Silver tanked in the crash
HalfDime
Posts: 267 ✭✭✭✭
Silver has a lot of industrial usage and doesn't always follow gold. The following chart shows how it tanked in the crash and hasn't recovered as well as gold:
This was barely a real blip, but if things really went bad what would silver prices go to?
Gold is king.
All ratios say silver is way undervalued, but then in a crisis it doesn't perform like gold.
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Comments
As our illustrious Blitzdude might say : “Gutter is as gutter does…it stays in the gutter”.
Buy the dip and that’s not today. Just have to wait , again.
Hundred to One
That’s a hundred $ per gram of gold & One $ per gram for silver . At least it’s easier to figure pricing as approximate goes.
a gram of blonde hash was $5 in 1983 , wonder what it is now
actually only about $12 a gram if you buy online
Silver isn't equivalent "money" to gold. That's the implied context to the sentiments you are expressing with "undervalued". Absent a return to its prior perception as "money", it will always remain "undervalued" unless gold loses it too. Look at the performance of platinum and palladium which aren't "money" at all. Both have been left in the dust over the last several years and underperforming today too.
Tanked? Crashed? That sure was short lived!
"When they can't find anything wrong with you, they create it!"
I was just gonna say that because it has gone up by almost 5% today.
https://www.pcgs.com/setregistry/u-s-coins/quarters/PCGS-2020-quarter-quest/album/247091
What crisis do you speak of?
A drop in an overvalued stock market is far from a crisis.
Capital investment depends on confidence. - Martin Armstrong
If the dollar collapsed then that perception could change very rapidly, as I doubt many would sell their silver for dollars.
Also anyone selling in a crisis would regret it later, just like those that sold out of gold recently already regret it.
All the media has said for the past week is we are in a recession and sell, sell, sell. Apparently many did.
The USD isn't nearly as close to collapse as I've read from so many posts on this forum. It's not close at all. The US financial system is at greater risk of a deflationary collapse than the "print to infinity" inferences I've read here repeatedly, but that's something else entirely.
I'd rate the risk of unlimited "printing" somewhat higher with the slight change in US foreign policy under the current administration, but only barely. But even if the hyper-inflationary path is consciously chosen, it would still crash the financial system into a deflationary financial chasm first. It's only in academic wonderland that people sit and around do nothing while their wealth is inflated to worthlessness.
Elite interests and the technocrats who work for them aren't about to destroy the USD through "printing" for any reason I've read on this forum, or to fund social programs so that any incumbent can win an election either. The USD is the foundation of US geopolitical power. It's also the source of elite wealth, but elites with the most influence aren't voluntarily sacrificing "hard power" for fake paper wealth.
"All the media has said for the past week is we are in a recession and sell, sell, sell."
There's your 1st mistake - believing the Media!
"When they can't find anything wrong with you, they create it!"
Silver isn't equivalent "money" to gold. That's the implied context to the sentiments you are expressing with "undervalued". Absent a return to its prior perception as "money", it will always remain "undervalued" unless gold loses it too.
Silver has fundamentals that gold doesn't have, and vice versa. And silver hasn't yet completely decoupled from gold in terms of being a monetary metal. Both India and China have a history with silver as money, and they are incidentally the two largest accumulators of silver on the planet at this time.
I knew it would happen.
What would people do to preserve their wealth? About half are living on credit cards, and go paycheck to paycheck. A financial collapse would not be deflationary as far as the dollar is concerned. The debt payments still have to happen, and if interest rates have soared, then it is not going to last. They will have to print money to make the payments.
The vast majority will not preserve their wealth in a financial collapse, with the losses and number impacted dependent upon someone's assumptions and definition of "collapse".
In the past, I've repeatedly stated that the majority of Americans are destined to become poorer or a lot poorer over the indefinite future. This is a very unpopular view due to the implications it has on the living standards and future of every American, including those reading my posts. It's not much different in most of the world; all of the developed world for certain.
There isn't anything "free" in life ever. The US is the beneficiary of inflated living standards from the biggest asset, credit, and debt mania in the history of human civilization. It's the same one from the GFC and dot.com bubble which never ended. Also, a substantially fake economy with fake "growth", artificial living standards, and fake job market with "make work" providing artificially inflated compensation from the loosest credit conditions and lowest credit standards ever.
