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more economic problems as it relates to pm
Danny9995
Posts: 115
So now they are talking about a new round of stimulus checks in time for the holiday season. Remember the $700B err $850B Bailout was not the first of the reckless spending. This summer the gov't spent over $1B giving out stimulus checks that were supposed to fix the economic problems. That didnt work, then came the $850B bailout, which hasnt worked. So now they are working on a new round of stimulus checks to save the holiday. Cost probably $2B. Something tells me that there wont be a public outcry over this gov't spending since its going directly in the pockets of the public. Also, the house dems want a massive $500 B or more program on US infrastructure that will help alleviate high unemployment.
Also, last week California had to borrow over $1 B to meet current expenditures. The money borrowed to be paid back plus interest in May and June of 2009 as tax revenues are recieved. But doesnt that mean they will have to do the same each subsequent year ? Seeing as how they have now already spent $1 B of next years tax revenue, not yet recieved. Also, Washington State and Oregon are considering similar moves to make up for huge budget deficits. Several other states are also in big trouble financially.
Clearly, the gov't has to do what it has to do now. But down the road there will be a cost. At best, that cost will be massive inflation. At worst, well it could be a lot worse. Either way, the PM's are destined to go up. And maybe there is a lot of silver. It is all how you look at it. The mining of silver is pretty consistent at 600 million ounces annually( silverinstitute.org). That is a lot. But when you compare that to 6 B people on earth, it doesnt seem like much. That is enough silver produced every year for the average person on earth to consume .1 ounce per year and its all gone. So really it is quite scarce. Also, consider the fact that there are now dollars all over the world. I dont know if you can even find out how much US currency is out there but it would far outstrip silver in exsistence by 1,000,000 to 1.
This can only lead to one thing and that is higher, and probably MUCH higher prices for PM once the economy fully recovers. Think about the fact that the economies of the world are pretty much all in recession and silver is still going pretty easily for $15 an ounce. Two things WILL happen. The worlds economies will pick up and have an increased demand for silver. And, the US Govt will print up another 2 to 3 Trillion dollars in currency before this mess is over. How does silver not go up ?
Also, last week California had to borrow over $1 B to meet current expenditures. The money borrowed to be paid back plus interest in May and June of 2009 as tax revenues are recieved. But doesnt that mean they will have to do the same each subsequent year ? Seeing as how they have now already spent $1 B of next years tax revenue, not yet recieved. Also, Washington State and Oregon are considering similar moves to make up for huge budget deficits. Several other states are also in big trouble financially.
Clearly, the gov't has to do what it has to do now. But down the road there will be a cost. At best, that cost will be massive inflation. At worst, well it could be a lot worse. Either way, the PM's are destined to go up. And maybe there is a lot of silver. It is all how you look at it. The mining of silver is pretty consistent at 600 million ounces annually( silverinstitute.org). That is a lot. But when you compare that to 6 B people on earth, it doesnt seem like much. That is enough silver produced every year for the average person on earth to consume .1 ounce per year and its all gone. So really it is quite scarce. Also, consider the fact that there are now dollars all over the world. I dont know if you can even find out how much US currency is out there but it would far outstrip silver in exsistence by 1,000,000 to 1.
This can only lead to one thing and that is higher, and probably MUCH higher prices for PM once the economy fully recovers. Think about the fact that the economies of the world are pretty much all in recession and silver is still going pretty easily for $15 an ounce. Two things WILL happen. The worlds economies will pick up and have an increased demand for silver. And, the US Govt will print up another 2 to 3 Trillion dollars in currency before this mess is over. How does silver not go up ?
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Mine Production
Year
1998----542.2 M ounces
1999----556.9
2000----591.0.
2001----606.2
2002----593.6
2003----600.6
2004----621.1
2005----643.8
2006----647.4
2007----670.6
Now at first glance, that does seem like a lot. But there are 6 Billion people on earth according to stats. I say its more like 10 Billion, because they were saying 6 billion 15 years ago. But using 6 Billion people, that comes out to enough for everyone to consume ~.1 ounce per year. And I say we consume that easily without even knowing it. In our electronics, photography, medicine, when we go have tests done. Even something as simply as the wear on your coins. 1/10 of an ounce per year isnt much. Also during the last 10 years, EVERY year has saw a net deficit in silver production meaning that there was more demand than produced and the excess demand had to be met by using already above ground stockpiles. The deficit has remained pretty consistant at 180 M ounces per year (source - silverinstitute.org)
<< <i>This is from silverinstitue.org
Mine Production
Year
1998----542.2 M ounces
1999----556.9
2000----591.0.
