Silver Horders spreading their "veiwpoint"

http://etfdailynews.com/2012/07/31/...ls-as-u-s-dollar-weakens-slv-gld-agq-uup-zsl/

 

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Right. Except that the "value" of those PM's is ALWAYS translated back to dollar amounts.

Makes no sense.

IMO, Silver and Gold will NEVER, EVER be used as an alternative currency "except" when purchasing more PM's. Both Gold and Silver must be accepted by the G10 (worldwide) as a form of currency and when that happens, both will be illegal to own (again!).

As it sits today, Gold and Silver are nothing more than commodities along the same lines as pork bellies and corn. Prices go up by .10 cents then go down by .08 cents. Go up by .10 cents then go down by .25 cents. Far too volitile to ever be used as a currency or form of payment.

 

Everyone is entitled to their $0.02. Just keep in mind that $0.02 isn't worth what it used to be.

 

It sure is if that .02 would have been put in safe bonds over the years.

What people need to "get over" is the idea that a $5 bill will keep its purchasing power forever. It won't, since economics dictate a low rate of inflation is the preferable modality for an economic system. I can go into that if wanted, but if you look at deflation, no inflation, mild inflation, mild inflation gives the best results.

As such, your .02 is guaranteed to lose value if you keep it as .02 cents. However, put into safe bonds over time, and your .02 in 1923, 1945, 1972, or today have roughly the same purchasing power they always had.

Sorry, just had to get that out there again. As a store of value, bank notes are not meant to be that. Your investment portfolio, be it bonds, cd's, stocks, PM, land, etc. is your store of value. Currency is meant to facilitate trade.

 

"Right. Except that the "value" of those PM's is ALWAYS translated back to dollar amounts."


Umm, that's not quite right. Here is a website which shows you percentage increases in gold price, for any time period you choose (up to 5 years) for more than 40 worldwide currencies:

www.goldprice.org/spot-gold.html

With one click, you can switch currencies and find the 5-year price range and percentage change, through yesterday's closing price. Let's look at a few:

British pound - 214.33%
Euro - 169.70%
U.S. Dollar - 142.59%
Canada Dollar - 128.10%
Swiss Franc - 97.25%
Australia Dollar - 96.70%
Japanese Yen - 60.24%

What does this tell you? It tells you that the decline in purchasing power of the U.S. Dollar is significant, compared to other currencies. Only the pound and Euro have fared worse. And as far as the price always expressed in U.S. Dollars, that's just convenience for U.S. investors; in the various foreign countries, the price is expressed daily in their own currencies, not ours.

Do not attempt to link these percentages with the CPI; that doesn't compute, it's apples and oranges. Five years ago, would you have been better off to convert your dollars into yen, buy your gold, and then sell it today (for yen), only 60.24% higher? A Japanese investor might say YES, but the lifestyles, spending patterns, and demographics are much different in deflationary Japan, and similarly, for every pair of countries you might choose.

Just consider these to be "index" numbers (like our CPI, of course), and gold outperformed the local currency in every country. In "some" more than "others," you ask? No. Gold is fungible, except where there are currency controls; over five years, it "should" have gone up an identical percentage in every country. It didn't, due to weakening currencies. Like the dollar.

 

MedoraMan, where in the world did you get the idea that bonds maintain purchasing power??? Only the TIPS do that, and the adjusted inflation numbers are cooked to insure that you lose purchasing power with them too, only not as much.

Right now, Treasuries are yielding something under 3%, I don't know the exact number. You are betting that inflation will be 3% (or less) over the life of the bond. And at 3%, you merely break even (and lose money, after you pay income tax on the interest).

When hyperinflation comes, let's be optimistic and say only 10% a year, the price PAID for your 3% bonds will be massively discounted, and you will lose your BUTT. That's what happens when market interest rates go up, or inflation surges -- same result, different causes.

