Gold prices and silver, 50 years?

You are not wrong, Silver is always in a perennial long term bull market. It is also priced just about at fair value now. So considering a commodity will trend on par with inflation, the most likley scenario is you will break even. Is that your goal? If so you have a good plan and right now is a good time to buy Silver.

If you would like to do a bit better than break even, there are probably better options.

 

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To me I want stuff I can hold in hand I've never had a dime in the stock market I don't trust a piece of paper that says you own a share of a company that could go bankrupt at any time everything I have I can hold in and except my money in the bank which I can write a check on or withdraw and use to purchase something tangible at any time and I'm sure I'm in the minority that can say I have zero debt my house everything paid I pay cash for everything one of the reasons I've never had a brand new car being self employed and growing up rather poor and my lack of faith in the government computers the economy etc has a lot to do with this I'll take gold and silver any day you used to be able to exchange your silver and gold certificates for the actual metal at any bank now is just paper who's only real value is the faith we put behind it even real estate you have a house you can live in land you can farm hunt log etc a property you can rent etc

 

Have unlimited cheap energy and you can have unlimited gold. Within the next 100 years we should be able to harvest energy from stars. Gold will be much cheaper than today.

 

Any political comments will be nuked. It is an interesting thread, but stay away from political or other rule infractions.

 

This is an excellent summary of investing in silver. If you time it half way decently (or dollar-cost average), you should at least be able to preserve your purchasing power over time. While I love collecting PMs, I think it would be a great idea to diversify into some paper assets eventually. I plan to move into gold, and eventually into maybe land or other things. It's just not practical to be lugging too much silver around, and a safety deposit box can only be so big.

 

Actually the recession is what drove the price of gold to skyrocket. Sure fear mongering sways some people to buy gold, but during the recession it was a no brainer.

 

When we had a lot of inflation it was a good place to be. I think (hope) it will hold its value until I need it. I am planning on retiring in 4 years and then will be the time to sell it. I hope it's up a little, but I guess we'll find out. I called it the "poor man's hedge fund", but now I'm not so sure. I am more of a silver person anyway, since gold is so expensive. I really don't advise anyone to buy silver, because I am not entirely sure right now, but I think of it as a good thing. Whenever I wasn't sure in the past it usually worked out. When I was sure it would go up it usually didn't. Does this make sense?

 

A couple things here. First you are talking about some diversification, with land, real estate, and bullion, which is a good thing, and I believe some amount of physical bullion has a place, in most portfolio's. The issue I have with only investing in real estate and commodities, is that it is very hard to get ahead with such a strategy. They fact for almost all of us is our salaries alone are not high enough to put us on the path of financial freedom, and assets that really will just preserve buying power (ie. track inflation) will not do it either.

The only realistic way to "get ahead of the curve" is to take some calculated risk. Equities are a vehicle that can actually build wealth instead of just preseving it.

Now, lets look at a mythical example to put things in proper perspective. Lets look at a casino. I really don't visit them much since the most likely scenario is I will lose money. Now in our mythical example though, things are different. Let's say there is a casino with a row of slot machines that are programmed to favor the bettor and not the house. The way the odds are set, is if you play for 6 hours, you will have an 80% chance of "winning" from 1% to 100% of your money. No guarantees, you still have a 20% chance of losing some or all of your money.

So the question is, Would you play at such a casino? If the answer is no because you don't want to assume the risk even if the odds are in your favor, then I agree, equites are not for you. On the other hand, if you feel like you would like to play that game, then you might want to rethink your investment strategy, and move a portion of your wealth into the equites market.

It is all about the odds.

 

No, of course not, the economy was in shambles, credit was locked up, we needed loose money policies to get us through a very tough time. What you need to understand though, QE and low rates only affected the equites market indirectly. The easy money gave the corps a better environment to earn money, but make no mistake about, it was the earnings that put the stock market where it is. As I said earlier, stocks are fairly valued if you value them by historical price to earnings ratio

Way too simple a view. QE should not be viewed as bad or good, but more as needed or not needed and how it effects the investing landscape. There are positives and negatives to easy money. The policies in place at a particular time should just be viewed as one piece of the puzzle for your investment decisions. Make no mistake about it, if QE was not sucessful and drove inflation upwards, PM prices would have soared, so you just cannot say QE was bad for PM. It could have went the other way also.

In addition, this round of easy money really didn't kill the PM market. PM's were driven way above fair value by fear. So far all it did was was bring PM's back down to near fair value. This was eventually going to happen anyway. A commodity can have wild swings, but for the long term, it will track the cost of production.

EARNINGS BABY EARNING!!!!!

I am not what your point is about bank stocks being lower. I am sure it is true but so what? We are where we are. I guess what confuses me is if you really understood how this all works, why didn't you just load up on bank stocks?

Now lets talk about this crash you seem certain is going to happen. The first thing is if you are certain about this, you should be dancing a jig since it is a sure fire way to a path of riches. All you need to do is invest everything and buy puts on an S&P index ETF and when the crash comes, Bingo, overnight multi-millionaire.

