Accumulate Gold But Be Cautious on Silver

goingbroke

Why is silver continuing to outperform gold? The silver/gold ratio tends to lead or follow the stock market. Risk assets are outperforming. Silver is outperforming gold as a risk asset. It is not outperforming for monetary reasons. That occurs when both gold and silver advance but silver outperforms gold. This is one of several reasons why bugs should be wary of silver in the near term.
Those who are banking on an immediate breakout and move to $40+ are likely to be disappointed.

Vetter

But he also said

"Let it be known that I believe silver will outperform gold over the long term and that most of the stocks I hold are silver stocks."

DuCrozat

Anyone looking for a quick buck on any precious metal should be cautious. They are mostly an offset against the erosion effect of inflation on the dollar.
There are rare opportunities, however.

jmski52

If I were really ambitious, I could produce a chart to show how holding both silver and gold reduces the risk of a portfolio of precious metals for any given mix, but hey - sometimes you need a little excitement in life.

gecko109

Im of the opinion that although the fundamentals of silver's quick rise arent all there, at least silver has a safety net behind it.

If we took all the gold known to man and launched it into space tomorrow, the world would change very little. However, the impact on society would be huge if we did that with silver. Gold is 95% a psychological commodity, and a 5% useful one. Silver is probably closer to 50/50 with its plethora of industrial uses. The fact that HUGE quantities of gold are stored in nation's vaults and central banks around the world attest to that. Also, while silver has been running an annual defecit between production and consumption during the past 15-20 years, gold actually has experienced about a 2% / year rate of inflation. In other words, there is more above ground stock s of gold today than 20 years ago, and less above ground stocks of silver today than 20 years ago.

Because of the silver defecit.....and its many industrial uses....even if there were a complete and total financial recovery tomorrow, and real estate and stocks heated up significantly, silver would have a safety net on its fall in prices simply because of increased industrial demand combined with decreasing above ground stock.

Weg

In forming an opinion whether to hold silver I find articles like this one as noise that needs to be filtered. Vetter picked up the most important sentence in the article. The author based his story around the proceeding sentence to that

<< <i>Those who are banking on an immediate breakout and move to $40+ are likely to be disappointed. >>

All that time and effort to say don't bet on silver jumping to $40+ today or tomorrow, an immediate breakout. Just a bunch of noise.

roadrunner

If we took all the gold known to man and launched it into space tomorrow, the world would change very little.

I have to think the financial system would change considerably. Something would then have to step up to take over the role that gold had as the final extinguisher of debt. Would it be Oil? Silver? PGM's? A basket of metals and commodities? Central Banks without a $1 TRILLION asset that at least subconsciously was backing their fiat as well as the nation....I think it would have huge repurcussions if it were gone tomorrow, such as the price of a lot of other things moving up sharply. CB's would then have no system for extinguishing any debt between themselves other than handing over more fiat, which in itself is more debt.

As soon as the plans for launching gold into space were being devised, the central bankers would either be secretly accumulating the next best thing, or would be setting up agreements with Russia or China to go into space and secretly bring the gold back.

roadrunner

gecko109

<< <i>If we took all the gold known to man and launched it into space tomorrow, the world would change very little.

I have to think the financial system would change considerably. Something would then have to step up to take over the role that gold had as the final extinguisher of debt. Would it be Oil? Silver? PGM's? A basket of metals and commodities? Central Banks without a $1 TRILLION asset that at least subconsciously was backing their fiat as well as the nation....I think it would have huge repurcussions if it were gone tomorrow, such as the price of a lot of other things moving up sharply. CB's would then have no system for extinguishing any debt between themselves other than handing over more fiat, which in itself is more debt.

As soon as the plans for launching gold into space were being devised, the central bankers would either be secretly accumulating the next best thing, or would be setting up agreements with Russia or China to go into space and secretly bring the gold back.

roadrunner >>





Final extinguisher of debt? Perhaps that held true pre 1971, but lets be honest for a second. Even with the single largest gold reserve in the entire world, at 261 million ounces, the U.S. could repay just 2.5% of its current debt. There has become a very clear and distinct disconnect between debt and gold holdings......2.5% is better than 0%, I will grant you that much. But 2.5% is such an insignificant number that if the number would go to 0%, I simply fail to see any real difference. Agree or no?

roadrunner

Final extinguisher of debt? Perhaps that held true pre 1971, but lets be honest for a second. Even with the single largest gold reserve in the entire world, at 261 million ounces, the U.S. could repay just 2.5% of its current debt. There has become a very clear and distinct disconnect between debt and gold holdings......2.5% is better than 0%, I will grant you that much. But 2.5% is such an insignificant number that if the number would go to 0%, I simply fail to see any real difference. Agree or no?

If you want debt technically extinguished, it can't be done with more credit, debt, fiat, TBonds, etc. You need a tangible asset. Gold has played that role for thousands of years. The fact that banksters prefer to tell the sheeple that FRN's extinguish debt is the sheeple's problem. And the fact that the gold is now staying put in the CB vaults indicates it is highly prized, more so than paper. The fact that the banksters don't want to waste their gold by extinguishing debt or that there isn't enough to go around at current prices doesn't change the facts that it's one of the few fully accepted means between nations to honestly reduce indebtedness. Recall back to the late 1960's when DeGaulle was taking gold by returning US paper. By 1971 the US wasn't having any more of that. The Chinese today are returning US TBonds and FRN's and buying up resources around the world wherever they can.

What other means would you suggest for properly removing debt? While it's not 1971 any more I would also say that gold's role as an alternative currency really hasn't changed in those 40 yrs. It may not be an "official" currency but the CB's hoard it and the world in general accepts it. It functions much the same way it did in the 1960's only not officially labeled as such. It's 5 fold rise since 2002 indicates it's still on the job....even if it has no true industrial purpose like copper, oil, silver, plat, pall, etc. One might say it's price has risen dramatically so that it can extinguish more debt if chosen to play that role. Gold rose to $875 40 yrs ago in an effort to balance out the US foreign indebtedness (ie extinguish debt). It's rising to some yet unknown number to balance out debt once again. Anyone stating that gold in 1971 could extinguish the nation's foreign debt would have been laughed at. But by January 1980 it reached a level almost high enough to do precisely that. However, in 1980 the US chose not to use their gold to extinguish that debt just as they did in 1971.

roadrunner