Topstuff, since gold price was held basically fixed up until 1971, I do not consider the pre-1974 era to be a basis for comparing gold prices. The fact that gold quickly doubled in price once coming off the gold standard showed how undervalued the metal was all throughout the 1960's. Once private ownership was restored in 1974 all he11 broke loose. Hence $42/oz is not a realistic number for comparisions and shows that gold has not held its own over the past 25 years...mostly due to market manipulations.
That's why I start my comparisons from the later 1970's, when gold had a chance to compete fairly with other assets. The gold price went exactly where it needed to go to balance the excess of currency creation....approx $850/oz. From that view point one could say gold is only "30 years old." While I do agree that the oligarchs will continue to manipulate the price they cannot fully control it unless they ban ownership once again, or install heavy taxes, tariffs, full disclosure upon purchases, etc. It would take gold at close to or over $1000/oz before the FED's started looking for various "legal" ways to curtail or inhibit ownership.
<< <i>With the exception of three spikes and two dips, I'm looking at the same $6/$7 silver that I've been seeing for 20 years. Assets should appreciate over time, especially after 20 years >>
True, but during that time the US has dumped its 200 years of silver accumulations, theres no more left to sell off.
<< <i>Perhaps, but I have YET to meet anyone who can explain, given Iwog's two points, how silver can fail, at some point, to rise dramatically in price. Want to take a crack at it? If we use more than we produce of a commodity and have every year for the last 30 years, and according to the USGS we are running out of silver below ground (not an unlimited supply), how can the price not go up? Supply and demand does not apply to silver? >>
Silver will someday have its day in the sun. But you forgot about the silver supplies in the ABOVE ground held by non-governments.
It is true that silver's price has not kept up with gold since the early 1970's or even the late 1970's or whatever date you care to start off with but here is why:
(1) In the U.S. gold has been able to work off its above ground supplies of domestically held gold in the form of business commerce coinage since gold was last minted in business commerce coin form in 1933.
(2) In the U.S. silver has not had as long a period of time to work off its above ground supplies of domestically held silver at face value in the form of business commerce coinage since silver was last minted in business commerce 90% silver coin form in 1966 and 40% silver coin form in 1969 (1970 was only in mint sets).
(3) Silver was much more prevalent in above ground supplies in the form of jewelry in Asia and elsewhere. As prices of silver and gold rose, dishording by citizens of the world is much more available in silver than for gold.
(4) Keep in the mind that the US sold off huge stocks of its silver to private hands in the 1960's at face value over and beyond the annual mintages while sale of coin gold at the old face value has not occured in over 70 years.
The above has moderated price increases for silver vis a vis gold and will continue to do so until the above ground hoard of silver held by private citizens dissipates to the level of gold.
I give it another 5-10 years then silver will then outperform gold long term.
<< <i>Silver was much more prevalent in above ground supplies in the form of jewelry in Asia and elsewhere. As prices of silver and gold rose, dishording by citizens of the world is much more available in silver than for gold. >>
India is one of the countries with the most silver holdings in private hands, in the form of jewelry. A professor of Indian history once told me, however, that he went over to India and people would still be farming with plows from the 1800s but would be wearing hundreds of dollars worth of silver bracelets, earrings, and necklaces. It is unlikely, given their lack of concern for the monetary value of their jewelry, that it will ever be dishorded in enormous quantities.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
True, but during that time the US has dumped its 200 years of silver accumulations, theres no more left to sell off.
This is not unlike the Central Banks unloading thousands of tons of gold over the past decade to help "control" the price of gold and help strengthen currencies. With as much as 50% of that gold now gone, CB's are far less likely to dump what remaining leverage they have against fiat currencies, esp. when they are making money on the price of gold as it ascends.
The gold carry game of the later 1990's was one of the best schemes around, even for the gold miners themselves. They could short their own future production and make a nice profit. That all worked great by buying central bank gold for 1% interest and then selling it only to reinvest the money in a device yielding 5-6%. Great game as long as the gold price stayed fixed in the $250-$320 range. Govt's love this game and especially so for the U.S. and the dollar. It was an ideal situation for continued currency growth and a strong dollar.
Gold rising about $350, and now $400 has really dampened gold borrowers spirits and placed hedgers under great financial risk if gold continues to rise. At some point they have to repay the gold to the Central Banks at market price....or default. That 5-6% won't be worth much if they are having to pay back gold at a 50-100% markup. Much of the ammo is now used up so how the game procedes from here will be far different from 1990-2002.
RR, that reminds me of one of Ted Butler's comments (last year?) when the price of silver dropped $1/oz. before it climbed back. He said he believed that gave the shorts just enough space to cover their shorts without losing too much, and that the shorts were left with quite a bit less leverage after that. Haven't paid much attention to the COT reports as of late, but it seems and interesting theory--for the big shorters, hopefully, once bitten, twice shy.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
ddink: Agreed about the India and their silver jewelry. However, the younger generation is not as attached to the silver jewelry and is willing to sell it to get an apartment and/or furniture in the cities.
It has little or nothing to do with price manipulation, but was simply a source of revenue for (particularly the UK) governments who felt there was little monetary future in gold.
For the past 20 years, there have really been only two central banks that count -- that of the US, and the Bank of Japan. Neither has made material gold sales.
how can the price not go up? Supply and demand does not apply to silver?
The foundation of those questions rests on the assertion that you are smarter than the entire silver market.... that you know the inventories and they don't. You think "they" don't know the supply/demand? I submit that is a path leading to unnecessary Risk in pursuit of Reward.
And lastly, if I were to crack at Iwogs 2 points, I would begin by asking how silver has performed the last 6 years in terms of Yen and Euros. I honestly don't know.... but it would be neat to see. We know semiconductor volume was sky-high in 1999....
