Icarus
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There is a report on silver investment in China today on CCTV. (CCTV is the Chinese equivalent of the BBC, but operates under slightly less political interference.)
http://english.cctv.com/program/bizchina/2...12/101184.shtml
In time the impact of 1.3 billion Chinese investors on on the price of the billion or so above ground ounces of silver may be significant.
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Please understand that I am not trying to SUGGEST that anyone "trade" gold.
I am rather telling others what I am doing, and my views along the way.
One thing that works for some, is to retain a core position (50%?) and then be prepared to trade in and out,
with another part of your portfolio. But even then, I would suggest that you vary the size of your in and out trades,
if you do any, according to the size of the opportunity that you see.
If Gold rises with inflation, and "value" is now $1000-1100, then a part sale at $1240, is a better idea, than the same
size sale at $1140.
You are getting a little too excited about gold's drop I think. Right now gold is still above 1100 bucks an ounce. Sure, the price has gone down for a couple of days. Maybe it could go down some more, who knows? After a phenomenal run like the one we've just seen you should excpect that. Personally I'd still rather hold silver or gold than pounds, dollars, bonds or stocks.
But hey, I could be wrong. Maybe it really is possible for people to consume more than they produce for ever. So, Dr Bubb, you tell me. Where do you think people should put their savings?
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Went to my usual bullion dealer.
Wanted to get another coin today...
SOLD OUT!!! unprecedented public demand, anyone and everyone is buying. Was told to try again next week or the
week after.
Shortages are a sure sign of market manipulation. If people have the money to buy but nobody will sell it is because the price is too low, it's that simple. Whenever you hear about shortages you can be sure there is price fixing.
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Taken recently from a Reuters article:
Goldman Sachs said it sees prices at an average $1,265 an
ounce in 2010, rising to $1,425 an ounce in 2011. It said low
U.S. interest rates will support gold.
This seems quite a moderate forecast predicting it will only go up some $50-60 from here for all of next year. GS trying to signal to investors that the high is in, ulterior motives?
Tungstenman Sachs has now increased its forcast to an average price of $1350 for next year.
http://ftalphaville.ft.com/blog/2009/12/03...ast-to-1350toz/
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The glitter of silver is history i think. When silver was special because it was so silver it was worth something but aluminium is used in many mirrors and stainless steel makes for a more useful shiny cutlery item.
Yes it does have unique properties but its value to humans as something to dream of seems majorly devalued to me with the arrival of other materials. The same devaluation must be also true of gold where goldness is not necessarily gold anymore and plastics can match the maleability and workableness of gold. For investors there are many precious metals.
Only in a total collapse of economies will gold be the king again and if that happens some bugger will steal all of your gold anyway unless you are the meanest SOB in town.
Silver trading almost seems like a scam where coins get minted but you cant sell those same coins back to dealers for anything like what you pay for as far as i know. Perhaps somebody can correct me on that if i am wrong. For example the silver dealer sells you a silver coin and you arrive later with a thing that could be a silver coin. He sees the risk in the trade and marks down accordingly.
On the other hand silver was 5 and it is now 17 but property was 30k and it is now 300k.
If you really want to understand the value of gold buy your wife some plastic jewlery for christmas. I'm sure she will be able to explain why gold is better than plastic in a way that you will understand. Anyone who ever bought their fiancée a plastic enganement ring will also know all about gold's value.
On the topic of silver's many and varied uses, has anyone tried x-static clothing yet? I hear it's quite good.
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Indian investors dump gold for silver
2009-11-06 17:45:00
RAJKOT, India (Commodity Online): India's smart investors in the state of Gujarat have now realized the importance of silver following the huge rise in prices of gold. So, many of them have shifted to silver to make a killing.
http://www.commodityonline.com/news/Indian...-22711-3-1.html
Exactly. This is what people who complain that the price of silver is only 80% up this year are missing.
India's IMF gold cost them about seven billion dollars. A seven billion dollar purchase had little impact on the price of gold. But, at current prices, seven billion dollars would buy about half of the comex's total silver inventory. The effects on the price of silver would be explosive.
For me this sets off alarm bells. At some point the price of silver going through the roof seems inevitable, even without a collapsing dollar. Right now you can still buy silver at incredibly low prices, but I don't know how long this is going to last.
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It happens we might buy a house soon for a number of personal reasons.
Running through the sums though, I can see that once back in the UK we could happily spend my salary on normal living even before we paid any sort of mortgage - I don't mean extravagant living, but just 'living' - food, heat, light, council tax, clothes, sink fund for house repairs, car depreciation.
