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The silver "bubble".........let's consider geometry for a minute.

jmski52jmski52 Posts: 22,824 ✭✭✭✭✭
The question has been raised as to whether silver is in a bubble or a "mini-bubble", and whether the current trend will be short-lived.

Consider an asymptotic curve in geometry that begins at point (0,0) on the x-y axis and approaches infinity on the y-axis but never intersects the y-axis. The actual scale is important if you are concerned with the units themselves, but the actual scale is unimportant if you are concerned with the rate of change.

Consider identical curves, with the only difference in the numbering on the x & y axes:

Case I - the units on the graph are based on 1975 prices, and the graph ranges from 0 to 10 (10 being the y-axis asymptote). As the value for x goes from 3 to 4, the value for y might go from 2.0 to 2.4, which means that we are still on the flat part of the graph.

Case II - the units on the graph are based on 2011 prices, and the graph ranges from 0 to 100 (100 being the y-axis asymptote). As the value for x goes from 30 to 40, the value for y might go from 20 to 24, which means that we are still on the flat part of the graph.

The units themselves don't alter the rate of change, if it's the same curve.

My contention is that we are still on the flat part of the curve, even though the units are different due to the inflation which has occured since 1975. We haven't made it to the steeper part of the curve yet, but people are primed and ready to freak out from a rise in silver from $24 to $36 simply because the numbers are larger than what they've been conditioned to.

When people forget to consider the impact of trillions in unfunded liabilities and trillions in bogus paper derivatives, they cannot see which part of the curve they are on, and how much faster the rate of change can become.

As this relates to inflation and precious metals prices, I don't think we're at the steep part of the curve yet. I think that we've become numb to all the data. I am concerned that the comprehension escapes most peoples' ability to grasp it.

That's what I've been thinkin.
Q: Are You Printing Money? Bernanke: Not Literally

I knew it would happen.

Comments

  • zrlevinzrlevin Posts: 734 ✭✭✭
    I don't know what you mean by an asymptotic curve. Are you talking about a logistic growth curve?

    Edited to add: The physicist in me follows your logic to an extent, but the engineer thinks you used an inapplicable model.
    Zach
  • EagleEyeEagleEye Posts: 7,677 ✭✭✭✭✭
    Just make it simple and use a logarithmic scale.
    Rick Snow, Eagle Eye Rare Coins, Inc.Check out my new web site:
  • JulioJulio Posts: 2,501
    jmski52; you have either awed me with brilliance or baffled me with BS. Unfortunately I'm not smart enough to tell. My gut tells me you may have it close. Take care. jws
    image
  • OPAOPA Posts: 17,119 ✭✭✭✭✭


    << <i>That's what I've been thinkin >>



    With all due respect...you've got to much time on your hands.
    "Bongo drive 1984 Lincoln that looks like old coin dug from ground."
  • jmski52jmski52 Posts: 22,824 ✭✭✭✭✭
    With all due respect...you've got to much time on your hands.

    Nah, just blowing off some steam after a semi-rough day. I am a bit concerned about the news, though.

    Zach, Rick, a logarithmic scale is an asymptotic curve, I think. I was trying to give an example but I don't know if it qualifies as a model, per se'.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    Silver has yet to take on the full parabolic shape of the curves in the Dow (1982-2000) or oil (1990's-2008) as they went ballistic in their final manic stages.

    As jmski52 suggests, it's still early. In baseball terms, might only be the 5th or 6th inning.


    roadrunner
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • CaptHenwayCaptHenway Posts: 32,119 ✭✭✭✭✭
    If a train leaves Pittsburgh at 3:30 PM going westbound at 65 MPH......
    Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
  • cladkingcladking Posts: 28,646 ✭✭✭✭✭
    It is far too early to suggest that this is a paradigm shift or a buying panic. I fully
    agree that prices would have to be substantially higher to even suggest this might
    be a bubble.

    So far all we can say is that prices have been escalating and silver is attracting more
    attention than it has in a very long time.

