An attribute of silver.
cladking
Posts: 28,649 ✭✭✭✭✭
This is not an original thought but I never considered it potentially important
before.
Silver is the "poor man's gold". If wealthy people really are buying up gold in
this enviroment then what happens when less wealthy people purchase sil-
ver. When you ask rich people why they don't like silver it's usually the same
answer; it takes up too much room. This is ironic in light of the fact that there
is probably less silver than gold in the world and the main thing needed to
close the price gap between the metals is a trigger to make silver move.
Imagine when silver doesn't take up so much room any longer! Will the wealthy
want it then?
before.
Silver is the "poor man's gold". If wealthy people really are buying up gold in
this enviroment then what happens when less wealthy people purchase sil-
ver. When you ask rich people why they don't like silver it's usually the same
answer; it takes up too much room. This is ironic in light of the fact that there
is probably less silver than gold in the world and the main thing needed to
close the price gap between the metals is a trigger to make silver move.
Imagine when silver doesn't take up so much room any longer! Will the wealthy
want it then?
Tempus fugit.
0
Comments
<< <i>Silver is the "poor man's gold". >>
This statement never made sense to me. Were the Hunt brothers and Warren Buffet poor men?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>
<< <i>Silver is the "poor man's gold". >>
This statement never made sense to me. Were the Hunt brothers and Warren Buffet poor men? >>
It never made a lot of sense to me either but now I'm looking at the possibility
of a major breakout in gold leaving silver in its wake. I've always known this was
possible but bet against it.
But now I'm imaging the possibility of gold going to crazy levels with silver barely
moving. Most poorer people and average Joes don't have a few thousand dollars
to plunk down on gold so what if they plunk it down on silver instead.
I still believe that all silver needs to increase many fold is a trigger. Could its attri-
bute of being affordable and storeable to poorer people during a gold breakout be
just this trigger. You can't get much wealth in a safety deposit box in silver but you
can get an awful lot of money as gold in one.
Could a gold breakout trigger the silver move that takes it to a significant fraction
of the gold price?
Or do I just need to curse my forecasting abilities forever?
For silver, think "slingshot"
I knew it would happen.
<< <i>I'm looking at the possibility of a major breakout in gold leaving silver in its wake.
For silver, think "slingshot"
I think so too. I think that with silver being scarcer than gold, and other fundamentals, such as it running out within 10-20 years, we'll eventually see the price of silver surpass gold. What will people say then, that gold takes up too much room? People amaze me sometimes.
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>This is not an original thought but I never considered it potentially important
before.
Silver is the "poor man's gold". If wealthy people really are buying up gold in
this enviroment then what happens when less wealthy people purchase sil-
ver. When you ask rich people why they don't like silver it's usually the same
answer; it takes up too much room. This is ironic in light of the fact that there
is probably less silver than gold in the world and the main thing needed to
close the price gap between the metals is a trigger to make silver move.
Imagine when silver doesn't take up so much room any longer! Will the wealthy
want it then? >>
I will let you know when this happens, at that point I will be wealthy!
Fred, Las Vegas, NV
huh? references please. there is no way this is true.
Liberty: Parent of Science & Industry
<< <i> in light of the fact that there is probably less silver than gold in the world
huh? references please. there is no way this is true. >>
There is a overhang of silver supply currently otherwise it would be higher
Silver just may get a ride on golds coattails yet and that would be cool
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Silver tends to lag gold in a commodities bull market. Silver will eventually catch up and surpass gold. Since we've been in a deleveraging scenario since the spring of 2008, silver has been far more skittish than gold. Money tends to gravitate to safety in these times and right now gold is perceived as safer than silver. As soon as there is another sniff of inflation when the current fear of a 2nd deleveraging event subsides, silver will soar.
roadrunner
Originally I typed-----"There is a overhang of silver supply currently real OR perceived otherwise it would be higher"
I decided to go with the more controversial version to illict a response or two
I still like the long silver/short gold pairs trade.............as a trade
Are you buying physical anything at these prices?
