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Assuming we're right about gold going to $5,000/t oz (£3,272/t oz) with a historical G:S ratio of 16:1, that would put silver at $313/t oz (£204/t oz) which means we're less than 6% of the way there.

 

Just curious as to what you guys hold as realistic targets for Silver (and Gold).

 

I must confess to putting these numbers into a calculator at times and shaking my head in disbelief. It can't go that high can it?

 

And would we want it to. There would be one hell of a mess if that were the case, at least in the financial world. But I don't buy into the carnage in the streets scenario so readily.

 

So I'm interested as to what potential numbers the folks on GEI are holding in their heads. Truth is, I don't really know.

 

Is this historical ratio accepted as the norm. Or are others more conservative?

 

 

 

 

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Just curious as to what you guys hold as realistic targets for Silver (and Gold).

 

I must confess to putting these numbers into a calculator at times and shaking my head in disbelief. It can't go that high can it?

 

And would we want it to. There would be one hell of a mess if that were the case, at least in the financial world. But I don't buy into the carnage in the streets scenario so readily.

 

So I'm interested as to what potential numbers the folks on GEI are holding in their heads. Truth is, I don't really know.

 

Is this historical ratio accepted as the norm. Or are others more conservative?

I take a conservative approach [one that also reflects the past few years action in gold] and think it will head up in two or three more stages over the next few years. Each year we might the price go up a few hundred dollars. In a few years with it at $2000, I think things will be so bad... currency and trade wise, that a new gold backed reserve currency will be introduced. Assets will then continue to deflate against money, so the real value of money will continue to rise.

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So what do you expect the price to be if it's coupled to a currency in a few years?

 

I take a conservative approach [one that also reflects the past few years action in gold] and think it will head up in two or three more stages over the next few years. Each year we might the price go up a few hundred dollars. In a few years with it at $2000, I think things will be so bad... currency and trade wise, that a new gold backed reserve currency will be introduced. Assets will then continue to deflate against money, so the real value of money will continue to rise.

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Yes. Historically this was the ratio of the 2 metals in the Earth's crust, however nowadays you would have to specifically include landfill in the definition of the "Earth's crust..." There is now believed to be less mineable silver than gold because of consumption, with silver effectively becoming extinct within 10 years. Silver will have to go through price discovery at some point due to scarcity, but TBH I'm not factoring that in to my estimates for this crisis, that is a more of a long term vision but it will happen.

 

Is this historical ratio accepted as the norm. Or are others more conservative?

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So what do you expect the price to be if it's coupled to a currency in a few years?

Well, with currencies fixed/ stabilized to gold, gold would be pricing currencies, rather than currencies pricing gold... and those prices would be fixed. This would involve throwing overboard the Washington Consensus/ market fundamentalist approach that has reigned for the past few decades. This new system would also resolve the problem of China looking for a stable/fixed currency on the one hand, and the need to "depeg" it from the dollar. Both currencies would be re-pegged to the gold currency at the appropriate levels. China, like any nervous creditor, will be happy to take a haircut of say 20 or 30% if it meant the bulk of their reserves were thus gauranteed.

 

Besides balancing trade, a fixed currency system should also balance our attitude towards money. With the [largely unconscious] inflationary bias of fiat currencies removed, savings and real investment would once again balance out consumption. This would also tend towards continued decline in asset prices. Given that economists in general prefer growth for growth's sake [without asking about the quality, or sustainability of that growth] it may take a period of economic havoc before a new currency system is instituted... out of necessity.

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This is like trying to nail jelly to a wall... :D

 

Both currencies would be re-pegged to the gold currency at the appropriate levels.

 

What's the appropriate level in terms of $$$'s?

 

Well, with currencies fixed/ stabilized to gold, gold would be pricing currencies, rather than currencies pricing gold... and those prices would be fixed. This would involve throwing overboard the Washington Consensus/ market fundamentalist approach that has reigned for the past few decades. This new system would also resolve the problem of China looking for a stable/fixed currency on the one hand, and the need to "depeg" it from the dollar. Both currencies would be re-pegged to the gold currency at the appropriate levels. China, like any nervous creditor, will be happy to take a haircut of say 20 or 30% if it meant the bulk of their reserves were thus gauranteed.

 

Besides balancing trade, a fixed currency system should also balance our attitude towards money. With the [largely unconscious] inflationary bias of fiat currencies removed, savings and real investment would once again balance out consumption. This would also tend towards continued decline in asset prices. Given that economists in general prefer growth for growth's sake [without asking about the quality, or sustainability of that growth] it may take a period of economic havoc before a new currency system is instituted... out of necessity.

