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Precious Metals Fundamentals: The Numbers Don’t Lie, Part I – Jeff Nielson

by Jeff Nielson, Sprott Money:

Recent commentaries which have discussed precious metals have focused on the precious metals “market” – meaning the paper-trading that the bankers and Corporate media call “a market”. Sophisticated readers understand that this fantasy world has almost nothing to do with the real market for gold and silver physical metal.

As we learned from Jeffrey Christian in 2010 (in an admission which he would love to take back), in this world of fraud, only 1% of “gold” and “silver” trading is actual metal. All the rest of this trading is paper.

Don’t look for real numbers on precious metals fundamentals from the World Gold Council or the Silver Institute either. These are banker-operated propaganda outlets , with the sycophantic senior gold and silver producers acting as their front-men. These sites get their crooked numbers from the same Corporate media which pretends that the bankers paper-trading represents the real gold and silver market.

Prices are once again being manipulated lower in this paper-trading. The blind, deaf and dumb Corporate media is once again pretending that there is nothing outrageous about this downward manipulation of prices. Readers require a reminder of the dominant fundamentals of the real, physical market for these metals:

Precious metals prices are below the cost of production. This is entirely unsustainable.
Precious metals supply deficits have been very large, for a very long time. This is entirely unsustainable in the near term.

In establishing that gold and silver are currently priced below the (full) cost of production, it’s easiest to start with the silver mining industry since the evidence is so obvious and extreme. We know that silver is artificially priced below the cost of production for one simple and unequivocal reason: actual silver mines ( “primary” silver mines) produce only a small portion of the total amount of the world’s annual silver supply, and only the world’s very richest deposits of silver can be mined at a profit.

Silver mines currently produce only about 25% of the total amount of silver produced each year. All of the rest of the world’s supply is mined as a byproduct of other metals mining. Silver is the only major metal on the planet where the (vast) majority of supply comes as a byproduct .

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