Written by Jeff Nielson Thursday, 15 November 2012 13:32
When a reader (and fellow silver-mining investor) recently expressed his frustrations on our Forum regarding the absurd valuations which most of these miners currently exhibit, I decided it was once again time to try to shed some light (and sanity?) on this subject.
When I began investing in these silver miners many years ago; one of the first anomalies to which I was introduced was that the vast majority of silver produced in the world (more than 75% at that time) was produced as a “byproduct” of other mining. While I immediately recognized that this was an extremely important factoid, at that time I lacked the level of understanding necessary to glean its true significance.
Since that time, the ramifications of these incredible parameters in silver mining are now apparent to me. Sadly, however, this important analytical point does not seem to be as apparent to others. While I’ve covered this subject matter once already in a prior commentary, the lack of general awareness in this area clearly merits repetition of this analysis.
The basic parameters for the mining of metals on our planet are simple and clear. With nearly every commercially-produced metal on the planet, the vast majority of that metal is produced via “primary” mining – mines which “primarily” produce that particular metal. The reason for this should be obvious.
At the large scale at which the modern, global economy operates; the need develops to secure large supplies of these metals. For purposes of both efficiency and a secure supply-chain; it is natural/preferable to seek to develop “copper mines” to meet copper demand, “zinc mines” to meet zinc demand, etc.
We would thus expect all of these commercially/industrially consumed metals to have production models where the vast majority of supply came from primary mining, with the metal which was produced as a “byproduct” (through the primary mining of other metals) being merely incremental to supply.
Indeed, with any/every metal for which there is this commercial/industrial demand, there are only two market paradigms where we would not expect the majority of (new) supply to come from primary mining, but rather as a byproduct of other mining:
a) Metals with a low level of demand, and/or only limited or specialized uses;
b) Metals which are found in either such small quantities or trace amounts that “primary” mining is not commercially feasible.
It is abundantly obvious that silver doesn’t come close to meeting either of those two conditions. With respect to its level of demand and its multitude of commercial/industrial applications; silver is literally in a class by itself.
With its aesthetic appeal (it’s the brightest of all metals) and malleability, it is (along with gold) the world’s best and oldest form of real “money”. On that basis alone there is significant investor demand for silver. Meanwhile, with new patents for silver-based industrial applications outnumbering those of any other metal; industrial demand for silver is large, strong, and growing.
The demand parameters are unequivocal: the majority of silver mined in the world should come from primary silver mining. This leaves the issue of supply. Is silver so rare in quantity and/or purity that primary silver mining is not feasible? Absolutely not.
Written by Jeff Nielson Monday, 12 November 2012 14:03
In the summer of 2011, I wrote a four-part series entitled “Economic Rape of Europe Nearly Complete”. In that extended piece; I detailed how the combination of three malevolent forces was decimating the economies of Europe one-by-one.
Through the relentless fraud/manipulation in Euro debt markets, sadistic “austerity”, and so-called “bail-outs” which just bury these insolvent economies even deeper in debt; the Western banking cabal is systematically looting these nations.
The manipulation of European debt markets was (is) accomplished through the fraudulent rigging of the credit default swap markets; combined with the complicity of the Big Three ratings agencies and the West’s media Oligarchs.
The bankers manipulate credit default swap prices higher, simply by piling-on massive bets that a particular Euro-zone nation will default. The propaganda machine immediately shrieks that “risk” has now increased for this debt market, and then the accomplices in the ratings agencies comply with a ratings downgrade – immediately driving interest rates higher.
With the massive debts being carried by these economies, any increase in interest rates automatically makes the economy significantly less solvent, turning this tag-team of fraud into a self-fulfilling prophesy. With the banksters literally capable of manipulating Euro zone interest rates to any number they desire, as a matter of simple arithmetic it is impossible to “bail out” any of these nations – by lending them more money.
The moment more bail-out dollars are released, the banksters immediately drive interest rates even higher. Thus all the bail-out dollars are siphoned-out of the economy in the form of higher interest payments to the Bond Parasites, meaning all that each “bail out” accomplishes is to pointlessly pile on more debt.
Meanwhile, as more and more of every revenue-dollar is sucked out of these economies by the debt-market fraud, Austerity is literally nothing less than economic suicide. In economies already starved for capital, Austerity is the precise equivalent of a doctor putting a severely anorexic patient on a diet.
The empirical evidence is overwhelming. In every European economy which has inflicted Austerity on its population, the rate of economic contraction has accelerated, and the size of the budget deficits has grown larger instead of smaller. Since the entire raison d’etre of Austerity is to (supposedly) shrink these deficits, it is nothing less than deliberate suicide to continue this policy, and serves no purpose except to free-up more dollars to be paid out as interest payments to the Bond Parasites.
With these European governments having no viable plans for excavating their economies from debt, and with the bankers capable of instantly sabotaging any plan with more debt-market fraud (even if there was a plan); lending these economies more money (and calling that a “bail out”) is still more suicidal insanity. All that is accomplished is to increase the size of these debts – and interest payments on those debts – still further.
This systematic looting can only possibly result in the complete bankruptcy and total destruction of each of these economies, as has almost been completed with Greece. Now these Financial Fascists want to both accelerate their economic rape, and to tighten the choke-chains of debt around the throats of these governments.