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The Forces That Will Push Silver Over $100
ksammut
Posts: 1,074 ✭✭✭
American Numismatic Association Governor 2023 to 2025 - My posts reflect my own thoughts and are not those of the ANA.My Numismatics with Kenny Twitter Page
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ANA Life Member & Volunteer District Representative
2019 ANA Young Numismatist of the Year
Doing my best to introduce Young Numismatists and Young Adults into the hobby.
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Message edited to add "physical"
Now are you referring to the paper or physical silver? Sorry, couldn't resist. Just being my usual smart arse self today OPA.
<< <i>He'd be surprised how much of a silver surplus there is once silver hits the magic $50 mark
Now are you referring to the paper or physical silver? Sorry, couldn't resist. Just being my usual smart arse self today OPA.
I don't mess with the paper...I'm referring to the "real stuff."
Paper does not is the point I was making. derryb and I discussed this late last week, and I'm still not sure whether we agree on it or not lol.
<< <i>He'd be surprised how much of a silver surplus there is once silver hits the magic $50 mark
Now are you referring to the paper or physical silver? Sorry, couldn't resist. Just being my usual smart arse self today OPA.
Exactly. If there was a huge amount of excess silver out there to be dumped why wasn't it used in 2008? Instead, JPM took the Bear Stearns silver short legacy and doubled up on
it to the tune of $200 BILL in otc short silver derivatives (ie 14 yrs of global silver production). Clearly, the big banks weren't hoping for silver to come out of the
woodwork at $18-21/oz back then....so they gave it a large push in July 2008 to ensure silver didn't bounce back again as it had just done.. At the $50/oz level JPM & Co. were
already being sniffed around by the regulators and couldn't double up on silver derivs like they did in 2008. The solution this time was 8 margin increases over several weeks to get
the job done. I don't think in either situation that oodles of silver came out of the woodwork to kill the price......it was oodles of paper and naked short positions.
Fwiw, silver already hit the magic $50 mark. So where's all the excess silver?
During the past 231 years, on how many days has the price of silver exceeded 40 US dollars per ounce?
During the same past 231 years, for how many trading HOURS has the price of silver exceeded 50 US dollars?
the answers might be somewhat surprising to some of these "to da mooooon!" bulls.
IMO, There will be intense selling pressure each dollar above 40, aka, "the forces that will keep silver below $60" namely, investor's emotions.
I loves me some silver, but all my bullion is for sale at $48; fooled me once, shame on you silver market, fool me twice, shame on me, and I can't be alone in that
I'll keep the numismatic stuff, but much of that starts to become bullion at $60 and higher.
Liberty: Parent of Science & Industry
<< <i>Physical does have a finite number though, we have no idea what it currently is, but it is finitie.
Paper does not is the point I was making. derryb and I discussed this late last week, and I'm still not sure whether we agree on it or not lol. >>
doesn't matter as long as one knows the benefits and limitations of trading with each and knows how to profit with those trades. The key to profit is staying on top of the game. Doesn't matter to me if my paper is backed by physical or not or how many shares are outstanding. As long as there are buyers at a higher price is what matters. As long as they are there to buy it I will be there to sell it. The profit comes from buying on weakness and selling to those who buy on strength. Unlike physical, one can play paper volatility with little effort and little expense. For now, there is a place for physical and for paper.
"Education is not the learning of facts, but the training of the mind to think." - Albert Einstein
<< <i>Here's some trivia questions for the group:
During the past 231 years, on how many days has the price of silver exceeded 40 US dollars per ounce?
During the same past 231 years, for how many trading HOURS has the price of silver exceeded 50 US dollars?
the answers might be somewhat surprising to some of these "to da mooooon!" bulls.
IMO, There will be intense selling pressure each dollar above 40, aka, "the forces that will keep silver below $60" namely, investor's emotions.
I loves me some silver, but all my bullion is for sale at $48; fooled me once, shame on you silver market, fool me twice, shame on me, and I can't be alone in that
I'll keep the numismatic stuff, but much of that starts to become bullion at $60 and higher. >>
Last I knew, we were concerned about the bull market of 2001-201X, not the silver market of 1781-2012. We might as well be trying to get parallels for today's rare coin market
by looking at pricing from 1781. This is the same old argument of look what silver had done over the past 30, 50, 100, 200 yrs, etc. What have otc derivatives done over the past
231 years? Not much really, since they weren't even formally tabulated until 1987 when they amounted to < $1 TRILL total. Today's "value"....>$1.1 QUADRILLION. This isn't your
great great great great grandfather's derivatives or financial market. Some things are different this time. But one thing that 240 yrs does have in common with today is that it's a 2nd
120 yr cycle coming to an end in 2014. So there are parallels to 1774 and 1894, and soon to join them, 2014.
