FUTURE SILVER SUPPLY MORE AT RISK THAN GOLD

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 I am currently working on my next article. This is a sneak peak. I truly believe that future silver production is more at risk than gold. Thus, I believe silver will gain much more in percentage than gold.

We all know about the serious trouble coming down the pike when it comes to ALLOCATED GOLD & SILVER that has been sold into the market and replaced by paper certificates. The information that I will provide in this article will add insult to injury to a silver market that is about ready to explode.

 A friend of mine and I recently took a drive around some old mining towns (now ghost towns) in Utah. We stopped at the old Frisco mining town and spent most of the day looking at the remains of the town as well as the mine itself. It was simply amazing to see that at one time, Frisco had a dozen saloons, businesses and several thousand people at its peak.

 The Frisco mine later named the HORN SILVER MINE, was founded in 1875 and by 1881 was producing over a million ounces of silver a year. However, due to the a rush to get the silver out and not bracing the mining tunnels correctly, the mine collapsed in Feb, 1885. The fortunate part about the major collapse is that it took place between shifts so no one was hurt.

The mine started to produce again at a decent rate in 1887, but never regained the level prior to the mine collapse. In the 30+ years the mine was open it produced over 14 million ounces of silver. This may not seem like a great deal today, but it was the largest silver mine in Utah at the time.

The most interesting part of researching the Horn Silver Mine in Frisco was finding out the tremendously high silver ore grades they were mining. When the mine first opened they were producing silver at a staggering 1,608 grams per ton (51.7 oz per ton). We must remember, at this time, the United States was figuring these ore grades by short tons or 2,000 pounds. The industry standard today is metric tonnes or 2,205 pounds. Thus, the earlier figures were 10% lower than the grades today.  If we add that 10% to this figure we see that compared to present mining ore grades it would have been 56.8 ounces per metric tonne — or 1,769 grams per tonne.

Visiting the mine in person, gave me the inspiration to write this article.  I looked at several present silver mines and decided to compare the Horn Silver Mine with First Majestic.  The chart below gives the STARK COMPARISON of how times have changed in 100 years.

 Here we can see dramatic difference.  During the entire 30 year lifespan of the Horn Silver Mine, they processed a grand total of 474,780 tons of ore and produced 14.21 million oz.  However, if we look at just one quarter of silver production at First Majestic, they mined a total of 482,077 metric tonnes of ore in Q2 2011 and produced 1.78 million oz.

WHAT A DIFFERENCE A 100 YEARS MAKES…

Basically, we have a 10 fold decrease in 100+ years.  We also must remember that during the early days, most of the mines did not use oil as a source of energy.  It was coal, wood or human and animal labor.

The remainder of the article discusses the energy issue and how it will impact the mining industry going forward.  Furthermore, due to the fact that 70% of silver is a by-product of base metal mining, it will suffer much greater than gold when the energy crunch hits hard in the next several years.

GOT YOUR PHYSICAL SILVER????