Let’s say you start a company that is building widgets. Your company starts out building this one type of widget and it is highly successful. Then you add a series of other widgets to your production. Your company is known for your first widget and your company takes the name that reflects this widget, we’ll call it “silver”. As your company matures, the other widgets begin taking the lead as far as volume of sales, profits produced and products manufactured. Your company is known as “silver”, but the other widgets are what are actually driving the company. Is your company still a “silver” company or has it morphed into something else?
This is one of the more interesting points that Keith Neumeyer, CEO, First Majestic Silver and Chairman, First Mining Finance, discusses during the interview below. The situation is this – if your mining company starts out producing 70% silver but as your mine is processing less and less silver while increasing the production of lead, zinc and copper how can it still be considered a silver mining operation? If your silver production goes from 70% to 20%, that tells us a lot about what is happening with the silver mining production. It may be isolated to a handful of mines, but, in my opinion, it is reflective of the silver mining industry as a whole.
Silver is a strategic asset. Our world functions in the way it does because of silver. The windows in your office building are coated with silver, all the technology, including the computer you are reading this on, functions because of silver. This is to say nothing of solar panels, biocides and the hundreds of other uses that make our world a more comfortable place. It also makes it a much more dangerous place as all the bombs being used around the world include a significant amount of silver in each of these deadly devices. Without silver, our world would look and function much differently than it does today.
The significance of all this can not be over-stated. Silver is much more rare than people can even begin to imagine.
This brings us to the reality of the current silver “market”. Silver currently trades somewhere around 70 to 1 when compared to gold. The production of silver, naturally out of the ground, is mined at 9 to 1. The natural mined ratio has been used as the standard of value for these two metals for thousands of years – not decades, not a couple of hundred years, but somewhere around 4,000 years. What this means is for every 1 ounce of gold that is mined there are only 9 ounces of silver mined; but silver, currently, trades at a ratio of close to 70 ounces of silver to 1 ounce of gold! Based on 4,000 years of history does something sound out balance to you?
Mr. Neumeyer has a lot more to share with you, so, please give this a good listen. If you like being associated with winners, Mr. Neumeyer is someone you want to be associated with. He has already built two different billion dollar companies and is currently building what very well could be his third billion dollar company. Confiscation, the Federal Reserve and the current state of our economy are all discussed during this 30 minute interview.
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