Gold at (1:30 am est) $1234.40 DOWN $0.70
silver was the star of the day: $17.19: UP 19 cents
Access market prices:
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
Shanghai FIRST morning fix Feb 10/17 (10:15 pm est last night): $ 1235.90
NY ACCESS PRICE: $1225.00.60 (AT THE EXACT SAME TIME)/premium $10.90
Shanghai SECOND afternoon fix: 2: 15 am est (second fix/early morning):$ 1235.97
NY ACCESS PRICE: $1223.90 (AT THE EXACT SAME TIME/2:15 am)
SPREAD/ 2ND FIX TODAY!!: $12.07
China rejects NY pricing of gold as a fraud/arbitrage will now commence fully
London FIRST Fix: Feb 10/2017: 5:30 am est: $1225.75 (NY: same time: $1225.40 (5:30AM)
London Second fix Feb 10.2017: 10 am est: $1228.30 (NY same time: $1228.70
It seems that Shanghai pricing is higher than the other two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.
Also why would mining companies hand in their gold to the comex and receive constantly lower prices. They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.
For comex gold:
NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH: 3 NOTICE(S) FOR 300 OZ. TOTAL NOTICES SO FAR: 5122 FOR 512,200 OZ (15.931 TONNES)
For silver: FEBRUARY
100 NOTICES FILED FOR 500,000 OZ/
TOTAL NO OF NOTICES FILED: 247 FOR 1,235,000 OZ
Let us have a look at the data for today
In silver, the total open interest ROSE by 1,281 contracts UP to 192,661 with respect to YESTERDAY’S TRADING. In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .963 BILLION TO BE EXACT or 138% of annual global silver production (ex Russia & ex China).
FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 100 NOTICE(S) FOR 500,000 OZ
In gold, the total comex gold FELL BY 6,954 contracts WITH THE FALL IN THE PRICE GOLD ($2.50 with YESTERDAY’S trading ).The total gold OI stands at 417,117 contracts
we had 3 notice(s) filed upon for 300 oz of gold.
With respect to our two criminal funds, the GLD and the SLV:
We had no changes in tonnes of gold at the GLD
Inventory rests tonight: 832.58 tonnes
we had no changes in silver into the SLV
THE SLV Inventory rests at: 334.713 million oz
First, here is an outline of what will be discussed tonight:
1. Today, we had the open interest in silver RISE by 1281 contracts UP to 192,661 AS SILVER WAS UP 4 CENTS with YESTERDAY’S trading. The gold open interest FELL by 6,954 contracts DOWN to 417,117 WITH THE FALL IN THE PRICE OF GOLD OF $2.50 (YESTERDAY’S TRADING)
2.a) The Shanghai and London gold fix report
2 b) Gold/silver trading overnight Europe, Goldcore
and in NY: Bloomberg
2c) COT report
3. ASIAN AFFAIRS
i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 13.52 POINTS OR .42%/ /Hang Sang CLOSED UP 49.84 POINTS OR .21% . The Nikkei closed UP 491.26 POINTS OR 2.49% /Australia’s all ordinaires CLOSED UP 0.84%/Chinese yuan (ONSHORE) closed DOWN at 6.8787/Oil ROSE to 53.73 dollars per barrel for WTI and 56.66 for Brent. Stocks in Europe MOSTLY IN THE GREEN. Offshore yuan trades 6.8703 yuan to the dollar vs 6.8787 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS QUITE A BIT AGAIN AS DOLLARS ARE ATTEMPTING TO LEAVE CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR
REPORT ON JAPAN SOUTH KOREA NORTH KOREA AND CHINA
b) REPORT ON JAPAN
c) REPORT ON CHINA
Trump learning to be a diplomat: he agrees to honour the ONE CHINA POLICY
(courtesy zero hedge)
4. EUROPEAN AFFAIRS
Greece lashes out at the IMF because they do not want them in the Troika. If the IMF bails then Germany also bails and thus Greece must leave the EU. As Mish states: this is nothing but a blame game
( Mish Shedlock/Mishtalk)
ii)They are all over the board with respect to Greece today. At first, there was a statement that the EU and the IMF agree on a common stance and then a Greek official blurted that no bailout deal is expected today
(courtesy zero hedge)
Schauble disparages Schultz as the SPD party is gaining in popular support against Merkel
We are starting to see stress in the system as investors are now shying away from safer bond issues:
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
Huge rally in Tehran protesting Trump and celebrating the Islamic Revolution. Not good
( zero hedge)
7. OIL ISSUES
i)Oil jumps because the IEA reports 100% compliance on production cut:
( zero hedge)
ii)USA oil rigs continue to escalate in count which no doubt raises total crude production. What will OPEC do if the market does bit rebalance?