<< <i>The foundation of those questions rests on the assertion that you are smarter than the entire silver market >>
More silver is being consumed than is produced. Taking it a step further is not rocket science. "The entire silver market" is manipulated by institutions that can sell silver they don't have today at $7 an ounce, and if they sell enough to make the price go down, they can buy all that silver back the next day at $6.98 an ounce and cover their short, turning a tidy profit.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
Eventually when the supply of silver is finally exhausted, must it not break out of the grip of the short sellers and respond to actual market forces? You can dam a river for so long, but eventually it will break free, and when it does, the results are instant and overwhelming.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
And the entire silver market does not know that dam exists? See, that's what gets me. Ted Butler magically knows everything and the people who actually own and trade silver know nothing. Pretty arrogant position to take.
FYI: Silver priced in Euros shows no gain (0%) over the last 6 years. For those who exchanged Euro's for silver in 1999 it's a thorough financial trouncing.
Regarding "Eventually when the supply of silver is finally exhausted, must it not break out of the grip of the short sellers and respond to actual market forces?" --
The price of silver is determined by market forces. An investment strategy based on any other belief is foolish.
<< <i>You think "they" don't know the supply/demand? >>
"They" don't care. "They" are money managers whose future is only as far as the market numbers at weeks end. The individual investor has the luxury to wait 5-10 years for a 400% return. If a money manager told his boss he expected a big return in the next 10 years he would be out the door. The "investment" must produce in 30 days or less. The markets are very short sighted.
I'm sure that this was stated before, but as a reminder...there is more silver held in paper notes than there is actual metal to cover those notes. Is there another business where you can sell the same thing twice-never deliver it, and get away with it while the government turns a blind eye?
<< <i>I'm sure that this was stated before, but as a reminder...there is more silver held in paper notes than there is actual metal to cover those notes. Is there another business where you can sell the same thing twice-never deliver it, and get away with it while the government turns a blind eye? >>
Selling it twice is one thing. I suspect that it's sold more like 50 to 100 times over physical quantity available.
Someday this scam will break wide open, hopefully sooner than later.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>And the entire silver market does not know that dam exists? See, that's what gets me. Ted Butler magically knows everything and the people who actually own and trade silver know nothing. Pretty arrogant position to take.
FYI: Silver priced in Euros shows no gain (0%) over the last 6 years. For those who exchanged Euro's for silver in 1999 it's a thorough financial trouncing. >>
Your statement makes no sense. Ted Butler makes a sound argument for manupulation in the market and the shortage is a known fact. If you've read him for a long time, you will find that he is not arrogant at all. He asks readers to poke holes in his argument, and he comes across as a humble, yet confident analyst. I have personally corresponded with him dozens of times giving him challenges to his position--he never takes it as an insult or a challenge to his ego. He thanks me for my question and calls it a good question when it is one (i've asked some dumb ones), but he has refuted everything that I have been able to come up with so far. He even admits that he could be wrong, but he hasn't been able to refute his own argument yet so he doesn't think so. So rather than call him arrogant, why don't you look up his entire argument, which is quite compelling and refute it. It is much more complicated than meets the idea as far as traders and dealers go, and they want to keep their manipulation for as long as possible. He's a good guy with a powerful argument, and by the way, the likes of Warren Buffet & Richard Russell agree with him.
Peace,
coinfool "You broke the bonds and you loosed the chains; carried the cross of my shame, of my shame--you know I believe it..."
>>>And the entire silver market does not know that dam exists? See, that's what gets me. Ted Butler magically knows everything and the people who actually own and trade silver know nothing. Pretty arrogant position to take.<<<
Never assume an intelligent market. I thought a 5000 Nasdaq proved that beyond a shadow of a doubt. People were dumping huge sums of money into unprofitable corporations and totally ignoring EVERY measure of value because they were convinced that other traders knew what they were doing and didn't want to miss the boat. It's possible that the price of silver remains low only because it's remained low for 25 years, and for no other reason! There are still plenty of investers who remember getting screwed in 1980 and they aren't going to be fooled again.
But the boat is going to sail anyway. The beauty of supply and demand is that they are independent of speculation and will eventually drive the price up no matter how negative the market is. Intel will require silver for its circuit boards if silver is $5 an ounce or $100 an ounce. It will pay whatever is required.
"...reality has a well-known liberal bias." -- Stephen Colbert
In these times of very confusing World economics I think Gold and Silver need to be looked at as insurance against those potential financial disasters that seem to be lurking around every corner. Is Gold and Silver a good investment today, probably not but then again what is? Every investment available on the planet seems to be over run with speculators, gamblers, government manipulation etc. Any of us here can make a case for the manipulation, and dangers in all of the investment areas, including banks, stock markets, metals markets, commodity markets, mortgage markets, etc.etc.
One thing that seems very clear, is that today and for thousands of years, Gold and Silver have had worldwide acceptance as a store of value. Unlike any other store of value, you can redeem a gold or silver coin in any major city, or the smallest corner of the world for goods and services.
Gold and silver should be a part of everyone’s holdings on the planet that needs some protection for their other assets and income. Time is your enemy in any financial disaster, and owning some gold and silver can give you time to plan, or recover, in an emergency.
Strictly my opinion, but I believe that every person should own enough Gold and Silver to pay all of their bills for a minimum of 12 months, and they should have possession of those metals.
<< <i>>>>And the entire silver market does not know that dam exists? See, that's what gets me. Ted Butler magically knows everything and the people who actually own and trade silver know nothing. Pretty arrogant position to take.<<<
Never assume an intelligent market. I thought a 5000 Nasdaq proved that beyond a shadow of a doubt. People were dumping huge sums of money into unprofitable corporations and totally ignoring EVERY measure of value because they were convinced that other traders knew what they were doing and didn't want to miss the boat. It's possible that the price of silver remains low only because it's remained low for 25 years, and for no other reason! There are still plenty of investers who remember getting screwed in 1980 and they aren't going to be fooled again.
