How Low Will Silver Go?

I don't know about other stackers, but I can explain very quickly what drives me to stack.

When I look at the national debt clock, it scares the begesus out of me.

http://www.usdebtclock.org

$188,702 in total U.S debt PER PERSON

$1,092,779 in unfunded liabilities PER TAXPAYER

When I try to contemplate how we will ever pay the debt, not to mention the unfunded liabilities, I just can't see how we get out of this without some kind of reset. I don't have any idea what that reset will be, but when it happens, the dollar's hegemony will be in dire jeopardy.

I see only one possible way to actually pay the debt. Massive inflation. Maybe not the kind of hyper-inflation that brought down the Weimar Republic, but massive nonetheless.

I am old enough to remember the debilitating effects of double digit inflation coupled with double digit interest rates. I can't imagine surviving triple digit inflation without some kind of hedge.

The day to day vagaries of the silver market are really only important to me in one respect: The lower silver goes, the more I can buy...period.

I relish the thought of $10 silver.

 

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Why don't you show the whole story and show how this level of comex gold is still much higher than ten years ago? Kind of leads to a different understanding of the situation don't you think? Also, how are you sure this is a result of backwardization, and not the result of people taking gold off the comex due to lack of interest in using it in derivatives? What has happened to gold etf volumes?

 

I don't mean what you think I mean. We have to get specific with definitions. When speaking about inflation or deflation we have to quantify whether we mean monetary supply or price because they are not a direct correlation although certainly walk the same coastline. The monetary system is inflating, but a lot of prices are deflating except for those for essential goods and services which is biflation. This price deflation is due to decreased monetary velocity which is due to the new money being printed with very little velocity. However the potential velocity is far greater due to this printing and is like a ticking timer.

So the dollar is in fact inflating as per monetary expansion, and it is weakening in general as evidenced by essential goods and services which are much more difficult to manipulate. But yes lately it has been getting relatively stronger due to safe haven demand from people running out of the Yen. So we also have to quantify the timeframe. Compared to a couple months ago the dollar is strengthening. Compared to 5 years ago it is weakening.

To say the dollar is strengthening in a negative real interest rate environment is...

I don't think the Fed is stupid. I think they know exactly what they are doing. How else do you win a class war? Steal peoples' wealth through inflation, justify inflation by holding the financial system hostage, use that inflation to make the system even more dependent on highly leveraged derivatives used to hold it hostage, rinse, repeat until such time as it's no longer sustainable.

You do know what rehypothecation is right? When you have one underlying asset leveraged to infinity then you have to unwind infinity. It works great for ballooning your balance sheets but there is no viable exit strategy when your solvency depends on it.

 

Gold wasn't in backwardation 10 years ago. It's not relevant to the point I was making. This may not be the direct result of backwardation, rather both may be the result of something else (such as the price being undervalued?), but they are related even if only as siblings.

 

Why isn't it a result of no one wanting it, so it wasn't worth paying to storage costs to keep it on the Comex? WHY did Comex stocks increase so much during this bull market? To me, it was to allow more paper plays. If people are now not wanting to invest in gold, then the demand for physical Comex stocks would decline dramatically as well, no?

I am just objecting to you showing a short time frame, which leads people to believe the current levels are dramatically low when historically they are still quite high, and also "declaring" this reduction was only due to backwardization. I do not think you know that for a fact, there are other, good, reasons for the decline possibly.

 

Well even for gold I no longer see unusual premiums being demanded.

As for Mr. Fekete, sorry but some off the wall, not well accepted academic theories from a professor at a no name, Newfoundland university is not terribly impressive. While I will listen to anyone, there are definite layers of academia. I read papers from economic professors from the University of Chicago every chance I get, since they are the best in the world. Other major universities around the world as well, as well as some from Canada like McGill, Toronto, etc. Base my economic and investment thoughts on a non-PhD mathematics professor at a university basically one step above community college? No thanks.

Btw, no offense to anyone here from Newfoundland. Just like Mankato State university here is not the same as Chicago, Harvard, or MIT, Memorial University is simply not McGill.

 

Are you looking in Asia and India, or in the US where people don't have a clue about sound money? That will make a difference.

You obviously are not familiar with Professor Fekete or you wouldn't be saying such things. His credentials are a mile long and he has lived through multiple monetary systems. Cloudsweeper would back me up on this one if he was around. You haven't even provided a name or specific examples for why your supposed professors are so much smarter, or specifically in what regard. Your disputes are vacuous.

