Price of silver continues to climb to extraordinary levels

Matt5791 · Dec 29, 2010

I think we need to brace ourselves for more price increases if the price of silver doesn't fall soon, it's hovering around the $30/ounce mark at present, which is more that triple what it was a few years ago.

http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

The only plus is that what goes up always comes down, but the question is when - hopefully when more confidence returns to other forms of investment.

Curt · Dec 29, 2010

And gas will be $5.00 a gal., what's next?

sandholm · Dec 29, 2010

Matt5791 said:
I think we need to brace ourselves for more price increases if the price of silver doesn't fall soon, it's hovering around the $30/ounce mark at present, which is more that triple what it was a few years ago.

Well, that means that the cost of film/paper will be higher but also that we get more money back from the silver recovery. So its important to not dump fixer which is both bad for your wallet and the environment, recover the silver and sell it. For example the silver magnet,
(there was a url link here which no longer exists)

Curt said:
And gas will be $5.00 a gal., what's next?

Dont complain we pay $6.8 a gallon here in switzerland.... and its going up..

Matt5791 · Dec 29, 2010

Good point about the fixer!

RobertV · Dec 29, 2010

Dont complain we pay $6.8 a gallon here in switzerland.... and its going up..

$ 8,35 in Holland so it can be worse .....

We have a big film - photo paper inventory now...

perkeleellinen · Dec 29, 2010

$8.76 here for petrol.

Hopefully silver will go down soon, petrol never seems to.

Marco B · Dec 29, 2010

Matt5791 said:
The only plus is that what goes up always comes down, but the question is when - hopefully when more confidence returns to other forms of investment.

That may be true if you throw up a ball, but it is disputable in this case. Just like with oil running out, precious metals are slowly too. In addition, silver, just platinum and palladium, has other unfortunately growing uses, for example for solar mirrors and as a catalysts in industry, and protective layer on electronics after the abolishement of lead soldering on electronics circuit boards.

What I find more disturbing is that most shops don't adjust their margins to a lower level. OK, they need to account for increased prices too, but is it really necessary to make a 50% profit on a roll of film, if that film increased its price from 1 to maybe 7 dollars in a few years?

50% of 1 dollar was 50 cents, now they earn 2-4 dollars on each roll sold, which just sounds like a ridiculous change to me :confused:, and forces prices upwards even more.

Normally, with higher priced products, margins seem lower. Certainly cameras are no longer sold with 50% margins as they probably did 15 years ago, more in the range of 5-10%.

Moopheus · Dec 29, 2010

Marco B said:
That may be true if you throw up a ball, but it is disputable in this case. Just like with oil running out, precious metals are slowly too.

That is true in the long run, or probably even in the medium run, but in the short run, there has been a lot of fear-based speculative buying in the commodities market. Recall what happened to oil a couple of years ago. Commodity markets are naturally highly volatile in the short term, and there's no reason to expect that to change. The problem for a market for any good where the price is rising very rapidly in the short term is that it requires a constant stream of new investors to enter the market at higher and higher prices; eventually you run out of buyers who can afford to play.

keithwms · Dec 29, 2010

Driving some of the wild commodity prices is the short-term prospect of a spike in inflation. The quantitative easing (QE) policy runs the very serious risk of overshooting the desired stimulative effect, which leads to rapid decline in the value of the USD and hence a big spike in the commodities traditionally valued in USD... oil etc. Now... since QE2 we've not seen much sign of inflation at all and oil is rising but in a gradual and predicted way. Yet certain commodities are being priced even further beyond reason. So this begs the question, who really believes these commodity prices will hold?

Buy land not precious metals, that would be my investment advice! At least you can put up a tent on it

jeffreyg · Dec 29, 2010

Silver prices may fluctuate but I don't recall film and paper prices dropping once they rise. Could be that the manufacturers are selling fewer rolls and sheets while the cost of production of which the silver is only a portion and advertising etc has increased. Film costs less in the US probably because the sales tax is lower. In 2005 a roll of Delta 400 120 was $2.99 (I have an old catalog) and now $4.12 a 4% increase. I'm not sure what that tells us other than stuff has become more expensive.

http://www.jeffreyglasser.com/

BetterSense · Dec 29, 2010

I would gladly start paying higher prices now if it could prevent materials from being discontinued. Frankly it concerns me that film/paper prices haven't gone up significantly even as silver prices have shot up. It means either that the MFGs are very well leveraged, or they are absorbing the costs right now. I'm fine with them absorbing the costs just so long as it doesn't jeopardize my ability to buy film in the future.

AgX · Dec 29, 2010

There should not be that great of a problem if manufacturers would buy silver on a daily basis, and if there would be a daily return on their expenses by means of flexible product prices . In the last silvercrisis they saw themselves limited by customer prices which they thought would not yield space to bring over increased raw material costs. I must add here that then on some markets prices were regulated.

