In the tiny “shadow world” of Precious Metals commentary, it’s incredibly rare to find high quality financial analysis – in the Wall Street style I personally spent two decades honing. Last year, I came across the great Steve St. Angelo of SRS Rocco Report; who continues to do the best work on Precious Metal mining costs of ANYONE I have read. And given I have seen essentially everything over my “TEN YEARS OF HEAVEN AND HELL” in the PM sector (now eleven), I do mean anyone.
On Friday, “MEXICAN SILVER – PRODUCTION COLLAPSE!” was based on Steve’s fantastic work; while yesterday, I followed through with this theme in “JUNIOR MINING – AND FUTURE PRODUCTION – DEATH.” Given how incredibly important this topic is – yielding nearly irrefutable evidence that an “HISTORIC BOTTOM” was reached in late June – I am publishing a third straight RANT on this topic. And wouldn’t you know I’m again utilizing Steve’s fine work to illustrate my point.
In the past month, he has followed the earnings reports of essentially ALL the world’s major silver producers – and after analyzing the data, has come up with the following, ominous conclusion…
For months, I have written of how the breakeven cost for the majority of global silver miners is approaching $30/oz. This analysis essentially PROVES it; as seven of the world’s 12 largest primary silver miners have net income breakeven costs exceeding $26/oz. – while three are well above $30/oz…
A case in point is Coeur D’Alene Mining; by resource size, the world’s eighth largest silver miner. CDE barely generated a profit in the first quarter of 2013, when it realized silver prices of $30.30/oz. However, it reported a MASSIVE loss in the second quarter – when silver realization averaged $22.86/oz. Using these metrics – ceteris para bus – Coeur required a $29.59/oz. silver price just to report breakeven results. And thus, it’s just a matter of time before it, too, joins the “hit parade” of MAJOR miners reporting MASSIVE write-offs and exploration/development cost reductions; inevitably contributing to significantly lower industry-wide production.
In my view, the upcoming collapse of GLOBAL gold and silver production could be as big of a story – or bigger – the simultaneous demand explosion that MUST follow such a MASSIVE, worldwide fiat Ponzi scheme. In the case of silver, it is already in EXTREMELY short supply; which is why the U.S. Mint was forced to shut down for 12 days earlier this year, and why prices for PHYSICAL bullion – and “junk” silver, for that matter – remained elevated throughout this summer’s PAPER PM smash.
When “the Big One” hits – and supply essentially vanishes – the great majority of the world’s population (as in 98 %+) will be kicking themselves for not PROTECTING themselves when they had the chance. Of that, I am 100% sure!