I increasingly don't understand how most people get buy in the UK unless they put no money aside for repairs etc; or live on credit. Either way, I sense something will go 'bump' for the vast majority of people. I also believe this sixth quarter of recession will strike home as a concept and puncture some of the recent ebullience. (I hope so - I'm short most indices!).
I'm considering, if we do decide to buy, whether to load up with a sizeable mortgage (2.5 - 3 times my sole income) on the basis this would give us funds to invest e.g. keep some of my gold intact, or just go 'all-in' and not take on debt. I realise that buying a house isn't a wealth-maximising solution. But we've previously made good money on houses and so in some ways don't mind if we have to lose on a house if it gives us security of tenure (we're global gypsies and my employer can move us at a stroke when we are overseas, so this is important to our family when we are back in the UK). Any views on this? (not on the buy/don't buy question, I know most people's views on that here).
On a related point, so I get a feel for where you all come from, what percentage/multiple of salary saved up and invested in things tangible (not houses) would people feel they'd need to feel comfortably 'protected' against inflation? I suspect some people's gold stashes on here are several x income, but others are just a few % - and this affects how to interpret what people are saying on the forum.
Good luck, dude.
Can't offer you much advice. Once you've weighed up everything carefully you've got to do what seems right for you. Maybe it will work out wonderfully or maybe you'll lose your cash. If it goes wrong don't beat yourself up for the choice you made. You did what seemed right at the time. On the other hand, if you make a lot of cash don't let it go to your head.
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I'm sure the Chinese will appreciate the cheap gold. Here's hoping they manage to knock the price of gold down a hundred dollars for a week or two, so we can get in on their subsidy.
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A gentleman in Las Vegas who paid everyone in gold and silver coins and then tried to use the coin's face value for tax purposes. It was no surprise he was found guilty. The story is from the Las Vegas Review-Journal and is headlined "Las Vegas businessman Kahre guilty of 57 counts" - Ed Steer
So make sure you don't pay for anything in copper pennies, as the metal is worth more than the face value of the coin. Same goes for pre-'65 silver coins . This ruling makes a mockery of the whole fiat system.
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Gold does best in deflation
When gold and silver are used as money inflation reduces the purchasing power of gold by definintion, which explains the table above.
How gold will hold value in another currency during a period of deflation is uncertain. It depends on the amount of leverage used to purchase gold.
As deflationists keep telling me I don't understand, a massive amount of credit has been issued and is evaporating. This credit allowed people to bid up the price of such things as houses, fitted kitchens, fancy cars and shoddy chinese consumer crap. As credit is withdrawn the price of these things will fall to their true market value. This is the 'disaster' of deflation that central banks hope to prevent by creating colossal amounts of money.
Some gold has also been bought on credit. But how much? If the price of gold has not been inflated by the same amount as the price of the other junk then the relative value of gold should increase as debt deflation occurs. This seems likely, but we will not find out. This is because central banks are creating phenomenal money to prevent 'the disaster' of deflation.
It is practically impossible for central banks to allocate the money they create so that the price of houses and consumer crap remains at its inflated, distorted high. Therefore general price rises in goods not bought on credit are inevitable. That means we can expect the price of such things as food and fuel to rise, while the price of houses and consumer crap continue to fall. As the amount of money created is huge and ongoing you can reasonably expect huge and ongoing price rises.
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A longer term chart tells a different story. All time high is 806 1998 dollars. With today's shortages and industrial demand wh knows how high the price of silver could go?
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EDIT: Found this too: Got Gold Report notes 'shocking' short concentration in silver - http://www.gata.org/node/7267 (the bottom of linked article particularly interesting)
We are approaching a shortage of physical siver for sale. Some people seem to belive that selling 'paper silver' can make up this shortfall. Maybe they can think up a way to substitute paper for silver in missile guidence systems or high end electronics. Good luck with that.
At some point silver prices are going to sky-rocket. Not because I want them to, or because someone famous said so. But because, according to the laws of supply and demand, no other outcome is possible.
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He he he! I feel for the poor suckers buying in now.
'The recession is over! Sell your gold and buy stocks!'
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Icarus, I own physical silver but I'm afraid you are flying into the sun here with your comment.
When you say permanent do you mean Dr Irving Fisher's "permanently high plateau" ?
It all comes down to supply and demand.
Remember that, economically speaking, demand is not only people's desire for a product, it is also their ability to pay. Fore example, many people would like to own a Rolls Royce Corniche but unless they can actually afford one their desire has no effect on demand.
Easily available credit can increase demand. This is because it gives people the means to buy goods and services that they can not afford. Increased demand pushes up price.
With this knowledge we can easily identify the cause of the stock bubble of the late '20s. That is, credit to buy stocks was eaily available. Demand increased and prices rose. Responding to the increasing prices more and more people began to buy shares and a bubble was formed.