(courtesy zero hedge)
8. EMERGING MARKETS
9. PHYSICAL MARKETS
i)A great commentary from Steve St Angelo. The Cannington mine in Australia’s has always been a big producer of silver. This mine is now owned by South 32 having been spun out of BHP Billiton. We have seen silver production fall as base metal production falters. Now we are witnessing silver production falter as mining does deeper into the mines. Silver is lighter and generally floats to the surface while gold is denser. Thus as you go deeper into the lens silver values decrease. This is generally true in primary silver mines as well.
( Steve St Angelo/SRSRocco report)
ii)I brought this to your attention at the beginning of December. Grant Williams repeating this presentation last week. It is important as oil pricing is being positioned to the yuan and those that wish gold can purchase the gold from the SGE with their yuan
a must read..
( Grant Williams/GATA)
i)The Court of Appeals unanimously rules against Trump. He now goes back to redrafting the executive order:
( zero hedge)
ii) he responds
iii)The wall will now cost $22 billion to build and it will take almost yrs to complete
( zero hedge)
iv)The important University of Michigan Consumer Confidence report plunges to near record lows as the “hope” component falters:
(c zero hedge)
(courtesy zero hedge)
vi) The only solution to the Dallas Pension mess is bankruptcy but that will hurt a lot of their pensioners
( Mish Shedlock/Mishtalk)
Let us head over to the comex:
The total gold comex open interest FELL BY 6954 CONTRACTS UP to an OI level of 417,117 WITH THE FALL IN THE PRICE OF GOLD ( $2.50 with YESTERDAY’S trading). We are now in the contract month of FEBRUARY and it is one of the better delivery months of the year. In this next big active delivery month of February we had a LOSS of 35 contracts DOWN to 1352. We had 0 notices served upon yesterday and therefore we LOST 35 contracts or an additional 3500 oz will NOT stand for delivery and these were cash settled for a fiat bonus. The next non active contract month of March saw it’s OI RISE by 75 contracts UP to 2154.The next big active month is April and here the OI FELL by 8587 contracts DOWN to 280,301.
We had 3 notice(s) filed upon today for 300 oz
And now for the wild silver comex results. Total silver OI ROSE by 1281 contracts FROM 191,380 UP TO 192,661 as the price of silver ROSE IN PRICE TO THE TUNE OF 4 CENTS with respect to YESTERDAY’S trading. We are moving further from the all time record high for silver open interest set on Wednesday August 3/2016: (224,540).
The active month of February saw the OI RISE by 106 contract(s) UP TO 285. We had 0 notice(s) served upon yesterday so we GAINED 106 CONTRACTS or an additional 530,000 oz will stand.
The next big active delivery month is March and here the OI decrease by 7397 contracts down to 106,030 contracts. For comparison purposes last year on the same date only 90,156 contracts were standing.
We had 100 notice(s) filed for 500,000 oz for the FEBRUARY contract.
VOLUMES: for the gold comex
Today the estimated volume was 224,836 contracts which is good.