I don't know when it's going to end, but it will. It's probably going to be a process, not a single economic event (like the GFC), meaning it could extend over several decades with numerous intermittent recoveries.
As to how best to preserve wealth, there is no definitive answer to that question. I'm quite confident most or all conventional approaches will fail or completely fail. Buying and holding the current ridiculously inflated major asset classes isn't going to work, such as a conventional 60/40 portfolio or US real estate. The interest rate cycle likely turned in 2020, meaning that rates are ultimately destined to "blow out" past the 1981 peak "eventually". Stocks are ridiculously overpriced (though not fully evident due to the distorted P/E ratio which is an unreliable metric of relative value) and the long-term "fundamentals" absolutely "suck". The true state of the US economy and society will be exposed with the end of the mania.
That's all I can write for now.
About half are living on credit cards, and go paycheck to paycheck. A financial collapse would not be deflationary as far as the dollar is concerned. The debt payments still have to happen, and if interest rates have soared, then it is not going to last. They will have to print money to make the payments.
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Yes, that's what practically everyone believes. The real question is, which one is going to come first? Get the timing and sequence wrong and you could be ruined.
Most posting on this Metals Forum seem to believe the government will "print to infinity" to bail out fake wealth and keep the pitchforks out of the streets. Even if true "eventually", there isn't anything the USG or FRB can do to prevent a deflationary collapse first because people are not a bunch of robots who will just sit around and watch their "wealth" destroyed by inflation. They will sell in mass and any "meaningful" scale will collapse the credit markets due to debt and leverage which will be deflationary first. Ultimately, the outcome is psychological, not mechanical, which is why it's impossible to predict the outcome in advance with certainty.
Besides, the real "canary in the coal mine" is not consumer debt or residential mortgages from a mostly actually insolvent population. It's corporate and sovereign debt, most of it not even in the US and much of it not USD, like China. The USG and FRB can't do anything about that, and no other central bank or government can prevent a deflationary implosion either.
There is a difference between "completely" and what's plainly evident in the expanding gold-silver ratio. Silver is used as a store of value, but it has no remaining role as "money". Maybe it's to barter in one or both countries. I visited India once (2008) but only in Delhi and Gurgon. It certainly wasn't accepted where I went, but that's only anecdotal.
It's my inference (not fact) that the expanding gold-silver ratio is due to this reason. If correct, that's the basis of my claim that the end of USD global currency reserve status is the most likely catalyst to restore silver's historical perception.
gold and silver are no more money than is oil. If oil were $3200 an oz. it would be getting stacked in safes. They are all an asset that gets exchanged for money in hopes that the demand for them will be greater than the demand for the money used to purchase them. Their day as money ended when they were removed from commonly issued coinage. Their removal from coinage marked an end to restraints on the creation of new money, they kept the money makers honest. And we now see what has happened not only to money but to entire economies ever since.
Capital investment depends on confidence. - Martin Armstrong
Stay outta the bars all. Ya don't really wanna get tanked there either all 😈
The only reason that the GFC didn't end in disaster is because the Federal Reserve still had enough liquidity to stop the crash. The day they opened up the spigots was the day the stock market bottomed. When the liquidity in the future dries up, so does the dollar.
Will we see one thousand dollar coins at that point? Ten thousand dollar bills?
They somehow need to set a fixed amount the government can spend per year and then let the elected officials fight over how to spend only that amount. The system of they get to spend as much as they want is not working. In the old days this was called having a budget.
After the crash they will have to use a real budget again, once it is too late for many.
What you are describing would lead to a deflationary crash first, not hyperinflation.
No central bank, including the FRB, can or will act fast enough to prevent a deflationary crash with market sentiment against it. Your post still infers market participants behave mechanically when they do not. Central banks and governments are committees composed of individuals who can and do disagree with each, and they do all the time, especially under crisis conditions. That's why both are late to act.
