Wednesday, January 27, 2016

US Silver Production Continues to Crash

Last year, the precious metals community was abuzz with the fact that US silver production crashed by roughly 20% in September. This news should have been significant and should have caused a surge higher in the silver price, but alas, as we now know, this was not the case.

Silver prices continue to suffer stagnation and outright depression; they have plummeted to the $13.00 range from their previous high near $50.00 only a few short years ago.

This has had the effect of depressing the precious metals market, and those with "weak hands" have completely and utterly jumped ship as the markets tell investors that the "sky is falling" and prices will never move higher again.

This low in prices has had one major effect: it has caused a massive increase in demand for physical metals. This, in fact, is the only long-term thing that investors should be thinking about, given the incredible tightness and scarcity of this metal.

Adding to this scarcity is the fact that US silver production has not recovered in the least bit since last September’s report; in fact, it has continued to get worse and go lower.

Recent reports show that silver production in the US fell to 84.6 metric tonnes in October 2015, down from 103 metric tonnes the year prior. This means that even after the huge drop of nearly 20% in September, silver production continued to plunge by another 18% in October.

How long can this farce go on? How long can the "tail wag the dog" and the paper price dominate the true, real physical market? The latter should, in fact, be dictating the price.

This is what we know. Prices are at absurdly cheap levels, production is crashing and demand for physical silver remains high. It shouldn't take a rocket scientist to figure out the inevitable direction of the price of this metal going forward into the future.

It is only a matter of time before the free market exerts itself and silver breaks free from its shackles. It is only a matter of time before investors are rewarded for their conviction and fortitude. It is only a matter of time before the price of silver explodes higher. Until then, sit tight and be right, because know this: you are.

- Source, Nathan McDonald via the Sprott Money Blog