    Of course since this might just be near the top of a normal move then there exists
    a possibility that prices might just drift lower or mostly move sideways. The thing
    about the future is that you can't predict it. If silver is at $70 and hitting the news
    often then we can probably assume a buying panic is underway but everything
    comes to an end and that applies to panics as well.
    Tempus fugit.
  • A picture tells a thousand words. Agree that not sure you're using the right model but to see it may give it some perspective.
    Still thinking of what to put in my signature...
  • The feds printing press & national debt continues
    to add gum to the silver bubble.






    I have a very strict gun control policy: if there's a gun around, I want to be in control of it - Clint Eastwood
  • yellowkidyellowkid Posts: 5,486
    Give me a break, I was a history major.image
  • erickso1erickso1 Posts: 1,705 ✭✭✭
    Jmski52, interesting point although one overly complicated by the verbage, however technically correct.
    In layman terms,you think the price of silver is rising fast, but in all reality silver prices are a sports car getting ready to shift from first to second and start accelerating in price at a much quicker pace in the near future (more than likely swearving to miss the deer and crashing into the ditch once fifth gear is hit).
    About right?
  • renman95renman95 Posts: 7,037 ✭✭✭✭✭
    Paradigm shift? Yes! This was the basis of my "$8,000 by 2012" gold thread over two years ago. The point wasn't so much the timing but a shift in thinking the unthinkable. I reflected back to the mindset of the early '70's and the thought of $50 silver and $850 gold by the end of the decade would have been ludicrous.

    During the 2000's silver has ranged from the $4's to the high $20's. Not a terribly big shift. But a $20 to $300+ run this decade would.

    Is our debt in a new paradigm?

  • morgansforevermorgansforever Posts: 8,461 ✭✭✭✭✭
    What will the banking industry do to kep PM's down?
    Would buying now be foolish? I say yes.
    The local news had a segment on the rising prices of PM's,
    so it must be a bad time to buy, let the chasers do their thing, n sitback.
    Kickin my self in the a**, when silver was at $4.
    World coins FSHO Hundreds of successful BST transactions U.S. coins FSHO
  • Steve27Steve27 Posts: 13,274 ✭✭✭
    It sounds to me that you're talking about an exponential curve as shown below on the left. If that model is correct and I'm not sure it is (I'm thinking an undamped sinusoid might be a better model), we do appear to be in the bubble zone .



    imageimage
    "It's far easier to fight for principles, than to live up to them." Adlai Stevenson
  • In the differential geometry of surfaces, an asymptotic curve is a curve always tangent to an asymptotic direction of the surface (where they exist). It is sometimes called an asymptotic line, although it need not be a line.

    An asymptotic direction is one in which the normal curvature is zero. Which is to say: for a point on an asymptotic curve, take the plane which bears both the curve's tangent and the surface's normal at that point. The curve of intersection of the plane and the surface will have zero curvature at that point. Asymptotic directions can only occur when the Gaussian curvature is negative (or zero). There will be two asymptotic directions through every point with negative Gaussian curvature, these directions are bisected by the principal directions.

    The direction of the asymptotic direction are the same as the asymptotes of the hyperbola of the Dupin indicatrix.[1]

    A related notion is a curvature line, which is a curve always tangent to a principal direction.

  • Steve27Steve27 Posts: 13,274 ✭✭✭


    << <i>In the differential geometry of surfaces, an asymptotic curve is a curve always tangent to an asymptotic direction of the surface (where they exist). It is sometimes called an asymptotic line, although it need not be a line.

    An asymptotic direction is one in which the normal curvature is zero. Which is to say: for a point on an asymptotic curve, take the plane which bears both the curve's tangent and the surface's normal at that point. The curve of intersection of the plane and the surface will have zero curvature at that point. Asymptotic directions can only occur when the Gaussian curvature is negative (or zero). There will be two asymptotic directions through every point with negative Gaussian curvature, these directions are bisected by the principal directions.

