If Silver is in more demand in manufacturing than gold,
dlimb2
Posts: 3,449
and there is more gold on earth than silver, then if gold is at $1124 an ounce what should silvers true value be?
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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>$17.58 >>
Gold is still gold and is the same 1000 years from now, even if at the bottom of the ocean.
by contrast silver is driven somewhat by investment demand by also to a large extent by manufacturing and jewerly demand (both of which are down due to the recession). ergo, $17.50 silver and $1200 gold.
Last I checked gold derivatives were in the neighborhood of $350-550 BILL while silver was around $110 BILL. It makes no sense that the gold/silver derivatives ratio is between 3-5 while the price of the metals is >60X different.
If the Central Banks kept silver in their vaults instead of gold then the price of silver would probably be higher. But one of the advantages of gold over silver is that it's supply is stable since it is not heavily used up in industrial applications. If silver starts to run out for industrial applications and no equivalent and cost-effective substitutes can be found, then the price will rise rapidly. There will also be a burgeoning industry in recycling silver from existing waste streams and landfills. But for now it's still cheap enough to keep throwing it away.
Some of the estimates I've seen peg the supply of above ground silver as 3X to 5X greater than the amount of gold. And on the low side there are some who claim silver is only 10% the supply of gold. Somewhere between those lies the truth. Rhodium, Palladium and Platinum exist in minute supplies in comparison to gold yet bring a price nowhere near in line to those ratios. As long as the Central Banks claim to have 30,000 tons of gold in their vaults (and no silver) then gold will continue to get the attention.
If the paper leverage in the silver market were in line with gold, I'd guess that it's price today would be at least $22-$25/oz.
roadrunner
<< <i> If silver starts to run out for industrial applications and no equivalent and cost-effective substitutes can be found, then the price will rise rapidly. There will also be a burgeoning industry in recycling silver from existing waste streams and landfills. But for now it's still cheap enough to keep throwing it away.
>>
We're at least 15 years away from away from any sort of disaster in silver and
this presumes slightly decreasing supply and a continued parabolic increase in
demand. But it would not be a minor event but an event of biblical proportions.
Something like higher prices or dramatically increased production will likely occur
to forestall such and event anyway.
A lack of silver were idle large parts of the industrial base. The alternative to
silver usage in many applications is dramatically reduced efficiency. In some
there is no alternative. When silver comes to be in short supply demand will
soar and factories will shutter.
This is the road we're on but the powers that be just keep putting off the de-
cisions that will avert this. I guess they figure fifteen years is a long time. My
concern is that the situation is increasingly attractive to speculators and they
can cause silver supplies to evaporate literally overnight. Of course in this e-
vent trhe silver will at least still exist and sellers would keep industry running.
what should their "true value" be, per ounce, compared to gold, by your logic?
and, btw, there's not more gold than silver on earth.
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