During the PMs bull market of 1962-1980 how many trading hours did silver spend above $6 prior to 1978? This will be surprising to many. The answer is at chartsrus.com.
I'm sure many sold silver out at the "round" numbers of $5/6 in the 1970's thinking there was no way silver could go double digits. I was around back then and that's what I thought.
That would have been insane, right? But silver put in a massive blow off parabola in 2011....don't all parabola's mark the end of the bull? Not necessarily. Silver and gold
put in a pair of such parabola's in the 1970's....late 1973 and late 1979.....6 years apart. And each one more than doubled the price in < 6 months. We've not seen anything like that
from gold so far. Best it has done is a doubling in 24-36 months. One can say gold has been well managed both up and down. Silver on the other hand did put in a 6 month doubling
in that run to April 2011. Those 6 yr peaks suggests a final mania peak several years further down the road. Silver's wave 5 in the 1970's took it from $4 to $50. Don't know yet
if we've seen a wave 4 bottom in silver (ie $26). But pick your bottom point and multiply by 12.5, it worked from 1975-1977. Still, it took silver 5 yrs of consolidating after
that early 1974 peak. If that's where we are now, silver has 3-1/2 more years to consolidate in the $40-$20 range. Somehow, I doubt that.
[
As far as intense selling pressure over $40....possibly. Silver crashed pretty hard from $49 to $32, then again from $44 to $26. That means the return trip from $35 to $40 will
be quite rapid. There will be some consolidation in the $40-$44 range that will probably take some time. But once past $45-$50 there's nothing standing in the way of the 32 yr
cup and handle formation that projects to $95 (linear chart) or $260 (log chart). What do they say about the 3rd time? Does it seem logical that silver put in a 31 year
double top? Or that the 18 yr 1962-1980 silver bull followed the usual 5 waves up, yet this one got it all done in 10 yrs and only 3 waves? When was the last PM bull market in modern
times where silver peaked out 4-5 months ahead of gold, and mining stocks peaked out 1-5 years before gold? What bull market in gold has ended with the mining stocks going out
with a whimper from 2006-2011? A lot of those stocks never even made it back to their 2008 highs. Fwiw during the last bull market, mining stocks peaked out well after gold and silver
left the building. Does the sum of all this techno info guarantee silver above $50 ever again? Nope. But the fact that silver has only spent a few hours above $50/oz in the last 231 yrs
is no guarantee it won't go higher. $6 in 1978 was no guarantee it wouldn't go higher either. I wonder how that rule would have worked for the Dow from 1966-1981 as far as how
much time it had spent above 1,000 to be a determinant of whether it could ever go much higher? 1,000 Dow, big round number that had failed 5X. $50 silver....big round number
that has failed twice. When silver bounced back to $44 in 2011 that was a dead cat bounce. If we get back up to $45-$48 again, that won't be a dead cat, especially if gold is already
>$1900.
$50 bill = silver?
It takes two to do a trade. This is why I always like to add on to a familiar saying we've all heard, which is:
It's worth what someone is willing to pay for it (and I add on) and just as importantly, what someone is willing to sell it for as well.
"Education is not the learning of facts, but the training of the mind to think." - Albert Einstein
silverseek is mainly a cheerleader site that pushes OTC junior miners.
They essentially publish this same article about 4 times a year.
DYOD
Loves me some shiny!
<< <i>Beware.
silverseek is mainly a cheerleader site that pushes OTC junior miners.
They essentially publish this same article about 4 times a year.
DYOD >>
steve has nothing to do with www.silverseek.com, and the article being there has nothing to do with presumed pump & dumps...
steve is SRSrocco...
and anyone wanting to read & study some cutting edge thinking and research check out his reports, then thats where u might want to spend time doing some dilligence...
Can't disagree with any of that.
Still, if anyone denies the possiblility of strong psychological resistance to $2000+ gold and $50+ silver, maybe they "have their heads in the sand"
Liberty: Parent of Science & Industry
Silver = Stored Energy
One factor that most precious metal investors fail to comprehend is the energy nature of silver as a store of value. Of course they understand that silver and gold are real money, worth a certain amount of perceived or intrinsic value. Unfortunately, they fail to realize that the most important value attached to an ounce of silver, is the stored energy contained in each coin.
