Just Some Core Reasons I Think Silver Is On Fire

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stewart Pillar of the Community United States 1126 Posts	Posted 04/14/2011 09:12 am Just from observations I have made over the last couple of years where the price of silver is concerned is. The price of silver is not influenced solely by the situations taking place in the U.S alone. Silver price is established by global events and markets. And over the last couple of years we have had some major changes in the way the world is looking at and relating to silver and gold. The Chinese have gone from a major exporter of gold to one of the largest importers of gold and silver on the planet. Actively getting their population to buy gold and silver. China's largest bank setting up funds for their people to put in small amounts of money at a time, to build up to purchases of ounces of precious metal to be credited to their accounts or taken home for those that want to take physical possession. For those that cannot afford to buy an ounce at a time. Why this even catches my attention at all is the fact that China is a communist country and the fundamental core of a communist country is the State itself. With the population working for the building of the wealth of the State. Not for the building of wealth of the general population. Which they have begun to do by wanting their people to purchase precious metals. I am not sure what caused this fundamental shift in policy. Maybe getting ready to start a new currency based on silver and gold. With the U.S. Dollar being the reserve currency of the planet that affords us a unique position in the world to our great benefit ever since the end of World War II. There has been a quite concerted effort to change that position that we enjoy. China and Russia set up an exchange at the end of 2010 so that they could bypass the U.S. Dollar altogether. In February of this year the IMF (International Monetary Fund) is pushing to replace the Dollar as the world reserve currency. And today the U.N. (United Nations) has joined in on calling for a replacement of The U.S. Dollar with a global currency March of 2010 JP Morgan Chase gets caught red handed suppressing the silver market there have always been rumblings of this going on for as long as I can remember. And those that did not believe it just chalked it up to conspiracy theory noise. But with them being caught in the act. The light begins to come on slowly in people's heads (It was like a lightning bolt in mine I remember the day the story broke in March 2010 very well and I began hard core stacking) with the historical ratio of silver to gold being 16 to 1 (16 ounces of silver equal in value to 1 ounce of gold) people began to understand that silver was way undervalued artificially by JP Morgan's price suppression scheme and began buying accordingly. With a small vendor in Tunisia feeling no respect from those in political power. He sets himself on fire in front a local government building, which sparks a protest which ends with the removal of the long time repressive Tunisian government. Which in turn ignites protests across the Middle East. Egypt is the next Government to fall with the entire event played out in the major press outlets of the world one was able to watch it every day all day if they so chose to on the internet. Live feeds coming out of Tahir Square. Now Libya is going differently and the Government is fighting back. Unlike Egypt where the Military were behind the people Libya has turned to killing the protesters drawing in the rest of the world into the fray. The entire Middle East is on fire right now. There are also protests in the UK and Germany because they no longer want to be part of the disastrous Euro experiment because they feel they are being made to foot the bill for bailing out other countries where the economy has crashed or is crashing Portugal, Greece and others. Protests all over Europe for various other reasons where governments are taking from the people to give to the banks and other various austerity measures. Protests here in the United States over heavy handed actions being enacted by state governments. Whether real or perceived The rise in prices of everything from Gas to Bread when a lot of people foolishly fell into the whole throw it on a credit card thing, and live right to or beyond their financial limits so any rise in prices would put them behind on everything. people are on fire and revolution is in the air around the planet. And in times of unrest and uncertainty people turn to what has been money for thousands of years. Silver and Gold My thoughts are that with gold at it's current price level and the historic silver to gold ratio of 16 to 1 the price of silver should be right around the $90.00 per ounce area. I just think the current rapid rise in the price of silver is due to silvers artificial suppression of price for decades and it is just racing to catch up with it's self. If anyone can think of other reasons I would love to hear them because the price of silver and gold directly affect one of the great joys in my life, Coin Collecting Edited by stewart 04/14/2011 09:13 am Report this Post to the Staff

hockingzig Pillar of the Community United States 1450 Posts	Posted 04/14/2011 09:39 am I would add to those "triggers" the development of the economies in India and China,etc. increasing demand for goods overall and commodities in general. In countries where wealth is measured in gold ownership ie. India,as wealth increases demand for gold and silver increase. I do not think we can avoid ,worldwide,going to some commodity backed currency. This last financial crisis has opened the eyes of the populace about "good faith and credit" of governments in general and fiat currencies will not survive,and I believe there will be a group of commodities that will be used,but gold and silver will form the basis. Report this Post to the Staff
