Silver bashers and history

I have noticed in several threads that many people refer back to history when the silver prices are discussed. The Hunt Brothers, $50 per ounce and then prices dropped, etc,etc.
The same reference seems to always come up that "historically" silver did this or silver did that.
Maybe history does repeat itself. But, is is possible that with the economic situation the way it is today, is there a possibility that this time it will be different? That maybe the economy is in much worse shape? That circumstances now are so much worse that history will not necessarily repeat itself? That maybe the silver game now has a whole new set of rules as compared to years past? Is it really wise to look back at "yesterday" and use it as an iron clad guide for "tomorrow"? I feel that holding onto what has "always happened before" could be a mistake.

Does anyone have any thoughts on this? I would like to know. I think it will make for an interesting thread that we all can learn from.

 

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I kindof tap into this subject in my first post in the Bullion section. Do your research into the factors that have you concerned. And formulate your opinion about what YOU think is best in regards to the future of Silver. People have many reasons to collect PM. I stated, the most important factor is, "the Human factor". Silver is a very hot topic, with many people asking questions cuz, of future economic, political and supply demands and concerns.
The easy part IMO. Is making your choice to invest. The trick is, when to cut loose and sell.

I personally think, Silver is a good investment to buy and keep for the next several years. Again, the trick is to know when to cut loose with silver in the future.

 

This time it's different! Heard that before. I wouldn't invest more than I was willing to lose, the good thing is that it probably won't go to zero like some other investments have.

 

Thats a big plus with silver. It will never be "0". And if you missed the sell of. Just hold onto them.

 

If anyone is going to use an historical analogy, then the analogy would have to be one where 3 emerging ecomomies were coming into bloom; with their growth potential just starting.

 

The late 70's that many of us talk about were such a time. You forget that is when Japan and Germany were really growing, surpassing other countries quickly on GDP basis. They were for their time as China and India are today. There will never be a perfect historical correlation, but to ignore the past is pretty silly IMHO. "Its different this time" is made fun of because SO many people say and believe it over and over, to their own detriment.

What is the 3rd country you are referring to today, Brazil? Be careful how much idealizing you give to some of these other countries, especially the ones with long histories of dictatorships and economy destroying social policies. Remember Argentina in the 90's.

 

I have considered the example of Germany and Japan. The problem with the analogy is the population sizes.

Japan = 127,704,000
Germany = 82,110,097

China = 1,324,655,000
India = 1,139,964,932
Brazil 191,971,506

So, the two countries you reference together have just a slightly higher population than the least populated of the 3 countries emerging today.

Also as to your reference to Brazil/Argentina - I see no reason to fear Brazil's political climate. China's communism seems to be no hindrance to it's economic growth. American capitalists seem to love China more than America itself.

 

I would disagree on China's outlook. China has many economic problems that are much worse the the US. China is running a game of Smoke n' Mirriors right now. China will not see growth in the next several years. Infact, it will contract IMO.

 

History is valuable. Those who don't understand that fail to see the future. It's that simple. As far as silver, you have to ask yourself this....what is driving the bullion market right now? Don't read the doom and gloom reports put out by those who stand to profit from increasing prices. Don't think governments buying large amounts of bullion is something new. Once you realize what drives demand, you'll have your answer. This goes for any commodity.
Guy

 

Thats right. History is valuable. In a smaller, but simular scale. How did Rome go under? This issue we face, is more then a silly housing market crumble. There are many factors around the world. With the US leading the way in printing paper to nowhere to keep everyone in check. The polar opposite is now being thrusted upon the dollar. I don't have the faith, that Washington or Wall street to get us out of the mess that was created by them.
To me. silver is a good metal to hege insanity. Somthing has to give. It's one or the other. No smooth ride in a 63 Caddy to the Ice cream store IMO. BTW, Can't wait for the Ice Cream stores to open. This winter is ruff... :smile:

 

Ahh yes, the old "they're printing too much paper" theory. Paper has been printed without backing for thousands of years. Continental currency, the very thing that financed the creation of this country was backed by faith alone, not gold or silver. Besides, why do you assume bullion has any more backing than paper?

 

The Fed Reserve is a Private company. They print currancy for the US Treasury. Every dollar thats printed comes with (if i remember) 6% intrest. So for every dollar printed (even to pay debt back to the fed) it cost more and more. Paper can work good (as i stated before) but, when it's abused. That's when you head for trouble and fiat. Gold and silver help as a fall back for hard times. But, can't save the currancy alone. By having little to no Gold or Silver in reserve. It's not even there to use as a semi crutch.
So now you have only paper alone. Weimar Republic anyone? They sold all their PM to fund WW1.
History has proved it again and again. Many countrys have fallen in currancy (the US twice).
I think we are heading for the "reset" button.

 

I can't lay blame on them alone. All of us have to take some blame. Everyone wanted to own a home whether it was financially possible or not. So the government told the banks to originate loans so everyone could qualify ( a part time employee of Target got a loan for over $300,000 based on his salary). He and the agent also most likely lied on the app. the lawmakers also made it easy for the banks to package up the loans and resale as derivatives. In the old days neither of these would occur. We the citizens are responsible because of who we elected and then they made the decisions. Most of us at the time didn't have the knowledge to understand why it was wrong, or if we did, thought it would continue on a while longer. SO , IMO, the banks( Wall Street) and government are doing a good job considering what they are working with, and who they are working with ( Congress). I think that a major bank like JPM, will match or beat the gains of PM in the next year.

Jim

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Coleguy: What do you feel is driving the bullion market right now?

 

I agree. I'm only painting a small portrait of some main players. Most everyone was living fat a happy and using the home as a ATM. There are still many who are maneuvering to squeeze every drop of blood from the stone. And are shorting stocks every day. Now, what do you do? Well, some will have the instinct to move assets in a "safer" place. Will it be safe in the end? Don't know. But, PM do have a proven track record to be a safe haven during times like this. Paper is paper. It's just a promising note. But, with no assets to back that note, it's worthless.

 

The Fed isn't a private company. It is a creation of Congress. They don't print currency, the US Treasury does [Bureau of Engraving and Printing]. Dollars don't come with a set interest rate. They are interest free notes. But I believe that the profits made by the Fed above a 6%(?) return on capital must be returned to the Federal Government making the Federal Reserve profitable for the US Government to operate.

Edit: The following is from the Federal Reserve website:

Who owns the Federal Reserve?
The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government."

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

 

I think good old Warren (Buffett) would agree with you Jim.......

 

Simple answer: fear. People are led to believe investing in bullion will preserve their wealth. Of course, so far that has only inflated gold prices as far as I'm concerned. I still think silver is a good buy and is undervalued. Does that mean I'd run out and buy a truckload? Not me. There's more to be made in more mainstream and traditional investments. I think when gold falls off it's pedestal silver will remain strong. Of course the science of it is akin to predicting earthquakes. Everyone's a crackpot theorist until someone gets a lucky guess.
Guy

 

Of course, Warren sold his silver at $7.50 or so. I would have a hard time choosing JPM over gold or silver if forced to hold for 12 months.

 

That's funny because I would say it is greed. Maybe it depends on the buyer. Central banks probably view it as a defensive holding. Hedge funds probably own it because it is going up. Individuals are all over the place.