When will Silver be Cheap again?

With an asset based currency wouldn't such a move amount to stealing wealth. Yesterday my $1000 worth of currency could be redeemed for an ounce of gold and today I can only redeem it for 1/3 of an ounce of gold. Who stole the other 2/3's of an ounce.

 

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Yeah come to think of it, the nuclear fusion idea would probably cost a lot more than the metal it yields, at today's prices at least. If we get to a point where silver is not available in any other method, then that could potentially propel it to new highs as well which I hadn't thought of. It's mostly science fiction at this point, but CERN is creating black holes by colliding electrons at near the speed of light which is quite a bit of energy.

I just found this article about the supply and demand dynamics of silver mined within the US and Canada for ASE's and CML's and found it to be reinforcing of my perception:
http://www.silverseek.com/article/silver-sales-supply-slips

 

I would be careful. Numismatic News just had a story a couple of weeks ago how there are surpluses of ASE's, no waiting at all, and the mint is actually discounting fractional AGE's to get rid of them. Doesn't sound like there is any shortage of any bullion right now, if anything there are too many.

 

I'm not sure that is meaningful. Prior to about 2009, wasn't that the norm? The shortages and long wait times are fairly recent, and silver prices went up in the past even when there were coins in the Mint inventory.

 

Technology has not yet progressed to the point where mankind can even produce the sustainable hydrogen to helium fusion reaction. They have been working on it for 60 years and more than likely it will be another 40-50 years before they achieve it. Helium to Lithium would be even more challenging. In any case, it's a moot point. When the process gets to iron, the process stops.

The higher natural elements colbalt -> uranium, including gold, are only produced when a certain sized star goes Nova. The forces involved, including our lack of understanding of gravity are unknown. Mankind has achieved production of a number of unnatural elements via nuclear fission, such as the creation of plutonium, but these elements are either very short lived and/or highly radioactive. I don't believe there is a way to produce gold by this method.

In other words, it's not possible with the current level of technology.

 

This is not the case. The problem with this analysis, is that it assumes gold coinage acts like fiat currency. If you had 1000s of silver coins in your vault, how do you think these items would enter into the economy? Would you hand them away? You could only spend these coins and if production had increased to match it, else the coins would remain in your vault unless you were willing to take substantial losses on this asset. It was the same with the federal government. This is why they were still releasing the Morgans into the early 1960s.

In other words, there is no way to introduce those coins into the economy unless the owner of those coins was willing to take a substantial loss. This is completely opposite of than that of fiat currency. In that case they can print it endlessly because it doesn't cost them anything to create it. Then they "loan" it into the economy and hence you have inflation. In the case of asset based currency, the currency does not enter into the economy until the economy has produced the wealth to support it. In a fiat based currency, the money is always created as a debt with interest with no restrictions on creation.

These are completely different concepts of money and since almost anyone now living has never experienced the former, its difficult for them to comprehend.

 

I suppose it would take forces nearing that which would crush an aircraft carrier to the size of a refrigerator but it's fun to dream. Remember, dreams are the motivating forces in progress!

 

The government should have taken a loss except the acts created by congress (pointed heads again) due to lobbyists fixed the price it would pay for silver no matter what the production amount thus creating an artificial demand for silver mining. The value of silver should have dropped gradually in value due to the surplus. However, the economy grew enough over time to catch up to the surplus silver until 1964 when it cost more to mint 90% silver coins than their face value. Then finally when it was legal for U. S. citizens to own gold bullion legally this further bolstered the prices of PMs. If I'm not mistaken, the U.S. government inventory of gold and silver is still assesed at a severely sub-market value per oz on their ledger.

 

You have gone way beyond the scope of this discussion to mention, quote, and repeat concepts that are too in-depth to try and associate to silver or the concept of fiat money. You're pulling events and micro-scale mathematical charts from the past at random to support your theory of doomsday. Then when someone disagrees, all you do is quote and pull another event from the past to support that small portion of your theory and say "here ya go. see, I'm right."

You can't do that. The "facts" you're trying to gather information from have nothing to do with the world and economy we currently live in. It's just NOT that simple.

