I admit I'm clueless on this subject. Here's a bit of my clueless thinking, for what it is worth. There are two basic silver production costs.
The first level production cost is the by-product production cost. About 70% of annual silver production is as a by-product of copper, gold, and other non-primary silver producers. These companies fully recover their costs from their primary products. These companies look at how much it costs to produce silver from their pile of leftover ore. For these companies I'm quite convinced that their cost to produce is less than $10/ounce.
The second level of production is from primary silver producers (CDE, PAAS, etc.). These companies likely have an "all in" cost somewhere north of $20/ounce. The actual cost varies widely from mine to mine and from company to company. So it seems to me that at some level the most efficient marginal producers more or less set a logical long term floor for the price of silver.
Of course there is a lot of silver floating around, because a lot of people own some silver at some level.
Also, it is worth noting that at another level silver is just a shiny rock. If I own this shiny rock, I'm hoping to sell it to a greater fool who will pay even more for my shiny rock. No income, unless you sell covered call options.
Question: Why hasn't someone with a spare billion or two manipulated this market by locking up much of the physical?
Actually, silver is highly demanding in high tech industrial as well as monetary value. With limited amount on earth, it will be appreciated much higher when people realize the facts: currency can be printed and manipulated by every country, inflation .... Can you print Silver, Gold? Silver will be $60s, $600... in the future...
I admit it, I can't resist when someone posts about silver being limited, like every other element on earth is not, and when they transition into currency comparisons, like the only two investments are...currency, or silver.
You can't print any element.....and silver doesn't seem to correlate to "printing", at least if you look to history. Except to the extent it generally follows inflation.
silver will be in the 60's when inflation goes up 250 %, and in the 600's when inflation has gone up 2500 %. Plot the price of silver verus inflation for the last 5 decades.
I recommend looking at long term silver and gold prices, versus most any other metal...and note they all tend to follow inflation...those that noted the disconnect around 2000...congrats (I sure didn't), but why it went up, and why it should go up that much again..two different discussions, imo.
Dlhild is wrong on most observations!
All in costs are much higher as primary mines and even some secondary mines(by product mines)
so with silver being 21 most all miners are losing money!
The primary ones are all losing millions per qtr!
So it is well above 20 for both to break even!
Most miners need silver to be high to make a profit on their base metals!
One cant survive without the other!
Value you have it right!
Also ore grades are in the dumps at the highest producing mines by a total of over 100 million ounces this past year!
This year either they up the price or they will need some luck getting some later in the year!
You don't sound clueless at all. I will note that many of the primary silver miners only come into existence when there is a cyclical price spike, such as a few years ago. Most investors, and legitimate mining corporations, have no problem with pricing these mines into bankruptcy, as most of them exploratory scams to begin with.
Shorting junior gold and silver miners at their current bloated levels is a great idea. JDST