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This is like trying to nail jelly to a wall... :D

 

What's the appropriate level in terms of $$$'s?

The dollar is in flux, so it does not make sense to think of gold having an appropriate price in dollars. It is because of instability between currencies, which would most likely lead to increasing protectionism, that the gold price will continue to climb steadily higher. At some point, I imagine governments will have to stabilize/ fix an increasingly unstable currency system to gold.... otherwise money would just keep going into gold which would effectively destroy economic activity. This would be done for pragmatic reasons and following certain events, not because of some theoretical price.

 

There are two ways of looking at it. At some point [who knows when, and who knows the price] the price of gold will be capped. From the other perpsective, gold will once again price/ stabilize/ fix currencies. I think the price could be around $2000. What is more important than the price is when a tipping point is reached, where money starts to increasingly move away from investment in the economy in a big way. I think this will happen in stages... and we've only just seen an initial stage.

 

More important than focusing on the nominal prices of gold, will be the relative strength between currencies, which gold prices represent. Say gold goes to US$2000, and the price in Yuan goes to 16000 [reflecting the current exchange rate 8:1 odd]. The price of gold could be capped at $2000 by the institution of a new reserve currency [gold backed]. The dollar would be fixed to this currency. The Yuan would be fixed at a higher level against this new currency... reflecting a 30% or so relative appreciation against the dollar. This would involve the new Yuan price of gold being say 11200 [representing a 30% appreciation of the Yuan... I suspect i got the math wrong a bit here]. The Chinese here have increased their purchasing power, while also having the bulk of their dollar reserves guaranteed [though taking a haircut] thanks to the new currency system.

 

 

 

http://www.greenenergyinvestors.com/index....st&p=149175

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I've just been thinking about Andrew Maquire's comments by proxy of GATA at the CFTC hearing and if the COMEX silver trading is leveraged 100:1 which he says it is, then this blows my 16:1 price ratio out of the water, silver could go to £1,200/t oz...

 

Just curious as to what you guys hold as realistic targets for Silver (and Gold).

 

I must confess to putting these numbers into a calculator at times and shaking my head in disbelief. It can't go that high can it?

 

And would we want it to. There would be one hell of a mess if that were the case, at least in the financial world. But I don't buy into the carnage in the streets scenario so readily.

 

So I'm interested as to what potential numbers the folks on GEI are holding in their heads. Truth is, I don't really know.

 

Is this historical ratio accepted as the norm. Or are others more conservative?

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Well, with currencies fixed/ stabilized to gold, gold would be pricing currencies, rather than currencies pricing gold... and those prices would be fixed. This would involve throwing overboard the Washington Consensus/ market fundamentalist approach that has reigned for the past few decades. This new system would also resolve the problem of China looking for a stable/fixed currency on the one hand, and the need to "depeg" it from the dollar. Both currencies would be re-pegged to the gold currency at the appropriate levels. China, like any nervous creditor, will be happy to take a haircut of say 20 or 30% if it meant the bulk of their reserves were thus gauranteed.

 

Besides balancing trade, a fixed currency system should also balance our attitude towards money. With the [largely unconscious] inflationary bias of fiat currencies removed, savings and real investment would once again balance out consumption. This would also tend towards continued decline in asset prices. Given that economists in general prefer growth for growth's sake [without asking about the quality, or sustainability of that growth] it may take a period of economic havoc before a new currency system is instituted... out of necessity.

In the event that people have lost faith in fiat-currencies, how do you issue a redeemable currency without seeing all the national Gold "redeemed"?

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In the event that people have lost faith in fiat-currencies, how do you issue a redeemable currency without seeing all the national Gold "redeemed"?

I'm not so sure if people will lose faith in fiat currencies, or that it would involve a hyper-inflationary event. More like hyper-instability between currencies, so it is only the class of investors who might be concerned enough to buy gold as an alternative currency, or due to economic uncertainty/ stagnation. The general population might well end up valuing money more as they continue to pay down debt and save. A new gold-backed currency would restore international trade by stabilizing and re-balancing currencies.

 

Where some currencies on the "periphery" might chronically depreciate, others at the centre might chronically appreciate.... without benefit to anyone. And conceivably it could be the indebted countries that get crucified on a relatively strong currency as their populations rush to pay down debt. Perhaps the fundamentals of debtor and creditor currencies might only play out with a new currency system.

