This must be distinctly understood, that CPM is bullish on silver at this time, projecting record prices at some point over the coming decade. It is working with several legitimate entities to encourage large and small investors to buy and hold silver based on rational and accurate information.

This week a group that is actively promoting silver to small investors based largely on inaccurate information and decades-old, discredited conspiracy theories approached CPM with a request that CPM be interviewed by them, ostensibly to help them better inform their audiences.

Reviewing the group’s postings, CPM saw buckets of misinformation and inaccurate commentary. One of the comments it focused on was the supposition that the decline in average grade of ore mined at primary silver mines over the past 15 years reflects a depletion of minable silver, that the world was running out of silver. This is a misunderstanding that is not uncommon.

To introduce the group to how CPM could provide its members better information and analysis, we provided information related to this decline in ore grade from 2005 to 2020 and why that conclusion is wrong. That information is presented here, edited for this format.

One of the group’s videos discussed how the decline in the average grade of ore at primary silver mines showed that the world is running out of silver ore. That is not accurate. The table below helps explain.

One factor determining the average grade of ore being mined is the price of silver. The decline in ore grades since 2005 reflects higher silver prices, not a depletion of ore. The 184.7% increase in silver prices from 2005 to 2020 allowed miners to earn more by mining lower average grades of ore, which ethical miners do to maximize the life of the mine, ore recovery, and return over the life of the mine. The mining term is to mine to the Average Payable Grade.

Mining companies mined higher grade ores in 2005 because the price of silver was roughly one-third of the price in 2020. This is called high-grading and is done to keep mines running at times of low prices. Many of those mines were unprofitable at the prices and grades of 2005. 

As prices rose mining companies mined lower average grades that were profitable at those higher prices. Miners today can profitably mine silver with ore grades that are a fraction of what they had to mine to try to be profitable in 2005.

The amount of silver reserves is larger today than it was in the past because part of the basic computation of reserves is a reasonably anticipated price. At higher prices, more resources are converted into reserves. The table below illustrates that.

Futurists in the early 1970s thought we would run out of silver, gold, copper, oil, and other raw materials by the early 1980s because they did not understand the interplay among resources, reserves, and prices. You can see from the table below that in 1981 there were only 8.1 billion ounces of silver in the world Reserve Base. By 1988 there were 10.8 billion ounces in the reserve base, even though 3.3 billion ounces of silver had been mined in the intervening years. Since 1988 cumulative world silver mine production has totaled 21.6 billion ounces, yet the Reserves are estimated to have risen more than 100% from 7.8 billion ounces to 16.1 billion ounces. More silver was mined from 1988 to 2020 than existed in reserves or the Reserve Base in 1988, and the Reserves are larger today than they were then. The world is not running out of silver. These are ore reserves. They exclude above ground inventories in silver bars, coins, jewelry, and decorative items, which are estimated to be at least 30 billion ounces.

CPM Group’s Position In The Market

CPM Group is a research and consulting companies. Our clients pay us to be right, not bullish or bearish.

Our analysts have decades of experience studying these markets in objective ways. We have done a good job so far, as the chart below indicates. Partly this is because we understand how commodities markets work.

Performance of CPM Group Silver Research Intermediate Recommendations
1 December 1980 Through January 2021

One of the sets of services we provide our clients is assistance in understanding markets, through the provision of accurate, unbiased research and consulting. Some clients pay us to advise their executives, management committees, boards, and others on markets. We provide a wide range of data, research, analysis, and consultations to help clients understand markets better, to improve their operating results.

One service we provide is “Deep Dive” seminars that last from two hours to three days. We also provide presentations to mining companies’ executive committees and boards as well as other clients focusing on some of the conspiracy theories, the evidence they put forth, the evidence refuting those claims, the fundamental illogic of these claims, and the evidence against such conspiracy theories. We are a private company as opposed to a public utility, so we are compensated for our work and our decades worth of knowledge.

CPM has posted several videos on silver recently. You may recommend that your subscribers visit our YouTube channel and view some of those, including the two-hour Silver Fact and Fantasy Webinar on 4 March. It might help them understand the silver market better, understand what has been happening in the silver market, understand what is happening in the broader economy and financial markets, and maybe begin to learn how to discriminate between unbiased research and silver marketing hype that leads investors to have unrealistic and factually unsupportable beliefs and expectations that ultimately disappoint the investors and thwart their ability to profit from owning silver.

https://www.youtube.com/c/CPMGroup

Should you wish to avail yourselves of our services, we gladly will discuss a suitable consulting program. Again, thank you for reaching out to CPM Group.

www.cpmgroup.com, [email protected]