What do you think will happen to Silver in the next few years??

OK one more before bed! First off, very well said. I agree, inflation is the story globally. A number of other countries are now upping their interest rates in part thanks to our impact as the global reserve currency, most of which are developing countries where inflation is a greater concern due to growth. The US has already done most of its expanding, so inflation is less of a concern here especially since most everybody else is printing money too. However I don't think that means it is not a concern by any means, just that we're ahead of the curve unfortunately at the expense of others which as you've stated will turn people away from the USD. I definitely have noticed prices going up with certain things, but I think supply and demand is also a strong factor, and I have been able to maintain a fairly static cost of living by becoming more of a bargain shopper and cutting out the frivolous things. For what I believe are these same reasons, some things haven't gone up at all. Some businesses have to cut profits to stay in business, but we can all only tighten our belts so tight before something has to give.

 

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For businesses this is known as margin compression and depending on the business cycle you are in it could be good. For individuals this is a decrease in standard of living that will be passed on to the next generation. In either case it represents cutting the marginal fat out of a budget. After the margin is gone businesses have no choice but to pass along increasing input costs to consumers. I do believe that there are solutions but they all involve political will, voter fortitude and many years of economic difficulty before things can truly become better.

Regards,

Bluesboy65

 

It's a fine distinction. For example, demand for oil in the world is increasing faster than supplies. This drives the price up. Is this inflation? No. It's a normal economic response to changes in the supply/demand function. As a secondary effect, the Fed might decide to increase the money supply to fund the higher cost. If they do this, the inflation rate will rise. If they don't, then people will have to cut back someplace else and there will be no systemic price rise. Currently, we are in the latter situation. Everyone focuses on QE2 but fail to see that there is a tremendous amount of debt liquidation and defaults going on elsewhere. That's why I watch median personal income levels. People can't spend more than they have so if food, energy and health care costs rise, something else will be cut from the household budget and there won't be any monetary inflation.

 

Regarding debt, people focus on what the Fed is doing and don't factor in the repayments and defaults on other forms of debt. When you do this, the case for inflation disappears [for now] because there isn't much of a net debt increase.

Default can never be taken off the table. Historically, this is the way nations have solved debt crises and eventually the US could be forced to do the same. The whole concept of "this can never happen here because it's different this time" may turn out to be deeply flawed. Time will tell.

M1 is rising, but velocity has dropped significantly since QE. http://research.stlouisfed.org/fred2/series/M1V?cid=32242

Bond yields are up a bit but still below historical norms, so this looks more like a reversion to the mean than fear of inflation. Real rates would not be so close to zero if the market feared inflation. It could also mean rising fear of default.

The fall in housing prices has also been a significant deflationary force. I've read that 30% of mortgages are underwater now, so expect significant additional defaults - another deflationary force.

If the Fed is determined to monetize to infinity, of course they could cause hyperinflation. But right now it looks more like they are trying to replace the money lost from defaults and liquidations in the financial system to fend off deflation. Also keep in mind that rapidly rising interest rates will crash the long term bond market, which is very deflationary.

So I come down to a 50/50 chance of inflation or deflation because there could very well be inflation, as you point out. I just think that people think it's a sure thing, and that's how mistakes are made. Nothing happening right now will cause hyperinflation. I fully agree that the Fed might take action at some point that will cause significant inflation, but it hasn't happened yet.

 

Responding to the points quoted:

Debt: we can agree to disagree on this one. When credit is obtained the money is used to purchase things and that is stimulative.

Default: From a technical perspective I can agree with your point. I just take it off the table in my scenario because a default would destroy our monetary system and our economy. All the Fed has to do to avoid default is to issue more paper. I just don't see an outright default happening.

M1 Rising: Have not had a chance to read the article but I do agree that velocity is low. My point was that a low Fed fund rates enable velocity - still need takers. Consumer confidence has been low for an extended period and corporate balance sheets are swollen with cash; the economy has clearly been holding back.