But the boat is going to sail anyway. The beauty of supply and demand is that they are independent of speculation and will eventually drive the price up no matter how negative the market is. Intel will require silver for its circuit boards if silver is $5 an ounce or $100 an ounce. It will pay whatever is required. >>
Almost all human activity is mere inertia.
Mother nature, mathematics, the real world, momentum, physics, gravity, the inevitable, the sunrise and destiny always win and will always trump anything we think is the way things are or ought to be.
The frogs voted against the EU constitition over the weekend. Gold is getting rocked and the dollar is exploding. No cohesion in Europe means no confidence in the economies.
Ladies and gentlemen....there is no alternative to the US dollar. It has been the strongest currency over time and will continue to be so.
cohodk...nice to hear some comments other than doom and gloom mixed with conspiracy theories.
From CNN Money on line this a.m.-
"In currency trading, the dollar gained versus the yen and the euro fell to a seven-month low against the greenback, extending a sell-off ignited after France's rejection of the European Union constitution.
The frogs voted against the EU constitition over the weekend. Gold is getting rocked and the dollar is exploding. No cohesion in Europe means no confidence in the economies.
Ladies and gentlemen....there is no alternative to the US dollar. It has been the strongest currency over time and will continue to be so. >>
Coinfool--If there's no alternative the to the US dollar then pity all of us. It is paper tiger that has lost its strength and is relying solely on its withering reputation. We've built up so many bubbles in our economy and the massive fiat currency creation is killing us.
Kurt Richebacher is considered to be one of the world's foremost experts on the US Dollar. He has been talking for some time about the facade of dollar strenth. He rightly predicted that some countries would begin replacing the dollar as the standard with other curencies and it has already begun to happen in a few coutries. I forget the names and currencies off hand, but I can look it up later and post it. History has shown us that an economy can NEVER sustain itself through the fiat creation of currency. Some of the latest from Mr Richebacher:
BEST OF KURT RICHEBACHER
May 9, 2005
It can no longer be doubted that the world economy is heading into a new downturn following a recovery that has been unusually short and weak among the industrial countries. The loss of momentum during the second half of last year was especially pronounced in Japan and several Far Eastern countries. In Europe, the major eurozone economies have been making headlines for some time with very unpleasant growth and employment numbers.
There seemed to be two great exceptions to this unfolding general economic slowdown: the United States and China. That, at least, has been the overwhelming perception. A strengthening dollar largely reflected the consensus view that the growth spread between the United States and the eurozone would considerably widen again, as the U.S. economy maintained its strong growth.
At a conference of the Federal Reserve Bank of San Francisco on April 14, Fed Governor Donald L. Kohn presented a cheerful picture of the U.S. economy, starting his speech: "The economy has been performing well of late. Economic activity has shown a good bit of forward momentum as businesses have stepped up their purchases of capital equipment and households have continued to increase their spending on consumer goods and services and on houses."
Further fuel for the new dollar bullishness arose from the expectation that gradually accelerating inflation would induce the Fed to step up its rate hikes further. In its earlier comments, the Fed’s Federal Open Market Committee has done its best to confirm these high-riding expectations about the economy.
As we have explained in detail many times, we radically disagree with this general unconcern about the U.S. economy. Its stellar aggregate growth rates, particularly since 2000, have masked a dramatic deterioration in the four key fundamental determinants of long-term economic growth: national and personal savings, productive capital investment, profits and the current account of the balance of payments. All four are in shambles.
In essence, recessions are the phase in the business cycle in which consumers and businesses unwind the borrowing and spending excesses of the prior boom. In the U.S. case, the ugly reality is that the excesses and imbalances of the boom years in the late 1990s have grown in the past few years to extremes unprecedented in history.
The big question now is whether the rosy assessment of the U.S. economy is right or wrong. In our view, it is dead wrong, for two main reasons: First, contrary to perception, the flow of economic data since the beginning of the year suggests the exact opposite; and second, and more important, the U.S. economy’s recovery from its recession in 2001 has a precarious foundation in the unsustainable housing bubble and exploding consumer debts, while employment and income growth are calamitously lagging.
While scrutinizing the economic data, we first noted a sharp slowdown in consumer spending. Inflation adjusted, it declined slightly in January, by 0.1%. An increase of 0.3% followed in February. Meanwhile, sluggish retail trade figures for March suggest little more than stagnation. With these weak numbers before our eyes, we have been following the public discussion and the Fed’s statements about the strong economy with amazement.
BEST OF KURT RICHEBACHER
April 13, 2005
In America and large parts of the rest of the world, the level of macroeconomic thinking has fallen to such a low that policymakers and most economists are unable to distinguish between true tangible, income-creating wealth and illusionary paper wealth lacking any income creation. It shocks us that central bankers are actively taking part in this deception. From the macro perspective, this celebrated wealth creation is wealth destruction, implying general impoverishment.
Peace,
coinfool "You broke the bonds and you loosed the chains; carried the cross of my shame, of my shame--you know I believe it..."
Maybe we need to be like some countries and restrict Real Estate ownership to citizens.
Better yet, let them buy up all the real estate and we can change the Federal Income tax system to a Property tax system and tax the crap out of them!!!!!!!!!!!!!
OK. In 6 years silver paid no dividends, no capital gains, and no increase in value. The 1999 silver investor (Euros) lost buying power for 6 years. This group believes inflation to be far more than published values.... but what if it was only 4% annually. That leaves a 24% loss in buying power (forgive me for not compounding and making it look worse) A long-term 24% loss is a financial trouncing in my book.
Ted Butler makes a sound argument for manupulation in the market and the shortage is a known fact.
I'm arguing against the logic that silver must dramatically rise in price.
I'm arguing against the arrogant position that investors (here) know more about silver than the silver market.
Lastly, I have read Ted Butler for several years. Years ago I found his logic to be dangerous to account balances.
