Podcast: The Brics Growing Influence on Silver
Mexican Newmont Situation and Silver Premiums
One major event surrounding silver is the suspension of operations at Newmont Corporation's Penasquito mine in Mexico due to disputes with the National Union of Mine and Metal Workers of the Mexican Republic. In addition, the premiums between Shanghai and Comex remain elevated and pronounced.
Transfer of Wealth from West to East
These events are examples of the ongoing transfer of wealth from the West to the East in real time. This process has been going on for years, with countries like India and China taking advantage of the situation. As supply moves towards demand in commodities, particularly precious metals, the West faces the risk of having their pockets picked by the East if they are not careful.
The Role of Bullion Banks
The bullion banks play a significant role in facilitating the transfer of silver from the West to the East. Banks like Goldman Sachs and Bank of America, which discuss silver and copper, can be considered as some of the main players in this process. However, the banks that say nothing about silver and copper and very little about gold should also be watched closely.
Newmont's Strike and Implications
The strike at Newmont's Penasquito mine stems from the miner's union demanding a higher percentage of profits in less than a year after a previous agreement was signed. This event has a few significant implications:
The world is moving towards more equitable distributions of profit: This is evident in the ongoing negotiations between the BRICS (Brazil, Russia, India, China, and South Africa) and G7 countries.
Countries are moving to nationalize natural resources: As the global political climate shifts towards protectionism and national interests, countries are looking to their natural resources to provide economic stability and independence.
Further strikes and disputes may follow: As more countries look to negotiate better deals with the West, it is increasingly likely that further strikes and disputes in the natural resource extraction industry will occur.
Ultimately, these developments are indicative of a growing trend in global negotiations for better trade deals, more monetary value, and a larger share in the value chain.
Impact on the Silver Market
As countries reassert control over their natural resources and renegotiate deals with the West, the cost of production for silver is expected to increase. With China's increasing appetite for silver and Mexico's desire for higher profitability, the likelihood of further strikes and disputes in the industry is growing.
This cost increase will likely be passed on to the West as true price discovery takes hold, driven by the dollar's dominance and the internationalization of trade.
Historical Perspective
In the 1970s and 1980s, a similar shift occurred as countries began to demand more equitable profit distributions. However, this trend faded in the 1990s as trade deals and labor unions shifted in favor of the West. It now appears that we may be entering another cycle of negotiation, with potentially significant implications for the silver market.
As we observe the development of this global negotiation process and its impact on silver, it's crucial to recognize that the real market for silver has changed. Its status as a precious metal and reindustrialization make its future value likely to increase exponentially.
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