Shades of 1980

Coulport

Stopped by the local shop to sell some badly cleaned junk silver.
Upon entering there was a sign stating 'Please form line to the right and wait for open station'. There was a belt between two poles for people to stand behind. Four stations were occupied and 3 people were ahead of me. Most were selling after the run up in prices.
Glad I bought some nice clean rounds and 5 ounce bars Monday.

cladking

To my eye this has almost nothing in common with 1980 except the rapidity at which
prices are moving higher. In 1980 there were very few sellers and no buyers. All the
silver was being shipped to the refineries as fast as it came into the coin shop. This
time there are buyers everywhere from jewelry stores to motel buyers and all the me-
tal isn't being destroyed. Much of it is flowing right back out of the store and only some
is headed off to the refiners.

More importantly in 1980 we knew that there was an attempt in progress to manipulate
the silver market higher and gold was along for the ride because inflation was soaring.
Only the extremely high interest rates kept gold from advancing nearly as much as sil-
ver. This time the manipulation is trying to push prices lower and this same manipulation
is what has caused the price to be absurdly low for decades; so low that there is much
less silver in the world than there was in 1980.

I do agree that watching the silver price soar feels a lot like 1980 but nothing else does.
One wonders that if this is what silver does with no inflation what will happen when in-
flation does appear and the shorters are out buying silver too!

Don't forget though that there will have to be at least token increases in interest rates
when inflation reappears and this will dampen gold enthusiasm but not as much as it
will spur flight to safety. The effect on silver will be less positive but the buying panic
may be in full swing by that time.

One thing certain; it will be interesting to watch.

OnlyGoldIsMoney

I recall 1980 as a time when acquaintances talked about selling long hoarded silver. No one I knew was buying silver.

At that time inflation was soaring. I can recall receiving 16% yields on my cash in a money market fund. That seemed to be a better alternative for my cash. Today's absurdly low interest rates punish anyone holding substantial amounts of cash.

RGJohn

<< <i>........when inflation reappears ........... >>



I usually don't correct grammar but in this case I believe that you used the present tense of the verb where the past is more appropriate.
Prices are soaring. Packaging is shrinking. The inflationary forest is blocking your view of the trees.

roadrunner

<< <i>I recall 1980 as a time when acquaintances talked about selling long hoarded silver. No one I knew was buying silver.

At that time inflation was soaring. I can recall receiving 16% yields on my cash in a money market fund. That seemed to be a better alternative for my cash. Today's absurdly low interest rates punish anyone holding substantial amounts of cash. >>



People other than the Hunts were buying silver for investment on silver's last leg from Dec 1977 to January 1980. It can't be a one way street. And I would suspect there were a lot of sharp individuals loading up on gold and silver even in early 1979. Silver was still only around $6/oz at the start of 1979. If one plotted out a simple channel from 1967 it would have
projected to $10/oz. Silver hit that in July 1979. It started going parabolic in Aug/September.

roadrunner

mrearlygold

This is nothing like 1980


But then again I don't buy scrap which I did in 1980

fivecents

<< <i>This is nothing like 1980 >>

.....Yet.

Coupdescrounge

It's 1984

mrearlygold

<< <i>

<< <i>This is nothing like 1980 >>

.....Yet. >>




I would agree with the yet.

I drove today to see a friend of mine in Miami . It's a long drive and nice and peaceful when going down alligator alley and the indian reservation. I listened to talk radio and boy oh boy are they pitching away.

cladking

<< <i>

<< <i>........when inflation reappears ........... >>



I usually don't correct grammar but in this case I believe that you used the present tense of the verb where the past is more appropriate.
Prices are soaring. Packaging is shrinking. The inflationary forest is blocking your view of the trees. >>



Of course you're right about inflation.

But the fact is most people are not seeing inflation. The government maintains that
one or two percent is good for the economy (politicians) and there was no inflation
because of the meltdown. Many people believe this.

In point of fact real inflation has been relatively tame since '08 because of the meltdown.

I'd say '08 was about 4%, '09 about 2%, and we're running about 8% so far this year.
But perception is everything and with money it's only the average perception that counts
and most people believe inflation has not reappeared.

This is just my opinion though.

Coulport

"In 1980 there were very few sellers and no buyers."

Don't know about your area but here there were 3 major dealers buying right up to the peak in 1980 and even when silver began the drop to the $20 level. There were lines outside the shops and they would only let 5 in at a time. People had boxes and suitcases of stuff including silverware, candlesticks, foreign silver especially Canada and of course US. One shop flew one employee to CA every week with gold and heavy silver to sell. Another didn't have the staff and just shipped to wholesalers or the refinery. The small shops sent to the big three adding to their load. It was a crazy time and to me it is beginning to look the same.

cladking

<< <i>"In 1980 there were very few sellers and no buyers."

Don't know about your area but here there were 3 major dealers buying right up to the peak in 1980 and even when silver began the drop to the $20 level. There were lines outside the shops and they would only let 5 in at a time. People had boxes and suitcases of stuff including silverware, candlesticks, foreign silver especially Canada and of course US. One shop flew one employee to CA every week with gold and heavy silver to sell. Another didn't have the staff and just shipped to wholesalers or the refinery. The small shops sent to the big three adding to their load. It was a crazy time and to me it is beginning to look the same. >>




There dealers weren't buying for their own accounts though. They probably had
a deal with bigger fish who owed the Hunts silver and were out in the market buying
it for the Hunts. Essentially these were the only buyers and everyone else was a
spectator or a seller.