A monetary value was attributed to an ounce of silver or gold based upon the amount of energy and capital it took to mine the metals as well as its degree of rarity. During the Roman times when silver was mined by human and animal labor, the monetary value was given based upon the amount of labor (energy) it took to produce a one ounce coin. Basically, the free market determined the prices of goods and services in silver coin to their relative energy value.
For example, if it took on average four hours of labor to produce an ounce of silver during the Roman Empire, that coin was exchanged for a good or service of equal energy value. In this example, a city laborer working a twelve hour work day might receive 3 silver coins as pay. I realize I am making a basic assumption here, but this is how a monetary value was given to gold and silver. Of course, the free market would determine the value of an egg, chicken, horse or say a cow in gold or silver coin. But, in the end, the more energy that went into producing a good or service, the more silver or gold coins it took to equal the energy transaction.
Once an investor realizes this energy value as it pertains to silver (or gold), you will then understand how important energy plays as a role in the production of the metal as well as its role in the overall economy. Thus, as the energy supply of a society increases, so will its production of gold and silver as money (if the society uses precious metals as money). On the other hand, as the society experiences a decline in its energy supply, so will the mine supply of its gold and silver.
Liberty: Parent of Science & Industry
Interesting stuff everybody. I love this place.
Although I can't understand half of what some people say, I feel like I'm smarter just by reading it....
Too many positive BST transactions with too many members to list.
The point is that (only referring to physical) there is a huge inventory that is being held by individuals that is just sitting there, waiting for the magic number. When that number is reached, and it appears to be exactly $50, then silver will be in play like folk haven't witnessed in over 30 years and the lines will be out the door. I guess that now they call it investor sentiment but call it whatever you will, there is a huge herd of individuals not on blogs or forums that are sitting there, quietly watching and when the herd get spooked, all hell will break loose so all those predictions and what if's are for naught...physical will move like a dam breaking when the number is hit.
And if we all were as smart as we play to be here, we wouldn't be posting on a chat board. We'd be on a beach with a drink in our hand most of the time
<< <i>Other than in 1980, the 2008 spike to $49 was a one time deal. What I can add to the topic is boots on the ground results from 2008. I was at a local B&M that I enjoy doing business with and we were talking about the $49+ situation right after it happened and silver had already began its retreat. At issue was the public response, the herd mentality. My B&M guy said that the folk wanting to sell during the run-up were not to much greater than normal business, there were some more sellers and even some buyers but nothing newsworthy. The telling item he offered is the phone traffic was off the charts from people wanting to know what the shop paid, to the cent. My B&M guy said that there were herds of people waiting at the gate as sellers as soon as it hit $50, not $49.50 but $50. He said that if the spot had reached $50 or better that the lines would have been around the block, 1980 revisited. Just that few cents made all of the difference in the behavior of the herd.
The point is that (only referring to physical) there is a huge inventory that is being held by individuals that is just sitting there, waiting for the magic number. When that number is reached, and it appears to be exactly $50, then silver will be in play like folk haven't witnessed in over 30 years and the lines will be out the door. I guess that now they call it investor sentiment but call it whatever you will, there is a huge herd of individuals not on blogs or forums that are sitting there, quietly watching and when the herd get spooked, all hell will break loose so all those predictions and what if's are for naught...physical will move like a dam breaking when the number is hit. >>
And if we all were as smart as we play to be here, we wouldn't be posting on a chat board. We'd be on a beach with a drink in our hand most of the time This place would be the farthest thing from our mind.
Common sense finally prevailed with the above 2 comments from 2 different posters. Thank you.
I keep hearing that there's no inflation...probably because the CPI is "stuck" from 2-3% per year all the time. There's good reason for that too.
But M2 increased $800 BILL in 2011. And so far in 2012 it's up $700 BILL. Isn't that the very definition of (monetary) inflation?
Those are annual rates of 8-9%. And we expect CPI to be 2-3%? CPI has increased about 1.44X since 1995. M2 is up 2.94X. Hmmm.
Who needs the $2 TRILL in bank reserves (M0) that were added since 4th qtr 2008 when we bump the broader money supplies by $800 BILL each year?
Nothing to see here....run along.