I just brought more gold recently...............MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Many members on this forum that now it cannot fit in my signature. Please ask for entire list.
Clive Maund had this to say about silver in his weekly article and it makes sense. As those buyers from Feb-March 2008 leave the market a large weight will be lifted.
The reason for silver struggling at the current level becomes obvious when we look at it 2-year chart, on which we can see that it is working off the resistance generated by those poor unfortunates who bought in the first half of 2008 before the cave in, and who are now trying to "get out even". Once this supply is absorbed, silver will be free to advance more swiftly.
Those articles that suggest that silver supplies are smaller than gold are probably going more on hopes than facts. On the research that I've run across I'd say it's more likely that the silver stocks are at best equal to gold's supply and at worst might be 5X the gold supply. Silver outnumbers gold in the earth's crust by about 10-1. And London daily trading volumes show silver outnumbering gold by about 5-1. Suffice to say that the current 65-1 gold to silver ratio is far out of whack with respect to any of the numbers above.
roadrunner
Kind of the same boat on what to do next............
I'm almost out of all the $USD I want to be..............It's taken me four years and is harder then it sounds
I have a Canadian T-bill that just matured. I actually just asked Sinclair whether he still advises this. He's great about responding
Not sure whether to roll it over or by more pm's or miners or all of the above ................Thanks for responding to my question. MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
silver in the world. But then I was challenged to find it and I sure can't. There
are no large stockpiles any longer as there used to be. Even manufacturers
use just in time delivery and are long the market to assure supplies. As we all
know these contracts will default if silver even blips upward because they are
held by only a few entities which can't survive in the event of a move in silver
prices. Either they sink financially or the government bails out the executives
again but in either case the paper has no value and represents no silver in the
event of a rationalization of prices.
So where's the silver? Most households had several ounces back in 1979 largely
in the form of pre-'65 US coins and tableware but most of this was sold off in
early 1980 after the price broke. Remember the long lines selling at 20 or $25
an ounce? Now days every household has a small amount of silver in electronic
gadgets but not much else. Silverware has not been a big seller for the last 30
years so it's not like everyone replaced the family silver at lower prices.
It's not only hard to find any silver but even harder to get a feel for how much ex-
ists. One thing is sure and that's that more than half of all the US silver coin ever
minted still survives. Mostly, of course, it's later dates. But this amounts to billions
of ounces. This probably is the worlds silver supply for most practical purposes. The
mines pump out a lot of silver each year but this all goes straight to consumption
and refined coin is making up the difference. So I'm figuring close to 4 1/2 billion
ounces of silver and a fairly comparable amount of gold. There's a little hyperbole
justified here since such a large percentage of the silver is not available for melting.
It is in museum pieces and various collections which won't be sold as scrap at any
price silver should be able to achieve. Much less gold is tied up so tightly because
gold has always been so much more valuable and less likely to survive due to plun-
dering and theft. Gold exists everywhere in massive stockpiles. Silver is spread out
evenly over the face of the earth.
Obsolete US coin will continue to flow into the refiners but the question is at what
price. In a market where physical metal is a requisite of continued human life and
most silver isn't even real at what point are sellers going to run out or hold out. At
what point will buyers (read speculators) step in and change the dynamics of a mar-
ket which were set into stone thousands of years ago?
One (well, we collectors anyway) wonders if the last of the world silver coins are be-
ing melted abroad to fuel their factories. Mintages of these were alway very small rel-
ative to US mintages and even in aggregate are not extremely impressive. Many of
these are known to have been previously melted by the issuer and recoined or scrap-
ped out of the system.
I know a Chinese curse for the following to be true;
These are interesting times.
One person you should ask is deadhorse. The guy is extremely knowledgable and knows his stuff. He has not been on for a long time now but maybe search his name up and read all his posts, he talked a lot about silver a while back. If he shows up, pick his brain as he is a very helpful person.
Many members on this forum that now it cannot fit in my signature. Please ask for entire list.