Peter THOMAS Pillar of the Community Australia 2830 Posts	Posted 04/14/2011 11:04 am thankyou: food for thought. quote regarding China: " I am not sure what caused this fundamental shift in policy." - Mao was a Marxist, and the driving intellect of the CCP during the revolution (or civil war, if you prefer to think of it that way); and of the PRC after "liberation" in 1949. He was a philosopher, but with a pragmatic side. After Mao died, he was replaced by the Gang of Four, who were extreme hard-liners, who wanted to renew the worst excesses of the Cultural Revolution. After a few months, it was apparent that they were going to purge the Party, and those at risk moved to oust the Gang. They looked for a moderate alternative, and they selected Deng. Deng's theory was encapsulated in a Sichuanese proverb: "black cat, tabby cat - it doesn't matter: if it catches rats, it's a good cat." So, modern China is a one-party state; and that party is still called the Communist Party, but modern Chinese divide their post-1949 history into the era of "planned economy" under Mao, and the "market economy" under Deng and continuing since his death. The Chinese are still learning about the "market economy" - their legal system has not yet caught up, but they are learning fast. I have a question: for a hundred years, silver was used in photography, but that became obsolete with the shift to digital cameras. That would lead one to think that demand for silver, and following that, the price of silver, ought to have declined over the last decade. So, is the recent increase in demand for silver driven by some shift in the uses to which silver is put; or is it largely because silver is a convenient and popular means of storing wealth ? I'll follow this thread with onterest. Peter in Oz Report this Post to the Staff
OneBowl Pillar of the Community United States 759 Posts	Posted 04/14/2011 11:11 am Silver has many electronic uses. And ETFs are buyers. Report this Post to the Staff
stewart Pillar of the Community United States 1126 Posts	Posted 04/14/2011 11:40 am Peter, Thank You for your reply about China A very good read. As for the lack of photographic use of silver leading to an excess on the market. My thoughts are that as quickly as film photography ended due to digital photography, that is a small portion compared to the use of silver in the electronics that took film photography's place. Silver use has ramped up dramatically for use in all the little electronic gadgets that now permeate our everyday life. In small amounts but in mass numbers. I think making recovery from these electronic devices uneconomical at today's silver prices Meaning it all goes back into the earth in land fills. There is a story going around the net that there is 500 Ounces of silver in each Tomahawk Missile That we have. And when we start lighting those baby's off we tend to do it in large batches at a time. with that silver being unrecoverable to say the least. Not sure how true it is but even if there is a quarter of that amount in each Tomahawk we are still burning through a lot of silver just in that area alone that will have to be replaced by mining. Link to story http://goldbasics.blogspot.com/2011...missile.html Edited by stewart 04/14/2011 11:40 am Report this Post to the Staff
LastGold Valued Member United States 228 Posts	Posted 04/14/2011 11:59 am Silver is also basically inelastic. That means the industries that use it, have a difficult time finding a viable substitute. There is also much less silver available for use than most think (see many articles by Jason Hommel). Recently, to the surprise of many - we discover the silver markets have been suppressed, (plug in JP Morgan + silver), or Andrew Mcguire + silver into any search engine). Also Ted Butler + silver, but do it when you have some time - as there is much to read. I have been a silver bull for many years, and have been expecting silver to correct to its' traditional relationship to Gold, (about 15 or 16 to 1) for a long time. My dad used to say, "it all comes out in the wash"... We are in the rinse cycle now. Report this Post to the Staff
Silverhawk74 Pillar of the Community United States 3670 Posts	Posted 04/14/2011 2:11 pm All mentioned above I agree with and it makes much sense to me, one really needs to look at it from a global view, instead of a national one. When China stopped selling it, and began stock pilling it, what more of a tip does one need than that.... Another thing I have not heard mentioned much, is silver is used often in automobile assembly lines, and even as the new techs move in, and perhaps oil powered gas engines become obsolete, I think there is no doubt silver will still be in much need in the auto plants. Seems like Ed B mentioned something a few weeks back, about circuit boards which run much better, when silver is used for the conductivity factor.... Report this Post to the Staff
Silverhawk74 Pillar of the Community United States 3670 Posts	Posted 04/14/2011 2:17 pm Oh, and by the way, I worked in a photo lab for three years, so no better to point out how digital is the main stay now, but don't fool ones self into thinks film is obsolete. They still run thousand of images via film. My best friend runs the digi department, and his wife is APS's accountant. It is her job to sell the silver, when the machines collect enough, and the market is right. I have even seen it, it looks like black chunks of worthless metal, the way it is collected. APS (located in Cleveland T.N.)just made 120 on silver, back when it was around 30 an oz, say two months back.... When I worked there, I ran a scanner, a machine which basically runs through 1000's of film images, scans into comp files, where it can be sized, croped, and printed later. Mostly school images an sepia. You know sepia, the guy with racoon hat and shotgun prop getting picture at Walmart in throwback clothes, that comes back black and white, and sometimes black an white with color. Well, APS and other film labs produce countless pictures via film everyday. How much longer that will last, hard to say, but some things are just here to stay, like a book or newspaper, even with the net, nothing can replace that in hand feel.... Edited by Silverhawk74 04/14/2011 3:06 pm Report this Post to the Staff
