Mr Pipples

That's where I'm at. Crap.

They both believe gold will do well as a money in deflation... Just not/not sure about silver. Silver would only do well as an alternative currency IF it's 'money' value can win over its commodity value. If not, then it may fail even while gold succeeds. I think retail investors, for now, consider silver pretty much like gold but if the big boys/banks/etc don't then that might be the end of it. Maybe China's (historic?) treatment of silver as a monetary metal could play a crucial part here?

Taken from Hoye's latest here: http://www.321gold.com/editorials/hoye/hoye091508.html Taken from Mish's blog here: http://globaleconomicanalysis.blogspot.com...eat-unwind.html Will people think of silver as a monetary metal enough to outbalance it's treatment as a commodity? It seems that typically, this doesn't happen at times of financial crisis - but maybe this 'mother' of meltdowns will be different? To me, right now, silver seems a FAR, FAR more risky choice then maybe a lot of people on here seem to think. I wish it wasn't so! I'd like to take encouragement from the spot/price difference on silver coins and small bars - but that situation only applies to the relatively v. small retail investor sector of the silver trade market and, with regard to shortages in these, it seems likely just down to temporary distribution and processing hold-ups rather then any real and lasting silver supply shortage. It looks like I might have to face up to big loss and cash in/switch to gold - either that or take what looks to be a massive gamble. If inflation was back in the headlines instead of deflation, I'd feel a bit less worried as, even as a commodity, silver should do OK, but I still have doubts if I'll make up on my losses unless silver can win at becoming 'money'.

Would just like to bring to the attention of those thinking of buying silver, Bob Hoyes opinion (and Frizzers it seems - anyone else?) of silver not trading alongside gold in crisis times - he predicts a G to S ratio of 1:100! Check out the 'watch silver' thread for more info. Having more silver bullion then gold now, this would be horrendously bad for me (things are already dire) and I hope things don't go that way - but thought I'd at least try and give people the heads up in case this is news to you. Fair play if you think otherwise - please let me know why if so!

Well, I wish I could take encouragement from the spot/price difference on silver coins - but, as I've posted before, that situation only applies to the relatively v. small retail investor sector of the silver trade market and, with regard to coin shortages, is likely just down to temporary distribution and processing hold-ups rather then any real and lasting silver supply shortage. Do you not see it this way Goldfinger? It's a sod ain't it? Guess it may depend on: if we are entering a prolonged period of deflation or this is more of a blip whether PMs (inc' silver) will be driven differently for this global 'mother' of a crisis Edit: Bob Hoyes latest: http://www.321gold.com/editorials/hoye/hoye091508.html He thinks Gold is due to climb - but (I think) he thinks silver will continue to diverge.

I guess it will depend on whether the + effect of people choosing silver as a monetary metal can outbalance any - effect caused by its treatment as a deflating commodity. Could be a bit of to-ing and fro-ing maybe - or would silver's 'money' demand simply be swamped by its commodity trading? Maybe, as banks typically hold gold and not silver, they don't/won't view it as 'money' - and that will mean it diverges from gold. Even if the public choose to buy it for some time... Well, I hope this isn't right / doesn't happen. I'll be knackered as my holdings stand if silver (continues) to diverge from gold! As if holding gold wasn't scary enough it now seems there's far more of a gamble in silver! Maybe I should accept my losses and get out of silver town!

Any thoughts people? Divergence between silver and gold? Silver seen as a poor short-term / long-term choice now?

Why does Hoye think this? Is that how you see it Frizzers - silver looks to get left behind? Anyone who's opinion you rate think otherwise?

+ without the -

More from James Turk re. paper/physical, etc: Thinking Like "Fat Tony"

Fair play. Bar a few SHTF coins I'm all at GM so... Wish something could make me feel sane! I'm just waking up to false confidence/over optimism - which has partly lead to me being uncomfortably over-heavy PM bullion. Away again for a few weeks tomorrow - wonder how things'll look when I get back. Sheeshhh.

True. But if there is no real 'divergence' throughout the whole physical silver market, and only a 'difference' in the small, retail sector, the price gap on coins is unlikely to last long as all that's holding it up are things like temporary hold-ups in the distribution and refining process. By the way, I'm 100% physical - up to my eyeballs. I do not question the 'unfair' effect of paper silver trade on real silver trade. I do question this use of retail price difference to spot as evidence of an emerging divergence.

Why will anything much have to give if the vast majority of physical silver trade is not in the retail sector and is still trading at spot/same as paper? That's only evidence of a shortage of supply in the retail sector.

I don't necessarily mean a direct, causal effect of retail price differences on all physical prices. I mean do people really think the factors (costs/returns, stock levels, availability, opinion, etc) that have caused this difference in retail price and spot price will have the same effect on the rest (majority) of the physical silver market?

