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South American Silver Plummets As Bolivia Announces It Will Nationalize One Of World's Largest Silver Deposits
Anyone long silver miner South American Silver Corp today is not happy, because while the precious metal responsible for the company top and bottom line has risen significantly, it is our old nationalizing friend, Bolivian President Evo Morales (who last year caused substantial moves higher in silver with threats to nationalize various silver mines in his resource rich if everything else poor country) who has stolen the spotlight, with his latest announcement that he is on his way to nationalize SAC.TO's Malku Khota property, which the company describes as "one of the world's largest undeveloped silver, indium and gallium deposits" and which El Pais adds "is considered one of the largest undeveloped silver deposits, with reserves estimated at 230 million ounces, and at least 2,000 tons of indium, gallium and gold as well." Of course, while this is good news for the actual precious metals as it means much more supply is coming offline, it is very bad for mining and extraction companies such as South American Silver, which stand to lose one after another property to a repeat of last year's wave of nationalization. Indeed, at last check SAC.TO was down 27% today alone and plunging.
This is how Reuters covered the development overnight:
Bolivia will consider nationalizing Canadian miner South American Silver Corp's silver property, President Evo Morales said on Sunday, following violent indigenous protests against the mining project.
Leftist Morales, who last month took control of global commodities giant Glencore's tin and zinc mine in the Andean country, said he hadn't taken a final decision on whether to revoke the Canadian miner's concession.
"Nationalization is our obligation, I already raised the issue of nationalizing (the Malku Khota project) last year, and I told (local residents) to reach an agreement, because when they want we're going to nationalize," Morales told a farmers' gathering.
Exploration work, in which South American Silver plans to invest some $50 million, is expected to end within three years. The company describes it as "one of the world's largest undeveloped silver, indium and gallium deposits."
Then, El Pais provided the following update:
Morales announced that he will nationalize major silver deposits
The Bolivian government withdraw the mining concessions awarded to the South American Silver Canadian company for the exploitation of silver deposits, indium and gallium Mallku Khota the hill, as agreed between government authorities and indigenous communities north of Potosi.
Agreement is reached, local communities agreed to free two engineers of the Canadian mining company and a police officer who had held for several days in order to pressure the government to listen to their demands to break the contract with South American Silver.
The Labor Minister Daniel Santalla, explained that the President Evo Morales is predisposed to reverse the mining concessions but that the decree will take several days due to legal and technical process should be launched for that purpose.
"Nationalize it is our obligation," said Morales in the city itself Colomi in the department of Cochabamba (center), barely a few kilometers from the mine site in question.
Finally, this is what the company itself had to say:
On Sunday the Bolivian Labor Minister, Daniel Santalla, signed an agreement to secure the release of the final three detained individuals with the indigenous opponents to the project. As part of this agreement the opponents were seeking cancellation of the mining concession, however, the government minister acknowledged that this could be difficult due to the original decree giving South American Silver the rights to the project.
Also on Sunday, President Evo Morales and the Government Minister Carlos Romero agreed that a "prior consultation” among all indigenous communities in the project area would be needed to proceed to determine the direction of the project based on the consensus view of all communities.
At this time there has been no change in the status of the project concession. The Company is continuing to work with the government at all levels and with the local communities to agree on an approach to development that is inclusive of all communities in the project area and allows development of the Malku Khota project to its fullest potential.
As noted in earlier updates, Bolivian government authorities have previously stated that there will be a period of constitutionally mandated consultation with local indigenous communities before the project enters the extraction phase.
On May 28 the Mining Minister Mario Virreyra signed an accord with 43 out of 46 indigenous communities in the project area specifying that the state will not reverse the mining concession and stating that the company should continue exploration activities and that Bolivian authorities should provide increased police security in the region.
The vast majority of the indigenous groups in the project area have formally demonstrated their support for the project and understand the social and economic benefits to their communities that the development of a world class, modern mine at Malku Khota will bring and which will create with thousands of well-paying local jobs.
By contrast, the artisanal mining that has been centered near one of three villages in opposition to the project would provide little economic benefit to the 43 other indigenous communities in the project area and has been cited by the Bolivian Mines Minister as causing local environmental damage.
South American Silver has worked closely with the local indigenous communities over the past several years providing significant direct employment on project related jobs, as well as jointly developing programs with the communities to facilitate job training, education, agricultural enhancement and water management for long-term sustainable development.
In conclusion, if before there was any doubt as to why miners trade at such notable discounts to the underlying precious metal, we hope that incidents such as this one give a good glimpse into the real ugly underbelly of what very well may happen to offshore projects if and when destitute countries decide to follow in the path of Argentina and Bolivia.
