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Peru Silver Production down 54%

— Peru Silver Production down 54%

The following article is dedicated to my newest customers and will also serve as a reminder to my old faithful customers as to why I am such a huge fan of investing in physical silver. I strongly believe that history repeats itself and that is the main reason why I spend so much time researching the past. The world’s investment markets are made up of savvy investors ….. and not so savvy investors. It is actually common knowledge that savvy investors make money off the not so savvy investors by being in the right type of investment before the masses move into that specific investment. The media is then used to boost that specific investment they already own. The not so savvy investors then buy that specific investment from the savvy investors just before the prices start falling. Does this make sense to you?

The specific investment in this case is precious metals and specifically silver. Let me first of all explain the reasons why I prefer silver.

  • Return on Capital – As investors we strive to get the best return on capital that we possibly can. History has shown us in 2008/9 what happened to gold and silver when the stock markets took a dive. Over a period of two years after 2008/9 gold went up by 157% and silver a whopping 380%. This is going to happen again …… just bigger!
  • Paper Money – The big economies of the world, USA, UK, China and Japan are continuing to print more paper money to prop up and protect the over priced stock markets. This situation takes me back to Germany towards the end of the second world war when you took your wheelbarrow full of worthless paper money to the shop to buy a loaf of bread. Currently Zimbabwe is showing us what happens when paper money gets out of control. Physical gold and silver will protect you from this catastrophe as the world famous writer of Rich Dad Poor Dad, Robert Kiyosaki explains.
  • Silver Supply Dwindling – The Uchucchacua Silver mine, the largest in Peru and also the third largest in the world, has seen a 54% drop in production in Q1 2019 as can be seen from the below graph courtesy SRSrocco report.
  • The official company explanation for the huge drop in production is a 21 day strike by contractors regarding some issues with management as well as an unusual amount of rain.. According to reports the conflict has been resolved but production is still down 3 months after the strike ended. My guess is that they are running out of high grade ore and they have not done any prospecting for new deposits due to the low silver price. It is interesting to know that the average production cost to produce one ounce of silver today is $16. That means that at the current price of $15.05, you will be buying silver at below cost. The price can only go up from current levels as supply is shrinking rapidly. The last time this happened was back in 2011 when the world silver mines could not supply silver for 2 months and silver shot up to $50.

  • The next graph shows the world silver supply over the last 11 years and we can clearly see that world silver production peaked in 2015. The largest silver mines are in Mexico and their production has also been going down rapidly. The number of paper ounce silver relative to real silver is also increasing rapidly. I have also written in previous articles on the huge stock pile if physical silver that JP Morgan has been accumulating over the last number of years. The fact that the gold silver ratio, which should be around 55, is currently at over 90 is hugely bullish. This ratio is widely used by big investors to determine which metal to own. This ratio being at 90 indicates that investment will soon start flowing from gold into silver which will cause a huge surge in the silver price over a short period of time. We must also not forget the global warming crisis that is getting worse everyday and will force more and more investment into green technology like sun energy which consumes silver in vast quantities via sun panels.
  • Tom Cloud – Tom Cloud has 45 years of experience in the precious metals markets. He is one of the most respected analyst when it comes to gold and silver. I strongly recommend that any serious investor take the time to watch his latest video on gold and silver. It will be worth your while to have a look.

A very wise investor friend of mine once shared these words of investment wisdom.

“You do not make money when you sell. You make the money when you buy at the right price”

Now is the right time to buy silver at the right price.

Fill out the contact form on this website for me to give you a courtesy call or send me an email at dawid@preciousmetalbars.co.za