Silver Is A Long-Term Buy: Here's Why
London (Mar 2) Summary•Silver has lost over 60% of its value since 2011 and appears to be priced below the cost of extraction.
•Gold and silver have been used as currency for 5,000 years.
•Buy when there is blood in the streets.
Silver is expensive to dig out of the ground. While many pundits argue the "cash cost" to mine the metal is around $10.00 per ounce, that figure likely understates the true economic cost to silver miners by at least 50%. Silver miners want investors to believe that cash costs can be evaluated without looking at byproduct credits, which accounted for around 40% of Endeavor Silver's (NYSE:EXK) total revenues in 2013. The real cash costs of silver mining have to take into account the fact that silver mining is not profitable at a price under $20 per ounce for most, if not all, of the public market mining companies. The net loss to silver miners in 2013 was in the billions, and that was when the metal traded for a 50% premium to today's prices. Silver is a commodity that is deeply oversold from a technical perspective with mining stocks in the sector trading like penny stocks. Just take a look at the weekly chart of Nevada Gold (NYSEMKT:ANV), which is mostly a silver mining company -- the stock is trading for just 33% of book value and for just $1 per share.