Finally, for those curious, here is a slideshow of the world's biggest silver mines.
Argentum Emptor.
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Now why would Evo go and do somethin' like that...
It ain't like Silver is one of the only true forms of real money...
Right???? Right????????????????????????
Right, it's not. Silver is too valuable as an industrial commodity and also too volatile due its industrial uses to be used as a "true form of real money". Silver also has too small an above ground stock to be used effectively as money too. It's much more logical to use gold, which has few non-monetary uses and, even though it is rare (about 6% as common as silver naturally) there exists a much greater above ground stock to be used as money.
So if silver is more rare than gold abouve ground should it not be worth as much or more? Supply and demand. Silver has an actual use where gold does not. (gold is an ok electrical conductor)
And that is why the miners underperform the metals.
Owning the miners has proved nothing but a Fools Game since 2008. (Gold/XAU above 10)
My advice is too liquidate all postions and buy 100% physical. That goes for the fraud ridden Bankster EFT's as well.
Paradoxically, selling shares to buy silver will not only increase the price of silver it will also then after the initial fall in share prices cause an uplift in share prices once the metal price surges.
Although shares in miners are not a paper investment as such, they do nevertheless have much the same dampening effect on the price of silver given that demand for physical is being diverted to paper.
Bay, Well spoken. My miners have been killing me for a long time. I only play in the miners because my taste in humiliation and pain is well known.
Almost bought some Pan American Silver shares two weeks ago...Pheeeew!
Keep on stackin.
Got silver ?
goooooaaaaaallllllllllllllllllllllll!!!!!!!
So when will Amerika nationalize McDonalds?
When McFries pass for currency.
McFries last for years. And you can eat it.
:mind blown:
And just like silver has no nutritional value.
maybe not but you can buy McFries with EBT.
A bird in hand is worth .......
Buying and holding miners is one of the dumbest things you can do. In addition to nationalization of mines, you also have the other downside risks:
1. The cost of mining goes up with inflation, thereby offsetting much of the "gains" you'd get as a result of currency devaluation
2. Governments will opt to raise taxes on mining activities as the global economy sinks
3. Mines can always have major problems (see: Hecla's Lucky Friday mine).
Miners are only good for trading. Even then, I'd still prefer to trade PSLV.
I prefer SLW, SNDXF (streaming companies) as well as RGLD, FNV (royalty companies). They don't face (most of) these issues
Buying and holding miners is one of the dumbest things you can do. In addition to nationalization of mines, you also have the other downside risks:
**************
This stuff is nothing new-its been happening for years-
I like producing miners here and have been adding on dips-
Bearish sentiment on miners is extreme-
Fund allocations to PM's is somewhere between 1-2%
I believe mining costs will drop as commodity prices and labor costs decline-
The country is nationalizing silver because the courrpt toilet in Chicago is constantly fucking with their export.
At a time like this the US should have an invasion fleet off shore. "The president must respond "This nationalization will not stand!"
Silver belongs to the corporation that buys the rights to mine it, the silver is not a national asset. This is what we have a military for, to enforce corporate rights.
Hold your fire. It's a Canadian mining company.
Sucks to be a non-nuclear nation right now doesn't it?
Well, then, the Canadians should just threaten to send Celine Dion down to Bolivia in retaliation --- I am sure that Evo will immediately back down.
Never underestimate the power of weapons of musical mass destruction.
Celine could power a million homes if used non violently.
Yes it does. No one ever goes to war over retail investor retirement funds anyways. I bailed on this POS stock back when other companies mines got nationalized. Expensive lesson #2... never invest in Bolivia. (Expensive lesson # 1 was to never invest in Chinese cross-listed companies).
I love having no counter party risk. Sorry paper pushers, you got what was coming to you.
Peter Schiff be damned... if it's not in your hands, it's not yours.
I have exposure to these pricks because of the Minefinders acquisition. Never invest in a company that relies on the integrity of a wetback to honor a contract.
Mitt Romney's father, George, is a wetback. Mitt is one of his anchor babies.
Never invest in a company that relies on the integrity of a Mormon or a Jew to honor a contract.
SAC is not PAA. As for PAA, COMIBOL is already partners with PAA on San Vicente. For PAA, its Navidad in Argentina that will hurt, hence the need for Dolores.
Time to update that old quote: "A mine is nothing more than a hole in the ground with a liar standing next to it."
