is silver a bargain at $40 ?

I believe the key is poor investor sentiment. In both timeframes investor outlook was poor. What will lower PM pricing will be unexpected, good news from some front. There is a ton of money on the sidelines right now, just waiting for a market to jump into. Right now its dabbling in PM and other commodities until something breaks.

Start having some market get hot, and investors getting upbeat and happy, and you will see PM pricing come back down.

Just my opinion.

 

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I once read an article (written by a gold bug admittedly) that stated that we approach gold and silver from the wrong angle [i'm still not sure i'm 100% convinced by all of this as I think gold can go up in value beyond it's true level as in bull markets only to fall again later, but here goes...].

Rather than taking dollars as the stick to measure by and seeing how gold rises and falls. We should actually use gold and silver as the static baseline and track the fluctuations in the currencies (dollars/euro/sterling or whatever). The trend of what is really happening then becomes apparent. If you look at the amount of dollars required to buy an oz of gold from 1971 to present. Assuming you agree that gold has an innate intrinsic value that is static (as the article suggested) then when you measure the currency against it, the ravages of inflation become rather apparent, and this is not in the bull periods but rather in the quieter times between, literally gold stays put, currency erodes, and in times of crisis like 'quantative easing' the currency supply grows larger and thus diminishes in value, so gold appears to go up, when in reality it's the currency going down.

Just a thought.

 

Although I must say looking at sterling, it's lost about 40% of it's value since 2000 and about 80% since 1990. If i'd got £1000 in an interest free bank account in 1990 and twenty odd years on I still had that £1000, it would now only be worth £200 in 1990 money.

If I had £1000 of gold in 1990, and I still had that now, i'd be sitting pretty.

 

Except in (say) 1979-1980, when gold went up, what, five- or sixfold, while the cost of living went up maybe 20% or so -- and then gold went back DOWN something like threefold, while the cost of living continued to soar? Silver's moves were even more extreme.

Gold and silver have price excursions that are completely out of proportion to currency moves. We appear to be in the middle of one right now.

 

I agree fully with Jeffb's post number 44, I would also add as well the problem of doing that is treating a pound in 1990 as a pound today. Currency should be assumed to be always getting interest. Interest like that is not profit, (though greedy governments tax them), but rather simply keeping the purchasing power steady. If you bought bonds for 1000 pounds in 1990, you wouldn't be so far off.

Any calculation of any asset versus nominal currency is a flawed analysis from the start. This is my problem with most gold bug analysts, they use nominal dollars. That choice right there would have earned them, if they would have turned their papers into me for a graduate Finance class, an immediate C as the highest grade that paper could grade. It is that serious of a flaw in analysis.

 

Forget "currency moves" ... currencies are pegged against EACH OTHER.
When you have all currencies being devalued, it can give a false impression.
When compared to each other, one can be, for a time, relatively stronger against the other.

Instead look at the money printing here in the U.S over the past 3 years.
This is why gold and silver are going up.

 

This is the reason I got into precious metals. It's a simple ratio of money supply divided by goods and services that are represented by the supply. Without also increasing goods and services proportionally, the only logical thing is for prices of those goods and services to rise. If I could store pork bellies in my home without having to worry about them spoiling I might consider that instead of gold and silver, but that's just not very feasible.

 

Currencies may be "pegged against each other", but the important issue is what they can buy. I don't have any idea what relative changes were happening among the dollar, the pound, the yen and the zloty during 1979-1980. I just know that, while (dollar-denominated) prices of silver and gold spiked violently and then crashed, prices of groceries, clothes, and vehicles climbed MUCH more slowly. So did wages.

I would argue that, during that period, the dollar steadily lost purchasing power, and gold and silver spiked followed by a crash.

If you argue that PMs are the proper measure of value, you're saying that both wages and consumer prices plummeted by something like 80% during late 1979/early 1980, then soared back to their previous levels. That doesn't seem an accurate reflection of what life was like at the time.

