Primary Silver Miners Now Losing Nearly $3.00 For Every Ounce Of Production

[bradley1719]

Never mind me! I have no Idea what I'm talking about! I probably said the opposite thing earlier in the thread! There is so much I want to learn and know, And it gets confusing! lol Just wait till tomorrow, I'll think aliens and big foot have some part in this! You just never know! Heck, I never know!

None of us knows. And that is the whole point. Anyone telling you that they definitively know which way silver or gold is going to go from here is lying. Two years ago I called $16 silver. How did I know? Logic, luck, and guessing. I could tell that what the PM bulls were saying at the time was garbage. And I made an educated guess based on some other factors.

It easily could have gone the other way. And silver could go up to $50 tomorrow if something really terrible happens (like Russia bombing us). But frankly, you can only cry wolf so many times before people just start ignoring it. And that's exactly where we are now. The fear is mostly gone. We've survived recessions, Europe's expected collapse, government shutdowns, countless world skirmishes, and on and on. In the end, silver still ended up at around $16. And it could definitely go lower. How low I don't know. But then again, tomorrow it could go higher. But probably not because of the reasons most silver bulls will shout from the rooftops.

As for paper silver, you have to take that with a grain of salt to. Yes, there can be a difference between what you can buy physical silver for and what you can buy paper silver for. But in the end, those people (who really matter because they have a LOT of money) can chose to take possession of the physical silver they buy at "paper" prices. And so, that paper price doesn't deviate TOO far from physical prices. For example, you won't see paper prices at $5 on the comex while physical prices are $50. It just won't happen. The "paper price" is another excuse that SOME bulls give to try and justify their failed world view. There is some validity to it. But it still doesn't explain why the physical price of silver is around $16-$17 instead of the $50-$100 that so many true die-hard bulls will quote you.

Now granted, there will be some silver bulls who will claim "well there isn't enough physical silver to back all of the paper silver there is". And this is actually one of the true statements that they make. But the world isn't black and white. A billionaire doesn't HAVE to take physical delivery of silver in order to make use of the threat of doing so. Most people don't WANT to take delivery because it costs money. And that is money that they would lose on their investment. So although there could come a day when there is a run on physical silver, the likelihood of it actually happening probably isn't as great as the silver bulls would have you believe. As long as the physical and paper prices stay within a few percentage points, then those billionaires won't demand physical because there won't be any profit in doing so.

Those are the checks and balances that exist today. The number of entities demanding physical ebbs and flows as long as the two prices stay relatively close.

 

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[Marchas45]

Sorry TP this is one time I really disagree with you and your comments. I've known Steve since I've been stacking and he sure as hell doesn't sit in a basement writing up his report and definitely not a bull shiter. He is actually one of the foremost researchers on mining costs and is well known in the industry.
Why don't you contact Steve as he is easy to get a hold off and explain your concerns and maybe get some answers to the issues that you think are bullshit but after reading what you have posted in the comments, I don't think you would believe him anyway. Keep Stacking, Charlie

Just found this link on Majestic Silver Report, kind of Interesting. First Majestic Reports Third Quarter Financial Results - News Releases

Here is another way to look at it: TheWealthWatchman http://thewealthwatchman.com/you-a-silver-stacker-this-figure-will-make-your-head-spin/

 

[bradley1719]

Sorry TP this is one time I really disagree with you and your comments. I've known Steve since I've been stacking and he sure as hell doesn't sit in a basement writing up his report and definitely not a bull shiter. He is actually one of the foremost researchers on mining costs and is well known in the industry.
Why don't you contact Steve as he is easy to get a hold off and explain your concerns and maybe get some answers to the issues that you think are bullshit but after reading what you have posted in the comments, I don't think you would believe him anyway. Keep Stacking, Charlie

Just found this link on Majestic Silver Report, kind of Interesting. First Majestic Reports Third Quarter Financial Results - News Releases

Here is another way to look at it: TheWealthWatchman Silver, US Mint, Silver Eagles, Manipulation,

I'm sorry Marchas but this article is still bunk. Your buddy can be the nicest, smartest guy in the world, but that doesn't change the fact that this article is full of ridiculous speculation. I've pointed out the flaws.