At least now all manufacturers seem to buy silver in batches, what to my understanding does not make things easier.

Now there are people in the industry who see the situatian of rizing prices for raw materials as positive as by lifting product prices they could accelerate the consumer to change to other (digital) products of them, from which they expect higher profits.

BetterSense · Dec 29, 2010

Any smart manufacturer that is beholden to commodity prices will have a strongly hedged position in said commodities. For example, trucking companies are heavily invested in oil futures, so that if the price of fuel spikes upward, they are not affected as much.

michaelbsc · Dec 29, 2010

BetterSense said:
Any smart manufacturer that is beholden to commodity prices will have a strongly hedged position in said commodities. For example, trucking companies are heavily invested in oil futures, so that if the price of fuel spikes upward, they are not affected as much.

Not to mention the fact that most manufacturers have contracted delivery prices for several quarters out. That's part of the reason the quarterly demand reports we devour so rabidly are calculated. They have to project for their suppliers in the contract, so they look at both long term and short term trends for the model.

For example, if there is a seasonal spike for the past 30 years of X%, but a yearly decline over the past 5 years of Y% they aren't going to buy for the season like they did 30 years ago. It's just common sense when you look at it, but it's a bunch of number crunching none the less.

While I don't sit on Ilford's or Kodak's financial advisory committee (1), so I cannot speak with any real authority, I'll bet you an unopened roll of K64 that they see less volatility in their silver price than the spot market.

(1) I'm not sure my wife even likes for me to sit on our household financial advisory committee!!

AgX · Dec 29, 2010

michaelbsc said:
I'll bet you an unopened roll of K64 that they see less volatility in their silver price than the spot market.

Their price is not volatile as seemingly they do not buy on a daily basis. But speculating on a baisse to stock up for future production is working with the volatily of prices.

But see my remark too on employing higher prices. And this is not made up out of thin air, to stay in the picture.

BetterSense · Dec 29, 2010

No amount of commodity hedging makes a difference if commodity prices go up and stay up due to currency weakening, of course, in which case we can expect the economy at large to suffer and niche products to do so even more so.

MartinP · Dec 30, 2010

jeffreyg said:
In 2005 a roll of Delta 400 120 was $2.99 (I have an old catalog) and now $4.12 a 4% increase.

Strange arithmetic ???? Surely that is a 37,8% increase ???? It would be interesting to know the total inflation rate of household commodities in those five years . . . it could well be about the same !

jeffreyg · Dec 30, 2010

Sorry for the typo was intending approx 40% but was multitasking and didn't pay attention to the keys. The "0" didn't get pressed hard enough before I hit reply.

Dave Martiny · Dec 30, 2010

What would be useful to know in this discussion is what percent of the purchase price of a roll of film is attributed to the cost of the raw silver in the film. Something tells me that it will be fairly small, with the majority of the cost going for manufacturing, quality control, distribution, and retail mark up.

Regards,

Dave

Moopheus · Dec 30, 2010

Dave Martiny said:
What would be useful to know in this discussion is what percent of the purchase price of a roll of film is attributed to the cost of the raw silver in the film.

According to thisarticle on Silver recovery from the USGS (2000), film has around 5-8 grams of silver per sq. meter (the paper notes that precise formulations are not revealed by film companies). Check the chart on p. N4. It notes a 24-exposure roll of 35mm is .04 sq. meters. One-fifth of a gram per roll, or thereabouts. About 15-20 cents at today's prices. A few years ago, that was probably more like 5 cents. A significant difference for a product with a retail price of $4-5. Note the usage numbers: 1 billion rolls for color, 40 million for b&w. 1800 metric tons of silver. A significant expense.

But of course there are other changes, too. Compared to a few years ago, the pound and the euro are weaker relative to the dollar, but the yen is much stronger. That's got to have a huge effect on the products that say, Fuji offers for export.

AgX · Dec 30, 2010

A significant difference for a product with a retail price of $4-5.

Don't forget that one can get films at 90cents (Euro) retail. And those contain not less silver.

Moopheus · Dec 30, 2010

AgX said:
Don't forget that one can get films at 90cents (Euro) retail. And those contain not less silver.

Are they from China?

alanrockwood · Dec 30, 2010

How many ounces of sliver are there in a roll of film?

removed account4 · Dec 31, 2010

in 1 gallon of fully spent fixer there is about 1/4 ( .25 ) troy oz of silver.
or so i have been told ...

AgX · Dec 31, 2010

Originally Posted by AgX
Don't forget that one can get films at 90cents (Euro) retail. And those contain not less silver.

Moopheus said:
Are they from China?

No, from Rochester.

Price of silver continues to climb to extraordinary levels

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