I set up once a year at our local show---about 30 dealers--to sell some dupes and lighten up on "stuff". I took a bunch of silver bars, ASE's and 90%. I did not have one person ask about buying any silver, not a single one. Had they asked I would have said ASE were $18, 90% was 12.5x and bars were at spot. So at the end of the day, I took everything to the wholesaler and dumped a bag of mostly BU 90% at 12x, sold the bars for $17 and the ASE's for $18. The dealers were buying, but the number of customers appears to be--at least in a city very representative of the USA--few and far between.
The "poor man" couldnt give a rats rear end about silver in current conditions.
FWIW---gold sold very well when priced to market.
Suffice to say that the current 65-1 gold to silver ratio is far out of whack with respect to any of the numbers above.
This is just faulty logic, kind of like saying humans breathe oxygen, when in fact 78% of the atmosphere is nitrogen. Over the last few years the GSR has bottomed at around 45, with a quick spike to 80. Chart looks very, very rangebound to me.
Knowledge is the enemy of fear
Silver is a byproduct of other mining operations, notably zinc, lead, and copper.
There are massive quantities of copper in the earths crust, and copper is vital to our way of life. The mining of it will never cease.
The amount of silver coming to market may slow down somewhat, but it won't ever stop.
As an aside, I personally prefer silver over gold, and I feel that it is very undervalued when compared to the price that gold is currently at.
Ray
I'm the same age as you, and that's exactly what I did last year, penalties, taxes and all.
Closing my retirement accounts brought home the reality of just how little real money you get back. However, you still pay taxes regardless of when you take the money out of a tax-deferred retirement account, so there is some offset to that decision.
It's quite possible that long term capital gains tax rates will increase in the very near future. It's also quite possible that income tax rates will be increasing - no way to know what they will be doing in that rat's nest, Congress.
I got out of all my stocks before the swoon, and I put that money into pms, so the end result was very good. I never lost that gut-wrenching 40% that the stock market did, and with that money, I'm up from where I was before I closed my retirement accounts. There's no guarantee that it will happen the same way now, but I see no reason to think otherwise.
Being out of the stock market and into pms, I feel comfortable in knowing where my finances stand. It's possible that things could turn around on a dime, but I tend not to think so. I don't mind being on the outside of the financial system, looking in.
I feel that they will try to keep pumping up the prices of housing, the stock market, and consumer spending. That being the case, I think that those same market forces will pump up the prices of precious metals as well, and that is what we have seen thus far.
Furthermore, I would rather have physical metals that I can put my hands on when those markets all crash. The metals may crash too, but I won't be tied in knots, trying to figure out who to get my money back from, or how to live without any access to it.
Lastly, I think that the final winners will be precious metals, after a crash - as people start to realize that the paper pyramids were their undoing. The only thing that is "good as gold" these days, is gold (or maybe silver, or platinum).
I knew it would happen.
That's why the poor man will remain poor. The average Joe is not and will not be participating in PM's. But hedge funds, banks, corporations, nations and investors will be. Those are the ones that will make out by it. Silver is lagging right now. But it probably won't be for long. Would not be surprised to see a jump to $20 before the year is out.
This is just faulty logic, kind of like saying humans breathe oxygen, when in fact 78% of the atmosphere is nitrogen. Over the last few years the GSR has bottomed at around 45, with a quick spike to 80. Chart looks very, very rangebound to me.
The logic is just as faulty as expecting the Dow/gold ratio to head towards 1 from a high of >40....which it has done like clockwork over several previous cycles. The GSR will likely be much lower in the spring than it is today. If the poor man is not buying silver today, that tells me it's the time to be getting back into it. Current chart suggests a H&S or an IH&S depending on how you look at it. Gold and the dollar have been doing just the opposite of what the majority has expected. I think they will continue to confound for the rest of the year. Silver will catch up because no one expects it. Everyone will continue to wait for the drop in the Dow, Silver, and Gold. I wouldn't get too caught up on what the GSR did last year or the year before. There is no lid clamped on at a GSR of 45 nor a USDX of .71.
roadrunner
My opinion is that the majority have thought gold was going higher and the dollar lower. Seems they've been right so far.