Jim asked to stick to facts which is exactly what I am trying to do. So I asked him a question and he conveniently ignored it. So I'll ask it again....

How can anyone know that the miners are losing money right now if they haven't released their Q4 results yet? Just the facts please...

Past performance is not always indicative of future results. Comparing today's silver prices to last quarter's costs and saying that miners must be losing money right now is not the mark of someone who is a foremost researcher in mining costs. Just because it cost a company $20 per ounce last quarter does not mean that the same company can't mine silver for less than that amount in the future. Heck, that same company might be mining silver for $14 an ounce next year. But the implication being made by many of the silver bulls is that the price of silver has no business being under $20 because NO ONE can mine it for less than that. And that simply is not a fact. Not only can costs go down significantly next year, but this very article list several major miners that were able to mine for less than $16 last quarter. And with gas prices dropping significantly this quarter, it wouldn't be a bad guess to believe that costs will be even less in Q4. Then again, who knows? Answer: only the miners.

 

[jim4silver]

I'm sorry Marchas but this article is still bunk. Your buddy can be the nicest, smartest guy in the world, but that doesn't change the fact that this article is full of ridiculous speculation. I've pointed out the flaws.

Jim asked to stick to facts which is exactly what I am trying to do. So I asked him a question and he conveniently ignored it. So I'll ask it again....

How can anyone know that the miners are losing money right now if they haven't released their Q4 results yet? Just the facts please...

Past performance is not always indicative of future results. Comparing today's silver prices to last quarter's costs and saying that miners must be losing money right now is not the mark of someone who is a foremost researcher in mining costs. Just because it cost a company $20 per ounce last quarter does not mean that the same company can't mine silver for less than that amount in the future. Heck, that same company might be mining silver for $14 an ounce next year. But the implication being made by many of the silver bulls is that the price of silver has no business being under $20 because NO ONE can mine it for less than that. And that simply is not a fact. Not only can costs go down significantly next year, but this very article list several major miners that were able to mine for less than $16 last quarter. And with gas prices dropping significantly this quarter, it wouldn't be a bad guess to believe that costs will be even less in Q4. Then again, who knows? Answer: only the miners.

The reason I didn't answer your question is because it is basically a stupid question (I thought you were asking it in a rhetorical sense). Based on your logic, we can never say a business is ever losing money because we don't know what the next quarter will be?? Where do you come up with this logic?

How about this Bradley, look at the past 3 quarters and average it out. So if a mining company has 3 (or more) losing quarters in a row, we can say they are losing money this year. Maybe they will have a good 4th quarter, but maybe not. Once they report a losing 4th quarter will you say we have to wait till the 1st quarter next year?

PS If these miners have lost money in the first 3 quarters averaged this year, why would they profit in the 4th when silver was actually much lower than say the 1st quarter? Fuel has not dropped that much (I would imagine they use more diesel than anything else and that ain't as cheap as regular gas in most places).

pss Under your thinking if you have a child in school that gets an F the first quarter, F the second quarter, F the third quarter, we have to wait till the 4th quarter grade to see if junior fails?

Just my opinion.


Jim

 

[bradley1719]

The reason I didn't answer your question is because it is basically a stupid question (I thought you were asking it in a rhetorical sense). Based on your logic, we can never say a business is ever losing money because we don't know what the next quarter will be?? Where do you come up with this logic?

How about this Bradley, look at the past 3 quarters and average it out. So if a mining company has 3 (or more) losing quarters in a row, we can say they are losing money this year. Maybe they will have a good 4th quarter, but maybe not. Once they report a losing 4th quarter will you say we have to wait till the 1st quarter next year?

PS If these miners have lost money in the first 3 quarters averaged this year, why would they profit in the 4th when silver was actually much lower than say the 1st quarter? Fuel has not dropped that much (I would imagine they use more diesel than anything else and that ain't as cheap as regular gas in most places).
Just my opinion.

