Here is my reaction, after some thought, to what happened today. No doubt it was devastating. I happened to be watching on Level 2 when it happened and almost all of the loss took place over a space of five minutes or less. It seemed like a cascade event.
It is interesting to note that I can find only two miners that were actually up today--GG and GLP were up just a bit. The other miners that I follow were all down.
Why would that happen on a day when the price of precious metals was actually up a bit?
Some thoughts--today one of our bigger precious metals "experts", Andy Hoffman, predicted that at these prices many miners will soon be out of business. Did that have an effect? Perhaps, but more importantly, the paper price of precious metals is approaching the amount of money that it takes to pull it out of the ground.
At $23 an ounce, USGIF and many other miners might as well leave it in the ground or else mine it and refuse to sell it on this terrible market. Mining but not selling might be a wise decision but for the short term it would be awful for the quarterly reports.
When you combine all of the costs of mining, very few producers can make money at the current price points of gold and silver--at least the current "paper" price. Under those conditions, can USGIF survive? I think it can.
Look at Hecla and its Lucky Friday mine. It is hardly producing and may not for some time. Look at the disaster at Rio Tinto.
So, am I worried? You bet. Am I concerned? Yes sir. Am I blaming management? Not yet. They and their much talked about options have nothing to do with the price of silver. We would be very happy campers if the POS was $40.
And forget dividends. With the current price of silver and gold, our little Company may have to cut back and certainly dividends are out of the question.
AI
