Prices precious metals out of whack?

AG47

The-Joker wrote: »

There is way more demand for silver than gold. Silver is essential in tens of thousands of industries gold only a fraction in comparison.

Plus gold is economic to retrieve from landfill but silver is not as it costs the same to retrieve an ounce of either from landfill

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True there has been a surplus of gold every year and a supply deficit of silver for 30 years now.

https://www.sprottmoney.com/Blog/silver-mining-vs-gold-mining-the-dynamics-explained-jeff-nielson.html

“As noted in a previous commentary, it has now been established that the silver market has had a supply deficit for roughly 30 consecutive years , if not longer. This is unprecedented, throughout history, anywhere else in the world’s spectrum of commodities.

What is supposed to happen, when any commodity experiences a supply deficit? Elementary supply/demand analysis provides us with the answer. The price rises. This rise in price discourages demand, while it stimulates supply (because it becomes more profitable to produce). The price continues to rise until the deficit is eliminated, and equilibrium is restored. The economics term for this principle is price discovery.

This is what happens in all legitimate markets. The fact that this has not happened, the fact that we have not had real “price discovery” in the silver market for three decades, is absolutely conclusive proof of systemic price-manipulation. There could never be any legitimate explanation for the complete absence of price discovery in any market, for three decades .“

The-Joker

Apodemus wrote: »

I’m not claiming anything, just keen to learn, and always wary of unsupported statements of fact!

It’s not unsupported statement that gold and silver are found together naturally and this is called electrum. It’s also not an unsupported fact to to extract the silver or the gold from electrum is a very similar process which costs the same.

Again it’s not an unsupported fact that all the costs are put on getting the gold refined and the silver is just called a byproduct that they are not going to throw away because it’s a precious metal, but they can claim very cheap mining costs because all the costs get put on gold.

These are supported facts that do not take long to verify.

Keep_pedalling

AG47 wrote: »

Me too.

I’m keen to learn.

Here is a good explanation of how the mining costs are the same for gold and silver but as silver is said to be a by product of gold all the costs are put on gold and silver is said to be almost free.

It could just as true to say it costs $1900 per ounce to extract the silver, and gold is just left over from the electrum

https://www.sprottmoney.com/Blog/silver-mining-vs-gold-mining-the-dynamics-explained-jeff-nielson.html

So it is apparently all a conspiracy to keep silver costs low.

The fact is there is nearly 18x as much silver in the Earth’s crust as there is gold, and from the following links you will see there is aprox 30x more silver mined PA than gold.

https://www.statista.com/statistics/253293/global-gold-production-since-2005/
http://www.munknee.com/how-much-gold-is-mined-each-year-what-countries-produce-the-most/

The OPs assertion that the cost to mine silver as gold is just rubbish. Yes most silver is obtained through mining other metals, but the vast majority comes through copper, zink and lead mining not gold.

The high cost of obtaining gold is partly down to its high price which make crunching up tonnes of rock to obtain a few ounces of the stuff, a viable option.

I agree that the difference in price is ridiculous, but the real question is why is gold so over priced, rather than silver under priced.

kinger101

Keep_pedalling wrote: »

I agree that the difference in price is ridiculous, but the real question is why is gold so over priced, rather than silver under priced.

Demand. About three quarters of gold produced is still used for jewellery. The main market for silver however disappeared when digital photography took over.

ColdIron

Thus has it ever been so

1,400 years ago a 3 gram silver dirham was pegged to the price of a chicken. A 4.25 gram gold dirham would buy you a sheep

Linton

You are looking at the cost of extraction and the price of gold the wrong way around. It is the price that determines the cost of extraction.

Gold can be extracted from a wide variety of sources, even sea water. However whether this is economically viable depends on price. It is not just the current price but the long term price as extraction facilities are expensive to set up and take many years to pay back their costs. The price of gold is volatile depending more on highly variable demand from investors than on the steady requirements of industry so it is difficult to make a good case to invest in gold extraction.

Thanks to Google I find that global gold production is 2550 tons/year. That is perhaps 1/3rd the amount of gold traded per day. So the effect of new gold on the gold price is minimal, almost all gold traded is bought from other investors who wish to sell at the current price.

AG47

Keep_pedalling wrote: »

I agree that the difference in price is ridiculous, but the real question is why is gold so over priced, rather than silver under priced.

Wrong because historically even gold is undervalued compared to the worlds rapidly expanding currency supplies.

In the late 1970s gold was $850oz and silver was $50oz, and just think how much inflation there has been since then with all currencies expanding their supplies.

Gold is now about twice that price but silver is about a quarter the price it was in the 1970s:T

Silver bullion is a much better investment ow than gold.

AG47

Keep_pedalling wrote: »

I agree that the difference in price is ridiculous, but the real question is why is gold so over priced, rather than silver under priced.

If gold is overvalued in your opinion at $1600oz then what about palladium which is $1950oz

ColdIron

AG47 wrote: »

In the late 1970s gold was $850oz and silver was $50oz

That's an extremely cherry picked date. A spike that was measured in days. Chose the right date an you can prove anything
https://www.bullionbypost.co.uk/silver-price/45-year-silver-price-history-dollars-ounce

back_to_reality

ColdIron wrote: »

1,400 years ago a 3 gram silver dirham was pegged to the price of a chicken. A 4.25 gram gold dirham would buy you a sheep

Never mind "precious" metals, give me a 1,400-year-old chicken