Jim

The problem is that whether or not someone is making money RIGHT NOW is based on what is happening RIGHT NOW and not what happened before.

You say: "we can never say a business is ever losing money because we don't know what the next quarter will be". There are two problems with that.

1. I never said that. Not even close. And if this is how you interpreted what I was saying then it completely answers why you are so confused.

2. We can always say whether or not a business LOST money once they tell us. But we can't know if they are CURRENTLY losing money until they tell us that information. Once they tell us then we can know. If a company comes out and says "hey, we're losing money right now" then we can know. We don't have to wait until next quarter. But ff you are basing your beliefs about current profitability on past performance then you are just guessing. Nothing more, nothing less. If you want to SAY in your article that you are just guessing then fine. But don't come out here or elsewhere claiming that you have definitive PROOF that it costs more than $20 to mine silver RIGHT NOW unless you really have that information.

You ask: "How about this Bradley, look at the past 3 quarters and average it out. So if a mining company has 3 (or more) losing quarters in a row, we can say they are losing money this year."

Sure. You can say that they have lost money in the first 3 quarters. You can even GUESS that they might lose money for the year. But you can't definitively say that you KNOW FOR A FACT that they are losing money right now unless you know that they are losing money right now. This article is taking the current price and claiming that these companies are losing money RIGHT NOW at the CURRENT PRICE. Sorry... that's just not logical. And of course, he's doing it on purpose because it fits his narrative.

So how many of these companies lost money in the first 3 quarters? I didn't see that in the article. He conveniently left out that information. Did the company that was able to mine silver for $13+ lose money? Why or why not?

Frankly, it doesn't really matter. And this is why I keep saying that costs are not indicative of prices. We all know how businesses work. In late 2013 (when the price of silver was around $20), the executives at the mining companies sat down and made price and cost estimates. They put together a business plan based on where they thought silver would be. At that time, they likely banked on silver being around $20 in 2014. So what happens? Silver goes down and they lose money. Big surprise. They make changes, try to salvage the year, but in the end they lose money in 2014.

But.... does this mean there is no possible way for them to mine silver for less than $20? Of course not. So what happens? They sit down at the end of 2014 and go through the planning process again. But THIS TIME, the price of silver is estimated to stay at or below $16. So when they make their operating budget for 2015 they take this into account and formulate a plan to be profitable. Or maybe not... perhaps they put together a plan to be profitable again in two years. But the point is THEY CHANGE THEIR PLAN!

So to say that silver CAN'T be below $20 and manipulation MUST be happening based on costs related to a business plan that was formulated in 2013 when silver was around $20 is BEYOND LUDICROUS. You KNOW that business just doesn't work that way. And this is why costs always seem to adjust to prices (within reason). Companies find ways to make their costs be what they need to be. Otherwise, they go out of business. Every business works this way. So why do so many people think that mining is so terribly complicated to figure out?

Looking at costs as a measure of potential prices is suspect at best. And at the very worst... it's completely illogical.

 

[pronghorn]

One hundred times more silver owned or traded on paper than actual physical in existence explains all of this, does it not?

My bad
250 times more silver owned on paper than actual physical in existence.

https://www.goldbroker.com/news/paper-silver-market-250-times-size-physical-silver-market-526

In my world that means physical silver and the mining costs involved have less than 1/2 of 1 percent influence on the price.

 

[jim4silver]

My bad
250 times more silver owned on paper than actual physical in existence.

https://www.goldbroker.com/news/paper-silver-market-250-times-size-physical-silver-market-526

In my world that means physical silver and the mining costs involved have less than 1/2 of 1 percent influence on the price.

Your theory holds water until people/institutions demand physical, real, hold-in-your-hand metals. The mining companies don't mine paper, they mine metal. To them costs to produce matter, just as the price of the finished product does.