 

CNBC had a report that the amount of gold coins sold this year is 1/6th the amount ( -80+ % ) and the quantity available ( inventory) is higher than in 2008. Most likely a similar report would exist for silver coins. So it isn't necessarily a conspiracy holding prices rather stagnant as it is that people/funds ( other than certain groups) aren't buying at this price. FWIW.

jim

 

I was mostly referring to the value of an opinion, which is $0.02.

If you invested $0.02 wisely for twenty years, you might have $0.20 today. When you offer me your $0.02 opinion, that $0.02 opinion is worth a lot less than it was twenty years ago. You would still have $0.18 in the opinion bank, but that's irrelevant to me since you only offered me a $0.02 opinion.

 

What they didn't tell you in Econ 101 -- inflation destroys households, deflation destroys commerce.

 

From history, either the data set from 1904 to present or the 1923 to present data sets. Take your pick, they are both accepted data sets for financial modeling.

I am saying HISTORICALLY you would have held about even investing in bonds, and would have maintained your purchasing power.

I am saying nothing about the future. Your scenario of hyperinflation but only 3% bond yields, while highly improbable, I was not commenting on. I was commenting on the lamentation of loss of purchasing power.

I wasn't trying to pick on your post Blaubart, as I know you were joking around, its just way too many people say loss of purchasing power is "proof" our currency is failing. It was never DESIGNED to maintain purchasing power forever. You take your $5 today, and if you wish it to be worth $5 in ten years you INVEST IT, maybe even some in PM's.

 

And if one has the attention span to watch stocks that pay large dividends ( currently 12.70%, as high as 17% over the past 5 years I have owned it) and is priced within most reach at 17.50 +/-, the REITS should grab a person's attention. I own NLY ( NYSE) and watch it as it does react to interest rates, but an upward jump in interest rates doesn't look soon.
I stress that any investment ( including PM) can have bad result ~ Especially if one wants to just hide it in their mattress.
IMO.
Jim

 

I taught Econ 401 and 402 sir, I am fully versed in inflationary and deflationary theories. Deflation destroys economies, hyperinflation destroys households and Balance Sheets, mild inflation SPURS economic activity due to human emotions in reaction to it.

If we wish to discuss WHY, I am open to it.

 

No discussion, we're close enough in theory. But I'll stick to my baseline belief, it's different this time.

 

Your logic is totally backwards. Your judging silver's worth in American dollars, a hollow piece of paper which is really just a promise to pay someone something tangible. SILVER once was used as money (what a concept!) in America not all that long ago... and before there even was an America the rest of the world since the begining of time measured their welth in silver and gold... I wonder why...

The US has (and will) keep printed dollars, but they cannot print silver. Which will you put your trust in, sir? A green piece dept that will continue to be inflated, or a tangible disk of white metal which is recconized the world over?

C.J

 

My thoughts exactly, about 5 years ago. I bought a security that was paying a nearly 20% dividend. Unfortunately, I only collected one quarterly installment before the company went bankrupt. Oh, well -- at least I retained 5% of my original investment.

 

I too have owned this stock, and made out quite well with it over the term I had it. Very good REIT. I like REITs in general, and have a portion of my 401k in funds that are centered around, or contain, REITs. They make me a nice return in dividend, and are some of the highest performing portions of my portfolio. And yes, it could lose value like anything else, that's why you stay diversified, and why I like PM's to be part of that. I can walk into any place that knows what a 1oz silver coin is, and trade it in for however many local dollars it's worth there at that time, it's not limited to the ratio value of one paper currency to another.

 

It's always different this time.

 

Um, looks like miners "printed" an all-time record 761 million ounces last year.

http://www.silverinstitute.org/site/supply-demand/silver-production/

Who has control over this greatly expanding "printing"?

 

When the CRUNCH comes, dividends will be among the first "bennies" to disappear. And TIPS won't save you, either.

"...Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater. TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation..." The government funds its TIPS by producing still more bad money out of thin air.

 

interesting, Iran and Turkey are using gold as a currency/form of payment currently.