OK. In 6 years silver paid no dividends, no capital gains, and no increase in value. The 1999 silver investor (Euros) lost buying power for 6 years. This group believes inflation to be far more than published values.... but what if it was only 4% annually. That leaves a 24% loss in buying power (forgive me for not compounding and making it look worse) A long-term 24% loss is a financial trouncing in my book.
Ted Butler makes a sound argument for manupulation in the market and the shortage is a known fact.
I'm arguing against the logic that silver must dramatically rise in price.
I'm arguing against the arrogant position that investors (here) know more about silver than the silver market.
Lastly, I have read Ted Butler for several years. Years ago I found his logic to be dangerous to account balances. >>
One of the most arrogant things people do is think they really know anything. Since all thought is individual there is a large tendency for groups of people (like a market) to actually have less ability to function rationally or to appear to think than individuals.
The market will do as it wants which might mean the price is finally right at $7.462/ OZt and will stay there or it will soar, plummet or oscillate but it won't do it because it knows more than anyone in this thread. It will do it in response to supply and demand which are both ultimately the result of individual action and thought.
<< <i>The market has the ability to remain irrational longer than you have the ability to remain solvent >>
Great quote that in another threaded was attributed to Keynes. Google shows nothing. Anyone sure who said this? Just curious.
Also bear in mind nobody here is advocating speculation in silver (i.e. mortgage your house and buy as much as you can now!). The people I've seen post merely advocate a nice hedge position.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
Fishcooker, I still haven't seen you explain away the fact that we've been using more silver than we mine every year for the last 20 years and show no signs of stopping any time soon. In economics, if supply decreases and demand stays the same (or rises) what happens to the price? What about when you allow people to sell a million ounces of silver that they don't own, today, and let them buy it back tomorrow, hopefully at a lower price?
The short sellers sell their million ounces, the price drops five cents, and they convince a few people to sell maybe 200,000 more ounces and the price drops another two cents. They then cover their shorts and net a two cent profit per ounce...WITHOUT EVER HAVING HAD THE MONEY TO COVER THEIR SHORTS IN THE FIRST PLACE. That's what makes no sense about COMEX.
<< <i>Never assume an intelligent market. I thought a 5000 Nasdaq proved that beyond a shadow of a doubt. People were dumping huge sums of money into unprofitable corporations and totally ignoring EVERY measure of value because they were convinced that other traders knew what they were doing and didn't want to miss the boat. >>
Very good point Iwog. Absolutely true.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
I believe silver shot up today due to large deliveries of silver contracts which required large short covering not due to the new exchange fund being discussed.
>>>OK. In 6 years silver paid no dividends, no capital gains, and no increase in value. The 1999 silver investor (Euros) lost buying power for 6 years. This group believes inflation to be far more than published values.... but what if it was only 4% annually. That leaves a 24% loss in buying power (forgive me for not compounding and making it look worse) A long-term 24% loss is a financial trouncing in my book.<<<
This is irrelevant. Have you ever heard the term "Past performance is not an indication of future results"? For an 8 year period from about 1991 to 1999 my home appreciated ZERO percent and I took a significant loss on the inflationary value of the money invested. Then over the last 5 years my house gained approximately 150% giving me a very respectable gain of over 10% a year. YOU CANNOT JUDGE ANY INVESTMENT UNTIL THE DAY YOU SELL YOUR POSITION. Don't forget that.
Silver is cheaper now than it was in the 1970's and FAR more scarce. I've never felt so sure about an investment in my life.
"...reality has a well-known liberal bias." -- Stephen Colbert
<< <i>Fishcooker, I still haven't seen you explain away the fact that we've been using more silver than we mine every year for the last 20 years and show no signs of stopping any time soon. In economics, if supply decreases and demand stays the same (or rises) what happens to the price? What about when you allow people to sell a million ounces of silver that they don't own, today, and let them buy it back tomorrow, hopefully at a lower price?
The short sellers sell their million ounces, the price drops five cents, and they convince a few people to sell maybe 200,000 more ounces and the price drops another two cents. They then cover their shorts and net a two cent profit per ounce...WITHOUT EVER HAVING HAD THE MONEY TO COVER THEIR SHORTS IN THE FIRST PLACE. That's what makes no sense about COMEX.
<< <i>Never assume an intelligent market. I thought a 5000 Nasdaq proved that beyond a shadow of a doubt. People were dumping huge sums of money into unprofitable corporations and totally ignoring EVERY measure of value because they were convinced that other traders knew what they were doing and didn't want to miss the boat. >>
Very good point Iwog. Absolutely true. >>
I couldn’t agree with you more. I haven’t yet heard anyone give a clear, cohesive rebuttal of Butler’s simple premise: The world is running out of silver. We are consuming more than we produce and that silver that is consumed is lost, for the most part, forever. This is an unprecedented situation in the commodities market, or any market for that matter, where the laws of supply and demand necessitate that silver, once the manipulation ends—and it is impossible that it last forever since there is not enough silver to play con-games with—silver is going to take off like a rocket. It’s the most bullish case for any type of investment ever, with very little risk to the downside and tremendous potential to the upside. Warren Buffet put it succinctly in his typical wordy manner when asked why he purchased the 60 million ounces in the late 90’s; he replied that it was supply and demand or course
Butler doesn’t preach end of the world theories. His argument doesn’t need an economic Armageddon to come to pass—it simply will regardless of the economic situation—sooner or later. And sooner seems to be coming. After much pressure by Butler and Attorney General Eliot Spitzer (NY, I think), AIG, a massive corporation with massive silver dealings suddenly pulled out of the market—disappeared. A large firm in Canada put in an order for 80 million ounces of silver (it might have been 8 million, I forget) last summer and it is yet to see the balance of it’s order—it’s getting tougher and tougher to fill big orders since large numbers of silver can’t be found in any one place in large quantities.