The reason the powers that be have been able to manipulate PM's down in the paper market (and yes, they can manipulate them UP just as easy- if they want to), is that not enough demand for the real, physical metals exists. Once it does (or if it ever does) the paper price won't matter anymore. Then you will see how the physical and paper prices diverge. That is real supply and demand, which the paper market dampens considerably due to the very reason you cited: they can sell paper representatives of silver at a highly leveraged rate BECAUSE not enough physical metals are demanded. If everyone "trading" PM's on exchanges had to buy the actual metal (that wasn't allocated to others) the price would be considerably higher. So your own very logic shows why and how they can manipulate because the physical metals don't come into play in most "paper" transactions. For example, you want to buy a ferrari? Would you take a paper ferrari for the same price (assuming you could sell that paper car when the time comes?). That is what goes on with PM paper markets basically.

And what most don't know is that it is completely legal for the contracts to be settled on COMEX without delivery, even if the long party demands delivery. Research force majeure. Yes such a thing would in theory send shock waves thru the market because it would be known not enough metals exist, but it can happen and is legal. So all the talk about Comex being depleted means jack $h!t in my opinion unless people demand physical (and stop investing in paper PM alternatives).

We need any of these events to happen to make PM's go up: 1. the manipulators to decide to go long (somewhat likely to happen- someday), 2. a terrible financial event which makes even the dumbest sheeple finally realize that paper assets are only paper (event might happen but the sheep probably still won't get it or they will be too broke to buy any PM's, 3. Some other country backs at at least part of their currency with gold (think Swiss ,etc) (probably won't happen anytime soon but will someday).

I guess we will have to wait and see. Funny how some posters here think they are gurus (not meaning you Pronghorn) because they called the falling PM prices right (this time). Just like many of us were right when we called silver's rise from 5 to near 50 (but the bears forget about that). The tide will turn again as everything in the universe moves in cycles (such as described in the ancient text called Kybalion- principle 5.)

Just my opinion.

Jim

 

[jim4silver]

Here is a somewhat recent article talking about gold miners and how the current gold price is affecting them.

Gold firms plan drastic cuts to stay afloat as bullion sinks | Reuters



Jim

 

[jim4silver]

I have been seeing many articles recently saying that oil fracking companies are going to be hurt by lower oil prices. If this is true, then why don't falling silver prices hurt silver miners?

I am asking this to those who posted previously that the lower prices wouldn't hurt the mining companies.

Jim

 

[Marchas45]

I have been seeing many articles recently saying that oil fracking companies are going to be hurt by lower oil prices. If this is true, then why don't falling silver prices hurt silver miners?

I am asking this to those who posted previously that the lower prices wouldn't hurt the mining companies.

Jim

Well they'll just say, "Well Silver Is Only A Bye Product" Lol Keep Stacking it's getting so volatile that something is going to break like the Derivatives Market. Get Ready.

 

[bradley1719]

I have been seeing many articles recently saying that oil fracking companies are going to be hurt by lower oil prices. If this is true, then why don't falling silver prices hurt silver miners?

I am asking this to those who posted previously that the lower prices wouldn't hurt the mining companies.

Jim

Who said that lower prices wouldn't hurt mining companies? This whole thread has been one completely illogical claim after another by the silver bulls.

Yes, lower prices hurt silver miners. Lower prices mean lower profits. But the claim being made by the silver bulls is that the silver miners can't possibly lower their costs below $20 per ounce and therefore there must be manipulation. Sure they can lower their prices below $20 per ounce. And yes, it will result in lower profits. And if they want to stay in business they will figure out how to mine silver at the new prices.

How is that not anything but logical? Why do you continue to debate the topic using illogical assertions and misrepresentations of what I have said? Why is it that every time I make a logical point or ask a simple logical question you run away and "hide" for a few days without answering it? Then, when you think I'm not looking, you return and poke at "those who posted previously" or "some posters who think they are gurus".

If you want to ask me a question or make a point directed at me then just do so. This is the reason I left previously. I got tired of making logical points and having the silver bulls run away and hide so that they didn't have to face the truth about their failed world view.

Yes, I called the price almost to the month (it still remains to be seen whether or not I got it exactly right). But I have never claimed to be a guru. Quite the contrary.

