Glad To See Gold And Silver Prices Fall!

I mean, prices going down, are a part of life. They happen all the time in the markets,,, and there is a ton of money to be made on the way day, as on the way up.

However,circling back to your thread, I mean I think its great, its exciting for collectors such as myself. I can see less enthusiasm for coins I wanted by other collectors which is good for dropping the prices, tho some numismatic stuff is barely budging, other items are dropping, not like a rock but they are moving lower.

Take those 5 oz ATB's, you know I completely forgot about those, just so busy. But I will be collecting those going forward, I like that the proofs got knocked down a bit too, the proof eagles which are my favs.

so yea, I mean lower prices aren't a bad thing, I had mentioned that in my thread many many months ago.

I think I am becoming a stacker just looking for opportunities to buy ASEs at good prices on a fairly regular basis.

Cost of production: Let's go back to South Africa in 1890 when they were sitting on tons of gold stuck to its raw form and no feasible way to get it out. A ton of this stuff would produce no more than an ounce of pure gold. Finally, cyanidation was introduced to the region and their output went from 1 ton of pure gold in 1886 to 14 tons in 1889 and then to nearly 120 tons in 1898.

(This info came from Peter L. Bernstein's "The Power of Gold".)

The time is coming when we will find our modern version of cyanidation that will allow gold to be either stockpiled or flooded onto the public. The bad thing about gold is that it rarely if ever disappears because it is not very useful outside of the artistic realm.

This notion that the Fed is printing a bunch of fiat currency that is worthless and will flood the market is the same tune your father's generation was pitching in the early 80's. I remember it well, and to quote Yogi Berra, "It's deja vu all over again!" Money is printed all the time and old notes are retired all the time. The Fed controls the money supply, and specifically circulation notes and coins (M0), through various techniques and can constrict M0 just as easily as they can expand it. Printed money isn't put into circulation as it's printed. It's put into circulation as it's needed, and pulled out as needed as well.

Also, this notion of production costs assumes high demand. It's like the oil sands in Canada. They can produce oil at a profit when the price per barrel is high, but curtail production when the price drops. If the global demand for gold drops, only the lowest cost producers will produce, thus lowering the average cost of production. Economics 101.

The bubble is bursting on precious metals and I'm ready to finally pick up some deals when silver settles in the $10 to $15 range ($12 perhaps?) and gold finally drops below $1000 ($750 is my guess). Ten years ago gold was around $375 and silver around $6. When you take away all of the irrational hoarding and hedge fund bets, it's hard to imagine gold and silver commanding MORE than double their pre-bubble values. If it's like the 1980's bubble, gold doubled in price ($200 to $400) but silver dropped back to pre-bubble prices ($5). That may be why silver is declining faster than gold right now. But who knows, this could be a dip before a big run up to $2000 gold and $40 silver. PM markets aren't for the faint of heart!

larsdog... um not to differ - but the money being printed is being spent. This is different than your analogy. In the past the money was put into storage and then dispensed as needed - today they are printing it and using it to buy government debt. That model is now being used around the world and has many wondering how sustainable it truly is and what the long term ramifications of it are, since it has never been done before.

We will see. I think a lot of the run up can be attributed to the massive position John Paulson, and then other hedge funds, took on gold. It reminds me of the run up in Silver in the 80's due to the Hunt brothers betting heavily on silver. Whether the hedge funds dump or hold may be the key.

I'm not talking about intentional market manipulation. John Paulson made about an $8 billion bet on gold because he predicted inflation. Several other hedge funds followed suit, at least in part. Now that doesn't look like such a good bet. If Paulson and the other hedge funds start unwinding those positions there could be a big drop in the PM markets. If the funds hold those positions, maybe not. It will be interesting to see what happens.

BIG NEWS! I have seen the first canary in the mine die! I was driving back from a rafting trip in North Carolina and saw a Gold/Silver store with a "Going Out of Business" sign! This could be an anomaly, but if I see a few more then I will know we are reaching the bottom. It's the same as the 1980's. It started with stores opening all over with signs screaming "Sell your Gold and Silver Here!". That is a sign it's time to HOLD. A year or two later the airwaves are FLOODED with "Buy Gold NOW (and get free silver)" advertisements which means it's time to SELL. Then all of those Gold/Silver shops go out of business because the volatility in the markets goes elsewhere and the price settles. THEN is the time to BUY small amounts each year until the next bubble. That's how to MAKE money in the PM markets. Keep what you think you need for a real meltdown, but if things get really bad, lead will be more precious than gold.