Ok, I spent a fair amount of my rainy day watching football and reading this thread.
I know a fair amount about the business of extracting natural resources (not silver mining specifically), and quite frankly think that most, if not all, of the data presented on this thread isn't worthy the digital space it occupies.
First and foremost, the location, climate, and geological formations that contain silver are wildly different and this has a major influence on the cost of extraction.
Second, most of the productive silver mines are outside of the US, and thus, face wildly different regulatory environments, which, believe me, also has a major influence on costs.
Third, reliable financial data that covers the spectrum of worldwide silver production simply can't exist in any reliable form. Many of the largest silver producers are privately (even govt) owned and are under no obligation to provide public financial information. Many of the firms that are public are either conglomerates or foreign-owned, which makes isolating or interpreting financial data to be problematic, at best. Also, TP is correct on one front, certain deferred maintenance and related costs can be turned on and off to achieve/mask financial results. Keep in mind, though, a fair amount of that maintenance requires production to be shut-down, which is less likely when prices are up. A bit counter-intuitive.
I do not buy into the concept that silver prices have a floor equal to the cost of production. There's just too much inventory out there for that to be true, not to mention the problem in determining that floor.
I, personally, will never be convinced that the current cost to extract and bring silver to market averages $20 or even $15. No empirical evidence offered here (as accurate support either way simply doesn't exist), but that price is just intuitively way too high. Those prices are just a silver pundit's way to justify their assertions.
Has anyone considered that silver production may be controlled in a manner similar to that of de beers and the diamond cartel? Makes more sense to me than believing in a hard price floor, based on production costs.
My opinions,
TCK