 

Look at the University of Chicago. All professors but one have won Noble Prizes in Economics. Anyone knowing a thing about the Economics field knows this. I don't need to go into some guy with a math degree and a master's in statistics and his theories. He is the one with the lower than usual qualifications, teaching at a "less than world class" university, espousing theories not very well accepted. I simply wanted to point out those things to others, lest they think this professor had some large worldwide following and has won a Noble proze for his theories or something. His theories are somewhat fringe, regurgitating Adam Smith for Pete's sake. The world is a lot different than when we were "striking out into a wild frontier" and shooting turkeys for dinner.

Btw, I just bought 1.5 ounces of gold jewelry in Thailand last week Inflexion, (sent the money to my mother in law). The price and premium was at a normal rate. How much gold have you bought in Asia lately, since you are so sure over there they "have a clue about money"?

 

I was hiking with my Father in the White Mountains (in the early '70s). We were at the Pinkham Notch lodge where I was paying for something with a dollar. I recall my Father commenting that his University of Chicago Economics Professor signed my dollar.

My Father received a degree in Industrial Engineering from the University of Michigan in the early '50s and followed it up with an MBA from the University of Chicago in the early '60s. His University of Chicago Professor was "George P. Schultz"...Secretary of the Treasury.

Schultz is probably the Professor that didn't win the Nobel Prize.

 

I don't put a lot of merit in Nobel prizes. The guy we have in office won a Nobel Peace Prize and he's not exactly a peace-time president. War is peace?

If you want to throw a specific name or a specific example out that disputes what Fekete says that I can research that would be great. No offense but I'm not here to take your word for anything. I verify information for myself so if you want to sway me now you know how.

I've seen pictures and read reports about Asia, but I really should been more specific and said China or Shanghai. I think if we are going to be realistic everything we believe has a degree of faith in someone else being truthful. If we're going to go strictly off of first person perspective then most things are not proveable.

Gold premium surges in China
http://www.resourceinvestor.com/2013/06/04/gold-premium-surges-in-china-wise-aunties-and-wea

China gold imports to keep growing after hitting record high
http://www.reuters.com/article/2013/06/04/hongkong-china-gold-idUSL3N0DO0BF20130604

Gold Backwardation and the Collapse of the Tacoma Bridge
http://www.thedailybell.com/29047/A...rdation-and-the-Collapse-of-the-Tacoma-Bridge

Per FekteResearch.com:
http://www.feketeresearch.com/upload/Who-said-the-hydra-would-take-it-lying-down-Prof-A-E-Fekete.pdf

 

Something just hit me. InfleXion, you spend huge amounts of time researching and studying finances and yet no amount of info or facts can or will change you baseless cult like beliefs. Now I not challenging your beliefs here, but just wondering why you waste so much time researching when your conclusion will always be the same. "Silver is the thing to buy, all day, everyday" I mean, why don't you just go to the beach? If I am going to be studying figures, I prefer them in bikini's. Inquiring minds want to know....

 

:luckyguy:

 

The Nobel Prize, while highly regarded and laudable, seems to have become terribly politicized in recent years. That's not to say those who undeservedly won the prize lack merit. I actually find Krugman and other mainstream economists insightful on occasion.

 

The stock market is down, and now mainstream fund managers like Bill Gross of PIMCO are openly questioning Bernanke's policies. Questions about the fundamentals underlying the market are now abundant within the mainstream media, such as CNBC. I suspect we may be starting a significant stock market correction, which may augur a temporary rebound in the metals, so we can expect some flames coming from the anti-precious metals crowd that is bullish on stocks. Like I said, I am long the dollar, and loaded up on it versus the yen today, and will likely add to my position on another major pullback. So I am hedged either way. I don't mind accumulating physical silver while selectively going long the dollar while the world prints money like there's no tomorrow.

 

Nevermind..

 

the stock market isn't down.

 

Silver seems to be hanging around $22.50 lately. Is it hanging around a floor? Who knows?

 

Oo...Ooo, Ooo

 

Baseless? I'm the one providing links, not you. You haven't given me any facts, though I would certainly incorporate them if you could. My perceptions are based on the information available. I don't believe today what I did 5 years ago, and 5 years ago I didn't believe what I did 10 years ago. I am perfectly fine with adapting when given rational and thought out arguments. Your posts are personal attacks and don't provide any substance to help me update my perception.

 

I never said levels were dramatically low. I said there were record level outflows. Putting words in my mouth again. The point is that people are taking the metal off the exchanges faster than has ever occurred before. I'm not saying they are necessarily going to default or that they don't have any metal. I'm saying that if this trend continues they are going to have to pay the physical price to replenish their inventory and the physical price should eventually return to dominance as their paper will reflect the physical price when they have to buy physical metal. That is unless they are also too big too fail and will start dipping into the Fed punchbowl which is certainly a possibility, in which case they can simply incur losses to maintain the price fixing.