Back to the Start

``I contend that the current price of silver is below the cost of marginal production, and if the price of silver does not rise, mine production will be reduced. As proof, I would direct your attention to the recent second quarter earnings reports of two well-known silver producers, Hecla Mining Company and Coeur d’ Alene Mining. Both companies reported operating losses, even though the price of silver averaged over $17 in the quarter, three times the price of several years ago. If someone told me 4 or 5 years ago that silver would be 3+ times higher and mainline miners like Hecla and Coeur would report operating losses, I would not have believed that. Then again, I wouldn’t have anticipated the shocking rise in the cost of silver production. Since silver is $2 lower, as I write this, than it was in the second quarter, it doesn’t take a rocket scientist to predict further losses for these miners, unless the price of silver rises. At some point, barring higher silver prices, silver production becomes questionable. No one can produce anything at a loss indefinitely. In my opinion, that puts a floor under the price of silver and strongly suggests that silver is undervalued.''