Interesting that gold's August 2011 spike correlates well to the sharp M2 bump.
Steady rise over 10 yrs....'er, make that 18 yrs. The curve is steepening. Where's the deflation?
10 yr graph
30 yr graph
MJ
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......
type2,CCHunter.
<< <i>Other than in 1980, the 2008 spike to $49 was a one time deal. What I can add to the topic is boots on the ground results from 2008. I was at a local B&M that I enjoy doing business with and we were talking about the $49+ situation right after it happened and silver had already began its retreat. At issue was the public response, the herd mentality. My B&M guy said that the folk wanting to sell during the run-up were not to much greater than normal business, there were some more sellers and even some buyers but nothing newsworthy. The telling item he offered is the phone traffic was off the charts from people wanting to know what the shop paid, to the cent. My B&M guy said that there were herds of people waiting at the gate as sellers as soon as it hit $50, not $49.50 but $50. He said that if the spot had reached $50 or better that the lines would have been around the block, 1980 revisited. Just that few cents made all of the difference in the behavior of the herd.
The point is that (only referring to physical) there is a huge inventory that is being held by individuals that is just sitting there, waiting for the magic number. When that number is reached, and it appears to be exactly $50, then silver will be in play like folk haven't witnessed in over 30 years and the lines will be out the door. I guess that now they call it investor sentiment but call it whatever you will, there is a huge herd of individuals not on blogs or forums that are sitting there, quietly watching and when the herd get spooked, all hell will break loose so all those predictions and what if's are for naught...physical will move like a dam breaking when the number is hit. >>
although your 1 place at one time, observance may be a "fact"...
it is far from truth and not even a very good statistical model for making any kind of prediction that would have a smidgen of credibility...
in pondering Baley's comments it would seem if one looked at actual data & might corroborate, i would make a decent assumption since silver traded at $49-50
for all intensive purposes, an insignificant time frame, there cant be too much physical waiting to reclaim par value of one's purchase at that level...
it also seems almost hysterical that one wouldnt sell physical because of 50 cents, maybe an "error" or statistical error margins for people who called that LCS...
and how much was really bought at $50 physical?... anyways selling at next run to $50 maybe the last great steal of silver wealth when one looks back in time...
funny people wanting to buy alot of 1 oz silver at + $60 today...
the same amount of people that sold at $50, and supposedly, there was alot of selling in the mid $40's and up to $50 and back down to the high $30's. So the number of oz's exchanged at that time might be surprising to us. There was alot of new money coming into the physical market at that time, and my local guys tell me that they have not seen those people come back in to sell and take their beating of a 40% loss at this point. I think that's telling me something too.
it is far from truth and not even a very good statistical model for making any kind of prediction that would have a smidgen of credibility..."
Hey, Mr. Wizard...we're not talking statistical model here, we're talking what could drive silver over $100. The point of the post is that the herd could easily drive the spot price of silver over $100. Nobody is building a statistical model here or making predictions. Where do you get this stuff?
"for all intensive purposes"
The idiom is "to all intents and purposes"
Worry is the interest you pay on a debt you may not owe.
Voltaire: Paper money eventually returns to its intrinsic value---zero.
<< <i>As long as we continue to have inflation, the price of silver will continue to creep upward and will eventually reach $100. I don't know when but it will happen eventually. >>
We could make an approximation. The M2 money supply has steadily doubled over the past 10 yrs while silver is up 8x.....a cubed function.
So to triple silver from $33 to $100, one would need to take the cube root of 3 or 1.44X increase in M2. A 44% M2 increase would take about 5 yrs. I would say that's
the longest it would take to reach $100/oz assuming we stay on the current steady path of 8-9% per yr increaeses in M2. This doesn't factor in the M0 reserves,
derivatives, currency swaps, and all other sorts of methods to inject liquidity into the system. 5 yrs corresponds well to Armstrong's estimates of 2015-2017 being a
peak period for the commodity bull.
<< <i>As long as we continue to have inflation, the price of silver will continue to creep upward and will eventually reach $100. I don't know when but it will happen eventually. >>
PM gains from inflationary forces don't generally produce real gains: they don't really result in "making" money. They do protect the purchasing power of money. While I'll be one of the first to celebrate $100 silver (paper trading reasons), the cost of seeing it will be in what I pay for everything else. Many PM holders will in reality not come out ahead, they will pretty much break even in real terms. The alternative is watching money not put into PMs become worth less as inflation (devaluation) continues to chip away at its purchasing power.