And if you argue that silver and gold are the proper measures of value, even while their relative value fluctuates by a factor of three or more -- well, I'm not sure what you mean.

 

Historical Data and Silver

Making descisions based on historical data, such as the manipulation in the 1980's, in my opinion, is pretty much useless. What we are seeing worldwide, in regards to the problems in the financial system, has never been seen before. Very few currencies are stable. The world has never been in this situation before.
Silver is most certainly a buy at $40.00 -$50.00 and if I had the cash I would buy some more bullion coins.
Gold, I believe, is overpriced due to the price being driven up by all the hype in the media.
Silver may not be going up as fast as gold but if, and when, gold crashes, silver will have a much softer landing. It's very possible that if gold crashes, silver may do the direct opposite.
Just my honest opinion.

 

i hope a few people followed my advice yesterday to load up the truck with silver at $40

silver closed at $42.80 today

 

I don't think of technology as a "thing." Besides, I don't see many $59 TV sets and $2 radios around anymore. Most of what is "cheaper" today didn't exist in the 70s, at least not in the same form.

 

@JeffB - I suppose I should have prefaced my other post with "In a free market", since you are quite correct in your assessment. However due to the manipulation involved in that scenario it is not an accurate representation of the fundamentals in play. This is why I prefer to look at long term historical information and not just recent history. The last handful of monetary systems have not lasted more than 40 years until the current one which just had it's 40th birthday a couple weeks ago. When people are putting faith in a system of paper that is considered 'as good as gold' yet does not have the failsafe that gold does of not being able to be conjured from thin air then it's no wonder that things get skewed, but I highly anticipate that we will get a gold standard in the near future and the free market will take over at least for a moment during the transition.

 

Are these the U.S. Bullion coins similar to the .9999 pure Maple Silver Leaf coins up here in Canada?
My bullion Maple Leafs have a $5.00 face value, what about these?





View attachment 134098

 

The American coins are American Siver Eagles [ASE] and are the US equivalent of the Canadian coin. They have a $1 face value and are .999 silver. Both sell for around the same price.

 

I am wondering why the Canadian Maple Leaf is listed as .9999 and the U.S. coin .999.

Is the difference so minimal it does not matter?

Silly Side Note:

If silver drops below $5.00 per ounce, I will have a little more buying power. God forbid.

 

The extra 9 matters to some people, but the coins are essentially identical in value.

Your question isn't silly at all. I called ScotiaBank several years ago [when silver was closer to $5] with the same question you have. The bank told me that they would not honor the face value of the coin if silver dropped below that value and would only pay the holder the value of the silver. They explained that the $5 face value is on the coin so that it can cross international borders without being subject to certain taxes, but that it is essentially bullion and not a $5 coin.

 

I received some newer $1.00 non-bullion silver dollars in change from a reputable coin dealer a few years and I am 100% sure they are legal tender for the face value on the coin, regardless of what the bank says. Legal tender is legal tender. But how many people would stand there and argue the point over whether a $1.00 non-bullion silver dollar is legal tender or not.
I certainly would, until they asked me to leave or the cops showed up, just to proove a point.

 

But one can always point to "manipulation" in one form or another. Everything anyone does in a market "manipulates" it, to however small a degree. In the 1980's, it was the Hunt brothers; now, it's big banks, or Nice Government Men, or whatever boogeyman best fits one's particular closet of anxieties.

If you start excluding particular parts of the historical record, it's hard to keep from excluding more of the parts that contradict your hypothesis, and keeping more of the parts that support it.

 

I have several canadian silver dollars. They are great coins and somewhat overlooked.

 

American Silver Eagles are .9993 and I actually prefer any silver that is .9999 (all I have of which is Canadian) because solar panels require that level of purity. I'm taking a wild guess that .9999 will eventually diverge in price due to demand over a very longterm outlook. I would actually love to get some .99999 just because I like purity. I can't really say why, but I just do. I'm not sure whether the market will see things the same way or not.