The Hunt silver is gone. There is no resistance.

This time there are buyers out in the market buying for themselves rather than sell-
ing it on the phone and shipping it to the refiner. Coin shops aren't assuming this
risk but laying it off as quickly as possible. Yes, a lot of silver is still going straight to
the refiners but there are numerous buyers though a lot probably ends up feeding
the ETF's. But the ETF customers are buyers as well; just paper buyers rather than
physical.

In 1980 all they had to do was change the rules and ruin the Hunts but there aren't
any rule changes that can have a lasting effect with millions of buyers spread all over
the world. Even if they could crash the price artificially on the commodity exchange it
would merely cause a surge in demand in China and India. Any effect would be short
lived.

MoneyLA

In 1980, consumers still had plenty of coin silver around... including silver dollars and Kennedy halves, plus other coin silver they held when the clad coinage appeared.

this time it's different.

what's being sold now is "oher silver" ranging from silverware to sterling silver tableware to silver jewelry.

there is actually a "shortage" of what I call "consumer silver" to be sold, which might in fact cause retail buying prices (margins) to increase closer to melt prices.

On the other hand, I doubt consumers are buying because Joe Lunchbucket is tapped out and probably broke from the housing collapse. This leaves only the "big boys" buying and once the big boys have bought what they need or can afford Im afraid the buying will stop abruptly.

I dont know what the price will be, however. I am just concerned that the universe of buyers is small because of the effects of the recession, and without NEW BUYERS coming into the market prices cannot increase.

Of course this reminds me of the old story about three commodity traders who kept on selling to each other and paying higher and higher prices. On paper, all three were getting rich because they kept moving the same bales of hay among the three.... till one day one of the traders said he wouldn't buy and then the three of them went broke.

jmski52

On the other hand, I doubt consumers are buying because Joe Lunchbucket is tapped out and probably broke from the housing collapse. This leaves only the "big boys" buying and once the big boys have bought what they need or can afford Im afraid the buying will stop abruptly.

I dont know what the price will be, however. I am just concerned that the universe of buyers is small because of the effects of the recession, and without NEW BUYERS coming into the market prices cannot increase.

MoneyLA, the big money is in the bond and stock markets, and those markets are currently being supported by government money-printing. Those are, in my opinion the markets most susceptible to an abrupt dose of reality when QE stops. Gold and silver are just along for the ride, and they actually keep moving ahead of the pack because every day more people see them as better investments having better security in uncertain economic times.

California, Nevada and Florida are the states which felt the brunt of the housing collapse, mainly because the prices were inflated by speculation fueled by idiotic lending practices, corrupt financial institutions and a plethora of unqualified buyers, spurred on by low interest rates. That didn't happen in most other places around the country, so Joe isn't completely tapped out in most other places - but nevertheless he is very worried about how to keep what he still has from being eroded further.

My feeling is that when the QE money stops the big markets (bonds & stocks) will seize up and start with some agonizing drops. This will take the silver and gold markets right along with them. Silver will get crushed again because it's probably overbought at this point. Gold will drop a little. The fun begins after that point, because at that moment, the big money will start looking even harder for a safe haven, and so will Joe. The big money will migrate into gold and Joe will be searching out silver.

Same story, different day. Gold participation will increase, and so will silver. Note that not everybody will take the plunge, but more than the last time, back in 2008. I see this cycle repeating, especially when the administration and Fed panic again and start with the next round of bailouts, rescues and free money for anyone who "needs" it. Until the fundamental problems of job growth, illegal immigration, work ethic, government overspending, government overreach, exporting of manufacturing jobs, and financial industry corruption are solved - the viscious cycle will continue. Keep stacking.

cladking

<< <i>California, Nevada and Florida are the states which felt the brunt of the housing collapse, mainly because the prices were inflated by speculation fueled by idiotic lending practices, corrupt financial institutions and a plethora of unqualified buyers, spurred on by low interest rates. That didn't happen in most other places around the country, so Joe isn't completely tapped out in most other places - but nevertheless he is very worried about how to keep what he still has from being eroded further. >>




Yes. And Joe doesn't even live in the US any longer. He now lives in China or India
and goes by the name of Pe or Rashid. Hundreds of millions of middle class people
are appearing in places they used to avoid like the back towns of Brazil and all through
North Africa. These new Joes are sometimes being encouraged to buy metal by their
own governments. But even withoiut encouragement they have money to spend and
were already spending it on things that wealthy spend money for. This includes things
like coin collections and silverware. It includes things like hedge funds that buy silver
producers.

cladking

<< <i>On the other hand, I doubt consumers are buying because Joe Lunchbucket is tapped out and probably broke from the housing collapse. This leaves only the "big boys" buying and once the big boys have bought what they need or can afford Im afraid the buying will stop abruptly. >>



You make some excellent points I had omitted like the fact that most of the household
silver was sold and melted in 1980 and no longer exists.

But I'm not concerned with the universe of buyers because it's such a low percentage
of people who have bought silver at all. The time to worry is when everyone is buying,
not when no one is.