$49 silver was the result of speculators anticipating the development of inflation. They wanted to get in early for the best gains. When the fear did not develop silver price found its equillibrium where it has been holding for a while now (thanks to money creation). When the fear of inflation becomes justified and widespread (and I believe it will) silver will resume its climb to new highs.
Least we not forget that the primary purpose for holding PMs is their role as a store of value - a good savings account with inflation protection.
"Education is not the learning of facts, but the training of the mind to think." - Albert Einstein
These are good points, and they are part of the reason that anyone who has any money to save should buy metals. The point is that most people are getting squeezed because of the inflation that is being caused by government largesse and overspending - and using "money creation" to pay for it all. That is exactly the reason that precious metals will go up as well.
Unfortunately "the people" don't move the silver market, but "the people" should try to protect themselves when they possibly can. The people are going to get squeezed by both higher prices on one end, and by taxes (even on reduced incomes) on the other end.
It's a viscious cycle perpetrated by bad government policy, but it's the cards we've been dealt.
And it's no longer just about folks in the USA being able to buy silver or gold to make a market. US demand is not the determining factor, (although US paper may still be). The problem we all face is that the dollar is being elbowed out of it's position as the world's reserve currency by all kinds of side deals between Russia, China, Iran, India, all of the middle east, and even Germany, who are tired of paying for US overconsumption to drive the world economy.
Once China has enough of our technology transferred in key industries, and once they've secured their raw material supplies throughout the world, and once they've secured their position as key trading partners with many of our former best friends, our cost basis for practically every manufactured good will be hit hard when they re-price the stuff they sell us with impunity.
Michigan, of all places should know this intimately. The only way that our costs will ever go lower is if the US leads in most industries, and that's just not happening.
I knew it would happen.
So to triple silver from $33 to $100, one would need to take the cube root of 3 or 1.44X increase in M2. A 44% M2 increase would take about 5 yrs. I would say that's
the longest it would take to reach $100/oz assuming we stay on the current steady path of 8-9% per yr increaeses in M2. This doesn't factor in the M0 reserves,
derivatives, currency swaps, and all other sorts of methods to inject liquidity into the system. 5 yrs corresponds well to Armstrong's estimates of 2015-2017 being a
peak period for the commodity bull.
Throw mhammerman's observations about the herd into this mix, and there are many possibilities for a price run-up. A big one, probably.
PM gains from inflationary forces don't generally produce real gains: the don't really result in "making" money. They do protect the purchasing power of money. While I'll be one of the first to celebrate $100 silver (paper trading reasons), the cost of seeing it will be in what I pay for everything else. Many PM holders will in reality not come out ahead, they will pretty much break even in real terms. The alternative is watching money not put into PMs become worth less as inflation (devaluation) continues to chip away at its purchasing power.
After taxes, and considering the likelihood of tax bracket creep and higher tax rates waiting in the wings, I think that you will be among the top 1% performers if you manage to come out ahead in real terms. There's no doubt that you will come out ahead in relative terms, but taxes can kill off a good gain made through brilliant planning & execution just as fast as a drop in the market.
I knew it would happen.
At $100 silver, gold will probably be on it's way to $5,000 and that is SHTF territory. There will be a lot on peoples minds besides ...'hmmm-should I buy silver?'.....
$100 silver, $5,000 gold probably means a meltdown of the financial markets. Economically, politically and sociallly...I do not like what I envision at those PM levels.
"Education is not the learning of facts, but the training of the mind to think." - Albert Einstein
<< <i>calling cohodk
MJ >>
When I see money creation exceeding money destruction, then I will jump on the inflation bandwagon.
I also agree with PerryHall and would add that I think the average car will be $50,000 and average income to be $100,000.
Knowledge is the enemy of fear
<< <i>When I see money creation exceeding money destruction, then I will jump on the inflation bandwagon. I also agree with PerryHall and would add that I think the average car will be $50,000 and average income to be $100,000. >>
without inflation?
