why is gold and silver going down right now?

Is it just me? Bullion is not "way down in price", even with the recent fluctuations. Man! I think it's way up from where it was just a few years ago. How quickly we forget.

Business is picking up, overall. Hmmm. Regardless of personal experience...?? Don't we base things on personal experience? I do. Just saying.. Maybe 'not getting any worse' is the same as saying improving? I could maybe go for that one.

 

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Yup, I bought some ASE's around the time it was what, dipping in the $25-$27 dollar range just at the beginning of the year.

 

Also people forget for better or worse upper and upper middle class (top 10%) has far more impact on US economy than bottom 50% as a result unemployment doesn't have as much effect on US economy as people think it does. With stock market going up, the income for top 10% has actually risen tremendously this year hence IMO we will see stronger spending come summer time but however right know increasing oil prices are dampening that...

 

*shrug*

Nobody's asked.

 

It is my opinion that it is all relative. The US dollar should drop because Americans are spending way more than they earn. It seems that the US is not alone in this theory. The rest of the world is doing it at slower and often faster paces. Thus, their currency are fluctuating with the dollar. As far as PM are concerned, it is relative again. What value is a shiny piece of metal. It is worth less when food and gas are more important than a shiny piece of metal. OK, the shiny piece of metal may have some other industrial value, but it is worth less in a recession than in a boom, sometimes. In the end, it is all relative to the year, the month, and the day.

 

If taxes were raised and spending lowered enough to balance the budget and pay down the debt over a period of years, the effect would be deflationary, not inflationary. Times would be tough as wealth was tranferred from taxpayers to lenders, the demand for dollars [to pay debt] would increase, and most likely the value of the dollar would increase also.

Better ask for a refund on that economics course.

 

To the OP, you need to understand that the price of silver is determined by ~99% paper contracts and ~1% physical silver. Unless you are an inside trader with an enormous wallet you'll have a hard time understanding the day to day movements. In spite of this, the fundamentals for silver are strong enough to keep the paper price from getting too out of control.

My interpretation of why it is going down is because of the trend channel the price of silver is in. There is a downtrend we have been amid since last May which we touched the ceiling of when silver last hit $37, and I ancitipated then we would begin a downtrend back to the bottom of that channel which could be as low as $26-$27. I think we will be rangebound in this last year's trend until we touch down to the longer term 2008 uptrend, at which point the recent downtrend and the longer term uptrend will squeeze the price and it will be decision point time.

 

I'm thinking you didn't get much of a bargain either but then again, economics courses are a waste of money anyway. This theory means that the debt won't ever be paid and in fact if paying it off is bad, then accruing more of it is better. Given this theory then they could simply borrow all they need and end all taxation.

I'm not disagreeing with you BTW as this is exactly what they are doing though they haven't completely eliminated taxation yet. Where is it headed? To the place called "not good" and then people will really experience tough times. On the plus side, the current fiat currency debacle will have finally failed, as they all do, and society can start over again with something else. It's the discontinuity between now and then that is the only unknown.

 

Gold has been money for 5000 years yet there isn't a gold currency remining in use. Eventually all money systems fail gold based or not for some reason or another.

 

The reason we went off the gold standard in 1971 is because they didn't have the gold to back up the currency like they should have. It wasn't because the gold standard failed. It was because the rules were not followed. Money systems may fail, but gold has retained purchasing power throughout the numerous systems. Currency without any gold or silver within it is what has not.

 

Has everyone fully considered a gold standard and what it would do economically? I am referring to the deflationary nature of such a standard. Even in simpler times you had mass protests and uprisings against it. How would you like to pay $200,000, take out a mortgage promising to pay x gold backed dollars a month to pay it off. Next thing you know, every year at work you are taking pay DECREASES because of the deflation going on. All of a sudden your house and car payments are too expensive so you lose both. You cannot sell them since everyone is losing pay due to deflation so the market has crashed on any major assets.

A gold standard is not a utopia. Its great for those who have a lot of money, since they are guaranteed to keep it, but its bad for those starting out, and can be extremely bad for everyone if it breeds self reinforcing deflation, which is much worst on an economy than inflation is. If it starts deflation, everyone loses except for those holed up in their houses rubbing their gold like Schylock.