This is the best example I can think of to mirror what you're saying: The human body is simple. Ralph primarily ate red meat for 3 years in Britain during 1943, exercised occasionally, got married, had 1 kid, and a steady job. Sometime in the near future Ralph is going to die.

 

Luv, then use the forum feature and put me on ignore. You will never have to read what I post again. You will no longer become possessed with the urges to attempt to discredit me instead of addressing what was posted. Problem solved for you.

 

Congratulations! You've broken the fatima code. This has been going on here for a long time. You state it very well.

 

Cloud, don't get jealous. Fatima loves you as always. I'm still here for you, my biggest groupie.

 

I never said there was a shortage of bullion. The story indicates that both USA and Canada are minting more ASE's and CML's than they mine on a given year. Not only are sales going up, but the amount coming out of the ground is going down. The trend is what is important, and what's also important is that ASE's are only supposed to be minted by the silver the USA pulls out of the ground. Any surplus is because they are buying on the open market, which is a key point. The article also goes into the fallacy of how the supply and demand dynamics are calculated. I will defer to article specifics for details. People can read it at their preference.

Also, dollar for dollar gold and silver sell the same amount on the physical market. That means that silver is selling more on a per weight basis than gold to the tune of the GSR, roughly 50 times more metal. AGE's weren't part of the analysis.

 

Well, I am not sure of their US and Canadian production numbers, but silver is silver, and other sources show consistent year on year gains in silver production. The loophole about ASE silver I don't know about.

I happen to agree with accounting for coin production as inventory rather than "use". "Use" implies the silver is lost, coinage is not lost but rather can be melted whenever the owner wishes to sell, just like any other stockpile of silver sitting in a warehouse. Granted there are proofs and other specialty coins struck, but most are simply bullion. Treating this as "use" as others claim greatly distorts true "use" of silver. Think about it, why do people buy bullion? To one day sell, right? Its an investment. Its identical to a company buying a few truckloads of silve for inventory, its physically put aside to be used another day.

 

If by loophole, you mean the law that was enacted when ASE's were first produced that stipulated they had to be from silver mined within the US, then yes there must be a loophole somewhere allowing them to now buy on the open market. Silver mined worldwide is on the rise, yes, but it still does not meet consumption/demand without recycling old silver.

I was referring to the separate trend in the US and Canada that these nations alone have more demand in their respective government minted coins than they individually produce in a given year. That doesn't even count all the other silver coins, bars, and industrial use, that is strictly ASE's and CML's. So they as governments are reliant on the open market to meet demand, just like everybody else at this point.

 

Depends on what you classify as "demand". I classify coinage and bars as inventory, not demand, since it is not lost and at any minute can be sold and used industrially. It gets back into what you call "demand". Last I saw, industrial use of silver was well below worldwide production of silver, with the difference being investor purchases. What will happen when investors get tired of holding silver? That is why I worry about classification, and the vast amounts of silver being purchased by small investors nowadays, especially new investors in PM.

Just my view.

 

With the announcement by the Fed Reserve that interest rates will likely be held at the current 0% until "late 2014" I don't think you need to worry about a decline in either gold or silver. It costs next to nothing to hold precious metals for the next two years. I believe silver will re-visit $50 and gold $2000. Precious metals had a nice bounce today BTW.

 

And a view that I can agree with. It does not change the fact that without this recycled scrap that not everybody who wanted to buy silver would be able to, regardless of how it is categorized though. If the law of supply and demand does its job, and I would argue that's a tall order these days, but if it does then that investment silver should fill the gap if and when the price rises due to such a scenario.

 

C'mon, NOS! I'm giving you a chance to be a superstar (or calling you out on a ridiculous prediction)! Don't back down now - that is one gutsy call you made, now just dial it in a bit. I'm calling your hand - let's see what yer holdin'!! Tell us HOW MANY MONTHS MAXIMUM UNTIL SILVER HITS $6/OUNCE.

You've got complete liberty to go as long (or short) as you want - so go nuts. I don't know of anyone else making this kind of claim, so you can be the guy they write the book about.

Fortune favors the bold! What's it gonna be, NOS??

 

Well said. Just today, I traded $2.50 face junk for some .45 ACP. Just reallocating and balancing my portfolio.