Yesterday’s confirmed volume was 263,330 contracts which is very good
volumes on gold are getting higher!
|Withdrawals from Dealers Inventory in oz||nil|
|Withdrawals from Customer Inventory in oz||
|Deposits to the Dealer Inventory in oz||nil oz|
|Deposits to the Customer Inventory, in oz||
|No of oz served (contracts) today||
|No of oz to be served (notices)||
|Total monthly oz gold served (contracts) so far this month||
|Total accumulative withdrawals of gold from the Dealers inventory this month||NIL oz|
|Total accumulative withdrawal of gold from the Customer inventory this month||121,574.9 oz|
Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 3 contract(s) of which 0 notices were stopped (received) by jPMorgan dealer and 1 notice(s) was (were) stopped/ Received) by jPMorgan customer account.
March 2016: 2.311 tonnes (March is a non delivery month)
|Withdrawals from Dealers Inventory||nil|
|Withdrawals from Customer Inventory||
|Deposits to the Dealer Inventory||
|Deposits to the Customer Inventory||
|No of oz served today (contracts)||
|No of oz to be served (notices)||
|Total monthly oz silver served (contracts)||247 contracts (1,235,000 oz)|
|Total accumulative withdrawal of silver from the Dealers inventory this month||NIL oz|
|Total accumulative withdrawal of silver from the Customer inventory this month||5,184,240.7 oz|
At 3:30 pm we receive the COT report which gives us position levels of our major players. Today is important because lately we have seen gold strengthening quite noticeably even at the comex table. Let us see if the banks are vacating their comex gold/silver shorts:
|Gold COT Report – Futures|
|Change from Prior Reporting Period|
|non reportable positions||Change from the previous reporting period|
|COT Gold Report – Positions as of||Tuesday, February 07, 2017|
Our large speculators:
those large specs that have been long in gold added 3994 contracts to their long side
those large specs that have been short in gold added 6000 contracts to their short side
those commercials that have been long in gold added 4240 contracts to their long side
those commercials that have been short in gold added 6583 contracts to their short side.
Our small specs;
those small specs that have been long in gold added 2137 contracts to their long side
those small specs that have been short in gold covered 2212 contracts from their short side.
Conclusions: the commercials go net short by only 1243 contracts. However it looks like they are having trouble getting out of their massive shorts as they had to buy 4240 contracts
And now silver:
|Silver COT Report: Futures|
|Small Speculators||Open Interest||Total|
|non reportable positions||Positions as of:||151||101|
|Tuesday, February 07, 2017||© SilverSeek.com|
Our large specs:
Our large specs that have been long in silver added only 955 contracts to their long side.
Our large specs that have been short in silver covered 972 contracts from their short side.
Those commercials that have been long in silver added 1414 contracts to their long side
those commercials that have been short in silver added 4538 contracts to their short side.
Our small specs:
those small specs that have been long in silver added 2087 contracts to their long side.
those small specs that have been short in silver added 890 contracts to their short side.
the commercials go net short again by 3124 contracts. They seem emboldened again by continuing their supply of non backed silver paper.
And now the Gold inventory at the GLD
Feb 10/no changes at the GLD/Inventory rests at 832.58 tonnes
feb 9/no changes at the GLD/Inventory rests at 832.58 tonnes
Feb 8/another “deposit” of 5.63 tonnes of gold into the GLD/The addition is a paper addition/total inventory: 832.58 tonnes
Feb 7/another huge fake deposit of 8.30 tonnes of gold into the GLD/the addition is a paper addition and no doubt not physical/ total inventory: 826.95 tonnes
FEB 6/a huge deposit of 7.43 tonnes of gold into the GLD/Inventory rests at 818.65 tonnes
FEB 3/no change in gold inventory at the GLD/Inventory rests at 811.22 tonnes
Feb 2/another huge deposit of 1.48 tonnes/inventory rests at 811.22 tonnes
Feb 1/a huge “deposit” of 10.67 tonnes of gold into the GLD/Inventory rests at 809.74 tonnes. this should stop GLD from sending gold to Shanghai.
