Loading ...Ramifications of Much Higher Silver Prices
We are all rooting for and expecting much higher silver prices in the months and years ahead. What about the ramifications of much higher silver prices? I am sure that despite this recent sharp rally in the price of silver, users of silver have relied on previous inventories, obtained at much lower cost. Now, and over the months and years to come, if silver reaches and exceeds it’s all time high near $50, and continues on to many multiples of that price, what happens to industrial users of silver. Apple with their smartphones and other electronic devices, Tesla and other electric vehicle makers, and all the various users of products that incorporate silver in their wares are going to face very large increases in their cost of goods. They will pass those on to consumers and end users in higher prices but eventually it will cause a large drag on profit margins and decreased numbers of units sold.
No quandry here, if I don’t stack silver today how many ‘smart’ devices will I be able to afford in the future.
You are right. That’s how markets work…
Ramifications are a two way street. Higher silver prices will mean more mines opening and more workers needed with a chance for those workers making a good livable wage regardless of primary or byproduct silver. On the other hand the amount of silver used in many gadgets is price inelastic. For example use a iPhone. The amount of silver, which I don’t know exactly, but is at most one gram. So at $31 silver the amount used is $1 in silver at $62 there is $2 and $310 silver there is $10 worth of silver used. You get the point.
Here are the ramifications…. The banks and fiat money system blow up and the effect on manufacturers will be minimal since they use so little of it in each device. It’s all good
Here is a segment written by Ted Butler on this subject:
Remarkably, as indispensable as silver has become in thousands of individual industrial applications, the actual amount of silver needed in the finished product of just about everything is miniscule – making the cost of silver immaterial in the total cost of the finished product. No manufacturer of any product that uses silver will stop buying silver in the short run because the price rises, no matter how high the price may jump. (I won’t argue about long-term substitution if the price rises ten or twenty times or more – but why don’t we deal with that then?)
No manufacturer, as Izzy liked to say, will shut down its assembly lines and send its employees home because the price of silver went too high – it will buy silver at any price as an alternative to ceasing production. Price alone won’t deter any manufacturer from buying silver, not when the cost of silver is still a tiny fraction of the finished product’s final total cost. However, and this is the key point, the flip side of that equation is that if silver becomes unavailable separate from price, then that is whole different matter.
This article was written in 2013 but you get the point: https://money.cnn.com/2011/10/13/technology/iphone_trade_in/index.htm
“There are 0.034 grams of gold in each cell phone, according to the U.S. Geological Survey. That’s the equivalent of 0.001 troy ounces, worth about $1.82 at today’s prices. There are also 16 grams of copper, worth about 12 cents, 0.35 grams of silver, worth 36 cents, and 0.00034 grams of platinum, valued at 2 cents.”
Thank you for all your comments. I believe you missed my point. I knew that the amount of silver in a particular device is infintesimal. I also know that higher prices will bring about more silver being mined. And that fiat and the central banks will blow up. What do the latter two have to do with the point I made? If silver goes first to $50 and on to Multiples thereafter, as most of us here believe will happen, the ramifications will be significant to the economy and specifically companies that need and use silver in their products. It doesn’t matter that each smartphone, electric vehicle and solar panel etc. doesn’t use a lot of silver. The companies are going to have to pay much, much higher prices for ALL the silver they need. Their profits and overall sales are going to be impacted. Not tomorrow, or even next year, but as silver soars it will hurt their bottom lines over the next 3-5 years.
The point about banks blowing up is the silver suppression then ends
Agree with you Plunger, and Ted Butler. Manipulation ends and prices soar. Agree with him that companies won’t stop buying as long as it is available. My point is that cumulatively, those much higher prices are going to effect profitability.