Someone above said that it is only being recommended to be used as part of a portfolio as a hedge, however, Butler is of the opinion that people should get hold of as much physical silver as possible—it’s a steal at current prices—or get hold of some really sound silver stocks. Richard Russell laughs about all of his readers that ask him how much Gold (and silver) one should buy, and with the dollars meaningless fiat creation of ‘wealth out of this air’, along with it’s impending demise, he counters by saying how much dollars should one own? At least gold is tangible asset/money, whereas our fiat currency is becoming simply paper.
Peace,
coinfool "You broke the bonds and you loosed the chains; carried the cross of my shame, of my shame--you know I believe it..."
<< <i>Silver is cheaper now than it was in the 1970's and FAR more scarce. I've never felt so sure about an investment in my life.
No offense.....but quotes like that make people poor very quickly. Over confidence causes blindness. >>
I'll probably be able to afford a seeing eye dog though.
I grabbed 2,000 ounces of bullion last week just before this 50 cent plus rise.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Comments
That's why I start my comparisons from the later 1970's, when gold had a chance to compete fairly with other assets. The gold price went exactly where it needed to go to balance the excess of currency creation....approx $850/oz. From that view point one could say gold is only "30 years old." While I do agree that the oligarchs will continue to manipulate the price they cannot fully control it unless they ban ownership once again, or install heavy taxes, tariffs, full disclosure upon purchases, etc. It would take gold at close to or over $1000/oz before the FED's started looking for various "legal" ways to curtail or inhibit ownership.
roadrunner
<< <i>With the exception of three spikes and two dips, I'm looking at the same $6/$7 silver that I've been seeing for 20 years. Assets should appreciate over time, especially after 20 years >>
True, but during that time the US has dumped its 200 years of silver accumulations, theres no more left to sell off.
<< <i>Perhaps, but I have YET to meet anyone who can explain, given Iwog's two points, how silver can fail, at some point, to rise dramatically in price. Want to take a crack at it? If we use more than we produce of a commodity and have every year for the last 30 years, and according to the USGS we are running out of silver below ground (not an unlimited supply), how can the price not go up? Supply and demand does not apply to silver? >>
Silver will someday have its day in the sun. But you forgot about the silver supplies in the ABOVE ground held by non-governments.
It is true that silver's price has not kept up with gold since the early 1970's or even the late 1970's or whatever date you care to start off with but here is why:
(1) In the U.S. gold has been able to work off its above ground supplies of domestically held gold in the form of business commerce coinage since gold was last minted in business commerce coin form in 1933.
(2) In the U.S. silver has not had as long a period of time to work off its above ground supplies of domestically held silver at face value in the form of business commerce coinage since silver was last minted in business commerce 90% silver coin form in 1966 and 40% silver coin form in 1969 (1970 was only in mint sets).
(3) Silver was much more prevalent in above ground supplies in the form of jewelry in Asia and elsewhere. As prices of silver and gold rose, dishording by citizens of the world is much more available in silver than for gold.
(4) Keep in the mind that the US sold off huge stocks of its silver to private hands in the 1960's at face value over and beyond the annual mintages while sale of coin gold at the old face value has not occured in over 70 years.
The above has moderated price increases for silver vis a vis gold and will continue to do so until the above ground hoard of silver held by private citizens dissipates to the level of gold.
I give it another 5-10 years then silver will then outperform gold long term.
<< <i>Silver was much more prevalent in above ground supplies in the form of jewelry in Asia and elsewhere. As prices of silver and gold rose, dishording by citizens of the world is much more available in silver than for gold. >>
India is one of the countries with the most silver holdings in private hands, in the form of jewelry. A professor of Indian history once told me, however, that he went over to India and people would still be farming with plows from the 1800s but would be wearing hundreds of dollars worth of silver bracelets, earrings, and necklaces. It is unlikely, given their lack of concern for the monetary value of their jewelry, that it will ever be dishorded in enormous quantities.
This is not unlike the Central Banks unloading thousands of tons of gold over the past decade to help "control" the price of gold and help strengthen currencies. With as much as 50% of that gold now gone, CB's are far less likely to dump what remaining leverage they have against fiat currencies, esp. when they are making money on the price of gold as it ascends.
The gold carry game of the later 1990's was one of the best schemes around, even for the gold miners themselves. They could short their own future production and make a nice profit. That all worked great by buying central bank gold for 1% interest and then selling it only to reinvest the money in a device yielding 5-6%. Great game as long as the gold price stayed fixed in the $250-$320 range.
Govt's love this game and especially so for the U.S. and the dollar.
It was an ideal situation for continued currency growth and a strong dollar.
Gold rising about $350, and now $400 has really dampened gold borrowers spirits and placed hedgers under great financial risk if gold continues to rise. At some point they have to repay the gold to the Central Banks at market price....or default. That 5-6% won't be worth much if they are having to pay back gold at a 50-100% markup. Much of the ammo is now used up so how the game procedes from here will be far different from 1990-2002.
roadrunner
It has little or nothing to do with price manipulation, but was simply a source of revenue for (particularly the UK) governments who felt there was little monetary future in gold.
For the past 20 years, there have really been only two central banks that count -- that of the US, and the Bank of Japan. Neither has made material gold sales.
The foundation of those questions rests on the assertion that you are smarter than the entire silver market.... that you know the inventories and they don't. You think "they" don't know the supply/demand? I submit that is a path leading to unnecessary Risk in pursuit of Reward.
And lastly, if I were to crack at Iwogs 2 points, I would begin by asking how silver has performed the last 6 years in terms of Yen and Euros. I honestly don't know.... but it would be neat to see. We know semiconductor volume was sky-high in 1999....
<< <i>The foundation of those questions rests on the assertion that you are smarter than the entire silver market >>
More silver is being consumed than is produced. Taking it a step further is not rocket science. "The entire silver market" is manipulated by institutions that can sell silver they don't have today at $7 an ounce, and if they sell enough to make the price go down, they can buy all that silver back the next day at $6.98 an ounce and cover their short, turning a tidy profit.
