Yanked The Rug Out From Under Silver An Gold Once Again....

I don't have to be optimistic to say that the global economy will get better. For thousands of years economic crisis have come and gone. They always end. Sometimes they end badly for one particular group of people, but global commerce goes on. I believe that going forward a successful investor will be invested globally. The United States has already fallen to only 30% of global equity.

The longer silver prices stay artificially inflated the harder the fall will be. Industrial users of silver hate paying current prices. The longer prices stay high the more incentive companies have to find alternative materials to replace the use of silver in their products.

I agree that the economy will eventually get better. The difference is that I believe this downturn is secular; not cyclical. Meaning it will probably take another decade or so to sort out.

The Western World has huge structural economic issues that won't be corrected without great pain. Sovereign defaults, the collapse of the EU and Japan, along with a set back in China are all realistic events that could take place this decade.

Fiat currencies usually don't last longer than 40 years.

The conditions for the PM bull market are intact, and look to be for the foreseeable future.




The first 9 minutes or so are just meh, but it gets very interesting after that.

I look at PM as a store of value. I lived in the 1960s as a very young child I was oe of those that kept silver coins as well as wheat pennies! Still have them. In the past about 2 years I have felt a very bad feeling about the dollar as well as all unbacked currencies. I have tried to get some PM with small amounts as I can. My feeling is that if currencies collapse silver junk (as well as any easily recognized form) will be put to use. If things recover still have silver value and all will be better. I also am in agreement with nickel keeping! Win win there no loss factor (except very low interest). Always can spend or if collApse they are real money as any coin actually is. (Some intrinsic not like paper) of course just my gut feeling

"why do people hoard nickels?"

Easy, our gambling speculative nature always tells us to buy large amounts of something esp if it cheap, if there is any reason to believe it will increase largely in value in near time....

Silver was 4 bucks an oz. back around 2000, and I am sure someone asked the same question about silver, that you now impose for nickel, or why not copper as well, or tin....

I will say, I don't agree with spring cypress, or JSH on all issues, and disagree with many, but you do present your arguments in a much more professional way, as opposed to some silver trolls who have 3 letters in their name (not you JSH its Joe rof)who will remain nameless, lol.....

And Spring I do get the tulip angle and being first bubble it does have relevance, but part of me always wants to point out it is a way different world now compared to then. The game has changed in many ways, question is can the smart investors find a way to adapt with it, in these most unpredictable economic times....

"I don't have to be optimistic to say that the global economy will get better. For thousands of years economic crisis have come and gone. They always end. Sometimes they end badly for one particular group of people, but global commerce goes on. I believe that going forward a successful investor will be invested globally. The United States has already fallen to only 30% of global equity."

And I can agree with many points in this quote, but keep in mind JSH we are not immune being the big powerful USA to these simple laws of economy, and there have been others that simply did not recover as you also mentioned, and there aint no guarantee in paper I can promise that says we will not be the next.....

"I've said this before & am going to throw it out there again because I have never got a serious response. The industrial use of silver is well below the annual production of silver."

If I read that correctly I believe you be 180 degrees backwards on this theory 007. As I believe personally there is way less coming out of the ground, compared to the orders coming in for it. If you are right and I am wrong, I still think it will swing the way I see it here within ten years....

Oh and JSH, replacement metals found in the future for silver, we have covered that as well in the past, and it is a feasible point IMO....

For the nickel question. I have decided to keep a few hundred dollars in nickels since they are the only 'real ' money now aside from pre 1982 pennies. No cost factor and I guess since I was taught at a Very young age to keep the silver coins! You never know what may happen and if nickel or copper don't become more valuable I just spend the nickels! Also, in deciding to pick some up, the very first roll I counted had a silver nickel so I decided to count them all a
s I got them and have a roll of silver as well as Buffalo nickels. Nickels are reaLly the only coins not picked through yet!

Here's a link to an article by The Silver Institute entitled "Silver Investment the Dominant Driver of a Remarkable 2010". In my original statement I referenced annual production of silver. I meant mined & recycled, but we can go with mined if you like. According to them in 2010 735.9 million ounces were mined & 487.4 million ounces were used in industrial applications.

http://www.silverinstitute.org/pr07apr2011.php

Industrial applications did show an increase of 20% over 2009. They also state that the increase brought production back to the level it was prior to the recession. That doesn't suggest that industrial demand will continue to increase at that rate. In fact, if that was a normal increase it wouldn't have been highlighted.

You could make a case that lumping photography, jewelry & silverware in with the industrial applications category would bring the total used in fabrication over the level of silver mined. If you wanted to go there I'd have to counter that 215 million ounces(roughly 29%) were recycled as scrap. I'd suggest that's probably a sustainable ratio of recycling.

You will notice I totally disregarded the amount of silver used to produce coins. That's due to the fact that silver coins are no longer used in everyday commerce, & are primarily investment vehicles.

Read the entire article, look at the headline, keep an open mind & come to your own conclusions. While you are doing that keep the following in mind. As/IF the price of silver rises it becomes feasible to mine areas that aren't profitable enough to mine at current price levels. As/If prices rise to a certain level alternative materials can/will be used as substitutes. Both sides of the supply demand equation are fluid & can go either direction.

I think we're seeing two issues in the recent bullion market:

- long term value of these PM's

- short term volatility


It's the volatility that freaks folks out. So much strange, conflicting news all the time that folks don't know where to place their bets.

A conservative guy would be out of the markets right now. A smart one would be in; the question is whether to be long or short.

I don't believe the US is immune. In fact I'm quite convinced that we are next. The power of the US is declining on the global stage and will continue to decline. Basic economics point to this fact as do demographics. The US has a small fraction of the world's population and that fraction is declining. The US share of global equity is also declining. As the US becomes a smaller fraction of the global market our economic influence will decline. As our economic influence declines our political influence will as well. This is why I made the statement above that investors need to be globally diversified. That is not only with investments but also with job skills. The current American worker is competing against a global talent pool.

The 80's PM bubble:

Yes the silver bubble was larger than the gold bubble. In my opinion, silver rose higher due to the bubble caused by the Hunt brother's market manipulations stacked on top of a general PM bubble. The underlying bubble, was not caused by market manipulation but fear. While I was alive during the late 70's / early 80's recession I wasn't old enough to understand it. However, from talking to my parents and others that lived through it, you had a general feeling of economic fear that was very similar to today. You had a recession, high unemployment, high oil prices, and a stock market that had ups and downs but had overall stayed flat for a decade. When people get scared they pull their money out of equities and put it in PM's. I believe the gold 1980's gold bubble was caused by economic fear not gold being pulled along with the Hunt brothers silver bubble due to gold / silver ratios.

The Gold / Silver ratio:

When our currency was backed by gold or silver the gold / silver ratio mattered. Now that the world's currencies are fiat, gold and silver are no longer tied. Gold is a commodity tied to economic moods. When the economy is going well, gold prices fall. When the economy falters we turn to gold as a safe reserve. On the other hand, silver is an industrial metal and prices are primarily driven by industrial use. That has changed in the last few years as gold prices rose enough to put gold out of reach of the average consumer and brokers realized that could make a killing with PM ETF based on futures. I don't see gold and silver's fates tied together today in a way that makes historical ratios matter in today's market.