New quote recommendation: "A mine is nothing more than a hole in the ground with a liar standing next to it and a thief standing next to the liar."
Or
"A mine is nothing more than a hole in the ground with a liar standing next to it...on Federal Land."
Which IS more the case - than not, IMHO.
It stinks when nations want their own resources....how dare they!
Justice before contracts, equality before fairness. All your assets are belong to us errr... All your asses are belong to us.
Governments are borders and they don't own anything in those borders any more than they own your clothing, house or bank accounts. Of course socialists actually do claim they own all those things, including you as an individual economic unit in their grand plan.
Bolivia should have started and fielded its own mining company if they want a legitimate claim. Governments are lazy, stupid and corrupt so it is easier to steal things from productive people. Legal theft from socialist thugs. I hope Eva ends up like Mussolini as the country deteriorates.
John, ownership is determined by power. "Might makes right" historically and whomever holds the sword will control the resource. Always was and always will be. Contracts are only so good as you can enforce them (see the GM bankruptcy? MF Global?)
Morales has been saying for years that he will 'return the resources of Bolivia to the Bolivian people'. So we have no sympathy for the holders of CDE, PAAS, SAC, et.al.
It's alot like Bernanke saying the FED will not allow deflation even if they have to drop money out of helicopters. Meanwhile, Prechter, Dent, Denninger and all the other deflation idiots saying the FED won't expand the money supply to defeat inflation. If the 'man' tells you he's going to do something, pay attention.
Meanwhile, Prechter, Dent, Denninger and all the other deflation idiots saying the FED won't expand the money supply to defeat inflation. If the 'man' tells you he's going to do something, pay attention.
*************
To defeat "inflation"
Think you got it backwards-Bernanke would love nothing more than to ignite inflation and all his printing hasn't done anything other than hold prices higher-which is not inflation-just high prices and he's losing that battle too-look at oil-
The Bernank hasn't even gotten started. Have you seen USD falling out of helicopters, yet? You will. The Bernank said so.
Have you seen USD falling out of helicopters, yet
*************
Do you actually believe it will be falling on the serfs?
Because if it don't-there will be no inflation-
Printing trillions and stacking it in banks hasn't worked-
Maybe the bankers are clueless and they will destroy themselves in order to bail out the masses?
And yet fiat currencies continue to depreciate across the board as almost all prices, and the cost of living, continue to rise and NOT fall as the deflationary flat-earthers desperately (and in ignorance of all monetary history) continue to predict.
And yet fiat currencies continue to depreciate across the board as almost all prices, and the cost of living, continue to rise and NOT fall
*************
Brilliant assbackwards rebuttal as usual-
12 eggs for $3 = inflation
Hey AK-
Have a peek at a few of your favorite inflation gauges-haven't heard you reefer much to them lately-
http://ycharts.com/indicators/brent_crude_oil_spot_price
http://www.fxstreet.com/rates-charts/usdollar-index/
More idiotic, irrelevant and disingenuous bullshit from a lying deflationary retard.
For one thing, how the fuck do the short-term moves in ONE commodity have ANYTHING to do with the long-term (and ongoing, and NEVER ceasing) depreciation of all fiat currencies? Nothing, of course. But it is only through the use of such flimsy and shallow non-sequiturs can the deflationary flat-earthers attempt to buttress their laughable and historically ignorant arguments.
For another thing, asswipe, the US dollar index, for the last fucking time, DOES NOT MEASURE THE VALUE OF THE US DOLLAR!!! It is ONLY a short-term currency daytraders' tool which compares an artificially (and out of date) calculation of the exchange rates of the US dollar against other, similarly depreciating fiat currencies. It has zero relevance (less than zero, actually) in trying to measure the ongoing depreciation of the US dollar. Or are you going to try to suggest that the US dollar is worth exactly the same today as it was back in the early 1980s when it had a similar value on the DXY?
Really, your pathetic attempts to deny the continued depreciation of fiat currencies are almost as risible as the simple-minded trolling of our Chinese dishwasher friend here.
Ya got nothing again huh
On the contrary, deflationary troll --- I have EVERYTHING! Facts, logic, and history are all on my side.
And you have .... what? The feeble academic theories of egghead statists and central bankers.
As usual, when the deflationary rat is trapped in a logical corner (which is pathetically easy to do), he can resort to nothing except running away.
Address the points I raised, you dipshit, or shut the fuck up.
Inflation has already happened...
The money supply has (and continues to be) expanded. That's inflation. Higher prices are the visible effects and are not going to be immediate.
Do you actually believe it will be falling on the serfs?