JAN 31/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes
jan 30/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes
Jan 27/no changes at the GLD/Inventory rests at 799.07 tonnes
Jan 26/no changes at the GLD/Inventory rests at 799.07 tonnes/
jan 25/another exactly the same withdrawal as yesterday: 50.4 tonnes and again this was used in the whacking of gold today/inventory rests at 799.07 tonnes
jan 24/a huge withdrawal of 5.04 tonnes and probably this was used today in the whacking of gold/inventory rests at 804.11 tonnes
Jan 23/a big change/this time a deposit of 1.19 tonnes of gold into the GLD/inventory rests at 809.15 tonnes. The drainage of gold from the GLD to Shanghai has now stopped!
Jan 20/no changes in gold inventory a the GLD/Inventory rests at 807.96 tonnes
Jan 19/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes
Jan 18/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes
Jan 17/17/a deposit of 2.96 tonnes of gold/inventory at the GLD rests at 807.96 tonnes. I guess there is no more gold inventory to sent to C+Shanghai
Jan 13/17/there were no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes
Jan 12/2017/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes
Jan 11/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes
JAN 10/no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes
JAN 9/A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 805.00 TONNES
NPV for Sprott and Central Fund of Canada
Major gold/silver trading/commentaries for FRIDAY
Gold Prices Up 5.8% YTD – Trump ‘Honeymoon’ Ends
Gold prices continued to shine this week reaching $1,244.70 per ounce and and has posted gains in five of the last six weeks. This week it reached a new three-month high – it’s highest since the Trump win and has climbed over 6% this year, beating the gains made in the same period in 2016.
The yellow metal has climbed 4.30% in the US dollar, 3.38% in the Euro and 1.35% in the sterling, in the last 30 days. This week gold is marginally higher in dollars and pounds but 1.5% higher in euro terms after the euro weakened on concerns of contagion due to the unresolved issues with Greece and other so called “PIIGS” nations and their still vulnerable banks and economies.
This performance has surprised many commentators and analysts as gold’s three month high has come at a time when stock prices are also breaking records.
When we are asked in years to come what we learnt from the Trump administration, the first thing that will come to mind is ‘Rules no longer applied.’
Whether you are for or against Trump, there is no denying that the rule book of what elected politicians should and should not do has been wholly torn to pieces and thrown out the window.
For starters, Trump appears to expect to be busy during his first 100 days putting in place exactly what he promised he would do, during his election campaign. This is almost unheard of. As Frank Holmes writes, the media took Trump literally but not seriously, his supporters took him seriously but not literally. The outcome of these expectations are showing themselves.
We take a brief look at what has driven gold this week and ask what the end of Trump’s honeymoon means for the gold price.
Strong stocks…strong dollar?
This week the gold price hit a three-month high and has surged over 7.5% so far this year. As we have shown in recent weeks, January saw gold post its biggest monthly gains since June 2016 (see table below) when surprise and uncertainty surrounding Brexit was driving the markets.
It may come as a surprise to some, but we are not just seeing reactions to everything that comes out of Trump’s mouth, office and Twitter feed at the moment. (Soon people will begin to realise that not every tweet can be seen as some kind of constitutional crisis). Attentions are beginning to refocus on the implications of what Trump may or may not succeed in doing, the wider US economy and, of course, what is happening elsewhere.
The gold price is being pushed upwards not only by the uncertainty surrounding Trump’s economic, foreign and domestic policies, a more dovish Fed, the growing populist movement in Europe, ongoing currency printing and debasement by central banks, growing inflation and the strength of the US dollar.
It is not just in Trump’s case that conventional rules no longer apply, they also appear to have been thrown out the window for precious metals in these first few weeks of 2017, namely that a strong US stock market means weak gold. Instead apparently strong economies, a record breaking stock market and recent highs for gold all seem to be able to exist in one realm of reality.
But this is a feat unlikely to last in the long-run, which only appears to be good for gold. As Frank Holmes points out in a recent piece, the rally on Wall Street is beginning to slow-down and investors are turning to gold.
Investors turn to gold at end of the honeymoon
Earlier this week we wrote about how you should really buy your loved one real gold this Valentine’s Day, by setting up a GoldSaver account, rather than waste money on the usual jewellery, chocolates and flowers.