Most supposed "money" isn't money at all, It's credit and debt. The only actual money is physical currency and bank reserves. It will take a huge amount of money creation to offset, much less overwhelm, credit destruction in a systemic financial crash.
It wasn't that they had liquidity, it is because they had a printing press and no physical backing on the money they printed.
They have a fixed amount (budget), but a way to keep increasing it. They will never have a real crash because they have MMT (Modern Money Theory, better known as a magic money tree).
Capital investment depends on confidence. - Martin Armstrong
Prices in Russia rose at catastrophic rates during the 1990s ruble collapse, with hyperinflation peaking in 1992 following price liberalization reforms.
January 1992: Prices surged 245.3% in a single month after most controls were lifted.
1992 Annual Inflation: Reached 2,508.8% (a 25-fold increase), the highest recorded level.
Monthly Trends: After the January spike, inflation gradually declined but remained extreme:
February: 38%
March: 29.9%
April: 21.7%
May: 11% .
Producer prices rose even faster, increasing 20-fold in 1992 compared to consumer prices' 16-fold rise. This hyperinflation persisted through 1994, with annual rates remaining above 200%. The crisis wiped out savings, plunged a third of the population into poverty, and created long-term distrust in market reforms. Monetary policy failures —including an 18-fold money supply increase in 1992—were primary drivers.
Russia was not primarily a credit-based economy. Not the precedent you think. Rubble was not a reserve currency either.
Apples and oranges.
What I'm trying to tell you is that the sequence of events matters. Metal advocates always assume country's will "print to infinity" without ever considering any alternatives.
Elites and government officials don't have the motives you imply. I've told you that they aren't about to destroy the USD's value for the reasons most people almost always claim. They don't care about the public and would have to be crazy to do it to reinflate an asset mania in exchange for the "hard power" that goes with a reserve currency.
In a true systemic crisis, I'd expect the FRB and Treasury to do "whatever it takes" to preserve both the USD as reserve currency and the integrity of USG debt, throwing the economy and the rest of the financial markets "under the bus" as necessary. This includes emergency measures most consider inconceivable, such as forcing retirement accounts to buy USG debt and using FACTA reporting to force repatriation of offshore assets. They can also tax unfavored assets like metals at punitive rates (like 100% or more) to penalize "profiteering".
I've also told you that governments and central banks aren't human beings but committees. NO ONE has the power to do what you infer unilaterally. Not the FRB chairman, not the President, no one.
Even if the FRB FOMC did decide to "print to infinity", they aren't about to do it unilaterally. Even if they did, they cannot prevent the credit markets from collapsing first.
That's what every metal advocate ignores. Metal advocates assume enough metal owners are "strong hands" who will not be forced to sell under adverse circumstances when there is no basis for this claim.
The gutter always tanks, that's what it does. 5,000+ years of recorded history tells us that. I do own a small amount of physical gutter, ~2300ozt. Hopefully the pumpers can pump it and I can find someone less informed to buy it. CMMN CNTS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Even if the FRB FOMC did decide to "print to infinity", they aren't about to do it unilaterally.
They aren't doing it unilaterally. They are all doing it simultaneously.
Even if they did, they cannot prevent the credit markets from collapsing first.
Do you see a collapsing credit market?
That's what every metal advocate ignores. Metal advocates assume enough metal owners are "strong hands" who will not be forced to sell under adverse circumstances when there is no basis for this claim.
I wouldn't lump metals advocates into a single group. There is a big difference between players in the paper markets and holders of physical metal. For one thing, you can't initiate a buy or sell order for physical with the push of a button. I think that holders of physical metal are much more deliberate.
I knew it would happen.
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It's not that I don't understand your point. It's that metal advocates always assume the first thing governments and central banks will do is "print to infinity".
The prior QE doesn't = what you infer. Yes, I presume the US will attempt to create some inflation to lighten the debt load, but this doesn't = what you imply either. It wasn't just the prior QE that led to the COVID inflation, it was the fiscal policy of "free money" that went with it. QE without "free money" MMT doesn't lead to the inflation you seem to be implying.
Why would elites intentionally destroy the basis of their own power for the implied reasons I've read from anyone on this forum?
