Silver Down 4.00...look Out Below

Silver drops as CME hikes cost of speculation

http://www.marketwatch.com/story/si...n-2011-05-02

Gold contacts in electrical equipment are a common use.

Good call, Junior. I am doing the same as you and really doubt that the SLV is wrong.

IMHO, the big silver ETFs are one of the BIG differences between 2010-11 and 1980-81. We did not have them back then but we sure do now. They are BIG players in the silver market, owning at least 220M ozs. This will increase as more people buy them to hedge their dollars with something that is a lot closer to REAL money.



I grew up in the 1950s, so remember well when a paper dollar (US Silver Certificate) and a silver dollar were 100% equivalent. One could be traded for the other at any bank in the US. Today, it takes around $45 in paper money to buy *1* silver dollar. Because of this, I see paper money as being worth 1/45th of a dollar or about what 2.2 cents was worth back then. That sure looks a lot like a 97-98% loss in value to me! And this is just since the late 1950s. The dollar has been eroding since well before that time.

My thought is that we cannot borrow or tax our way to prosperity whether we pay a steep price or not. It simply cannot happen.

Prosperity is the result of low taxes, a business environment that promotes idea and job creation, decent infrastructure, an educated work force, and a level playing field that people can count on. US business today has been literally licensed, regulated, permitted, and taxed to death. It has basically given up trying to succeed in the US because of the above.

Only by moving over-seas to locations where both the people and the government understand that business is not simply a convenient cash cow to be milked at the whim of government and then converted into hamburger when it is no longer producing milk, do we see REAL productivity, job creation, and prosperity. Investing over-seas has gone from a nice portfolio booster to an absolute necessity.

That's one possibility. The other is that investors move on to the next big thing & the bottom falls out of the silver market. I can't foretell the future so I don't know which will happen. What I do know is a prudent person keeps both possibilities in mind.

Those who invest in commodities realize a great deal that the pointy-headed academics and government types apparently do not. The value of the dollar was once backed by a large hoard of gold in Ft. Knox and in various large banks. Now that the dollar is not backed by gold, the perception is that it is backed by the US economy and the US government's ability to tax its productivity.

That would be fine IF... the money supply was equilibrated to US production and both grew and shrunk to keep pace with it. Unfortunately, this is not the case. The US money supply has been allowed to balloon hugely and with no relationship to US productivity whatever. This is causing a world dollar glut with the result that dollars are too plentiful now to be worth as much as they once were. Not a week goes by without seeing more US dollar buying power erosion; hence higher commodity prices.

IMHO, this trend will continue until either the dollar collapses completely OR DC gets its act together and implements an austerity program that forces the government to become smaller, live within its means, and that generates enough extra free cash flow that a significant part of the debt can be paid down. Interest rates will have to rise, possibly considerably, entitlement spending will have to be reduced, spending will have to be reduced or at least frozen, and taxes will have to rise. All of this will create the financial and economic pain that terrifies so many, yet is absolutely essential to rebuilding America's financial strength. I wish that I had more confidence in our politicians to "man up" and handle this problem but their reputation so far does not suggest that to be likely. In lieu of that, about all that we can do is to make sure that our individual financial futures are as solid as we can make them and that we are not depending on the government for our financial future or success. Anyone who does depend on the government is sure to be badly disappointed.

There is quite a bit of gold in circuit boards, especially older ones. Any volume computer repair/recycling service has a drum they fill with bad boards, and it can add up to substantial money.