A tightening of credit, or credit crunch, ended the easy credit. Thus causing decreasing demand. Prices fell. The stock market crashed.
The increased price of silver is not based on a credit fuelled bubble. On the contrary, it is a decrease in the amount of silver available for sale, or the supply. In general. decreasing the supply of a product increases its price.
The decrease in supply was caused by the amount of silver being used in industry being greater than the amount produced in mines. A situation which lasted a century and resulted in the permanent destruction of just about all the above ground stocks of silver.
Now the price of silver must increase to reduce demand. The price rises must be sustained until supply increases to match demand, which is very unlikely.
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It's very often said that 'historically' the ratio between the prices of gold and silver is about 20:1 (or less), and, therefore, implied (and sometimes explicitly stated) that we should be expecting a return to that 'norm'.
However[1], the ratio hasn't been consistently 20:1 (or lower) since about 1880, and since then has fluctuated between about 100:1 and 20:1, the average ratio over the last century being about 48:1.
That's not to say it won't be sub-20:1 again (as it has been a couple of times in the 20th century), but it does seem odd to me that sub-20:1 is time and time again cited as being 'the norm'.
[1] Assuming the data I have are correct.
Gold was not priced higher than silver because it is yellow, or because it is more dense or maliable. Both silver and gold are traditionally used as money. For that funtion the two elements are practically identicle. They equally divisible. and fungible. Neither decays to theyare be equally good stores of value.
Their relative values was historically determined by how rare each element was. And the classic ratio of 16:1 is very close to the relative quantities of silver and gold in the earth's crust.
(http://www.gold-eagle.com/editorials_01/poitras022801.html)
Silver became more abundant after the discovery of America, consequently its value fell. But the metal is now much rarer than gold. And or silver to become so abundant again would require surplusses of around 50 million ounces per year for a hundred years.
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People have been comparing the recent rise in the price of silver to the commodity bubble of 2008. In my opinion the two phenomenon are entirely different. The bubble was caused by speculators gambling with massivly leveraged positions. Current price increases, on the other hand, reflect a shortage of available silver and is being driven by small investors trying to preserve their wealth.
Government sales of around 50 million ounces of silver per year, every year, for a hundred years, have kept the price artificially low.(see http://www.silverinstitute.org/supply_demand.php#demand.) Low prices allowed to silver being used as an industrial metal. Now that the above ground supply has now been almost completely wasted prices must start to rise.
Just to bring supply and demand into equilibrium the price of silver has still got to increase massivley. Furthermore, as the price increases, investors will be reminded that silver is a store of value. For it is rare, in demand and can not be destroyed.
Not only is the price of silver set to rise massively but the price increases will be permanent. Buy and hold.
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The shutting down of mines must be moving that 2020 date back (?)
Silver is generally produced as a by-product of base metal mining. So silver production is difficult to increased without affecting the price of base metals. Currently mines are shutting down which decreases silver production. Silver consumption is almost certainly also decreasing. Maybe the two will balance perfectly, but I doubt it. My guess is that the reduction in supply will hasten the decline in above ground silver stockpiles.
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These are my thoughts as well. Silver will be the more affordable safe haven.
I'm not so sure. At current rates of consumption ground silver will be completly exhausted before 2020. Therefore between now and 2020 the supply of and demand for silver must reach equilibrium. This can only be achieved by massive price rises. If supply does not equal or excede demand then then all available above ground silver will disappear. There will be a bidding war for freshly mined silver and prices wil be astronomical.
I believe that righ now silver is the buy of a lifetime.
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Icarus, your knowledge of silver is astounding. I really look forward to you posts.
A couple of points.
Recycling will become viable as the silver price increases. This will slow the price rises.
I hope so. It is a shame that we waste so much of such a valuable commodity.
Rear heated windows do not use silver (because it’s too good a conductor). Rear heated windows are resistors. They get hot when you pass a current down them.
Maybe the site is out of date. It was refering to the old fashioned strips, described on wikipedia this way
'...electrically conductive lines are composed of a silver-ceramic material which when fired on glass becomes bonded to the glass and is highly resistant to abrasion. There is no danger of electric shock, because of the low voltage, and no danger of burns as the elements are only heated slightly.'
http://en.wikipedia.org/wiki/Defroster
rather than the forced air type of defogger.
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To back up what I mentioned above you might want to have a look at this link;
"The largest component of recycled silver comes from spent photographic film, paper, and solutions."
That is a good paper, thank you. As this is your area of expertise, your knowledge is bound to be greater than mine.