Regards,

Bluesboy65

 

After reading all the responses and indentifying the responders logic and view points I have come to realize that there are 2 main types of individuals that have responded to this thread.
Type 1: Those who believe that a really bad economic storm is on our horizion.

Type 2: Those who feel things are somewhat ok and the Gov can make it through the turmoil and debt.

Whichever side you choose is your given right. I am not passing judgement on anyone or their beliefs here. I find it interesting that some of us are preparing while others are not. It is my hope that everyone here can make their own decisions and do what is best for them. Ultimately, beyond the verbiage of economic language lies the event that is either unfolding or that will remain unseen. I hope the best for you all and that your prudence in whatever decision you make will be the right one.

As it stands today, I just went to the local grocery store and got 2 cartons of milk, bread, 3 boxes of cereal, pasta, pasta sauce, chex snack mix, coffee, coffee creamer (2bottles), 3 cans of corn, 3 cans of beans, 2 cans of chili and walked out $80.00 lighter than when I went in! Wow was what I thought. How are people feeding families?
My income has not risen in the past few years and I feel lucky to have a job. All of my expendable cash has gone toward survival and self defense items for the past year+ a few months.

As I have posted images of what I have accquired, the Benelli MR-1 (5.56mm) and M-4 12 g Shotgun, Cold Steel Trail Master Knife, Cold Steel Peace Keeper 1 Knife, Smith and Wesson Model 1911 .45 cal ACP , Ruger 22 LR Stainless Steel Bull Barrel for small game, Ammo, Ammo Storage, Fuel for cooking and automotive, and Emergency Field Medic Kit.

I feel like I am still far behind as I need some Silver and gold, a 4x4 vehicle, Large Tent, and other consumables.

So what have you all done in case you loose your job, your home, and become self reliant?

Here are the images all together. Can you tell I fear the worst?
I traded the M-2 for the new M-4 and will take delivery in 2 weeks. Also waiting for delivery of the new MR-1 5.56mm weapon. That will be in 3-4 weeks as it is coming from Italy.

M-4

MR-1

Model 1911

Ruger 22 LR

PK-1

Trail Master

The Peace Keeper Knife (first one has a 7" double edge Blade)

The Trail Master (2nd one) has a 9.5" blade

If social unrest develops in this Country from a collaspe in the dollar, the impact on Silver and the other PMs will default into a value exchangeable need. Therefore I also think that this will have an effect the ability to purchase items of self defense as the cost's will simply be enormus to accquire protection.

 

I think I need to call and agitate Time Warner. RoadRunner seems to be intercepting my requests to CoinTalk.com and rerouting them to MyHot2ndAmendmentFantasy.com.

 

jeffb

No fantasy here. These are actual purchases over the last 1.5 years. All of these weapons fall under the "legalities" of the State that I reside in.
I had to be finger printed, slap printed, palm printed, for my FID card. It is ok with me as these are or will be used as self defense purposes only.
At current I have some silver bullion in case of a pinch. I am planning to add more once I get some additional funds saved.
It set me back a nice chunk of change, but I feel it is worth it. BTW I am former Army as well.

 

I think whether someone is a type 1 or a type 2 as you say Zeplyn, it is prudent to be prepared regardless of the liklihood of what some consider to be an eventuality. Whether firearms, food, metals, or other survival supplies, they will all be well worth the money spent if things go south, and most of them in most cases will retain their value better than the dollar under normal circumstances anyway (was that a careful enough statement? ;D). When it comes down to it though, you can't eat metal, and I think food storage often goes overlooked. I highly recommend a water purifier as well - http://www.rei.com/product/778044. Boy Scout Motto: Always Be Prepared. /end of tangent

 

Folks , I do believe we are drifting farther away from the subject of the original question which was " what will happen to the price of silver in the next few years." Lets keep our posts within that context please.

Jim

 

zeplyn did you stock up on canned food? and what about a fallout shelter?