Then you have your answer to why silver need not rise dramatically in price.
And the entire silver market does not know that dam exists? See, that's what gets me. Ted Butler magically knows everything and the people who actually own and trade silver know nothing. Pretty arrogant position to take.
FYI: Silver priced in Euros shows no gain (0%) over the last 6 years. For those who exchanged Euro's for silver in 1999 it's a thorough financial trouncing.
The price of silver is determined by market forces. An investment strategy based on any other belief is foolish.
<< <i>You think "they" don't know the supply/demand? >>
"They" don't care. "They" are money managers whose future is only as far as the market numbers at weeks end. The individual investor has the luxury to wait 5-10 years for a 400% return. If a money manager told his boss he expected a big return in the next 10 years he would be out the door. The "investment" must produce in 30 days or less.
The markets are very short sighted.
<< <i>I'm sure that this was stated before, but as a reminder...there is more silver held in paper notes than there is actual metal to cover those notes. Is there another business where you can sell the same thing twice-never deliver it, and get away with it while the government turns a blind eye? >>
Selling it twice is one thing. I suspect that it's sold more like 50 to 100 times over physical quantity available.
Someday this scam will break wide open, hopefully sooner than later.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>And the entire silver market does not know that dam exists? See, that's what gets me. Ted Butler magically knows everything and the people who actually own and trade silver know nothing. Pretty arrogant position to take.
FYI: Silver priced in Euros shows no gain (0%) over the last 6 years. For those who exchanged Euro's for silver in 1999 it's a thorough financial trouncing. >>
Your statement makes no sense. Ted Butler makes a sound argument for manupulation in the market and the shortage is a known fact. If you've read him for a long time, you will find that he is not arrogant at all. He asks readers to poke holes in his argument, and he comes across as a humble, yet confident analyst. I have personally corresponded with him dozens of times giving him challenges to his position--he never takes it as an insult or a challenge to his ego. He thanks me for my question and calls it a good question when it is one (i've asked some dumb ones), but he has refuted everything that I have been able to come up with so far. He even admits that he could be wrong, but he hasn't been able to refute his own argument yet so he doesn't think so. So rather than call him arrogant, why don't you look up his entire argument, which is quite compelling and refute it. It is much more complicated than meets the idea as far as traders and dealers go, and they want to keep their manipulation for as long as possible. He's a good guy with a powerful argument, and by the way, the likes of Warren Buffet & Richard Russell agree with him.
coinfool
"You broke the bonds and you loosed the chains; carried the cross of my shame, of my shame--you know I believe it..."
Never assume an intelligent market. I thought a 5000 Nasdaq proved that beyond a shadow of a doubt. People were dumping huge sums of money into unprofitable corporations and totally ignoring EVERY measure of value because they were convinced that other traders knew what they were doing and didn't want to miss the boat. It's possible that the price of silver remains low only because it's remained low for 25 years, and for no other reason! There are still plenty of investers who remember getting screwed in 1980 and they aren't going to be fooled again.
But the boat is going to sail anyway. The beauty of supply and demand is that they are independent of speculation and will eventually drive the price up no matter how negative the market is. Intel will require silver for its circuit boards if silver is $5 an ounce or $100 an ounce. It will pay whatever is required.
One thing that seems very clear, is that today and for thousands of years, Gold and Silver have had worldwide acceptance as a store of value. Unlike any other store of value, you can redeem a gold or silver coin in any major city, or the smallest corner of the world for goods and services.
Gold and silver should be a part of everyone’s holdings on the planet that needs some protection for their other assets and income. Time is your enemy in any financial disaster, and owning some gold and silver can give you time to plan, or recover, in an emergency.
Strictly my opinion, but I believe that every person should own enough Gold and Silver to pay all of their bills for a minimum of 12 months, and they should have possession of those metals.
<< <i>>>>And the entire silver market does not know that dam exists? See, that's what gets me. Ted Butler magically knows everything and the people who actually own and trade silver know nothing. Pretty arrogant position to take.<<<
Never assume an intelligent market. I thought a 5000 Nasdaq proved that beyond a shadow of a doubt. People were dumping huge sums of money into unprofitable corporations and totally ignoring EVERY measure of value because they were convinced that other traders knew what they were doing and didn't want to miss the boat. It's possible that the price of silver remains low only because it's remained low for 25 years, and for no other reason! There are still plenty of investers who remember getting screwed in 1980 and they aren't going to be fooled again.
But the boat is going to sail anyway. The beauty of supply and demand is that they are independent of speculation and will eventually drive the price up no matter how negative the market is. Intel will require silver for its circuit boards if silver is $5 an ounce or $100 an ounce. It will pay whatever is required. >>
Almost all human activity is mere inertia.
Mother nature, mathematics, the real world, momentum, physics, gravity, the inevitable, the sunrise and destiny always win and will always trump anything we think is the way things are or ought to be.
The frogs voted against the EU constitition over the weekend. Gold is getting rocked and the dollar is exploding. No cohesion in Europe means no confidence in the economies.
Ladies and gentlemen....there is no alternative to the US dollar. It has been the strongest currency over time and will continue to be so.
Knowledge is the enemy of fear
From CNN Money on line this a.m.-
"In currency trading, the dollar gained versus the yen and the euro fell to a seven-month low against the greenback, extending a sell-off ignited after France's rejection of the European Union constitution.
COMEX gold fell $5.50 to $416.90 an ounce."
<< <i>Thank the French!!!
The frogs voted against the EU constitition over the weekend. Gold is getting rocked and the dollar is exploding. No cohesion in Europe means no confidence in the economies.
Ladies and gentlemen....there is no alternative to the US dollar. It has been the strongest currency over time and will continue to be so. >>
Coinfool--If there's no alternative the to the US dollar then pity all of us. It is paper tiger that has lost its strength and is relying solely on its withering reputation. We've built up so many bubbles in our economy and the massive fiat currency creation is killing us.