The article you provided says that a roll of film contains, on average, 0.254 grams of silver, which is silghtly less than 1/10 of an ounce (troy). Furthermore, as you correctly pointed out, some of this is recovered -
'On the basis of the above figures, about 630 t of silver was contained in photographic products in the pipeline for delivery to consumers, on the shelf, or in the cameras of consumers. An estimated 420 t of silver was retained on negatives and photographic papers and was irretrievably lost.'
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A lot of silver is used in photography, most of which is recovered, so I think that this graph does include that.
A roll of photographic film contains about 1/100 of an ounce of silver. Film is not recycled after use. The low price of silver makes recycling uneconomic, so much of the silver used in industry is lost forever. From the same web page I took the chart -
'The first chart shows that 1 billion ounces of gold existed in 1900 versus 5 billion ounces today in 2008. This makes sense. Gold is valuable, therefore hoarded and its industrial uses are largely reclaimed through recycling. Roughly new mine supply adds to the ounces in existence.
However 12 billion ounces of silver existed in 1900 but only 1 billion remain in 2008. Yes thats right less than 1 billion ounces and there is 5 times more gold available than silver! Why is this so? Well silver has far more industrial uses than gold. It is critical to electronics, whitegoods, medical technology, solar technology, industrial equipment, water purification, photography, nano technology, military weapons etc etc. Silver is critical in our daily lives. However the low price of silver makes recycling uneconomic, so silver used is silver consumed and lost forever. Secondly, silver is mined as a bi product of other metals such as zinc, lead, copper and gold. Silver is scarce in the earth and very expensive to mine. World silver mine supply could decline substantially in the next 2 years as economic conditions worsen around the globe. Silver mines themselves are going bust (ie Macmin silver in Australia) but also the base metal miners who mine some silver as a bi product have now become uneconomic and closing at an accelerated pace. Peak silver is with us!'
Some facts about silver -
'# Silver has superior bactericidal qualities. Small concentrations of silver or silver salts kill bacteria by chemically affecting the cell membranes, causing them to break down. Bacteria do not develop resistance to silver, as they do to many antibiotics.
# Silver is the best conductor of heat of all elements. Its uses in solar panels and automobile rear window defoggers take advantage of this quality.
# Silver is the best conductor of electricity of all elements. In fact, silver defines conductivity - all other metals are compared against it. On a scale of 0 to 100, silver ranks 100, with copper at 97 and gold at 76. Silver is commonly used in electrical circuits and contacts. Silver is also utilized in batteries where dependability is mandatory and weight restrictions apply, such as those for portable surgical tools, hearing aids, pacemakers and space travel.
# Silver has the highest degree of optical reflectivity of all elements. A silver mirror can reflect about 95% of the visible light spectrum. (most mirrors are silver). Besides vanity uses, mirrors are important components in telescopes, microscopes and solar panels.
# Silver is more ductile than any element except gold. One ounce of silver can be drawn into 8,000 feet of thin wire.
# Silver is more malleability than any element except gold. One grain of silver can be made into a sheet one hundred and fifty times thinner than a piece of paper.'
From http://www.silverusersassociation.org/silver/facts.shtml
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Here is a chart showing the daily distribution of gold-to-silver ratio for each day since Jan 1 2000.
The ratio currently favours buying silver instead of gold.
I believe this to be a more imporant chart. It shows the amount of above ground gold and silver in ounces since 1900.
Use the chart to extrapolate the amount of above ground silver in 2020 and then tell me what you believe is going to happen to the price of silver.
image from
http://www.bullionmark.com/2008/12/how-muc...r-is-there.html
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This guy on ebay is selling 1 ounce silver chinese pandas for £14.99 each. He said that he would send free P&P if I got 25 off him. I think he is in Gurnsey and would be posting them out individually so as to get round a VAT regulation. They are cheap compared to CID who want £18.84 incl vat (£16.38 ex vat)
http://www.coininvestdirect.com/main.php?a=11&id=231
http://cgi.ebay.co.uk/1-Troy-oz-999-Pure-S...%3A1|240%3A1318
I have bought from him before. his service is good. But he does send you your silver in lots of one ounce, which annoys the postman
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Hi all,
I'm holding onto some very badly timed purchases of silver ETFand Silver Wheaton. My ratio in value between the two is currently 10:1, although when I bought it was nearer 3:1 i.e. SW has done even worse than Silver. Assuming I still believe in the case for Silver, the courageous part of me is thinking now might be the time to flog my silver ETF and put the amount into the Silver Wheaton. Views?
Wanderer
IIRC Petrov says that etfs follow the stock market. It's on one the gold investment analysis videos -
http://video.google.com/videoplay?docid=-6841701169481269722
'Remember, if you're one of the ones holding paper in the end, you will have given away your products and services for nothing.'
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Put your money where your mouth is. Short gold down to 1030.