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Silver

Anybody have an informed opinion on how much does it cost to produce an ounce of silver?

Comments

  • Silver production costs will vary by silver-miners. But on average, in 2020, the cash-costs for silver production were $4.73/oz, and all-in-costs $11.17/oz. Seems very profitable business with current silver prices in $20s.
    https://www.silverinstitute.org/mine-production/
  • $12.75 during GFC, so $11 makes sense. Silver seems attractive to me if it could be purchased at the right price in times of distress. Recycling makes estimating a cost to produce more difficult. Silver can't go bankrupt like stocks so risk is appealing to me. The nations debt situation makes it attractive. Silver/gold ratio is good. It has a steady demand in global jewelry and manufacturing. I would be willing to raise the normal portfolio allocation % at the right purchase price. I don't own it now.
  • As best I can tell, it looks like all in sustaining costs were above $18 on average in 2008. So it traded below costs for a bit. Cost varies widely from mine to mine as to be expected as many variables are involved.
  • Howdy folks,

    @shipwreckedandalone

    Interesting discussion as I have been a silver fan since the Hunt Brothers tried to corner the market in the late 70s early 80s.

    I've always been an advocate of everyone having a small percentage of physical gold and silver bullion as an investment - let's say 5-7%. More than this is speculation and while that's fine, it's different.

    You mention the g/s ratio and it's about 77 to 1 which is extremely favorable for silver relative to gold. I also like silver because the leverage is much greater than with gold.

    Different ways to play: bullion or the miners. Different markets and while they track each other over time, they can deviate a lot in the short term. With silver, the pure play bullion ETFs are taxable at the higher rate. Nasty. Make SURE you keep them in a deferred account. Of these, I prefer the Sprott offerings like CEF and PSLV. Then there are the miners. This is where the vast majority of the mutual funds invest - in the mining stocks for gold, silver, etc. Then there are the ETF miners and there are bunches. In silver, you have SILJ, SIL, and SLVP. I like the first because I like the junior silver miners. They're fun and a bit like a roller coaster ride at time. These are penny stocks and the leverage here can get insane.

    http://www.kitcosilver.com/equities.html

    As for physical bullion, you have to watch the premium, or vigorish. It's getting very nasty as I type. This is because demand for physical silver is very strong right now and the paper price is suppressed. This results in higher premiums. Here's my local dealer and their price quotes for various types of bullion, from plain vanilla to ASE. You want to buy top shelf bullion because it's more fungible.

    http://libertycoinservice.com/wp-content/uploads/quotes/daily_quotes.pdf

    good luck,

    peace,

    rono
  • Thanks Rono. I am leaning towards a 50/50 SLV and PSLV purchase at some point in the future. Any Au purchases would be bullion buy and hold insurance policy.
    Silver is difficult to value because no earnings or dividend. Silver is rare in that there are very few vehicles you can purchase (commission free) with little chance of going to zero w/o a K-1. There is enough volatility to allow for profit if an investor purchases at the right price and has patience.
  • Beware of PFIC issues with Canadian gold and/or silver funds. These arise because rules differ on what physical assets the US vs foreign funds can hold.
  • edited March 24
    The reason I hold a very small exposure to Canadian miner Wheaton (WPM) is because they’re heavier than most on silver mining. However, it’s lagged gold for years and so WPM has actually been trying to increase gold production and become less engaged with silver. A well run company. I don’t know how the stock has done since picking it up 6-8 months back, but not bad - roughly in line with the gold miners.
  • Howdy folks,

    The point I was making about the artificial pricing resulting in greater premiums is highlighted by the fact the US Mint cannot buy silver blanks because the mark up is too high by law.

    https://www.numismaticnews.net/coin-market/acquiring-silver-u-s-mints-hands-are-tied?fbclid=IwAR07-nX4rth8AWhprP352XVDgR7cLcoXuY880H2UA-gZBnvdzxyhyU5zPgE

    and so it goes,

    peace,

    rono
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