Now personally, I see a problem with this. This is not the Feds first Rodeo,
If you are making a bet that the market will crash when the FED tightens, well, that is simply not what history tells us will happen. History in fact tells us in a tightening environment, the ride gets a bit bumpy, but equities do power upward, but hey if you know better, go for it.

As far as you last point about about loose money only being good for the big fish, well that is ridiculous. If you had enough money for PM's you had enough money for a nice ETF and could have enjoyed the stellar run up just like the big fish.

 

I'm glad gold and silver are low. Why would I want them high? Expensive to buy and usually there are bad things happening with jobs and the economy.

 

I've become used to around $20 and now it seems like the price silver is supposed to be at. I am having an easy time figuring out how much things are worth at $20, since it's an easy number to put an ounce of silver at. For example I bought a silver quarter sized coin and it was about $5, which made it an easy way to calculate its value. I bought it.

If it goes up or down to some other number it won't be easy like $20.

Therefore, I vote for it staying around 20 bucks for the time being!

 

I think viewing $20 as rock-solid support is accurate. I am the one here who has pointed out that silver seems to have a hard time staying below that level for a long period of time. It is the psychological level traders are focused on at the moment.

I don't think silver can stay below that level for long due to rising energy costs. So, I don't see much long-term risk buying at these levels, even if we are not truly at a bottom.

 

Sometimes it is difficult to determine if what you are viewing is a floor or a ceiling. They look a lot alike.

 

I agree MikeM! Hard to tell what's going on. I am not as happy with $18.97 this morning, but I choose to see it as end of the year selling and am going to try to find some at this price. Wish me luck!

 

Good luck. Even though I still think Silver is drifting lower, I really cannot argue with buying Ag at $19 for anyone looking at it for the long haul. I think slow accumulation is the best strategy here and will even out all the bumps along the way.

Mike

 

The shelf life of fiat currency is on average 40 years. The current dollar is already beyond that since the rest of the world is helping extend the global fiat system. Things will look very differently for gold and silver in 10 years when the current monetary cycle runs its course, let alone 40 or 50 more.

The illusion of recovery is illustrated by the CAPE (cyclically adjusted price-to-earnings) ratio which shows the stock market is trading at over 20 times its average earnings over the last 10 years. Couple that with the fact that leverage is back at all time highs, even worse than 2007-2008, and that both stocks and bonds are at all time highs it's apparent that this is a "sell high" moment for IOU assets, and a "buy low" moment for gold and silver.

 

Make no mistake, without QE we would not have markets as we know them today. The Great Reset would be a memory instead of an eventuality.

When interest rates hit zero in 2008 bonds hit a brick wall and we had an electronic run on the banks. In order to simulate negative interest rates they had to print new money to buy up more bonds, because when the floor can't go any lower the only alternative is to raise the ceiling. This was how they restored confidence for the speculators to continue to play in the casino by ensuring that the show would go on. If you want to know the alternative, look up what Hank Paulson said to Congress - which was a rosy outlook that stocks would drop 2000-3000. In actuality markets would have imploded due to counter party risk and hundreds of magnitudes of leverage (which is still the case today).

We can only speculate what would have happened next, and while the Fed can spin it like they saved us from impending chaos the reality is that they created the problem in the first place by enabling financial institutions (their primary dealers) to leverage themselves to the hilt with free money thus no having consequences for making bad financial decisions, and Congress for not performing their Constitutional obligation to audit these institutions.

So what has changed since then? Things have been papered over and the problem has gotten worse.

QE is not good for the buying power of gold and silver. It is preventing them from reaching fair value by enabling markets where price is determined not by supply and demand but rather by assets with no underlying value that can be duplicated infinitely by a process known as rehypothecation - reloaning the same asset over and over to balloon balance sheets with debt which is actually a liability and not an asset.

However, it is good for people who were late to get a clue and still have a chance to acquire undervalued assets that are not at risk of financial system implosion. It is also "good" for the price of stocks and bonds for as long as it is sustinable, however commen sense and more concretely the law of exponents tells us that is temporary.

 

Stereotyping the gold dealers says more about you than anything else. The gold market is far too huge for them to impact it. There are still lines out the door to buy gold in China, and it's not because of the dealers or the US economy. It's because the Chinese government has educated their citizenry on the necessity of holding tangible assets.

 

Yes, $20 can also be seen as resistance. It seems that silver is stuck in a trading range between $18.50 and $21. Commonly, a level of support, once breached, becomes a level of resistance. Like I said, if silver falls way below it, to, say, $14, I don't think it would stay that low for long. Clearly, while the inflation numbers can be disputed, the Fed's policies have driven silver from $4 more than a decade ago to the price today. I don't see a single digit silver price as very sustainable, and, assuming we were to reach it, it would imply a disastrous deflationary depression that would hurt virtually everyone.

 

I believe the Japanese were the first to experiment with QE, and it seems to have gotten them nowhere. So, given that Main Street is really not feeling the Wall Street euphoria, the merits and demerits of QE are very debatable.

I believe one key difference that separates us from the Japanese is that we have a much more dynamic culture that fosters innovation. If anything, we have been rebuilding despite QE.