For the record.... what have you called? You've been dead wrong for three years and are too stubborn to admit it. To say that you called "$50" is downright laughable. Did you put a date and amount on that "prediction"? Or did you just say that "some day the price would be much higher"? Gee... some prediction. None of the reasons you've ever given for a prediction of higher prices have ever come true. The dollar is still here; the derivatives market hasn't collapsed; the national debt has not been reduced; the European economy didn't fall into the ocean; and on and on. Anyone can call for higher prices in general. But if your reasons don't hold up and you can't call it any closer than 30 years then it isn't saying much. Just based on inflation alone the price of silver will one day be $50 again. Gee... what a wonderful prediction! I'm a genius!

I'm done with this topic. And frankly, it just reminds me of why I went away in the first place. I got tired of even trying to have a discussion with fanatics who simply couldn't admit (to themselves) that they could possibly be wrong.

I don't know where silver is going from here. But what I do know is that you have been dead wrong for three years and are too stubborn to see it. You are only hurting yourself by continuing to ignore logic. Well, that's your problem, not mine.

Peace.

 

[jeff of pa]

I'm done with this topic. And frankly, it just reminds me of why I went away in the first place. I got tired of even trying to have a discussion with fanatics who simply couldn't admit (to themselves) that they could possibly be wrong.



Peace.

I think they have meds for that these days

 

[jim4silver]

Who said that lower prices wouldn't hurt mining companies? This whole thread has been one completely illogical claim after another by the silver bulls.

Yes, lower prices hurt silver miners. Lower prices mean lower profits. But the claim being made by the silver bulls is that the silver miners can't possibly lower their costs below $20 per ounce and therefore there must be manipulation. Sure they can lower their prices below $20 per ounce. And yes, it will result in lower profits. And if they want to stay in business they will figure out how to mine silver at the new prices.

How is that not anything but logical? Why do you continue to debate the topic using illogical assertions and misrepresentations of what I have said? Why is it that every time I make a logical point or ask a simple logical question you run away and "hide" for a few days without answering it? Then, when you think I'm not looking, you return and poke at "those who posted previously" or "some posters who think they are gurus".

If you want to ask me a question or make a point directed at me then just do so. This is the reason I left previously. I got tired of making logical points and having the silver bulls run away and hide so that they didn't have to face the truth about their failed world view.

Yes, I called the price almost to the month (it still remains to be seen whether or not I got it exactly right). But I have never claimed to be a guru. Quite the contrary.

For the record.... what have you called? You've been dead wrong for three years and are too stubborn to admit it. To say that you called "$50" is downright laughable. Did you put a date and amount on that "prediction"? Or did you just say that "some day the price would be much higher"? Gee... some prediction. None of the reasons you've ever given for a prediction of higher prices have ever come true. The dollar is still here; the derivatives market hasn't collapsed; the national debt has not been reduced; the European economy didn't fall into the ocean; and on and on. Anyone can call for higher prices in general. But if your reasons don't hold up and you can't call it any closer than 30 years then it isn't saying much.

I'm done with this topic. And frankly, it just reminds me of why I went away in the first place. I got tired of even trying to have a discussion with fanatics who simply couldn't admit (to themselves) that they could possibly be wrong.

I don't know where silver is going from here. But what I do know is that you have been dead wrong for three years and are too stubborn to see it. You are only hurting yourself by continuing to ignore logic. Well, that's your problem, not mine.

Peace.

Bradley,

So I have been wrong for 3 years as you keep saying? That is BS. You don't know what I invested in over the past 3 years. I saw your little post the other day that you quickly deleted, so I will respond to this one why it is still up. I never paid over $20 for an ounce of silver until the silver market was correcting (not in any real amount that is, maybe a proof Eagle or something) on the way down from $50, in that on the way up I generally stopped buying at $20 and focused on platinum, palladium and gold. I am actually still up on much of those purchases (what I still have from them in gold) since I sold some of my silver to buy those items and did well.

I have been wrong on silver's direction thinking it would rebound, yet it hasn't. I will give you that. But the game is not over. There is much time to go. You are calling victory in the 3rd quarter of the game.