Kurt Richebacher is considered to be one of the world's foremost experts on the US Dollar. He has been talking for some time about the facade of dollar strenth. He rightly predicted that some countries would begin replacing the dollar as the standard with other curencies and it has already begun to happen in a few coutries. I forget the names and currencies off hand, but I can look it up later and post it. History has shown us that an economy can NEVER sustain itself through the fiat creation of currency. Some of the latest from Mr Richebacher:
BEST OF KURT RICHEBACHER
May 9, 2005
It can no longer be doubted that the world economy is heading into a new downturn following a recovery that has been unusually short and weak among the industrial countries. The loss of momentum during the second half of last year was especially pronounced in Japan and several Far Eastern countries. In Europe, the major eurozone economies have been making headlines for some time with very unpleasant growth and employment numbers.
There seemed to be two great exceptions to this unfolding general economic slowdown: the United States and China. That, at least, has been the overwhelming perception. A strengthening dollar largely reflected the consensus view that the growth spread between the United States and the eurozone would considerably widen again, as the U.S. economy maintained its strong growth.
At a conference of the Federal Reserve Bank of San Francisco on April 14, Fed Governor Donald L. Kohn presented a cheerful picture of the U.S. economy, starting his speech: "The economy has been performing well of late. Economic activity has shown a good bit of forward momentum as businesses have stepped up their purchases of capital equipment and households have continued to increase their spending on consumer goods and services and on houses."
Further fuel for the new dollar bullishness arose from the expectation that gradually accelerating inflation would induce the Fed to step up its rate hikes further. In its earlier comments, the Fed’s Federal Open Market Committee has done its best to confirm these high-riding expectations about the economy.
As we have explained in detail many times, we radically disagree with this general unconcern about the U.S. economy. Its stellar aggregate growth rates, particularly since 2000, have masked a dramatic deterioration in the four key fundamental determinants of long-term economic growth: national and personal savings, productive capital investment, profits and the current account of the balance of payments. All four are in shambles.
In essence, recessions are the phase in the business cycle in which consumers and businesses unwind the borrowing and spending excesses of the prior boom. In the U.S. case, the ugly reality is that the excesses and imbalances of the boom years in the late 1990s have grown in the past few years to extremes unprecedented in history.
The big question now is whether the rosy assessment of the U.S. economy is right or wrong. In our view, it is dead wrong, for two main reasons: First, contrary to perception, the flow of economic data since the beginning of the year suggests the exact opposite; and second, and more important, the U.S. economy’s recovery from its recession in 2001 has a precarious foundation in the unsustainable housing bubble and exploding consumer debts, while employment and income growth are calamitously lagging.
While scrutinizing the economic data, we first noted a sharp slowdown in consumer spending. Inflation adjusted, it declined slightly in January, by 0.1%. An increase of 0.3% followed in February. Meanwhile, sluggish retail trade figures for March suggest little more than stagnation. With these weak numbers before our eyes, we have been following the public discussion and the Fed’s statements about the strong economy with amazement.
BEST OF KURT RICHEBACHER
April 13, 2005
In America and large parts of the rest of the world, the level of macroeconomic thinking has fallen to such a low that policymakers and most economists are unable to distinguish between true tangible, income-creating wealth and illusionary paper wealth lacking any income creation. It shocks us that central bankers are actively taking part in this deception. From the macro perspective, this celebrated wealth creation is wealth destruction, implying general impoverishment.
coinfool
"You broke the bonds and you loosed the chains; carried the cross of my shame, of my shame--you know I believe it..."
are we fools for exchanging billions of dollars for goods and oil from other countries...............
or are they the fools for taking paper in exchange for thier natural resources and manufactured products
Better yet, let them buy up all the real estate and we can change the Federal Income tax system to a Property tax system and tax the crap out of them!!!!!!!!!!!!!
Does anyone know of anything that might account for this? The dollar is back up even
higher than early in the day and gold is at a small loss.
It may be a technical move of some sort or a breakout but there's nothing I've found on
the net to account for it.
<< <i>Silver is up $.36 in the last three hours from the intraday lows.
Does anyone know of anything that might account for this? The dollar is back up even
higher than early in the day and gold is at a small loss.
It may be a technical move of some sort or a breakout but there's nothing I've found on
the net to account for it. >>
There is talk of a new exchange traded fund being started. Much the same as the Streettracks Gold Trust.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
OK. In 6 years silver paid no dividends, no capital gains, and no increase in value. The 1999 silver investor (Euros) lost buying power for 6 years. This group believes inflation to be far more than published values.... but what if it was only 4% annually. That leaves a 24% loss in buying power (forgive me for not compounding and making it look worse) A long-term 24% loss is a financial trouncing in my book.
Ted Butler makes a sound argument for manupulation in the market and the shortage is a known fact.
I'm arguing against the logic that silver must dramatically rise in price.
I'm arguing against the arrogant position that investors (here) know more about silver than the silver market.
Lastly, I have read Ted Butler for several years. Years ago I found his logic to be dangerous to account balances.
<< <i>Your statement makes no sense.
OK. In 6 years silver paid no dividends, no capital gains, and no increase in value. The 1999 silver investor (Euros) lost buying power for 6 years. This group believes inflation to be far more than published values.... but what if it was only 4% annually. That leaves a 24% loss in buying power (forgive me for not compounding and making it look worse) A long-term 24% loss is a financial trouncing in my book.
Ted Butler makes a sound argument for manupulation in the market and the shortage is a known fact.
I'm arguing against the logic that silver must dramatically rise in price.
I'm arguing against the arrogant position that investors (here) know more about silver than the silver market.
Lastly, I have read Ted Butler for several years. Years ago I found his logic to be dangerous to account balances. >>
One of the most arrogant things people do is think they really know anything. Since
all thought is individual there is a large tendency for groups of people (like a market)
to actually have less ability to function rationally or to appear to think than individuals.