    The direction of the asymptotic direction are the same as the asymptotes of the hyperbola of the Dupin indicatrix.[1]

    A related notion is a curvature line, which is a curve always tangent to a principal direction. >>




    Now tell me something I don't know.
    "It's far easier to fight for principles, than to live up to them." Adlai Stevenson
  • JustacommemanJustacommeman Posts: 22,847 ✭✭✭✭✭
    I'm certain bubbles can't be accurately predicted using a chart. Folks shout bubbles everyday sometimes for years before the "pop". These same folks often miss the best part of the move yet claim an, "I told you so victory" once a burst occurs, often years and a zillion dollars later. Chuckle. MJ
    Walker Proof Digital Album
    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......
  • jmski52jmski52 Posts: 22,824 ✭✭✭✭✭
    interesting point although one overly complicated by the verbage, however technically correct.
    In layman terms,you think the price of silver is rising fast, but in all reality silver prices are a sports car getting ready to shift from first to second and start accelerating in price at a much quicker pace in the near future (more than likely swearving to miss the deer and crashing into the ditch once fifth gear is hit).
    About right?


    erickso1 - yeah, what I should'a said was, "I think that the cat is out of the bag on silver"image

    Steve27, yes that graph is a pretty good example (a logarithmic curve is a type of asymptotic curve) but I don't consider any of this a model because I don't pretend to predict where we are going to be at any particular time other than "up from here". This is hyperbole', not hyperbola.

    I remember the 1970s, and it was clear to me for years before silver spiked that it was going in that direction. I was dabbling in silver in 1974 but didn't have enough money to make a statement until 1978.

    As far as public perceptions, I think we are almost through the "everybody's talking about it, but nobody's doing anything about it" stage. I think we're coming near the end of the flat part of your curve. I think we've got "2 more years" of political gridlock and at the same time, "2 more years" of stagflation to hit us before the general public decides that there is a "problem". I think it will take about that long to overcome the usual BS on CNBC before the herd gets spooked and finally stampedes, but in the meantime I think we'll see the curve start climbing more noticably - in fact it already has.

    Oddly, this is 2 years into the same type of presidency that we were 2 years into the last time that silver reacted like this to a spooked herd.

    BigRick, I'm not talking about the curve's asymptotic direction or of the curve's tangent, but of the asymptotic curve itself. I am not talking about Steve's exponential function of population vs. time either, but of the tendancy for the value of silver to approach but not equal infinity (the asymptotic line) as the Fed continues to print dollars (the x-axis).

    Gosh, does this mean that pretty soon, the Fed won't even have to continue to create increasing amounts of dollars because each new dollar will start having a greater impact on the price of silver than the one before it? That's what the asymptotic curve implies to me, and that also explains the Weimar type hyperinflation scenario human behaviors. Once past the point of no return, it won't matter even if they stop printing/creating dollars. Hope I'm wrong about that.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • 57loaded57loaded Posts: 4,967 ✭✭✭
    differential geometry still makes my head ache, but yeah, i'm in the back of your class room nodding my head up and down.

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    Dupin indicatrix. Of course............it was on the tip of my tongue all week. image

    Is that like a Duplicit dominatrix?

    Took 4 yrs of higher math and fortunately none of that stuff. But advanced abstract analysis and topology kicked my butt pretty good. What was I thinking? And what do I still use 35 yrs later...just arithmetic, a little algebra, and not much else. Well I did use some basic geometry and trig before deciding to shovel off my roof this winter....lol.


    When considering that 8 yr silver chart two things have to be understood. The mania move to $20 was far overblown, as was the following mania dive to <$10. If I were going to chart
    a parabola to cover that 8 yr chart it would not include either of those points, but something less sharp inbetween them. Silver has been heavily manipulated by otc derivatives,
    much more so than gold. Keeping silver under the $21 mark for 2-1/2 yrs caused a massive rebound from Sept to date. A much smoother parabola or exponential curve could be fit through it all and it would be nowhere near going vertical yet.

    roadrunner
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
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