The National Debt and PM's
BLUEJAYWAY
Posts: 9,124 ✭✭✭✭✭
How much influence/bearing, if any, does the +$18 trillion debt have on PM prices? I thought I'd run it past the experts here for your opinions. I'm considering a small purchase of some silver and would like to know if there is a correlation twix the two.
Successful transactions:Tookybandit. "Everyone is equal, some are more equal than others".
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may have on PM's... Cheers, RickO
Liberty: Parent of Science & Industry
value of PMs is directly related to confidence in government/currency. However, price of PMs is determined in the paper futures market where the "supply" of paper appears to be unlimited. As long as futures market is allowed to distort prices by distorting supply, prices will remain distorted.
As confidence dwindles and demand for physical PMs continues to increase the day of reckoning on true price discovery moves closer. Futures market price distortions will only exist as long as buyers see no risk in buying the paper promises. As paper holding risk increases so does price. At some unknown lower "confidence" level, demand for paper promises will cease to exist and the lid will be blown off of physical price.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
To answer your question: I think the value of the US dollar has a huge impact on precious metal prices. The dollar has been on an upward climb for 2 years now (and a slow climb from 2011 to 2014) as precious metals have moved the other direction. I would be more concerned with the long term movement of the dollar.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I would be more concerned with the long term acceptance of and confidence in the dollar. The dollar is only worth what the person accepting it thinks it will be worth when he asks the next guy to accept it. Unsustainable debt by a country weakens the future value of the currency issued by that country. Insurance against a weaker future currency is a smart move.
Agreed
Derryb's answer should be well taken, but whether Gold or Silver will be the "holly grail" is a matter of conjecture.
Golly, that will be awesome! I have a lot of gold and silver that I'd like to sell at an all time high price. I'll even host the forum celebration party at the Northern Outpost.
Meanwhile, "we've been hearing that ("blow the lid off physical price") for a while now. Any idea WHEN?"
all they are hearing on talk radio right now that silver is ready for a big increase and that it is super cheap right now.
That's what the show's sponsors pay the "experts" to say, because they want to sell their silver to the audience members. If they really believed it, they'd shut up and "buy buy buy"
Liberty: Parent of Science & Industry
FYI..The Nat'l debt has increased substantially since PM's hit their all time high in 2011. PM's, however, have declined substantially since then. Food for thought.
Derryb's answer should be well taken, but whether Gold or Silver will be the "holly grail" is a matter of conjecture.
This is what happens when the pricing mechanism is allowed to be contorolled - fundamentals no longer matter.
The OP's question should be "will fundamentals ever matter in the PM market?" The answer - yes they will once enough confidence is lost to eliminate the influence of the paper market. Expanding premiums show this to already be in play.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I knew it would happen.
Interesting chart today. They should've knocked gold & silver back down by now.
They've got a lot of cats to keep in the bag. In order to keep the FED solvent they've got to let gold run.