I was just responding that saying silver and gold should trade at a 10:1 ratio since thats the ratio found in nature is faulty.
Knowledge is the enemy of fear
<< <i>
The "poor man" couldnt give a rats rear end about silver in current conditions.
>>
Yes. Of course.
But what about when inflation is starting to turn into a steady drumbeat. When
bread and milk triple and increases are seen weekly people start thinking about
the money in the savings account or the 401k. Eventually even those who live
paycheck to paycheck want something that holds value.
<< <i>The world isn't going to run out of silver any time soon.
Silver is a byproduct of other mining operations, notably zinc, lead, and copper.
There are massive quantities of copper in the earths crust, and copper is vital to our way of life. The mining of it will never cease.
The amount of silver coming to market may slow down somewhat, but it won't ever stop.
As an aside, I personally prefer silver over gold, and I feel that it is very undervalued when compared to the price that gold is currently at.
>>
We'll never run out of silver.
But the amount consumed will continue to increase exponentially until
it can't be mined fast enough to meet demand. In other words even very
much higher prices will have little impact on the demand because so little
is used in each application that cost has little impact on units sold. Sharply
higher prices will stop some uses, of course, but the demand will remain
high and then resume its exponential increase because silver is a high tech
resource and more uses will be found every year.
We will eventually get to a point that there isn't metal enough. Curtailment
of other mining could actually hasten that day if the mined metal (such as
lead) is being used in much less economic products than the silver byproduct.
A great deal of silver might flow out of a lead mine but if the lead can't be
profitably mined than the silver doesn't flow even at far higher prices.
Silver isn't anywhere close to being on a precipous which will suddenly re-
sult in no silver being available. Even after silver goes to a higher price
this will still not be true. Production will increase slightly, consumption will
decrease slightly, and new uses will continue to be found every year. There
is enough backlog in supplies to cover the difference for at least a couple
decades dependent on how rapidly new uses are found and developed.
But the wild card here is human nature. Humans have played Rip Van Winkle
for a very long time as this situation developed. The situation is that we
live hand to mouth with silver supplies while the total amount of silver in the
world has dropped to below the amount of gold available. It's humans who
are eventually going to see this as an investment opportunity of a lifetime
who are going to bid the price sky high.
There will still be lots of silver coming out of the ground compared to gold
but it will still be earmarked to keep the factories running. Nothing has much
of any value once the factories shut down so this should be factored into all
investment decisions.
If they are living paycheck to paycheck then they can barely afford bread and milk to begin with. What are they going to buy silver with?
In 100 years the global population will cease expansion. Perhaps there will be increased usage of silver in technology, but demand from humans will no longer increase.
Knowledge is the enemy of fear
<< <i>
If they are living paycheck to paycheck then they can barely afford bread and milk to begin with. What are they going to buy silver with? >>
This has happened previously in advanced economies when inflation gets
over a couple hundred percent (not that this will necessarily happen here).
People will take their paychecks and buy perishables and immediate needs
and then take anything left over and buy gold or something for resale before
their next check or for a rainy day.
<< <i>
In 100 years the global population will cease expansion. Perhaps there will be increased usage of silver in technology, but demand from humans will no longer increase. >>
Such long term predictions are so apt to be warted by real world events but
as a rule of thumb and an observation of human nature, I'd guess as long as
people are well fed and feel secure populations will increase. Perhaps by that
time we'll have to spread out a little or stack them up in the desert somewhere
but there's enough room for a lot more people if we can find a way to feed them.
My point was that every physical ratio (not the paper gold to paper silver ratio) points to a number from 1-1 to 10-1. Those are miles away from 60-1. Even though GSR has reached up to 100-1 in times of crisis where cash in king I don't believe there are any real limits on how low or high it can go. We're just coming off a ratio of 84-1 last year. So it seems reasonable that in a longer term commodity bull market the ratio will overshoot towards a lower number than the previous channel values of 45-55.
I hope silver takes off, cuz I just sold a bunch.