The market will do as it wants which might mean the price is finally right at $7.462/ OZt
and will stay there or it will soar, plummet or oscillate but it won't do it because it knows
more than anyone in this thread. It will do it in response to supply and demand which
are both ultimately the result of individual action and thought.
"The market has the ability to remain irrational longer than you have the ability to remain solvent."
- J. P. Morgan himself.
<< <i>"The market has the ability to remain irrational longer than you have the ability to remain solvent."
- J. P. Morgan himself. >>
That's a great one. Those are very wise words I hadn't seen before.
- J. P. Morgan himself.
I think anyone who dabbles in the options markets finds this out rather quickly.
<< <i>The market has the ability to remain irrational longer than you have the ability to remain solvent >>
Great quote that in another threaded was attributed to Keynes. Google shows nothing. Anyone sure who said this? Just curious.
Also bear in mind nobody here is advocating speculation in silver (i.e. mortgage your house and buy as much as you can now!). The people I've seen post merely advocate a nice hedge position.
The short sellers sell their million ounces, the price drops five cents, and they convince a few people to sell maybe 200,000 more ounces and the price drops another two cents. They then cover their shorts and net a two cent profit per ounce...WITHOUT EVER HAVING HAD THE MONEY TO COVER THEIR SHORTS IN THE FIRST PLACE. That's what makes no sense about COMEX.
<< <i>Never assume an intelligent market. I thought a 5000 Nasdaq proved that beyond a shadow of a doubt. People were dumping huge sums of money into unprofitable corporations and totally ignoring EVERY measure of value because they were convinced that other traders knew what they were doing and didn't want to miss the boat. >>
Very good point Iwog. Absolutely true.
This is irrelevant. Have you ever heard the term "Past performance is not an indication of future results"? For an 8 year period from about 1991 to 1999 my home appreciated ZERO percent and I took a significant loss on the inflationary value of the money invested. Then over the last 5 years my house gained approximately 150% giving me a very respectable gain of over 10% a year. YOU CANNOT JUDGE ANY INVESTMENT UNTIL THE DAY YOU SELL YOUR POSITION. Don't forget that.
Silver is cheaper now than it was in the 1970's and FAR more scarce. I've never felt so sure about an investment in my life.
<< <i>Fishcooker, I still haven't seen you explain away the fact that we've been using more silver than we mine every year for the last 20 years and show no signs of stopping any time soon. In economics, if supply decreases and demand stays the same (or rises) what happens to the price? What about when you allow people to sell a million ounces of silver that they don't own, today, and let them buy it back tomorrow, hopefully at a lower price?
The short sellers sell their million ounces, the price drops five cents, and they convince a few people to sell maybe 200,000 more ounces and the price drops another two cents. They then cover their shorts and net a two cent profit per ounce...WITHOUT EVER HAVING HAD THE MONEY TO COVER THEIR SHORTS IN THE FIRST PLACE. That's what makes no sense about COMEX.
<< <i>Never assume an intelligent market. I thought a 5000 Nasdaq proved that beyond a shadow of a doubt. People were dumping huge sums of money into unprofitable corporations and totally ignoring EVERY measure of value because they were convinced that other traders knew what they were doing and didn't want to miss the boat. >>
Very good point Iwog. Absolutely true. >>
I couldn’t agree with you more. I haven’t yet heard anyone give a clear, cohesive rebuttal of Butler’s simple premise: The world is running out of silver. We are consuming more than we produce and that silver that is consumed is lost, for the most part, forever. This is an unprecedented situation in the commodities market, or any market for that matter, where the laws of supply and demand necessitate that silver, once the manipulation ends—and it is impossible that it last forever since there is not enough silver to play con-games with—silver is going to take off like a rocket. It’s the most bullish case for any type of investment ever, with very little risk to the downside and tremendous potential to the upside. Warren Buffet put it succinctly in his typical wordy manner when asked why he purchased the 60 million ounces in the late 90’s; he replied that it was supply and demand or course
Butler doesn’t preach end of the world theories. His argument doesn’t need an economic Armageddon to come to pass—it simply will regardless of the economic situation—sooner or later. And sooner seems to be coming. After much pressure by Butler and Attorney General Eliot Spitzer (NY, I think), AIG, a massive corporation with massive silver dealings suddenly pulled out of the market—disappeared. A large firm in Canada put in an order for 80 million ounces of silver (it might have been 8 million, I forget) last summer and it is yet to see the balance of it’s order—it’s getting tougher and tougher to fill big orders since large numbers of silver can’t be found in any one place in large quantities.
Someone above said that it is only being recommended to be used as part of a portfolio as a hedge, however, Butler is of the opinion that people should get hold of as much physical silver as possible—it’s a steal at current prices—or get hold of some really sound silver stocks. Richard Russell laughs about all of his readers that ask him how much Gold (and silver) one should buy, and with the dollars meaningless fiat creation of ‘wealth out of this air’, along with it’s impending demise, he counters by saying how much dollars should one own? At least gold is tangible asset/money, whereas our fiat currency is becoming simply paper.
coinfool
"You broke the bonds and you loosed the chains; carried the cross of my shame, of my shame--you know I believe it..."
No offense.....but quotes like that make people poor very quickly. Over confidence causes blindness.
Knowledge is the enemy of fear
<< <i>Silver is cheaper now than it was in the 1970's and FAR more scarce. I've never felt so sure about an investment in my life.
No offense.....but quotes like that make people poor very quickly. Over confidence causes blindness. >>
I'll probably be able to afford a seeing eye dog though.
I grabbed 2,000 ounces of bullion last week just before this 50 cent plus rise.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Rotsa Ruck!
I am saying that whenever something is a SLAM DUNK...you are usually wrong.
Knowledge is the enemy of fear