Ed_B Pillar of the Community United States 4008 Posts	Posted 04/14/2011 2:31 pm Silver photography once consumed about 28% of all silver production. It now consumes about 15%. That's less but no small amount given the annual world production of about a billion ounces. As to the currencies... yes, both China and Russia, and perhaps others as well, are getting tired of the US Fed playing with the dollar so that our creditors get paid with cheaper and cheaper dollars. Russia has a lot of natural resources. They are riding high on oil and gas right now but they have a LOT of gold as well. The Chinese are buying LOTS of gold and silver now and they are using US dollars to do it. They want out of the US dollar and are using PMs to get out. It would not surprise me to see the Russians and the Chinese sponsor a new gold or silver backed world currency that would be used initially in international trade and that eliminates any currency games from any one nation. A cheap currency only benefits debtor nations. Creditor nations despise them. Change IS coming on this issue. No one really knows when it will arrive but there will be a tremendous shake-up in the currency and financial markets when it comes. I fully expect an international monetary attack on the US dollar at some point and with George Soros leading the charge. A lot of the difficulties in the US right now are not due to rapidly increasing prices of commodities. It is the rapidly falling value of the dollar that is making commodity prices spike upwards. We look at a gallon of gasoline at $4 and say, "Wow... that is really expensive!". But, in REAL terms, is it? No, not really. With $40 an oz. silver, that gallon of gas costs 1/10th of an oz. At one time, a silver dollar really was a dollar. Today's paper dollar is about 1/40th of that or about 2.5 cents. Want to buy a gallon of gas? Hand over a couple of silver dimes and you will get a few pennys as change. Report this Post to the Staff
ayejay1974 Valued Member United States 314 Posts	Posted 04/14/2011 2:43 pm The amount of silver lost used in photography was picked up by the newer technologies in greater numbers. Cell phones, palm pilots, etc. Silver is used in the medical industries due to it's natural antibacterial properties. With an increase in the need for solar power, silver is essential. We lost silver use in one industry, but it's use in other areas have increased. Report this Post to the Staff
JackB Pillar of the Community United States 1064 Posts	Posted 04/14/2011 4:16 pm Well said Ed_B. A very comprehensive write-up, a nice picture of what's happening, even though a bit scary. Report this Post to the Staff
vinnycoin Valued Member Canada 442 Posts	Posted 04/14/2011 5:32 pm I believe China and Russia are already trading directly in their own currencies, and by passing the USD altogether. Report this Post to the Staff
ronpacheco4 New Member United States 41 Posts	Posted 04/14/2011 9:19 pm I wonder which way silver will head if and when warren buffet sells his 100 million ounces? Report this Post to the Staff
Peter THOMAS Pillar of the Community Australia 2830 Posts	Posted 04/14/2011 10:00 pm quote: "We look at a gallon of gasoline at $4 and say, "Wow... that is really expensive!". " - where I am, petrol (gasolene) is AUD $1.50 per litre 1 AUD = USD 1.0546 US gallon = 3.8 litres that's equivalent of US $6.01 per US gallon ... hmmmmm makes me glad a bought a more economical car last year. Peter 29.4° Celsius; Wind: ENE at 16.6kph; Humidity: 74%; at 11.30am Report this Post to the Staff
JackB Pillar of the Community United States 1064 Posts	Posted 04/14/2011 10:19 pm Peter - do you have different grades of petrol, like we have the 87, (89?), 93 octane grades? I live a near Boston, and tody paid $4.09 per gallon for 93 (premium). Report this Post to the Staff
Ed_B Pillar of the Community United States 4008 Posts	Posted 04/14/2011 10:44 pm Quote: Well said Ed_B. A very comprehensive write-up, a nice picture of what's happening, even though a bit scary. - JackB Thanks for the kind words, Jack. I agree that there are plenty of reasons to think that a very scary scenario is possible. When I look at what has already happened to the dollar within my lifetime, it really does not have to go a lot further to be in VERY bad shape. The American people have a great gift in their possession and that is the fact that the US dollar IS the world reserve currency. This means that virtually everything is priced on the world market in US dollars. We are the only nation on Earth that can buy things without first converting our currency into something else. This give us a lot of advantages in business conducted all over the world. If the US dollar were no longer the world's reserve currency, we would see much less demand for dollars around the world and a further decrease in the value of the dollar. This would likely not be by a small amount, either. Think in terms of 30-40% reduction almost immediately upon losing WRC status and probably a long slow slide afterwards. Only by getting our debt under strict control and our interest rates up can we bring the dollar's value back up to where it should be. None of this is fiction. Great Britain's currency was the world reserve currency for over 200 years. It was replaced by the US dollar. That change did some nasty things to the British people in terms of their savings, property values, and the value of the British Pound. During WW I, the British Pound was valued at US $5. Today it is valued at US $1.62. That's less than 1/3 of its former WRC value, so it has been devalued by more than 2/3. To really grasp what this means, imagine everything becomming 2/3 more expensive in this country. Yikes! The Pound is making a bit of a comeback, though, because the Brits are doing a very good job of supporting their currency and taking financial measures that cause some pain now but that will also make for a much brighter future. When my wife and I took a trip to Great Britain in 2001, the Pound was only $1.43. We got a pretty good deal for our travel dollars and enjoyed the trip immensely. We would like to tour London, Scotland, and Ireland next year but the currency situation makes this more expensive than we want to pay. Report this Post to the Staff
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