Seems that wishes do come true. Don't feel bad. I sold off way too much generic gold last month and then more 2 weeks ago. I was just beginning to dip into my longer term core holdings when I slapped myself in the face and said "what the heck are you doing?" I've yet to sell any silver ever. I figure that's not to be touched until silver gets to maniacal heights a few more years down the road. Because once I sell it I probably would be too chicken to replace it. Now if I could just learn to do that with cheap gold stocks.
My opinion is that the majority have thought gold was going higher and the dollar lower. Seems they've been right so far.
I'm looking at the financial mainstream and most everyone has been calling for pullbacks in everything while expecting a big dollar bounce. Regardless of the odds and the technicals, they've been wrong again and again. So many of the gold analysts were caught off guard on the early Sept, Oct, and Nov gold moves. Even on the Kitco boards all I was hearing about shorting gold and the SM and how much cheaper they would be able to buy back in at. Wrong...wrong...wrong. Those gold bulls were loading up on FXP, SRS, FAZ, etc. Some even sold off their entire core bullion holdings because they were sure they'd be buying back at $700-$950. No doubt a major pull back is coming eventually in everything non-dollar but the way things are going now that might not be until as early as Jan or as late as May/June of next year. For now, the trend is gold's friend. Yeah, it could fall off the cliff tomorrow. It's a risk I willingly take.
roadrunner
I watch CNBC everyday (unfortunately) and I have yet to hear a single commentator (analyst) call for the dollar to go higher. Not a single one. And thats party the reason why I am beginning to clear a spot in the forest and begin to set up camp. Got a few more trees to clear and want to dam up the stream, so I have a bit more work to do before I officially set the flag pole. But I do see a few lights and maybe a covered wagon coming in for a vist. Back to the chainsaw.
Knowledge is the enemy of fear
I'm confused. You aren't going to flood the campsite, are you?
No, really - talk to me cohodk, are you saying that you're comfortable with a longterm core gold position? I am. Are you?
Added - I guess that question applies to silver as well.
Who's coming to visit the campsite?
I knew it would happen.
I'm not sure about that at all. U.S. silver coins have been melted on and off for more than 40 years. There was quite a bit of melting in the late 1960's, so much that it was banned for a short time, if I recall correctly. There was also the big melt of 1979-80. Aside from those two spikes, 90% silver bags have often traded significantly under melt, making it profitable to send them to the smelters. Forty years is plenty of time for a lot more than half of all U.S. silver coin ever minted to disappear.
My Adolph A. Weinman signature
<< <i>Got a few more trees to clear and want to dam up the stream, so I have a bit more work to do before I officially set the flag pole.
I'm confused. You aren't going to flood the campsite, are you?
No, really - talk to me cohodk, are you saying that you're comfortable with a longterm core gold position? I am. Are you?
Added - I guess that question applies to silver as well.
Who's coming to visit the campsite? >>
Long term, sure Im comfortable. Some say "gold is money", I say "time is money" and am only trying to maximize returns everyday. If the dollar is going to go lower, I want more of them. Thats all. The massive inflationary pressures we expect may be at least 2-3yrs away. Capacity utilization at 70%, commodity prices at historically high levels, and unemployment in both the USA and Europe at generational highs, do not project into supply/demand imbalances. New car prices are lower this year than last, RE is not appreciating, soft comodities are still near lows. We are still in a deflationary environment. If the dollar stayed at March's levels, the effects would have been devastating. Uncle Ben is doing his damndest to not repeat the past. I just hope he does not create a future that we will not want to repeat.
Silver will probably ride golds coattails.
The pond is for fishing. I may be sitting by myself for awhile and might get bored. And will have to feed the visitors.
Knowledge is the enemy of fear
The dollar's future seems hinged to another deflationary deleveraging event. Without one I find it gaining much strength hard to fathom. Who will pull the final lever to initiate another crash? FED? Treasury? Congress? FASB? CFTC? China? Too-big- to-fail banks? Who will be the next Lehman that will be allowed to fail and drag the system down with it?
roadrunner
Commercial real estate?
