Introduction
In our previous complete Q3FY13 gold cost analysis, we went over a number of the industry's all-in costs to mine an ounce of gold in 2013 and discussed one of the most important metrics to analyze the gold industry, the actual cost of mining an ounce of gold, which can help an investor figure out whether it is time to buy GLD and/or the gold miners. In that analysis, we used the 2013 financials to calculate the combined results of publicly traded gold companies and come up with a true all-in industry average cost of production to mine each ounce of gold.
We're going to do the same thing for the silver industry and try to compute the true costs it takes to mine silver. One thing that needs to be known about the silver industry is that most mined silver is produced as a byproduct, and thus silver production isn't limited simply to the costs that it takes to mine silver.
But that does not mean that investors should entirely ignore the costs to mine silver as it still is very important for the following reasons:
- 30-40% of annual mined silver is produced by primary silver miners who obviously are driven by the costs of production
- As the price of silver drops, it causes the costs of non-primary silver miners (i.e. byproduct miners) to rise as they get less money for their byproduct silver
- Silver costs usually rise in parallel with gold costs, and gold miners produce a lot of the byproduct silver and thus rising silver costs suggest that gold (and other minerals) are costing more to mine
We're still working on completing and publishing a complete FY2013 and first half 2014 all-in costs for the industry, so if you are interested in receiving it and keeping
