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 Replies: 48 / Views: 5,528 |
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Valued Member
United States
405 Posts |
How low can gold and silver actually go? At some point it has to stop right? Is it just me or does there seem to be a disconnect from physical PM compared to paper traded pm?
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Pillar of the Community
United States
5850 Posts |
They won't ever go to zero, obviously, but there's a real chance they could return to historically low levels. I'm talking $4-5 for silver and $300-400 for gold. There are plenty of arguments against that happening, but there are also good reasons why the prices stayed at those levels for so many years before their recent upsurge.
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Valued Member
 United States
405 Posts |
I just can't understand how people trading paper in New York can effect the price of something that is produced with physical labor. You would think that the miners would be the ones to determine the price. Just like any thing else that is manufactured.
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Pillar of the Community
United States
808 Posts |
Hey everyone! Took a few months off from the CCF forums and buying in general. Did I miss anything?
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Pillar of the Community
United States
5850 Posts |
Quote:
I just can't understand how people trading paper in New York can effect the price of something that is produced with physical labor. You would think that the miners would be the ones to determine the price. Just like any thing else that is manufactured. I am by no means an expert on this stuff, but I suspect the reason is because the amount of gold and silver that is traded on paper far, far exceeds the amount of gold and silver that actually exist on the planet. When you're trading in "shares" of gold and silver, no actual metal is trading hands. And as long as spot price is tied to the paper market and not actual sales, the value will not be affected by the actual availability (or lack thereof). |
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Valued Member
United States
410 Posts |
Quote:
You would think that the miners would be the ones to determine the price. Just like any thing else that is manufactured. Commodities are different than manufactured goods because the product is the same regardless of who supplies the product. Silver is silver and it doesn't matter if it is mined in the USA, South Africa, or Australia. Since there is no way to differentiate the product, commodities are sold at auction and it is the bidders at the auction that set the price. |
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Bedrock of the Community
13014 Posts |
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I just can't understand how people trading paper in New York can effect the price of something that is produced with physical labor. The paper trade that always gets complained about is one of the reasons the metals havent completely crashed by this point. Trading effects every commodity and literally everything is made with physical labor so theres nothing unique about that. If 1 mining company tried to up the price on their own they might as well just close their doors because that would be the end of them. Edited by basebal21
06/26/2013 4:42 pm
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Pillar of the Community
United States
1454 Posts |
Paper trading PMs is a relatively new venture. It's existed for what, around 10 years? Almost exactly coinciding with the historic rise of the two commodities. Coincidence? Maybe. Contemplate the fact that silver and gold remained extremely low for the better part of twenty years prior to the advent of paper trading. Before laying the blame for the recent losses on paper, keep that in mind.
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Valued Member
United States
410 Posts |
The GLD ETF was started in November 2004 and SLV in April 2006. I hadn't thought it before but it does seem that the bull market for PM's started when PM ETF funds started trading. It makes sense, it is much easier to buy shares on a computer than run down to the local shop and buy physical metal.
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Valued Member
United States
75 Posts |
It also makes it easier to invest in precious metals on a whim. It's just a click away...
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Bedrock of the Community
13014 Posts |
One of biggest advantage to the ETFs is you can actually buy for spot instead of having to pay the premiums for making the coins. Considering the price is largely a supply and demand issue and you can find silver literally everywhere we should have bottomed out on price by now if it was only the physical market driving the price. You can also sell in a few clicks like miz mentioned so you have less of a worry of having to try and unload large amounts of coins in a falling market
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Valued Member
United States
405 Posts |
I am not sure if this is a dumb question but are the PM ETF just like our currency. Meaning they are just printed up when someone wants more? Or do the amount of shares directly correlate to a given amount of gold or silver? Sorry I might not be making any sense, just trying to wrap my head around the whole thing.
thanks
Cory
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Pillar of the Community
United States
1454 Posts |
cj, it's supposed to correlate, but it's also a widespread belief around here that there are more outstanding ETF shares than actual ozs. of gold and silver. I'm not sure if there is a simple way to get to the truth of the matter so it's a good question with no easy answer.
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Bedrock of the Community
13014 Posts |
Theres a correlation. You couldnt just say I'm starting a silver ETF and have it on the market. They have significant holdings of the metals, you wont ever be able to turn your shares into it but there is logic behind the number of shares out there
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Valued Member
United States
405 Posts |
With gold and silver being consumed in the industrial fields (cell phones, computers, etc.) and the human population going up and the fact that there is only so much gold silver on our planet. Is it not inevitable that prices will rise?
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Pillar of the Community
United Kingdom
616 Posts |
Considering there is less than 1 ounce of gold per person on the planet perhaps the question would be how could it function as money. Bascially there are many rare and limited resources on the planet some valuable some just unusual. Personally I have been trying to understand what drives gold's value for several months now and still not sure I have a handle on it. There are many opinions on the issue but I encourage you to listen and research it for yourself then come to your own conclusion. Afterall you are the one who will either benefit or suffer from it.
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Replies: 48 / Views: 5,528 |
Posted 06/26/2013 10:45 am