Roadrunner, you read Reggie Middleton. He's been humorously sarcastic in his analyses in the past, but anymore he just seems disgusted and more than just a little bit concerned. And he's a guy who knows his stuff - as a really good classical financial analyst. I trust his commentary.
This doesn't feel like 1970's inflation or stagflation. It just doesn't feel the same. This has a very uncomfortable political twist, and a China factor. I just heard a commentary that China's plan is to bring 100,000,000 million workers from rural areas into their manufacturing complex - I didn't catch the timeframe. The upshot is that they will have so much capacity that they will have the potential to wipe out every single manufacturing job in North America and Europe. And that's not counting the 10.2% unemployment figures we already have.
Instead of more auto bailouts, it sounds like a trade war is brewing. In that regard, cohodk may be making a good move, (although gold can't hurt either, imo). Obama hasn't been able to negotiate anything for the U.S. anywhere else that he has visited, and I doubt that he has much to offer China anyway. Something has got to give, and no doubt it will.
And China is telling Obama that his health care plan is too expensive. All this, in addition to your points about confidence in the currency. Then, there's all this chatter about SDRs as a new world currency. Something has got to give, and no doubt it will.
Oh, I already said that.
I knew it would happen.
There's so much conflicting news out there about China I don't know what to believe. One analyst says they are building and bustling and the next guy says it's all a scam to seem like they have growth when they are in fact flailing. One post I read tonight said they were going to accumulate 10,000 tons of gold to back major investments in new technologies/infrastructure. Another one said the FED is headed for bankruptcy early in 2010. They probably already are but it's another thing to prove it to the sheeple. On top of that the same source indicated that most of the gold sold via the FED/Treasury over the past decade has proven to be mostly tungsten. So in any event the news in interesting regardless if true or not.
I can only rely on what I see right here in front of me and since 2004 it hasn't been uplifting. So I stay steady on course. In Thomson's latest article he feels the dollar is riding the line of no return. While it could recover it's also right on the cusp of further and substantial downside. This is sort of the same sense that you are giving in the fact that things don't feel right. Reggie Middleton has been dissecting Big Bank balance sheets for the past few years and found very few that were any good. I read some of his stuff but often times the accounting gets above my head real quick and Ijust don't have the time to lean to be a CPA. I spend enough time reading other material as it is. Reggie's calls have been dead on as far as who is ripe for failure. His overall view of the financial sector and the economy is certainly not bright. He's just analyzing the facts. And I've never seen anyone dispute what he's written.
roadrunner
That's what the Chinese just finished telling Obama. Unsustainable.
Now, FOX is saying that Geithner essentially gave full value to AIG on a bunch of large bets, even when he knew that they weren't worth 2 cents on the dollar, just so that AIG could pay off Goldman and JP Morgan's contracts at full value. This is the guy who is guarding the henhouse. Yeah, right.
Here's the deal, Geithner et al can screw the American Public all day long as long as they call the shots in Washington, but they can't get away with screwing China forever. Whatever problems we have with unemployment here, multiply them by 10X in China.
I really am out of my element in knowing how to figure the outcomes for these things, and how it will impact gold. That's why Sinclair is good - he's had his global education for a few decades, and so has Casey (whom I subscribe to). They are both saying gold, and I see no angles by which to dispute them.
I knew it would happen.
<< <i>I dont feel bad about selling as I can buy back in in about 2 seconds--actually less.
I watch CNBC everyday (unfortunately) and I have yet to hear a single commentator (analyst) call for the dollar to go higher. Not a single one. And thats party the reason why I am beginning to clear a spot in the forest and begin to set up camp. Got a few more trees to clear and want to dam up the stream, so I have a bit more work to do before I officially set the flag pole. But I do see a few lights and maybe a covered wagon coming in for a vist. Back to the chainsaw. >>
Camp coming along nicely. Visitors showed up toward the end of the month. They say they will stay another week or so. At least they brought some Christmas cheer and their own food.
Knowledge is the enemy of fear