As Frank Holmes explains it seems gold is also what we should turn to when the love affair is over, which is exactly what institutional investors are doing as the rose-tinted glasses and honeymoon with Trump disappears.
As we mentioned last week, the World Gold Council’s report for 2016 showed that gold demand climbed to it’s highest in four years, by 70%. Much of this was driven by ETF demand, which had their second-best year on record. Flows into gold ETFs have continued this year. Currently GLD holdings are 150 tonnes below their peak of 2016, but still at significant levels.
The inflows into GLD are perhaps having some effect on the gold price. These significant inflows are likely coming from institutional buyers which are indication of perhaps further gains in the gold price.
Holmes also highlights the growing demand for gold as a safe haven and hedge against uncertainty. He explains that as the world starts to get a proper feel for the Trump presidency, fund and investment managers have been ‘given a strong opportunity to demonstrate [their] value in the investment world.’
Institutional buying was no doubt influenced by leading hedge fund manager Stanley Druckenmiller who announced this week that he had bought gold in late December and January. Goldcore readers will remember that we wrote about Druckenmiller’s gold sales on the night of Trump’s victory. At the time he declared that he no longer saw the reasons to hold gold.
Today however he does, in an interview earlier this week he stated, “I wanted to own some currency and no country wants its currency to strengthen. Gold was down a lot so I bought it.” Quite the about turn!
It is likely that comments from the likes of Mario Draghi and Fed Chair Janet Yellen, that economic growth could be derailed, have encouraged Drukenmiller to buy back the gold he was so sure was right to sell
Uncertainty, gold’s best friend.
According to Bloomberg, Druckenmiller also pointed to the uncertainty over whether or not Trump will back the House Republican’s tax plan, as a reason for his precious metal’s purchase.
Holmes also points to this uncertainty as reason for the slow down in the Wall Street rally and gold’s climbs. Two campaign promises regarding infrastructure and tax reform, appear not to be moving anywhere. In fact, the chance of tax reform happening in the first 100 days days, even 200 days looks ‘less and less likely.’
Even though Trump has signed an executive order that is designed to reduce red-tape, companies, executives and shareholders seem increasingly lukewarm in their responses to Trump’s changes.
The most notorious of these was the Executive Order banning the immigration of citizens from seven countries. Holmes writes”
“…many in the business world have traditionally depended on foreign talent. That’s especially the case in Silicon Valley, where close to 40 percent of all workers are foreign-born, according to the 2016 Silicon Valley Index. (Around the same percentage of Fortune 500 companies were founded by immigrants or children of immigrants, including Steve Jobs, whose biological father was Syrian.) One of the more dramatic responses toward the travel ban was Uber CEO Travis Kalanick’s dropping out of Trump’s business advisory panel, following an outcry from users of the popular ride-sharing app who saw his participation with the president as an endorsement of his immigration policies.”
And whilst we may not all agree with Trump’s protectionism ideas and planned policies, Holmes argues that it is difficult not to see why US companies might feel like they need some level of protection. He refers to “China’s ascent as an economic and corporate juggernaut”.
“Take a look at the chart below, using data from Fortune Magazine’s annual list of the world’s 500 largest companies by revenue. Whereas the U.S. has lost ground globally over the past 20 years, China’s share of large companies has exploded, from having only three on the list in 1995 to 103 in 2015. The number of Japanese firms, meanwhile, has more than halved in that time.
But this, combined with how it is received across the various areas of US policy and lawmaking, is making predictions regarding the financial climate, so uncertain.
The weakening in the US dollar, something Trump has been pushing for since the week of his inauguration, combines with a dovish Federal Reserve, expectations of higher inflation and growing demand for a safe haven, have each helped to support the gold price.
The broken record of uncertainty
The most imminent threat of uncertainty comes from Trump. His proposals are running into problems and the new President’s reactions each time he realises the meaning of checks and balances are not even worthy of a prediction.
