The best gap numbers I could find are: 1997: 218.2 1998: 179.4 1999: 120.2 2000: 92.4 (est) If one was looking at 120 gap at the end of 1999 with the stockpile down to 330, the stockpile would be gone in 33 months. It now appears, however, the lower 2000 projected gap of 92 would take the stockpile down to 240ish which is still 31 months left (i.e 12 months have passed but only 2 months of stockpile depleted)
I am looking at production, which continues to increase at a higher rate ( 5-8%) than demand (flat). BHP's Cannington mine should do 35moz AG in 2000 versus 25moz in 1999, and with 700moz of reserves it could ramp up over 40Moz. I'd love to find the silver production numbers for Yanacocha, which increased gold production from 1.7moz to 2.2moz this year. Silver reserves are 356moz AG vs 35moz AU, so I suspect silver prodution has gone from 17moz to 22moz. Several of the large gold developments (Pascua-Lama, Veladero, etc..) in Peru/Argentina have a lot of silver in them.
I seriously think it it possible/probable that the supply/demand gap could be closed in under 24 months, which means the stockpile would NOT be depleted. Stockpiles would actually start to go up as supply was greater than demand. "Silver-to-zero" would be what happens when static historical trends are projected in a linear fashion into the future. My dynamic projection would be that the gap closes before the stockpile depletes eliminating the assumption the price must rise. This makes me the exception to the conclusion of the essay "As the pitifully small supplies are depleted, the price will rise and continue to rise into the future as far as I or anyone can see."
I have been negative on silver for about two years and was just starting to change my mind to bullish, but think I just talked myself into neutral - just can't see reasons for it to go up or down much from here. |