Absolutely! It won't even need to printed. They can just double or triple what they load on the SNAP cards.
It's not hard currency. It's imaginary money. And Ben will 'imagine' a lot more of it before this is over.
You do realize that the USDX is the equivilent of an altimeter that measures the distance to the floor of the cockpit, right?
"Nationalization is our obligation, I already raised the issue of nationalizing (the Malku Khota project) last year, and I told (local residents) to reach an agreement, because when they want we're going to nationalize," Morales told a farmers' gathering.
At least he does what he says. Someone did not listen.
I feel sorry for the Bolivian people. All these ignorant farmer peasants who voted for another garden variety ignorant arrogant socialist. They are about to learn for the 375th time in the last century how this redistributionist socialist BULLSHIT does not work. They will not become richer by making the rich poorer through legalized government theft.
For all you sympathetic leftist theftists, do you want to take any bets on how this turns out for the prosperity of Bolivia and the average citizen? Yeah, you know how this turns out even if you stick to your fantasy lefty doctrines.
it says right in the quotes posted,
and,
so, it's in the Bolivian constitution to consult with all indigenous communities before extracting resources in their communities, who inevitably bear the brunt of the "waste" and so should have a say in who profits, equitably.
I daresay if it was an amrkn community wanting to preserve the integrity of their resources, say, perhaps your community that, say, China was extracting resources for export, with others profiting, you might want to have a say in this, no?
http://www.globalresearch.ca/index.php?context=va&aid=26785
Under "amrkn" law there is no collective ownership of things. There are individual property rights...along with zoning, etc. There is this thing called contract and property rights. This company I am sure complied with all existing laws and regulations. It brought it its own property in the form of capital and took a risk to produce and extract a resource that was not there before. Notice in your first quotation is that they want to "break the contract". So there was an agreement and now there is suddenly no agreement based on the dictat of Morales. So, all property is seized in violation of the government's own contract.
Even if you are sympathetic to "the people" or whomever you think the agrieved party is, you cannot agree with this method.
Another horrific investment.
Much better off investing in paper, such as U.S. Treasuries which are powering to new highs.
Nobody can "confiscate" paper promises, they are dollar good come hell or high water.
This Explains A Lot: The US Center for Disease Control & Prevention estimates that around 25% of American adults are mentally ill.
Dollar good.
Says it all. I think the (sarc)detectors have been disabled today!
I like you Robottrader....dogmatic zeal and all.
Precious metals investments are a bet on the fecklessness, incompetence and greed of politicians. (Not a risky bet at all.) Evo Morales (Hugo Chavez's mini-me) has done all silver investors a favor by taking potential supply off-line.
Of course, Evo screws the Bolivian workers who might have otherwise had mining jobs. But for Leftists, they are little people -- they don't count. For Leftists, you are either members of the Ruling Class or you are little people. For Evo, the miners are little people.
You nailed it, Steve. This company will become the Trabant of mining companies. Bolivians will not see how much capital is leaving and avoiding Bolivia right now. They will never figure out how they became poorer...although Morales will spin a tale of greedy foreigners and capitalists.
YESSSSSSSS This is what I have been waiting for. Now come on MEXICO
Mexico only nationalizes oil companies.
Nothing beats Silver or Gold IN HAND.
Except... Chuck Norris' hands.
This is just the begining. We dicsussed this on this site when YPF was taken over, etc etc.
I love the smell of napalm in morning.
Those mining operations seem to be a lot of trouble to go through for a metal that has no significant value. Civilized people would invest in companies that produce something. Like insurance companies or a bank.
Come now... Facebook is a better example...
Why don't world governments put sanctions on countries that expropriate private property? Oh, 'cause they all do...
Interesting thought. The idea has occurred to me that governments like other governments more than their own people. Explains a lot.
If the state does take the mine that should be a bonus to silver prices. We all know the gubmnet runs less effciently than private industry. Should be less silver on the market now.
"Haters gonna hate, Stackers gonna stack" -FUU
Sup.
Or in other words: "They see me stackin. They be hate'n"
https://www.youtube.com/watch?v=GWYRfGDx9xc
Sprott loaned $70 mil to this Canadian miner.
http://www.lsgold.com/Investor-Centre/Press-Releases/Press-Release-Detai...
A solid vote of confidence. They gross $40 mil/quarter and growing.
edit: all their properties are in Canada too.
I would not invest a cent in any South American country because they all are heading to another wasted decade. With the exception of Chile!!!