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Yes. Historically this was the ratio of the 2 metals in the Earth's crust, however nowadays you would have to specifically include landfill in the definition of the "Earth's crust..." There is now believed to be less mineable silver than gold because of consumption, with silver effectively becoming extinct within 10 years. Silver will have to go through price discovery at some point due to scarcity, but TBH I'm not factoring that in to my estimates for this crisis, that is a more of a long term vision but it will happen.

 

It's interesting to note that the demand reasons for gold and silver were historically similar, i.e. as money and a store of value (often in the form of jewellery, ornaments etc.). It is therefore no surprise that their relative values were inversely proportional to their relative supplies.

 

In this modern era silver has become an important industrial metal far more than gold. I therefore expect that the ongoing demand for silver is relatively higher, so the ratio might eventually go lower than the old historical equilibrium (less than 1/16).

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pd92-pres.gif

 

Palladium went from $400 all the way up to almost $1100 in a space of year without the world falling apart.

See that dip around Dec. 2008? That's where I bought mine. :lol:

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In case anyone's interested and unaware. CID are doing 1kg Libertads at 7% VAT - total cost: £469.46

 

Why the 7% rate - is it a mistake or a special offer?

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Thanks - it does seem strange - perhaps a software glitch.

Maybe they are acting as agents for a third party company who supplies these and hasn't reached the VAT registration limit? I don't know, but they are definitely confirming orders of them at the stated price.

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My guess is that they have an allowance each tax year before they have to pay full UK VAT. Its the start of the new tax year.

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In case anyone's interested and unaware. CID are doing 1kg Libertads at 7% VAT - total cost: £469.46

 

Thanks for that, I had already bought a load of Philharmonics this week from Sarnia Silver but couldnt resist this.

I love getting envelopes/parcels stuffed with PMs turn up at my desk at work :P

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Hi Nobla, welcome to GEI.

 

I'd like to throw out a question about exit strategy, if I may.

 

I'm sorry if I seem preoccuppied with how I'm going to get out pf PM's, but as a physical long-term holder, having a pile of gold and silver in my safe seems pretty alien to me, even after all this time. Plus, I am on the verge of making another purchase that will put me about 40% in PM's. I am totally comfortable with this level of exposure, but can't help wondering whether buying is the easy part.

 

Whichever way I look at it, I can't see a happy ending for the fiat money experiment. In cgnao's recent post (07/04/2010) he warns about "the end of the financial world as we know it" again. I like cgnao's posts BTW.

 

If PM prices go "to the moon" as we all hope they will, won't this mean that that the value of paper money will have been crushed across the board. So, as the ultimate store of wealth will there be anything worth exiting into and whose going to be a buyer at sky-high PM prices.

 

Am I making any sense?

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Maybe they are acting as agents for a third party company who supplies these and hasn't reached the VAT registration limit? I don't know, but they are definitely confirming orders of them at the stated price.

Correct.

 

Any purchasers should not worry because if was sold to you for a reduce VAT price and it is wrong then the seller has to pay the difference not the purchaser. The seller cannot request or enforce the return of the item because you paid the correct price for the item which is its un-taxed price. It is the sellers responsibility and risk if they have not collected enough tax.

 

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Hi Nobla, welcome to GEI.

 

I'd like to throw out a question about exit strategy, if I may.

 

I'm sorry if I seem preoccuppied with how I'm going to get out pf PM's, but as a physical long-term holder, having a pile of gold and silver in my safe seems pretty alien to me, even after all this time. Plus, I am on the verge of making another purchase that will put me about 40% in PM's. I am totally comfortable with this level of exposure, but can't help wondering whether buying is the easy part.

 

Whichever way I look at it, I can't see a happy ending for the fiat money experiment. In cgnao's recent post (07/04/2010) he warns about "the end of the financial world as we know it" again. I like cgnao's posts BTW.

 

If PM prices go "to the moon" as we all hope they will, won't this mean that that the value of paper money will have been crushed across the board. So, as the ultimate store of wealth will there be anything worth exiting into and whose going to be a buyer at sky-high PM prices.

 

Am I making any sense?

Another option besides the world blowing up and gold going orbital, is gold just becomes the prime currency. In this scenario, currencies might be stabilized/ re-fixed to gold, and you could just keep gold or swap it for the local currency on the purchase of assets. It's just a financial crisis people... not the end of the world.

 

PS: Just finished listening to Nick Barisheff and Jeff Christian on FSN..... shows up some of the stories going around as paranoid fantasy. I wonder if the latest one about the ScotiaMocatta vault being near empty is just a weak attempt of scare-mongering. Don't believe the hype.

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