"Education is not the learning of facts, but the training of the mind to think." - Albert Einstein
<< <i>Other than in 1980, the 2008 spike to $49 was a one time deal. What I can add to the topic is boots on the ground results from 2008. I was at a local B&M that I enjoy doing business with and we were talking about the $49+ situation right after it happened and silver had already began its retreat. At issue was the public response, the herd mentality. My B&M guy said that the folk wanting to sell during the run-up were not to much greater than normal business, there were some more sellers and even some buyers but nothing newsworthy. The telling item he offered is the phone traffic was off the charts from people wanting to know what the shop paid, to the cent. My B&M guy said that there were herds of people waiting at the gate as sellers as soon as it hit $50, not $49.50 but $50. He said that if the spot had reached $50 or better that the lines would have been around the block, 1980 revisited. Just that few cents made all of the difference in the behavior of the herd.
The point is that (only referring to physical) there is a huge inventory that is being held by individuals that is just sitting there, waiting for the magic number. When that number is reached, and it appears to be exactly $50, then silver will be in play like folk haven't witnessed in over 30 years and the lines will be out the door. I guess that now they call it investor sentiment but call it whatever you will, there is a huge herd of individuals not on blogs or forums that are sitting there, quietly watching and when the herd get spooked, all hell will break loose so all those predictions and what if's are for naught...physical will move like a dam breaking when the number is hit. >>
I suspect silver's getting ready for another move.
My thinking is that the economy is about to stage something of a comeback over the
next few years. We live in interesting times and almost any scenario is possible but
the bottom line is still that productivity is very high. We'd be better off with bad times,
perhaps, to work on structural problems but it's politically unpalatable. It's also very
risky because of the extreme fragility of the world financial system. Instead we're like-
lier to get inflation that will damage the system as well. Inflation could be a blessing
in disguise since it will not only ruin some good companies and prop up bad ones but
it will wring a lot of "frivolous demand" and other waste out of the system. It can force
a sort of efficiency though it will be at great cost.
As inflation ratchets higher some of those sellers at $50 might soon be buying back at
$150. Inertia is a very strong force but, so too, is panic. People can get used to almost
anything almost overnight. The paradigm that defines value can shift rapidly.
It is entirely possible that silver will drop also. As the US middle class continues to be
squeezed out a lot of silver could hit the market and depress prices badly. But this is
necesarily a gradual process caused by excessive government spending and waste and
any sudden force that would cause this would probably be even more devastating to
financial markets. The bond bubble popping would be an ugly thing and it will require
lots and lots of QE to keep it inflated.
Interesting times indeed.
<< <i>
<< <i>When I see money creation exceeding money destruction, then I will jump on the inflation bandwagon. I also agree with PerryHall and would add that I think the average car will be $50,000 and average income to be $100,000. >>
without inflation?
I think I have been on record numerous times saying that the inflation bubble that has been created since 1933 is the largest bubble of all time. HMMMMMMMMM
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>When I see money creation exceeding money destruction, then I will jump on the inflation bandwagon. I also agree with PerryHall and would add that I think the average car will be $50,000 and average income to be $100,000. >>
without inflation?
I think I have been on record numerous times saying that the inflation bubble that has been created since 1933 is the largest bubble of all time. HMMMMMMMMM
so you have jumped on the inflation bandwagon?
"Education is not the learning of facts, but the training of the mind to think." - Albert Einstein
Well, now an ounce of gold will now buy two or three good pistols or suits of clothes, not just one.
Similarly, an ounce of silver used to buy three gallons of gas, or three loaves of good bread. Now it buys 7 or 8 or 9 gallons or loaves.
You can make the same arguments for hourly or annual wages, the prices of houses or monthly apartment rent, haircuts and massages, you name it...
reckoned in terms of goods and services, either metals are expensive, or those goods and services are underpriced.
question for the inflationistas: why aren't gallons of gas or loaves of bread $10? Why aren't good guns or tailored suits $1700?
Liberty: Parent of Science & Industry
<< <i>Why aren't good guns or tailored suits $1700? >>
I could argue that technology and manufacturing methods have changed over time and that a fine pistol or suit is closer to $1700 when more human input is involved, especially in the west.
<< <i>Here's another way to think of it: the old , trite, expression "an ounce of gold has always bought one good pistol, or one good handmade suit of clothes".
Well, now an ounce of gold will now buy two or three good pistols or suits of clothes, not just one.
Similarly, an ounce of silver used to buy three gallons of gas, or three loaves of good bread. Now it buys 7 or 8 or 9 gallons or loaves.
You can make the same arguments for hourly or annual wages, the prices of houses or monthly apartment rent, haircuts and massages, you name it...
reckoned in terms of goods and services, either metals are expensive, or those goods and services are underpriced.
question for the inflationistas: why aren't gallons of gas or loaves of bread $10? Why aren't good guns or tailored suits $1700? >>
My company sells good suits for a little over $1800.
