The price of gold and silver is set to explode according to one of the most well known CEO’s in the precious metals mining space.
Keith Neumeyer, the CEO of one of the world’s lowest-cost primary silver producers, says that the negative headlines surrounding history’s most trusted monetary instruments will soon give way and the smart money, including the likes of George Soros and Carl Icahn, is taking massive positions ahead of the breakout.
Neumeyer, who has created two billion-dollar companies and recently founded the mineral bank investment firm First Mining Finance, argues that the fundamentals are simply too great to ignore.
It’s really what you pay for stuff that creates value. If you’re buying stuff at the top of the market you’re destroying value. You never really know when the exact top of the market is and you never really know when the bottom of the market is. But, I know we’re around the bottom or are close to the bottom… But I don’t really care because I’m a long-term fundamental investor and I know that we can make a lot of money buying assets at these prices that we’re paying today.
I do believe that markets ultimately prevail. I do believe that supply and demand will ultimately prevail. I’m confident that we will see that occur…
The fact there are some very substantial new players coming into the sector and taking positions in gold and silver… I think that’s showing that things will change and I think things are in the works as we speak.
Neumeyer recently sent an open letter to the Commodity Futures Trading Commission slamming the rampant manipulation of precious metals paper markets, going so far as to call on global producers to withhold silver deliveries in an effort to bring balance to markets.
As he notes in his interview, that prices of silver are currently trading at around $15 per ounce is counter-intuitive given that demand today is significantly more than it was at the height of silver’s rise to nearly $50 in recent years. Moreover, the price at which mining companies are able to acquire precious metals assets in the ground has collapsed significantly from just a few years ago:
Generally speaking the average price that a mining company would pay for gold ounces that are drilled in the ground is about $50 an ounce. That number did go over $100 and there were some transactions that went through in the 2011 time frame that were much higher.
But I am just using generally speaking over the last thirty years… $50 is the normal one that we use as mining companies in the industry… so if we’re buying ounces today at $10 an ounce… and it’s actually lower that that… we’re paying $7 to $9 an ounce… that’s five times less than a normal market.
The silver market is extremely tight. Unfortunately you don’t see it in the price.
When silver was $45-$50 per ounce the demand was a little bit less than it is today. That’s a surprising statement. The demand today at $15 silver is greater than it was at that $45-$50 silver.
It goes to my earlier point about headline news and the hate on the mining sector, the hate on resources, the hate on metals… That’s what is causing prices to be where they are today.
I do believe that the street will wise up to that supply and demand fundamentals story and see that silver is actually a strategic metal.
The question, of course, is when? When will prices of silver and gold finally respond to widespread global demand?
While we can’t time the markets, if we take Neumeyer’s advice it doesn’t really matter. The long-term fundamentals are strong and the manipulation is clearly evident.
I think the supply/demand fundamentals for silver are the best of any metal. Of course gold is interesting because of the money printing that’s going on by governments. That’s why I am very much focused with First Mining on buying gold assets.
I think gold is going to start moving in the next six to eighteen months and I think gold will be driving the rest of the metals much higher.
I do believe that silver will outperform gold. The ratio currently is 75-to-1. I wouldn’t be at all surprised to see the ratio go down to 20-to-1.
…It’s not that inconceivable and that’s going to put silver in triple-digit categories.
The reality is that silver paper markets trade about one billion ounces daily. The entire yearly production of silver is about 800 million ounces. At some point that disconnect will be revealed for the sham it really is.
When that day comes we can expect gold and silver to rise precipitously as mainstream financial pundits look on with bewilderment.