 

InfleXion

If economic turmoil does rear it's ugly head the "potential" effect on silver could be huge. There are a multitude of predictions out there and everyones favorite is "hind sight" is 20/20 right?
I agree with food and water and I did not mention everything. We are all aware of the potential and water will be an essential for sure. This filter is the best on the market at this time for portable filtration. I decided to pick it up as well.
I suppose time will tell the story. I am still sticking to original thoughts on "What I think will happen to Silver in the next few years". I do hope you have some.

 

In the works on the food part, not so much canned but dehydrated, much lighter to carry and pack, thus the water filter.

I can not afford a fallout shelter so I paln to escape via remote locations away from major cities and rural areas. If this happens at the level where you need this fallout shelter the impact on Silver, Gold and all PMs will be simply huge. Have you looked at what dealers are charging for a roll of Silver Eagles? I have seen them as high as $680. Back in 2006-2007 an ounce of gold was that cost so it was a 20;1 ratio so to speak. It is now more like a 45:1 so Silver has some catching up to do.
Do a search on underground survival shelter and you will be amazed at what you find. I was.
My plan is to add silver every chance I get. I aslo plan to get a ATV if I have enough time and money. How else would one carry all this stuff to your shelter in the remote hills.

 

The Fair Tax doesn't just eliminate Corporate Tax; it eliminates ALL Federal income tax. There's an embedded 23% income tax in goods all through the manufacuring process of American made goods. It places a defacto 23% tariff on good produced in America. American companies have no choice but to relocate overseas to be competitive in the global economy. The Federal income tax was establish over 100 years ago. Economic changes in the past twenty (20) years requires (demands!) a significant change in our tax code.

When we provide economic "stimulus" we're only using tax dollars to stimulate the economy in China and elsewhere; very little stays in this country. Stimulus under a Fair Tax (temporary reduction of the tax) provides direct stimulus for American made products, thus directly stimulating American jobs. Everyone...please give "The Fair Tax" book (by Neil Bortz and Congressman Linder) a quick read. I think you will be surprised how an (admittedly "revolutionary") change to our tax code can address a whole host of problems we're currently facing.

EDIT: Oh...and get us to put all our knives and guns back in the closet. :thumb:

 

....

 

Struggling mightily to return the topic to precious metals, rather than base metals propelled at high velocity:

You're comparing the cost of gold in 2006-2007 to the cost of silver today. The gold-silver ratio does not work that way. Between 2006 and 2007, the ratio was mostly in the range of 50 to 55:1. Silver has caught up quite a bit, although one can certainly argue that it has further to go.

To put it another way, by your logic, I could say this: "Have you looked at what dealers are charging for an AGE? I've seen them as high as $1500. Back in 2006-2007 an ounce of silver was $12, so it was a 125:1 ratio so to speak. GOLD has some catching up to do!"

 

+1

 

I am not comparing it like that. What I said is; back in 2006 and 2007 gold was ~$600-$700. per ounce. A roll os ASE today cost what an oz of gold did back then. I recall during that time a roll of ASE could be bought for $200-$250.

With Gold being $1350/oz and Silver $29.90/ oz take 1350/29.90 and you get $45.15
This is what I meant to come across the right way. Perhaps my english is not well written as my thoughts are in my mind.
So, the spread is such that silver has plenty of room to catch up on the ratio of today Gold-vs-Silver.

I really expect Gold to come down a little to $1000 to $1150.00, if it does what a great buy signial that would be. Downside for Silver is $22-23.50 range.
I hope this clears up my last words a little better. And yes I have looked at dealer prices for AGE. ~$1460 or in that general neighborhood.

BTW jeffb, I like my odds better with high velocity. Yes I have more "base metals" that precious ones. How about you?

 

Since I'm not especially anonymous on this or other online forums, I tend not to provide specifics about either. Any precious metals I may still have are in a secure place, and any high-velocity base metals I may have will be discussed only on a need-to-know basis -- for example, with people who visit me on the assumption that I'm holding those PMs.

 

This is great! I never mind posting my weapons, the other stuff, well like you say, dare you vist me when uninvited? LOL
Love the answer.