For the very good ones you would need 2 ounces!
<< <i>Here's another way to think of it: the old , trite, expression "an ounce of gold has always bought one good pistol, or one good handmade suit of clothes".
Well, now an ounce of gold will now buy two or three good pistols or suits of clothes, not just one.
Similarly, an ounce of silver used to buy three gallons of gas, or three loaves of good bread. Now it buys 7 or 8 or 9 gallons or loaves.
You can make the same arguments for hourly or annual wages, the prices of houses or monthly apartment rent, haircuts and massages, you name it...
reckoned in terms of goods and services, either metals are expensive, or those goods and services are underpriced.
question for the inflationistas: why aren't gallons of gas or loaves of bread $10? Why aren't good guns or tailored suits $1700? >>
This is a modern expression. Gold and silver production exploded in the 1860's to 1870's
and relative values plummeted. Silver has since been consumed and gold production has
likely peaked in the short term unless the price goes much higher. A few hundred years
ago half an ounce of silver was a months rent now it will get a decent place for about 14
hours unless you're in a high rent district and then you better be out by 6 AM. A quarter
ounce of gold was a years savings for a working man but now many people earn that much
on January first alone.
There's no set level for any commodity but gold has a connection to money and as people
lose faith in money there is far far more wealth today seeking a home than in jolly olde En-
gland. There are millions of dollars of wealth for every man, woman, and child and a lot of
it is liquid enough to flow into gold.
Silver is a far better relative value than gold and to the degree the human race succeeds
it will gain greatly relative to gold.
<< <i>There is only so much money that will chase silver. At $50 it is almost priced out of most industrial uses and the demand is 'the herd'. At above $50, a lot of sellers are taking profits, repositioning and moving into gold or coins. I certainly will be.
At $100 silver, gold will probably be on it's way to $5,000 and that is SHTF territory. There will be a lot on peoples minds besides ...'hmmm-should I buy silver?'.....
$100 silver, $5,000 gold probably means a meltdown of the financial markets. Economically, politically and sociallly...I do not like what I envision at those PM levels. >>
Just as $875 gold or $50 silver didn't melt down the financial markets in 1980, neither will $5,000 gold or $100 silver today. Gold increased 15X-25X in the last bull market depending on whether you want to factor in the supressed official gold price until August 1971. A 15X increase today would point to $3780 while 25X is $6300. That 15X increase in gold in the 1970's didn't mean a 15X increase in the prices of other things other than items outside mainstream financial (ie silver, miners, superb rare coins, etc.). It doesn't take much money to chase silver considering just how tiny the market is. It only produces $27 BILL worth of metal per year, a fraction of the value of many large cap US caps. Heck that's inside the market cap of gold miners Barrick or Goldcorp. There are 225 US exchange listed large caps with a value > the $27 BILL world annual production of silver. So it could take a tiny 1/500th shift of the money in those top 225 companies ($16.5 TRILL) moving into silver to double the price (1.6 cents per $10). This doesn't even consider overseas demand, public and private. 5% of the market cap of Apple Computer equals the same value as 1 yr of world silver production. If one charts silver demand over the past 5-10 yrs, rising investment demand is the crux of the price increases, not industrial demand. I'd agree the demand is the "herd"....but it's a big herd encompassing probably > 1 BILLION non-US people....dwarfing US demand. Even at $100/oz silver is still the cheapest of the precious metals with very few substitutes (if any) for its particular qualities. For comparison purposes annual world gold production is valued at around $175 BILL (1/3 of Apple). Copper checks in at around $125 BILL (1/4 of Apple). Looks like Apple easily swallows all precious metal production and copper as well. Might even be room to toss in rare earths, moly, lead, tin, and diamonds ($14 BILL) as well. Silver is 2X the production value of the world's annual diamond output. Considering industrial silver is not recovered, $27 BILL is a pittance in the scheme of things. The US govt spends that in a week.
At above $50/oz there will probably be a huge paradigm shift from gold to silver as it breaks out of 30 yr resistance and heads towards the 1st projected target of $100/oz. Once that $50 line breaks, demand will explode higher as momentum players will ride it hard. At $100 silver I would expect approx $3,000 gold, certainly not $5,000. The gold to silver ratio won't likely stay in the 50's with silver at $100. It could even be in the 20's by the time $100/oz is hit. When gold was $60 in the early 1970's I'm sure no one wanted to live in a world of $500 gold, let alone $875 gold. They got them both anyways and the world did just fine. $3,000 or $5,000 gold will have little effect on the average person....central banks is another story though.
