Good News: Silver down 28%

[semi-ambivalent]

http://www.bloomberg.com/news/2013-...g-5-billion-hit-in-crossfire-commodities.html

I wonder how far out the film companies buy.
s-a

 

[declark]

Just like oil prices are connected to gas prices... Oil goes up a couple percent and gas goes up up a buck, oil goes down 25 percent and gas goes down a nickel.

 

[Tom1956]

Just like oil prices are connected to gas prices... Oil goes up a couple percent and gas goes up up a buck, oil goes down 25 percent and gas goes down a nickel.

+1. Infuriating.

 

[Sal Santamaura]

+1. Infuriating.

Why? It's a simple matter of supply and demand. Earth's overpopulation by homo sapiens, along with concomitant ever-increasing demand for gasoline, is what drives prices at the pump. Cost of crude oil is only related to the extent that, if it's too high for the supply chain to bear given gasoline prices that the market will bear, production of gasoline will stop. Otherwise, those driving cars -- the gasoline market -- have placed themselves at the mercy of oil companies. As long as human numbers keep increasing and "developing countries" try to "catch up" to those with a western lifestyle, i.e. two cars in every garage and a KFC drive-through for chicken, the trend will continue.

With respect to silver commodity prices and silver halide photographic materials, a different dynamic exists. Demand is much more elastic. Depending on how the market reacts to a long-term drop in silver cost, manufacturers may be forced to eventually lower their prices or terminate production. However, there are other significant costs to consider, particularly oil. Unless the film/paper market considers these when deciding whether it is still willing to buy at higher prices, it might force manufacturers out of business. That would, in my opinion, be a classic example of knowing the price of all things and the value of none.

 

[Kevin Kehler]

Just like oil prices are connected to gas prices... Oil goes up a couple percent and gas goes up up a buck, oil goes down 25 percent and gas goes down a nickel.

I wish they would just stop pretending that oil prices have any connection to gas prices and admit they will charge the maximum amount they think the market will bear. Realistically, they could double prices and what is anyone going to do, build a $2 Billion dollar refinery to compete?

Silver is a significant part of film production but not as much as labour, fixed manufacturing costs and distribution. It might mean next years hike is 5% instead of 8% but it will not mean the price of film will drop at all.

 

[benjiboy]

Assuming that because silver prices are down 20% that film prices will also reduce is rather ingenuous it's more likely to increase the film companys profits, and their share holders dividends.

 

[jeffreyg]

+1 When we buy film we are buying a product not a commodity. Silver is only one component of the cost. A number of years ago a couple of investors ran up the cost of silver causing the cost of x-ray film and other films to have a sharp rise in cost to the consumer. After their speculation ran it's course the price of silver came down but the price of film remained essentially the same. History has a way of repeating, I wouldn't expect the price of film to come down any time soon if ever.

http://www.jeffreyglasser.com/

 

[Tom1956]

It can't come down. When they made more profit when the raw material price was lower, their taxes went up. When their profit went back down, their taxes did not. I believe we can file this under the heading "the rich get richer, and the poor get poorer". AKA The Facts of Life.

 

[declark]

I'm all for profits, hope it keeps Kodak churning out Tri-X for a long time. Just pointing out that a drop in component price never seems to reflect itself in the end product price.

 

[wy2l]

Radio station have advertisements (Boston) that proclaim silver commodity prices will hit new highs... the sky is the limit! Invest now!

Reminds me when my stock broker calls me and says "Good News! XYZ just dropped 25%! Time to buy more!" Sure.

 

[semi-ambivalent]

Assuming that because silver prices are down 20% that film prices will also reduce is rather ingenuous it's more likely to increase the film companys profits, and their share holders dividends.

Any time costs of materials goes down for Kodak (or Ilford, for that matter), I think it's a good thing. The rich are getting richer but I refuse to see a bogeyman behind every tree. It's self-limiting.

 

[Poisson Du Jour]

I thought Silver was bought and sold on the Futures indices.

 

[AgX]

The problem with silver is that its price-evolution is even less predicitable as with other raw materials.

 

[mgb74]

http://www.bloomberg.com/news/2013-...g-5-billion-hit-in-crossfire-commodities.html

I wonder how far out the film companies buy.
s-a

I would bet that they don't physically buy much in advance at all. However, I'm sure they hedge with futures contracts and other vehicles.