In turn, whilst Trump’s words to clearly have an impact, there is a wider world out there that is also trying to navigate financial crises, political changes and security issues. We have written before about ignoring the hype. Right now, it is difficult not to as one cannot disparage the thought that is the US-centric news that is supporting gold and will likely send it much higher.
But, the wider-outlook is what makes gold a good investment for the long-run. Presidents come and go, but their impact takes time to unfold and in the meantime there are decisions, trades, wars and elections going on across the world that also feed into the long-term gold trade.
Not too mention the looming milestone of a bankrupt America hitting the $20 trillion national debt mark in the coming weeks.
Gold as Druckenmiller alluded to, is a currency. But unlike sovereign currencies, it holds its value and does not rely on outside sources to maintain its value.
We’re starting to sound like broken records here but we strongly believe that the uncertainty and unpredictability that exists across much of the geopolitical sphere, but is exacerbated by Trump, makes being long-gold right now, an entirely logical and prudent decision. Providing it is owned in non digital, website, technology dependent formats of actual gold coins and bars that you can sell to many providers and take delivery with a phone call or a visit.
I brought this to your attention at the beginning of December. Grant Williams repeating this presentation last week. It is important as oil pricing is being positioned to the yuan and those that wish gold can purchase the gold from the SGE with their yuan
a must read..
(courtesy Grant Williams/GATA)
Grant Williams sees oil pricing transitioning to the yuan and gold
Submitted by cpowell on Fri, 2017-02-10 03:35. Section: Daily Dispatches
10:36p ET Thursday, February 9, 2017
Dear Friend of GATA and Gold:
Market analyst Grant Williams’ presentation at the Mines and Money conference in London in November, posted in the clear at Zero Hedge tonight, sees the end of the petrodollar system and its gradual replacement, already underway, with a Chinese yuan convertible into gold, transferring the gold pricing system to Asia:
Williams, publisher of the “Things That Make You Go Hmmm. …” letter, writes:
“If you are an oil producing country, do you:
“– Minimize your production in order to maximize your holdings of one of the most abundant and easily-produced commodities in the world — U.S. treasuries — as has been the case for the last 40 years, knowing full well that, with the level of entitlements due in the next decade, more will need to be printed like crazy? Or do you…
“– Maximize your production to gain the largest possible market share in the biggest oil market in the world and, through the ability to buy gold for yuan, thereby maximize your reserves of a scarce, physical commodity that is impossible to produce from thin air and that happens to be not only the most undervalued asset on the planet, but is trading at its most undervalued relative to U.S. treasuries in living memory?”
The problem with Williams’ conclusion is that gold is not really “impossible to produce from thin air.” Rather, central banks lease, swap, and sell gold nearly every day, causing it to be hypothecated and rehypothecated, creating vast imaginary supply, just as vast imaginary supply is created every day on futures exchanges.
Oil-producing governments acquiring gold should know this and should be insisting on delivery of real metal. But even if they are, they may be cooperating with the Western central banks that long have been undertaking leases, swaps, and sales to restrain the gold price, moderating and timing their acquisitions so a free-market price is delayed until the major governments and central banks are ready to transition as a group to a new world currency system.
Maybe, as Williams suggests, pricing oil in gold will be part of such a system. But that won’t be the key to such a system. The key will be the inability of governments, central banks, and their agents to keep producing the monetary metal “from thin air.”
What will cause that inability? If not international agreement — that is, the changed interests of governments and central banks — then only the wising up of gold investors and gold mining companies, which, as you may have noticed, has been taking quite a while.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
A great commentary from Steve St Angelo. The Cannington mine in Australia’s has always been a big producer of silver. This mine is now owned by South 32 having been spun out of BHP Billiton. We have seen silver production fall as base metal production falters. Now we are witnessing silver production falter as mining does deeper into the mines. Silver is lighter and generally floats to the surface while gold is denser. Thus as you go deeper into the lens silver values decrease. This is generally true in primary silver mines as well.
(courtesy Steve St Angelo/SRSRocco report