None of this seems to ever get brought up on gold bug sites.

 

Simplified:

There's a finite supply of gold.

There's an infinite supply of apples.

Eventually a single atom of gold is "worth" more than an apple. Then what?

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That's putting it mildly.

What? The people who profit off of fear want you to be afraid? No way, can't be! :too-funny:

 

Both of the preceding opinions are not borne out in any fact. The USA was on the gold standard from 1792 to 1933, and partially until 1971. During the 1792 to 1933 period this country saw the greatest economic growth in it's history and one of the greatest expansions of an economy in human history. All of that done on the pure gold standard. During the period of time when the USA still promised to redeem USD for gold to foriegn nations, we still were forced to follow currency restrictions for the most part, and it was during this period that industrial power of the USA reached it's peak.

However due to bad monetary policy by the Federal Reserve, which was creating currency that could be exchanged for US Treasury $s. and hence gold, Nixon was forced to end the gold standard and the USD went completely fiat. It's been during this period that our industrial base has been devastated, debt has hit unprecedented levels. 1/2 the working population can't find work and there are almost 50 million people on foodstamps. We changed from a production economy to a "consumption" economy and one, which is unsustainable.

The results speak for themselves. Anyone who would argue that gold is bad for economies and ignores the folly of fiat, isn't looking at the facts.

 

you start out with some big ifs. I don't see those two things happening so the rest of it won't follow. lower taxes, lower spending? not in my lifetime. hasn't happened and I've been around a while. won't happen going forward because they are on the hook for too much now. that's my take.

 

Technically the US was on a silver standard, and the actual formal "gold standard" didn't come about until the early 1820s or so, but gold & silver were the basis of money, so anyway... (nevermind the horrible panics and extreme crashes, too)

You're comparing 141 years of the country's history to the remaining 78? Let's look at the actual data:

• From 1792 to 1933, the increase in real GDP per capital is: $4647.87 (2005 dollars), or $32.96 per year
• From 1934 to 2010, the increase was $35924.33, or 472.68 per year

And I'm also prrrreeeetty sure the US didn't hit it's "peak of industrial power" until after 1933... you know, that whole WWII thing and becoming a superpower and all... all after 1933.

You're talking about things "not borne out in any fact"?

Ref = http://www.measuringworth.com

 

The worth of Silver was defined in terms of the value of gold. i.e. 16X. The USA was on a gold standard, the problem is there was no gold until Charlotte.

Read the act.

Go re-read my post. Someone who actually took a moment to do so would have figured out that I said the peak of our industrial power was reached in the 1960s.

Finally, of course GDP goes up. It's valued in fiat money. USD today is worth just 2 cents on the 1914 $. So using your own #s, GDP is increasing at the great rate of $9.44. LOL GDP is also a meaningless measurement now. 40% of that is growth in the fiat money supply.

 

The dollar was measured in silver. Gold was given a fixed ratio in terms of the dollar that was silver. It was bimetallic for all intents.

Those values were normalized to 2005 dollars, so inflation adjusted. They hold up.

Are you arguing that the requirement of having international settlements in gold caused the post-war industrial boom?

 

Mmmm, more popcorn :yes:

 

This is simply incorrect. It's not stated this way in the act. Here is the exact wording:

[highlight]"Sec. 11. And be it further enacted, That the proportional value of gold to silver in all coins which shall by law be current as money within the United States, shall be fifteen to one, according to quantity in weight, of pure gold or pure silver; that is to say, every fifteen pounds weight of pure silver shall be of equal value in all payments, with one pound weight of pure gold, ans so in proportion as to any greater or less quantities of the respective metals. "[/highlight]​

You obviously confuse this with the technical specifications of the coins themselves. This clause clearly establishes the value of silver to be based on the value of gold. I will admit however that I did forget that at this time was 15 to one. It's a pointless argument however, it's clear the USA was not on fiat money then.

You will have to provide your source or calculation for the GDP numbers for me to consider it. I would want to see what was included.

 

I neither said that paying off debt was bad, nor said that accruing more of it is better. It is a mistake for you to think so. The economics courses I've taken have been of great value to me. They are particularly useful in light of all of the internet garbage floating around that people quote endlessly like parrots.

I don't agree that the failure of the currency will be a good thing. It will be a social catastrophe.