While the earth’s stores of silver may not actually run out anytime soon, increasing demand and increasingly difficult mining opportunities for silver tends to put upward pressure on the cost of extracting what silver is left from the planet.
Those mining costs are also getting more and more complex as new processes and resource scouting techniques are required.
Energy prices ultimately will go up. If not because of dwindling supply, then they will very likely rise due to inflation. The same is true of precious metal prices.
The Silver Mining Industry
The silver mining industry, much like the agricultural industry, is aging. It will take a substantial capital investment to train new people and bring in new innovation to meet growing industrial and investor demand for silver.
Furthermore, silver mining is machine and labor intensive. This makes it more difficult to factor in abstract costs and risks like political or regulatory challenges, or the constant threat of nationalization of personal silver stashes.
It will take years to re-develop the silver industry and build the infrastructure needed to meet the coming demand for the metal. As capital and controls over its flow increase, it will cost more to raise the funds needed for this redevelopment process.
Furthermore, it seems that too many people are relying on scrap silver flows coming into the market to quell price rises by acting as an alternate source of supply to mining.
Silver is Being Kept Deliberately Undervalued
Silver miners are still languishing and beholden to the bullion banks, who keep putting their intrinsically valuable product on sale at deeply discounted prices by manipulating derivatives markets.
It has been a tough road, with the years of suppressive price management and the growing “financialization” of the global economy creating underlying pressure for a substantial rise in silver’s price.
Silver has also been kept tethered to its "mined-as-a-by-product” status. This has made silver an even more obscure and off the radar investment. Most market analysts just do not understand the silver market, and are probably looking for momentum anyway.
Breaking Silver’s Shackles
Basically, the physical silver market has not yet broken through the shackles that the questionable use of derivatives has placed on it.
When the breakout eventually occurs, the price of silver can only go much higher to better reflect its genuine value and supply limitations relative to intrinsically worthless fiat currency, which is currently being printed and electronically generated in vast quantities by central banks around the world.
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