I can see the obvious problems for silver price re. trade in 'paper' silver (which only has a limited connection with actual amounts of physical silver) and it's effect on the price of physical silver. What I don't get though, and I'm repeating myself because not many seem to be commenting on this here, is why people keep going on about the divergence between 'paper' and 'real' silver prices - when the 'real' prices they're referring to are only those for small, retail investor market amounts (coins, small bars). The vast majority of physical silver is apparently still being sold at spot - eg. 1000oz bars. When the majority of the physical silver trade market starts using prices that are different to 'paper' spot prices - then that's a proper divergence. I don't see how what's going on just in the retail investment trade can be held up as evidence for anything other then the state of play in that small(?) sector of the silver market. Does anyone have figures for commercial and larger size/quantity physical silver trade that can prove genuine divergence between 'real' and 'paper' prices for the physical silver trade as a whole? Do people think this difference in only retail prices to spot will spread somehow to a true divergence throughout the complete physical market?

I've heard that before. This is cronic. Is it all of them who are stupid - or us?

Crikey, it's getting to Jim. (Or everyone is getting at Jim.) http://www.jsmineset.com/

Yes, WHEN along with IF are hard words to live with! Re. silver performance, I've looked at the graphs and seen how silver typically over-emphasises golds actions - but does it always do that? - and past performance doesn't always dictate future - particularly during times of radical change. Re. shortages in silver, they seem real but only, from what I gather, when it comes to retail investment amounts and coinage. There seems to be lots of headlines on 'shortages' but when it comes to other areas of the silver trade (the vast majority amount-wise, I'm sure) there's apparently no shortage - eg. James Turk's comments on 1000oz bars. (So the majority of real physical silver is still selling at spot price.) The shortages seem more down to a hold up in distribution and processing then base supply. (Maybe PM retail traders balance sheets too.)

Fair point. For the few G&S coins I've bought, that's kind of how I've figured them. But that will only really apply in the case of a fairly catastrophic SHTF scenario (paper money becomes worthless and unacceptable) - and I feel if things develop that way there's only a very slim chance of an ad-hoc PM currency system becoming established and functioning in the probable chaos that will ensue. (I doubt we could all get along so amicably.) Will silver be recognised and act as money in terms of a 'store of wealth' - I guess that's my real concern here. I don't think it's looking that way at the moment - in comparison to gold or fiat.

This was posted over on M&PM:

There seems a fair amount of opinion (especially recently) that silver won't work (like gold might) as 'currency'. Got me worried. Yep, that was my thinking - plus some in energy, ag, water, juniors, Brazil, etc.... Unfortunately I messed up and ended up over-heavy PMs (particularly silver now). To explain, I decided to switch cash savings in Euros held at GM into £, $ and Cad$ (mix it up basically - decided just euro wasn't good) via G&S (a punt on rising prices to be honest - naughty). Unfortunately, I missed my exit point (back to G&S core holdings) of $975 gold because I got stuck with no internet access for a couple of weeks while volunteering at an eco-type festival during July. (Didn't expect prices to rise quite so fast from @$940.) I was probably busy cleaning compost toilets out when G&S peaked - shite(!) By the time I got back to the web, gold was down to $920-30 and I figured 'ahhh, it'll pop back up again soon'... Now my cunning plan (roughly, biggest chance of inflation with some chance of deflation - in some order or another. Maybe not so cunning) of having a fair chance of avoiding big losses, whichever way things fall, seems bust. From my amateur gestimations I'm pretty confident that national and global financial institutions and systems are in for it big time and that things have a fair chance of getting very ugly - but I'm not quite so confident PMs are going to be a decent bet. (Who is? Anyone who never gets things wrong? Stuff is crazy!) Take a big loss now to save a maybe far bigger loss? (Would have to be back to iffy cash I guess.) Or resign myself (and my families store of wealth) to the whims of 'the fundamentals' and hope things turn out 'nice' in the end. That's exactly what I'm trying to sort out. I want what's really usable, useful and necessary - not just a load of metal/cash sat somewhere for the sake of it. Looking for ag/wood land to buy on my own, as part of a group, communities already with land, etc, etc. right now and have been for some time. I'm on it - but it ain't that simple and there's little to nothing around or happening that's reasonably suitable. Moaning, bitter, anxious... Sorry for the bad vibes. Might go off and hide amongst the trees and whittle a little until after the presidential elections.

I'm still holding on... But my knuckles are white, my pants are brown and my eyes are turning red.

Thought this worthy of a bump.

Yep, I'm nodding too... Particularly with regard to silver.