My question to you is why do you feel the need to come here to berate PM bugs (or maybe it is just me you have a fetish for?) who are on a PM bug related site. This is not Meet the Press where we (or at least I) wish to see your constant poo poo-ing of PMs or to "debate". For some reason you seem to attribute all bad PM calls here to me? I find this somewhat strange since there have been times in this market where I became bearish (for brief moments albeit). I also had to sell most of my silver (to pay bills, when silver was $32-34). I have been deep down a bull for all this time and perhaps have been wrong but the game is not over.

Do you go to church sites and preach atheism or go to AA sites to preach the joys of drinking? Why are you here if you hate PMs. (Your usual M.O. will be to say "i never said i hate PM's, you are misrepresenting me, etc, etc).

I guess you ran out of flies to pull the wings off of at home or something? Do you have a miserable little life somewhere? I run a successful business (actually they call it a profession not a business but it is similar) and in my 40's am single and date much younger gals and drive an awesome car so I am doing OK and having a good time and like my PM's as a hobby and hopefully will make some money off them before I retire or sell my practice someday. Maybe you are king at your 9 to 5 job, maybe you hate your life so much you have to come here and try to berate and show everyone how smart you think you are, but you are not fooling me.

PS Since you are so smart, how much money did you make shorting PM's to this point? If you did not, then you are actually less smart than us stupid PM bugs, right?


All my opinion.

Jim

 

[Mackaydon]

To understand what is happening to the price of oil, this article may hold your interest:
Oil prices keep plummeting as OPEC starts a price war with the US - Vox
Don.....

 

[Dman]

Bradley,

So I have been wrong for 3 years as you keep saying? That is BS. You don't know what I invested in over the past 3 years. I saw your little post the other day that you quickly deleted, so I will respond to this one why it is still up. I never paid over $20 for an ounce of silver until the silver market was correcting (not in any real amount that is, maybe a proof Eagle or something) on the way down from $50, in that on the way up I generally stopped buying at $20 and focused on platinum, palladium and gold. I am actually still up on much of those purchases (what I still have from them in gold) since I sold some of my silver to buy those items and did well.

I have been wrong on silver's direction thinking it would rebound, yet it hasn't. I will give you that. But the game is not over. There is much time to go. You are calling victory in the 3rd quarter of the game.

My question to you is why do you feel the need to come here to berate PM bugs (or maybe it is just me you have a fetish for?) who are on a PM bug related site. This is not Meet the Press where we (or at least I) wish to see your constant poo poo-ing of PMs or to "debate". For some reason you seem to attribute all bad PM calls here to me? I find this somewhat strange since there have been times in this market where I became bearish (for brief moments albeit). I also had to sell most of my silver (to pay bills, when silver was $32-34). I have been deep down a bull for all this time and perhaps have been wrong but the game is not over.

Do you go to church sites and preach atheism or go to AA sites to preach the joys of drinking? Why are you here if you hate PMs. (Your usual M.O. will be to say "i never said i hate PM's, you are misrepresenting me, etc, etc).

I guess you ran out of flies to pull the wings off of at home or something? Do you have a miserable little life somewhere? I run a successful business (actually they call it a profession not a business but it is similar) and in my 40's am single and date much younger gals and drive an awesome car so I am doing OK and having a good time and like my PM's as a hobby and hopefully will make some money off them before I retire or sell my practice someday. Maybe you are king at your 9 to 5 job, maybe you hate your life so much you have to come here and try to berate and show everyone how smart you think you are, but you are not fooling me.

PS Since you are so smart, how much money did you make shorting PM's to this point? If you did not, then you are actually less smart than us stupid PM bugs, right?


All my opinion.

Jim

Bradley deleted his post after I questioned when and where he predicted $16 silver. I am still waiting to see when where he said silver would drop to $16. You can look at my past posts and see I predicted silver to be $16 over a year ago. It was fun making money when silver went up and when it went down. I am now investing in other things until I think it is time for silver to make another move.