I remember in 2001 when Jim Sinclair came out with $100 TRILL to decribe the world's total otc derivatives. It was an "unfathomable" number for the time. Everyone raise their hand who wanted to see a world with 10X that amount only 7-8 yrs later.
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<< <i>He'd be surprised how much of a silver surplus there is once silver hits the magic $50 mark
Now are you referring to the paper or physical silver? Sorry, couldn't resist. Just being my usual smart arse self today OPA.
I don't mess with the paper...I'm referring to the "real stuff." >>
Probably the same surplus physical silver that's always available at a certain price point. Same silver, different hands.
SLV is not a bad proxy for overall silver supply/demand. Note that SLV currently runs at about 96.8% of the silver price.
There's a large pocket of air above SLV 38-39 (ie silver >$40) from last year. Other than the $46 level, there doesn't appear to be
a whole lot of supply that can be dumped on the market. And probably a lot of the SLV bought at $46 was later dumped in panic at lower levels.
The price-volume bars from $38-$45 are much lower than those at $26-$28. Most of the action has been in the $33-$34 range.
And for good reason. Once it pops above $35 there's little holding it back from near $40. And once over $40 there's not a lot of supply in the way until $45+.
This is why silver has been capped in price around $35 since October 2011.
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<< <i>When I see money creation exceeding money destruction, then I will jump on the inflation bandwagon. I also agree with PerryHall and would add that I think the average car will be $50,000 and average income to be $100,000. >>
without inflation?
I think I have been on record numerous times saying that the inflation bubble that has been created since 1933 is the largest bubble of all time. HMMMMMMMMM
so you have jumped on the inflation bandwagon? >>
Nope. I see no increase in inflation. The bubble I speak of has been building for 80 years. It probably has greater room to deflate than inflate.
Knowledge is the enemy of fear
This is a 9x-18x increase. Gold has already increased 9x. Can it double again?. Maybe, but so what. Lots of investments can double in coming years.
Knowledge is the enemy of fear
<< <i>The problem I have with comments such as gold went up 15x-25x is that it was only at those levels for a matter of hours, if that long. The price at which gold traded for any length of time was closer to $650.
This is a 9x-18x increase. Gold has already increased 9x. Can it double again?. Maybe, but so what. Lots of investments can double in coming years. >>
One has to weigh the counterparty risk.
"Education is not the learning of facts, but the training of the mind to think." - Albert Einstein
<< <i>The problem I have with comments such as gold went up 15x-25x is that it was only at those levels for a matter of hours, if that long. The price at which gold traded for any length of time was closer to $650. This is a 9x-18x increase. Gold has already increased 9x. Can it double again?. Maybe, but so what. Lots of investments can double in coming years. >>
Counterparty risk is a good one. Gold responds well to negative interest rates, rising money supply, and rising debt. What other non-counterparty risk assets are there that respond well to all three of those and can fit in your sdb? Until real interest rates turn "positive," I'm not too concerned about gold. Gold increased 9X in the 1970's but with far less foreign debt, money supply, and derivatives to eventually counter balance. This time around it will probably take a whole lot more than 9X. And how do we determine what trading range of gold to assign that 9X to? $400? $500? $1000? $1500? The $105 major low back in the 1970's equates to the bottom of wave 4 in Dec 1976. If we just experienced the end of wave 4 then it's 9 X $1522. More conservative would be the bottoms in summer of 2006/2007 ($550) or October 2008 ($681). No matter how you slice those 9X is quite far away from $1750. There's nothing magical about 9x-18X or 15x-25x. In both cases the multiple that arose was based on balancing debt. The current situation is far more extreme than in 1978-80. It only makes sense that the final multiple will easily eclipse the one seen in the 1970's. Just to balance debt on today's #'s already takes a multiple of 50X the 2001 low....and that debt is still growing rapidly. It may reach 100X before things even out. The question remaining is what multiple between 10X and 100X will this game end at? Those multiples in the 1970's may have only existed for a "few hours." But, there was months of preparation in 1979 to see it approaching. The first sign will be a doubling of the gold price within 6 months. Not even close to anything like that yet.