Obviously, I understand that they will do it to "save their own necks from the noose", but that's more toward the end of a crisis as in the French Revolution.
No, it hasn't happened yet, just as "print to infinity" hasn't either. My point is that any government or central bank attempting to "print to infinity" cannot prevent the credit markets from collapsing first.
I understand this too. I own some physical. I have some of it stored locally and part of it elsewhere. I've considered which metal to buy, the form to hold it, paper or physical, where to store it... everything. I'm aware there are advantages and drawbacks to every option.
Yes, I agree physical holders aren't speculating in the traditional sense. I know they almost never buy with loans and are buying it as long-term hedge to preserve their wealth.
None of this still means they are as solvent as you're implying either. These are predominantly middle-class people owning relatively small amounts of the metals (probably mostly silver) with moderate net worths who also still depend upon their jobs.
In a real financial crisis, I'd expect the typical physical metal holder to be in a better position than the typical person who doesn't own it for obvious reasons, but that's not really saying much either.
@WCC:
Nothing you've stated is particularly wrong, however my whole point is that the interest on the debt is unsustainable especially since spending isn't even beginning to decrease.
The inevitable collapse in the debt market will require a complete re-vamping of the currency and all of the contractual obligations that hinge upon it. In essence, a default having major ramifications.
Printing to infinity? Probably. How else would you expect the interest on the debt to be paid - other than an acceleration of money printing? The only other options are either a complete monetary reset (whatever that entails) and/or a bailing-in of retirement funds which is what's being proposed already in Europe.
I knew it would happen.
Only to the extent elites must do it, but not for any reason I've ever read here. It's still also the sequence that matters too.
Whenever this subject comes up, every post I read (without exception) is written from the standpoint of hedging for inflation. I've never read anyone indicate that they've even considered the possibility I bring up.
My point is that if someone gets the sequence wrong, what good is it going to do them to have bought the metals if they have to liquidate it as the price is crashing if "everyone" is selling it too? There will be a lot of forced selling in any kind of systemic "collapse" and metal holders won't be exempt.
Yes, I'm aware someone can only do what they can do, and some things are beyond our control.
As for your last point on a "monetary reset" or debt "restructuring, I can see that. That's a form of default and deflationary too, initially at minimum. Logically, it makes a lot more sense to default on the debt to some extent than to both "destroy" the currency and also get "shut out" of the (long-term) credit markets.
There is a 2011 opinion article by Jefferey Rogers Hummel (San Jose State professor previously if not now) on the web discussing this option. He's also written other similar articles to my recollection.
Another aspect of the upcoming debts default is bank "bail-ins". I consider this a virtual certainty and it's the right thing to do. "Depositors" are unsecured creditors and in a financial crisis, I'm placing my bets they will be "thrown under bus" too, as they should be.
The stock market? It's mostly fake wealth. Why would anyone with a clue bother to try to keep it inflated when the financial system is falling apart?
The economy? Yes, I presume some "printing" will occur to lessen any "collapse", but no government or central bank can prevent a decline or crash in living standards, and this includes the USG and FRB.
That's why I've repeatedly stated the majority of Americans are destined to become poorer or a lot poorer. I expect it to happen through a combination of asset deflation (paper assets definitely) crushing net worth, and price inflation absorbing much of the "printing" which will make the cost of essentials (much) more expensive crushing living standards.
If it happens over an extended period, nominal prices may decline a lot less or not at all, but the value measured by what people can buy with wealth will still decline substantially or collapse. Real estate should get crushed even as affordability crashes with it. No 30-year fixed rate mortgage anymore. Gold should lose substantial relative value from wherever it peaks. It's historically very relatively overpriced now and has been for a long time. There is no "buy-and-hold" forever asset to protect someone's wealth. In the casino economy in which we live, everyone is forced to involuntarily act like a speculator, or risk becoming poorer or get wiped out. Credit availability will decline substantially across the board, both availability and cost, meaning most Americans will mostly have to pay upfront for their consumption, just as they did decades ago.
asset deflation is simply a result of asset inflation. Those that didn't cash in at the right time have only themselves (or their broker) to blame.
The milk is spilt and it's cryin' time. Lest we forget the jug at one point was more than full.