 

[jim4silver]

Bradley deleted his post after I questioned when and where he predicted $16 silver. I am still waiting to see when where he said silver would drop to $16. You can look at my past posts and see I predicted silver to be $16 over a year ago. It was fun making money when silver went up and when it went down. I am now investing in other things until I think it is time for silver to make another move.

DMan,

I went back and checked and he did say $16 in a thread I found. But I also remember him saying it would drop to $14 or so and stay there later.

Jim

 

[jim4silver]

To understand what is happening to the price of oil, this article may hold your interest:
Oil prices keep plummeting as OPEC starts a price war with the US - Vox
Don.....

Don,

This seems like some sort of mutually assured destruction. If the OPEC nations are all in on it, they are hurting themselves for sure in the short term. For mid to long term, even if the strategy works and stops fracking companies, don't they (OPEC) think the fracking companies will just come back online once the price goes back up someday? If they have to keep the price this low or lower for the long haul, they will be hurting themselves. I can't vouch for the veracity of the article you posted, but the chart there from 2012 shows basically all those OPEC countries far underwater right now on the cost to produce vs. market price, some by $30 to $40 per barrel. How long will they tolerate that? Not that the countries will go out of business per se, but I don't think they will happily accept lower prices. They could easily decrease output and the price would go up eventually.

Maybe the Saudi's are wanting to keep output where it is, but I would imagine the other OPEC countries don't want to play along so much. Is Saudi Arabia still a US ally, I cannot remember since things seem to be changing over there so fast? From what I am reading they seem to be leading the call to keep output where it has been. If they are still a US ally, then that would still lead me to believe that the US and NATO countries are more behind the oil price decline than OPEC (to sanction Russia and possibly some of the other countries that are friends or becoming more friendly with Russia), although OPEC might be playing along for whatever reasons they have. This is just my gut feeling and I don't have any facts to base this on.

Just my opinion.

Jim

 

[TheCoinKid]

I can't vouch for the veracity of the article you posted, but the chart there from 2012 shows basically all those OPEC countries far underwater right now on the cost to produce vs. market price, some by $30 to $40 per barrel.

Jim,

After skimming the article, you must have been referencing the chart labeled "OPEC median budgetary breakeven price" when you made that comment.

The article defines "median budgetary breakeven price" to be the price the countries need in order to break even on their budgets and pay for all the government spending they've racked up. (ie, fund their annual operating budget). This is not their cost to find and produce oil.

FYI, the finding, development and production costs for a barrel of oil produced in the Middle-East is under $20 per barrel, compared to around $35 per barrel for oil produced onshore in the US (Information obtained from the US Energy Administration Independent Statistics and Analysis website U.S. Energy Information Administration (EIA)).

The difference in cost is one reason why OPEC's current actions are (from their perspective) economically sound. OPEC nations have very deep pockets and could sustain a relatively low price for an extended period of time, thus, bankrupting the higher cost, weaker hands US producers (I'm talking independents here, not XOM).

Word is prices are going lower, not necessarily a good thing.

TCK

 

[TheCoinKid]

...

 

[jim4silver]

Jim,

After skimming the article, you must have been referencing the chart labeled "OPEC median budgetary breakeven price" when you made that comment.

The article defines "median budgetary breakeven price" to be the price the countries need in order to break even on their budgets and pay for all the government spending they've racked up. (ie, fund their annual operating budget). This is not their cost to find and produce oil.

FYI, the finding, development and production costs for a barrel of oil produced in the Middle-East is under $20 per barrel, compared to around $35 per barrel for oil produced onshore in the US (Information obtained from the US Energy Administration Independent Statistics and Analysis website U.S. Energy Information Administration (EIA)).

The difference in cost is one reason why OPEC's current actions are (from their perspective) economically sound. OPEC nations have very deep pockets and could sustain a relatively low price for an extended period of time, thus, bankrupting the higher cost, weaker hands US producers (I'm talking independents here, not XOM).

Word is prices are going lower, not necessarily a good thing.

TCK

TCK,

Thanks for catching that. I skimmed too but missed that.

Jim