2001----606.2
2002----593.6
2003----600.6
2004----621.1
2005----643.8
2006----647.4
2007----670.6
Now at first glance, that does seem like a lot. But there are 6 Billion people on earth according to stats. I say its more like 10 Billion, because they were saying 6 billion 15 years ago. But using 6 Billion people, that comes out to enough for everyone to consume ~.1 ounce per year. And I say we consume that easily without even knowing it. In our electronics, photography, medicine, when we go have tests done. Even something as simply as the wear on your coins. 1/10 of an ounce per year isnt much. Also during the last 10 years, EVERY year has saw a net deficit in silver production meaning that there was more demand than produced and the excess demand had to be met by using already above ground stockpiles. The deficit has remained pretty consistant at 180 M ounces per year (source - silverinstitute.org) >>
I don't believe those numbers. They have been massaged somehow. They must be adding in what little is recycled or it's just a flat out fib using expected ore from un-yet mined areas.
2008 should be around 60% of what they list for 2007. Of course 2007 is wrong as well as everything from 2003 forward. Sounds like a stock pitch, something isn't right. We peaked in 2001.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
The numbers only seem huge. Really 600 M ounces per year isnt that much. The same chart says that yearly consumption has been higher than production every single year.
<< <i> Clearly, the gov't has to do what it has to do now. But down the road there will be a cost. At best, that cost will be massive inflation. At worst, well it could be a lot worse. >>
As I try to play out the scenarios in my head, inflation seems like the the answer. I don't think we will see hyperinflation - far from it. But 15 or 20% inflation, even using the official stats? Sure. Inflation is in some ways the easiest way for government to get out of the mess. Cutting social expenditures is very difficult because it targets and hurts a specific constituency (seniors, etc.). So that won't fly.
Raising taxes? Well, I see that happening if and when Obama gets in and the Democrats are running everything. And it won't just be the top 5% or whatever fanstasy he is currently peddling. It's going to be across the board, because that's where the money is. But even a tax increase won't close the gap, and it will have negative effects on growth and employment.
So what's left? If they can't really cut spending or increase taxes, there's two ways out of the mess, and both are inflationary. First is to run huge deficits, which will destabilize the dollar, and that'll be inflationary. Second is to simply start printing more. We're already doing a lot of both of these. I just don't see how these can be anything other than inflationary. And good for PMs.
[People who have been following my comments here over time may have noticed that I've become a lot more bullish on PMs after seeing the lengths to which the gov't will go to trash our currency in order to "save the system." This is not the response we saw after the 1991 or 2001 recessions. I just don't see, in the end, how the massive creation of new money and the spiraling deficits can be anything other than inflationary. Bernanke himself told us, in a 2002 speech, in essence that he will not let deflation happen. The way he'll not let it happen is through inflation. LINK to speech.]
What DH says makes sense, especially for 2008. No way silver production is increasing in light of the lower futures prices, higher cost of doing business (higher gas, utility, material, labor, fees, etc.) and the fact that most silver comes from other base metal mining which has been decimated this year. Like the various "gold" organizations out there with official sounding names, most are anti-gold (ie run via the cartels). The "silver institute" sounds like it's cut from that same mold.
roadrunner
Yepper, as forcasted...WPA Works Progress Administration and civil works progress administration (further down in the article.
Secondrepublic, 15% or 20% soon becomes 35% to 50%. Something or somebody has to MAKE THEM STOP, and I don't see that happening.
As mrearlygold will tell you - the majority of Americans want to be provided for, and this is the progression we are seeing. It's not just seniors either - throw in everyone on the lower 50% of the wage scale who stands to benefit from more social spending programs.
On top of that, the inflationary spiral - it's global, and very hard to stop now.
I knew it would happen.
<< <i> Think about the fact that the economies of the world are pretty much all in recession and silver is still going pretty easily for $15 an ounce. How does silver not go up ? >>
I thought spot was under $10?
<< <i>
<< <i> Think about the fact that the economies of the world are pretty much all in recession and silver is still going pretty easily for $15 an ounce. How does silver not go up ? >>
I thought spot was under $10? >>
That's the paper price, paper is cheap.
There has been a complete decoupling from the spot/paper prices and the real world of physical metal.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>So now they are talking about a new round of stimulus checks in time for the holiday season. >>
Hey! I need to beotch!
I never got no stinkin' stimulus check.
Isn't it actually welfare for those who don't pay taxes?
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Then also, where are the considerations for depleted stockpiles? Stockpiles of silver have been drawn down over the past decade. Once the stockpiles are gone or almost gone, we are left with only new production to satisfy demand.
Ren
would be a massive infrastructure
building program. It will create jobs
and leave a lasting asset to the nation.
This will mean bridges, improved roads,
light rail and more beer for us worker
bees and bears.
Camelot