Capital investment depends on confidence. - Martin Armstrong
When they had the ability to refinance our national debt a few years ago at record low interest rates, they failed to do it. Metal horders will do very well in a financial collapse. I expect all gold to be bought up, including the mint to run out of coins, online dealers to sell out, and secondary metals will then have to be bought up. In Mexico during the devaluations the people held anything other than the Mexican Peso.
They are constantly refinancing the debt and at the current interest rate. There is no real planning with "when" to borrow. Their only question is "how much" can we get away with.
Capital investment depends on confidence. - Martin Armstrong
Yes, metal holders want to believe what you wrote, because another outcome is detrimental to their circumstances. It's still based upon the assumption that the government will "print to infinity" first or that metal holders won't be forced sellers under adverse circumstances in a declining market.
Mexico is not a precedent for the US, and neither is any other example you can cite. In the post WWII era, (that's the fiat currency era) there isn't an existing precedent where a predominantly credit based economy with a reserve currency (not just global reserve, any reserve currency) had to do that.
The incentives for elites to do what you claim in Mexico (or any developing country) are entirely different, because most elite wealth isn't in Mexican Pesos. It's in USD or another "hard currency" and usually domiciled somewhere else. Mexico gutting the value of the Peso didn't make much if any difference to Mexican elites. Whatever wealth Mexican elites hold locally is in property or controlling interests in local corporations. The "paper value" of these stock holdings may or does decrease, but that's all it is, a value in a statement. It doesn't change their living standards, their social position, or their influence. It can increase again later.
US elites aren't about to destroy their own wealth and reduce or abandon their power for any reason I've ever heard by anyone taking your position. The proverbial "barbarians at the gate" doesn't happen on "day 1" or before the crisis.
Elites have cashed in on their paper wealth, leaving the losses to the masses.
Capital investment depends on confidence. - Martin Armstrong
The gutter will never be money. Stick with the real deal and you will never be wrong. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
but it will last a lot longer than money and will be more sought after as money get abandoned.
Capital investment depends on confidence. - Martin Armstrong
They are still dependent upon the currency for their political power and in the US, global "hard power". I have no idea why anyone on this forum would ever think that US elites will ever give that up voluntarily for any reason I've ever read here. It's ridiculous.
they're giving up nothing. they are awash in cash ready for the next boom cycle.
Capital investment depends on confidence. - Martin Armstrong
Ratios are a complete waste. Enough said.
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I've posted the following sentiments on this forum before, but it seems worthy of reiteration:
In 1933 gold was confiscated because the obligations of the government, private corporations, and especially the Federal Reserve, were denominated in gold and there wasn't nearly enough to cover the shortfall.
Today, government obligations are Social Security, Medicare, Medicaid, etc. If there is going to be any type of "confiscation", this time around it will likely be curtailment of these entitlements.
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Folk don't understand this has been a transfer of wealth from public to private sectors. We should be careful what we wish for.
Knowledge is the enemy of fear
Not when looking for trends. Aren't trends part of investment research?
Capital investment depends on confidence. - Martin Armstrong
Fixed it for ya.
Capital investment depends on confidence. - Martin Armstrong
Kinda wonder if that is what's happening with gold... deep pockets of the upper class now pulling it away from the middle and lower classes? Cornering the market so to speak? We've seen it with real estate, where concentrated money buys up all available real estate.. driving higher and higher prices.
KITCO: Silver Squeeze 2.0
key takeaways:
Capital investment depends on confidence. - Martin Armstrong
Well, if ConspiracyCO reported it, must be true. Plenty of gutter metal available via all my regular channels. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
John Rubino: "Watch the gold/silver ratio."
Capital investment depends on confidence. - Martin Armstrong
I'm watching the gold/gutter ratio go higher, higher and higher. Don't be surprised to see 120/130. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
buy, buy, buy
Capital investment depends on confidence. - Martin Armstrong
You made it more more simplistic but not more accurate. The middle class has benefitted from the $36 trillion in Govt deficit spending, as have the upper class. That does not the change the wealth transfer from public to private sectors.
Knowledge is the enemy of fear