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The National Debt and PM's

BLUEJAYWAYBLUEJAYWAY Posts: 7,940 ✭✭✭✭✭
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".

Comments

  • rickoricko Posts: 98,724 ✭✭✭✭✭
    $19 Trillion and counting.... I will let the experts regale you with opinions on the effects it

    may have on PM's... Cheers, RickO
  • BaleyBaley Posts: 22,658 ✭✭✭✭✭
    Precious metals peaked in value in 2011, while the national debt is at it's all time peak right now.. I mean right now, um, I mean right now, wait, wait, NOW..

    Liberty: Parent of Science & Industry

  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    There is always correlation between competing investment assets. Gold competes with the dollar. What is bad for the dollar is usually good for precious metals.

    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.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • hchcoinhchcoin Posts: 4,825 ✭✭✭✭✭
    One thing I know for certain, a lot of people are talking to me about beginning to purchase silver. These are people who have never even bought precious metals before. Some of them are telling me that 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. I am not sure if this is a sign of things to come but I do find it interesting how the rhetoric has picked up in the last month or so.

    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.
  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    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.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • hchcoinhchcoin Posts: 4,825 ✭✭✭✭✭
    Originally posted by: derryb
    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
  • OPAOPA Posts: 17,104 ✭✭✭✭✭
    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.
    "Bongo drive 1984 Lincoln that looks like old coin dug from ground."
  • BaleyBaley Posts: 22,658 ✭✭✭✭✭
    demand for paper promises will cease to exist and the lid will be blown off of physical price.



    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" image



    Liberty: Parent of Science & Industry

  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    Originally posted by: OPA
    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.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • BLUEJAYWAYBLUEJAYWAY Posts: 7,940 ✭✭✭✭✭
    Thank you all for the many points to ponder.
    Successful transactions:Tookybandit. "Everyone is equal, some are more equal than others".
  • jmski52jmski52 Posts: 22,308 ✭✭✭✭✭
    Interesting chart today. They should've knocked gold & silver back down by now.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cladkingcladking Posts: 28,307 ✭✭✭✭✭
    Originally posted by: jmski52

    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.



    Tempus fugit.
  • TwoSides2aCoinTwoSides2aCoin Posts: 43,796 ✭✭✭✭✭
    Buy , or sell. The wheels of commerce are turning.
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