Which will moderate the impact of both increases and decreases in commodity prices.

 

[AgX]

Hedging on raw material has been done.

 

[lxdude]

Well, it is all too complicated for my poor brain. I think a lot of factors will determine if film prices go up or down and the price of silver is only one of those. If the Chinese stop exporting rare earth metals to Japan, the US and the European Union, like they say they might, then fancy-dancy electronic thingamabobs will skyrocket in price and people will dust off the old film cameras because gigetal-digiaal cameras are too expensive.

Or those fancy-dancy thingamabobs will be made only in China.

 

[benjiboy]

I can't think of one instance in the 61 years I've been involved in photography when the price of film has gone down, so don't hold you're breath folks.

 

[waynecrider]

Well, it is all too complicated for my poor brain. I think a lot of factors will determine if film prices go up or down and the price of silver is only one of those. If the Chinese stop exporting rare earth metals to Japan, the US and the European Union, like they say they might, then fancy-dancy electronic thingamabobs will skyrocket in price and people will dust off the old film cameras because gigetal-digiaal cameras are too expensive.

From what I remember the Chinese threatened to cut back exports. But it seems that I also remember some huge supply being found off the shore of Japan. Now it's all about mining it. There was also some other news about another huge supply being found somewhere else outside China.

Silver on sale, 28% off; Maybe I'll buy more.

 

[benjiboy]

Well, it is all too complicated for my poor brain. I think a lot of factors will determine if film prices go up or down and the price of silver is only one of those. If the Chinese stop exporting rare earth metals to Japan, the US and the European Union, like they say they might, then fancy-dancy electronic thingamabobs will skyrocket in price and people will dust off the old film cameras because gigetal-digiaal cameras are too expensive.

That's right China is one of the World's only places where rare industrial metals like Neodymium are mined and the Chinese say that in the next ten years as the the Chinese economy develops they will need it all for domestic use and will not be exporting it any more. https://en.wikipedia.org/wiki/Neodymium

 

[kb3lms]

Well, it would be nice if the price of AgNO3 would drop a little. Actually, some vendors have dropped prices but they could drop some more.

However, I'm sure they hedge with futures contracts and other vehicles.

Back in at least the film heydays of the late 1980's and early 1990's Kodak very actively traded in precious medals futures. They still might today. The wife of a friend I worked with for a number of years worked in that operation at the main headquarters. She once told me that, on paper anyway, Kodak sold almost as much gold and silver as they physically received. They'd sell off stuff bought at higher prices when they would predict that they could buy it back cheaper in the short term future because of some move they thought the market would make. They'd also sell metals bought at lower prices when the price went up and they projected it would drop again. It was quite the sophisticated operation. She'd told us that while they ended up wrong from time to time that overall they saved the company millions of dollars per year in precious metals costs. They also actively traded in various foreign currencies and other unrelated commodities. There were about 75 people working in that operation at the time.

 

[pentaxuser]

I can't think of one instance in the 61 years I've been involved in photography when the price of film has gone down, so don't hold you're breath folks.

Maybe not in absolute terms but relative to wages and salaries I am sure that there were periods up to quite recently when film prices fell relative to income. Then came the quite sudden and dramatic rise in both film and paper from about 2007/8 which was put down to dramatic increases in material prices, the silver price being cited as the main culprit. As I recall it this was certainly the substance of Simon Galley's post on prices.

With a drop as large as this I wonder if we can expect to see Simon posting anything in this thread?

pentaxuser

 

[Truzi]

I'd expect the prices to stay down for quite some time before I'd expect to see lower prices on anything made from silver. Who is to say it won't go back up in a month or so?

 

[Edwardv]

You never know what the results are when you are investing in the stock market or purchasing precious metals. Its the game of chance you take.

 

[semi-ambivalent]

You never know what the results are when you are investing in the stock market or purchasing precious metals. Its the game of chance you take.

"Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it."

- Will Rogers

 

[Sparky]

been watching this effect since a 100 pack of portriga rapid cost $25. Ha. never fails.
or maybe it was $17... 1984 ish anyway.