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Silver& zinc, copper, lead, nickel, cobalt.
Comparison of the production, the prices and the reserves.

It is very frequent that we made reference to the ratio of the price between the gold and the silver, sometimes we speak about their production. Nevertheless, it is very rare that we compare the price and the production of the silver with those some zinc, some copper, some lead, some nickel and some cobalt. The zinc, the copper and the lead are often associated to the production of silver, on the other hand the nickel and the cobalt are not connected on it. The average report between the production of silver and the other metals is calculated in a first part, then I calculate the average price between the silver and these other metals. The last ratio is the report between silver in reserve and other metals. These figures are then used to make one theoretical calculation of the price of the ounce of silver according to this ratio.

I. Calculations.
- Zinc, Zn.
The zinc production is on average, for 100 years, 318 times superior that silver.
The price of silver is on average, for 100 years, 156 times superior to that of the zinc.
The zinc reserves are 1071 times superior to that of silver.

Average prod 318: $1 022 / tons Zn * 318 = $324 996 / tons = 10.1 $ oz Ag.
Average price 156: $1 022 / tons Zn * 156 = $159 432 / tons = 4.95 $ oz Ag.
Ratio reserves 1071: $1022 / tons Zn * on 1071 = $1 094 562 / tons = 34 $ oz Ag.

- Copper, Cu.
The copper production is on average, for 100 years, 411 times superior that silver.
The price of silver is on average, for 100 years, 71 times superior to that of the copper.
The brass reserves are 2261 times superior to that silver.

Average prod 411: $2870 / tons Cu * 411 = $1 179 570 / tons = 36.68 $ oz Ag.
Average price 71: $2870 / tons Cu * 71 = $203 770 / tons = 6.33 $ oz Ag.
Ratio reserves 2261: $2870 / tons Cu * on 2261 = $6 489 070 / tons = 201 $ oz Ag.

- Lead, Pb.
The lead production is on average, for 100 years, 239 times superior that silver.
The price of silver is on average, for 100 years, 183 times superior to that of the lead.
The lead reserves are 333 times superior to that silver.

Average prod 239: $965 / tons Pb * 411 = $230 635 / tons = 7.17 $ oz Ag.
Average price 183: $965 / tons Pb * 71 = $176 595 / tons = 5.49 $ oz Ag.
Ratio reserves 333: $965 / tons Pb * on 2261 = $321 345 / tons = 9.99 $ oz Ag.

- Nickel, Ni.
The nickel production is on average, for 100 years, 33 times superior that silver.
The price of silver is on average, for 100 years, 26 times superior to that of the nickel.
The nickel reserves are 333 times superior to that silver.

Average prod 33: $13 920 / tons Nor * 33 = $459 360 / tons = 14.28 $ oz Ag.
Average price 26: $13 920 / tons Nor * 26 = $361 920 / tons = 11.25 $ oz Ag.
Ratio reserves 333: $13 920 / tons Nor 333 = $4 635 360 / tons = 144 $ oz Ag.

- Cobalt, Co.
The production of cobalt is on average, for 100 years, 1.3 times superior that silver.
The price of silver is on average, for 100 years, 9.1 superior to that of the cobalt.
The reserves of cobalt are 30.95 times superior to that silver.

Average prod 1.31: $56 054 / tons Co * 1.31 = $73 431 / tons = 2.28 $ oz Ag.
Average price 9.1: $56 054 / tons Co * 9.1 = $510 091 / tons = 15.86 $ oz Ag.
Ratio reserves 30.95: $56 054 / tons Co 30.95 = $1 734 871 / tons = 56.96 $ oz Ag.


II. Average of the prices, the production and the ratio of reserves between silver and zinc, copper, lead, Nickel, Cobalt.
- Average of the prices:
The zinc is, for 100 years, 156 times cheaper than the silver, in price of zinc it gives a price of the ounce of silver of $4.95 / oz Ag.
The copper is, for 100 years, 71 times cheaper than the silver, in price of copper it gives a price of the ounce of silver of $6.33 / oz Ag.
The lead is, for 100 years, 183 times cheaper than the silver, in price of the copper it gives a price of the ounce of silver of $5.49 / oz Ag.
The nickel is, for 100 years, 26 times cheaper than the silver, in price of the zinc it gives a price of the ounce of silver of $11.25 / oz Ag.
The cobalt is, for 100 years, 9.1 times cheaper than the silver, in the going price of the cobalt it gives a price of the ounce of silver of $15.86 / oz Ag.