Incompetent socialists running the silver mines is bullish for silver .... and domestic producers ! Ole ! Canadians drank their own Kool-Aid thinking they had a special rapport con estos cerdos latinos ! They dared to invest where Americans were unwelcome ! It's too rich ! Monedas 1929 Comedy Jihad Do Not Deviate From Capitalist Protocols
Why not nationalize everything?
Silver is a powderkeg ready to explode.
Many experts estimate that there are only 1 Billion ounces of Silver above ground. Much of this is not for sale.
So @ $30 an ounce, the entire global aboveground Silver stockpile could be purchased for $30 Billion, or less than 1/2 the price of FaceBook, which very well could be the next MySpace.
Any billionaire could easily bust the Comex, and there are over 1,500 Billionaires in the World.
It happend in the 1980s with the Hunt Brothers.
Two barely subcritical hemispheres being held apart by a pencil. Everytime the pencil is knocked away, a banker has to jam their finger in there, and they die within a few days because of it.
Silver will follow gold. Everywhere. Period. A young girl never abandones its mother. And certainly not for a guy that whistles form a dark car window saying: hey, i can create money.....
LowBrowProfile ! You remind me of the 2nd grade playground ! White bread is better than brown bread, black shoes are better than brown shoes, girls are better than boys, gold is better than silver ! Grow up ! Monedas 1929 Comedy Jihad My Mommy Wraps My Sandwich In Saran Wrap !
It's all about value. Political risk has been figured into S American Silver share price; if Malku Khota were in US or Canada, would've been at least $7 or 8, not 1.
There's logistical risk too, like with Hecla (USA all the way). Their Lucky Friday mine will be back online within six months, yet s/p still under 5. Gimme some -- great risk/reward, talk to me in 18 months when it's 12 or more.
Sure, phys to preserve wealth and eventually multiply. For added risk with increased potential, I'll buy and hold several Heclas, looking to turn them into double, 5x, 10x stacks when sentiment turns.
Silver isn't going off the market in Bolivia the money for it has just been redirected.
Nationalized mines inevitably produce less than private ones.
whatever, your post still does not make me wrong.
That which can be destroyed with the truth, should be. That includes opinions.
Nationalized mines tend to be less productive than private ones, meaning that future supply has been reduced.
The Market is 100 percent WRONG to see this - and the earlier Glencore move - as negative for CDE, which is "grandfathered" in Bolivia and is pretty much the only international miner with good relations at all levels of the Bolivian government.
In fact, Glencore - not to mention Fresnillo, Frisco, or Freeport - should now seriously consider making a bid for CDE before Silver makes its next big rally - which many of us believe is imminent.
And re Latin America in general: It - and Africa - show why this is an important inflection point in US history, marketwise and otherwise.
If we do not come up with a Worldwide plan for Growth - the US, Europe, China, Russia all working together - the US could lose pretty much ALL of our remaining influence and goodwill in the developing world.
China and Russia, in their different ways, will fill the gap.
Just a fad or a growing trend here? Don't cry for Bolivia, Agentina.
Why do you rob banks? Because that is were the money is.
Companies should stop playing this charade with cooperating with the indigonous people. It is a red herring, gvts do not care about cooperation with the indigonous people, like they do not care about global warming. They want power, control, money and use violence and threats of violence in stead of voluntary coorporations.
I used to wonder why they never learned: you steal, investments dry up, country goes down the tube.
But now I realise that these people do not care what happens after they steal, that IS the end goal.
A bird in the hand is worth 4.5.6.7......to QE in the bush
The Bird has beat you all over the place, Poopsie.
Time for EVERY Bird Game to be called for rain - or in some cases, for pure stupidity.
Sometimes, Banality is not Evil - it's merely Banal.
That's only 1.15 billion dollars worth of silver.
Why dont they just pay the Canadian CIA cisa to take Evo the fuck out?
I'm fine with govt developing the resources but when they fuck over companies and shareholders.... Holy fuck if I was the CEO, for a million I could buy a lot of desperate hitmen- I would at least try to take him out. Then you could even do the whole James bond villan thing and wear a eye patch.
First OPEC; now OPMEC
Maybe its Silver over gold due to its 10,000 industrial uses as well as having been money throughout history.
My favorite expression, "If you understand Gold buy Silver".
Gold is a first step, like training wheels.
To: Mr. Low Profile,
Ref:
"Trying to herd the sheeple into silver ahead of "The Great Reset", eh?"
No, actually, trying to trigger "The Great Reset" by herding the sheeple into physical Silver.
It's payback for 911 and JFK.
I'm Silver. Karma's a bitch.