Sunday, April 17, 2011
The Never Ending Silver Price Rise
BHP Billiton knows all about that. It is mining 42 million ounces a year at Cannington in Queensland, Australia. If you take the first-quarter average, assuming it holds for calendar 2011 which, on trend for the past thirty years seems a safe bet, it means that an additional annual pre-tax earnings from the mine of about $500 million is definitely on the cards. That's for the silver alone of course quite apart from the lead and zinc produced also.
Alcyone has returned to its Twin Hills silver mine near Texas in south-eastern Queensland and by the end of this year; Cobar Consolidated Resources expects to have its Wonawinta project south of Cobar in NSW in production.
Not to be outdone, Texas, a 1.5-2 million ounce-a-year silver producer, forecasts a cash operating cost of just $13 an ounce. And Wonawinta is planned as a 2.5 million ounce-a-year producer with a smaller cash operating cost of $10.20 an ounce
More silver mines are expected to open as it becomes increasingly more profitable to mine silver. With the gold silver ratio at around 36:1 and reducing the future for silver looks brighter. Another reason to buy silver.
Currently silver is in short supply. A recent study by the United States Geological Survey, has shown that silver is, in fact almost twice as rare as gold simply because it is not recycled at the same rate and with current consumption increasing all the known silver in the earth's crust is likely to disappear within the decade. More exploration is needed to find more silver deposits and with the increase in the value of silver this becomes more likely.
As well as the standard industrial use for which silver is know, it now has a new bedfellow in the form of the solar energy industry. Silver, in the form if a paste, is used in 90 percent of all crystalline silicon photovoltaic cells, the most common type of solar cells. In addition silver is used in other ways to generate electricity by reflecting and condensing solar energy onto collectors containing salts which are used to run generators. As nations continue to seek a cleaner energy standard, the demand for solar energy is very likely to increase. The demand for solar energy has grown at nearly 30 percent per year over the past 15 years and this growth is expected to continue.
With the price of silver rising faster than gold, as evidenced by the decreasing gold silver ratio, it is obvious that silver is the new boy on the block to watch and the catch cry, "buy silver", is going to echo through the future months.