The average of the prices obtained for the silver from these five metals is $8.77. It is the value which should have one ounce of silver according to the going prices of Zn, Cu, Pb, Nor and Co and to the average report between the price the silver and of these metals for 100 years.

- Average of production:
For 100 years, the zinc’s production is 318 times as important as that of silver, if we use this ratio to determine the value of one ounce of silver, we obtain then $10.1 / oz Ag.
For 100 years, the copper’s production is 411 times as important as that of silver, if we use this ratio to determine the value of one ounce of silver, we obtain then $36.68 / oz Ag.
For 100 years, the nickel’s production is 33 times as important as that of silver, if we use this ratio to determine the value of one ounce of silver, we obtain then $14.28 / oz Ag.
For 100 years, the cobalt’s production is 1.3 times as important as that of silver, if we use this ratio to determine the value of one ounce of silver, we obtain then $2.28 / oz Ag.

The average of the prices obtained for the silver from these five metals is $14.1. It is the value that should have one ounce of silver according to the going prices of Zn, Cu, Pb, Nor and Co and to the average report between the production of silver and these metals for 100 years.

- Report between the reserves:
Silver in reserve is lower 1071 in the zinc reserves. If we use this ratio to calculate the value of one oz Ag according to the value of the zinc, we obtain 34 $ / oz Ag.
Silver in reserve is lower 2261 in the brass reserves. If we use this ratio to calculate the value of one oz Ag according to the value of the copper, we obtain 201 $ / oz Ag.
Silver in reserve is lower 333 in the lead reserves. If we use this ratio to calculate the value of one oz Ag according to the value of the lead, we obtain 9.99 $ / oz Ag.
Silver in reserve is lower 333 in the nickel reserves. If we use this ratio to calculate the value of one oz Ag according to the value of the nickel, we obtain 144 $ / oz Ag.
Silver in reserve is lower 30.95 in the reserves of cobalt. If we use this ratio to calculate the value of one oz Ag according to the value of the copper, we obtain: $56.96 / oz Ag.

The average of the prices obtained for the silver for these five metals is $89.19. It is the value which should have one ounce of silver according to the going prices of Zn, Cu, Pb, Nor and Co and to the report between money in reserve and these metals.

Be careful!!!!! The calculations of this part are purely theoretical, they are only putting in evidence the importance of the annual production in the establishment of the prices of the silver in the fact that its weak reserves are not taken into account with regard to these other metals.

III. Offer, demand and reserves.
- The price of metals is obtained, for 100 years, according to two parameters: the demand and the availability. To take an image, we can think of a bottle the discharge of which is too weak, on this one we place a more important neck to increase discharge according to the demand. However, we forget an important point, it is the contents of the bottle. If we increase the neck, she empties faster. The producer who arrives at the end of the bowl understands that he has to decrease are output, not because of technical limit, but because it will not be capable any more of renewing the contents. The producers of silver, for centuries, open a new mine when the old is exhausted. But for the first time, they begin to have difficulties finding new veins, their attitude should thus change on the way she produces. The producers of silver can answer the future demand, but will they want it?
- The average of the prices obtained according to the prices and to the production for a century are globally close ($8.77 and $14.1), the price ensues from the production. But the prices obtained from the reserves are various $(89), because the price of metals takes into account more their availability than their rarity. So ratio production and the prices are close but nevertheless very remote from the ratio reserves.
For example, the silver maybe produced in a relatively weak cost, between $4 and $5 the ounce, its accessibility is thus very good. This moderate cost of production makes its rarity forget. What would be the rate of the gold if it average price of production was only $5? This would pull an increase of its production and a decline of these rates, it would be cheaper, but always so rare. Consequently, golden deposits would more quickly be exhausted.
That is why I believe that, as soon as we shall have become aware of stocks limited by silver, a takeoff hastens of these prices going to occur and from then on the production is going to fall. This approach begins to be born among the producers of silver, they refuse to produce in the current rate that they consider too weak, with regard to the reserves (and not with regard to the possible production). Contrary to the gold, for which by digging deeper, we can increase the reserves at the price of an increase of production costs (example of South Africa), the silver will occur it until last ounce in relatively weak production costs. It is for it that the silver is for a long time “over exploit” and sold to costs far too weak with regard to its rarity. It is so for that reason that it will doubtless be one of the first metals to reach its peak of production.

I distrust producers of silver who make too much communication on their current production and generally little on their reserves. I prefer mines which hibernate as the bear during winter by producing the least possible to protect their stock. Certain mines even stopped temporarily their production, it is a wise person decision, why to sell to settled prices, a with difficulty renewable product. The value of a silver mine is not determined by its production, but by its reserves.

Dr Thomas Chaize

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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