Gold prices and silver, 50 years?

Where does this come from? What study shows "the shelf life of fiat is 40 years"? What industrial nation has abandoned their fiat currency, short of wartime activities, in the last 40 years? Just seems like a curious, matter of fact, statement to make assuming we all agree with that "fact".

 

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Agreed, I do not see single digits either. I am thinking a chance at $14 though, simply because I have seen it time after time where markets over correct. It is more of a norm then exception, so I am still holding off to buy, but as I said earlier, a slow accumulation at these levels may work too.

 

I agree. Whatever the bottom is, it's got to be pretty soon. I missed the chance for under $19, and it bounced back up to 19 and a half!

 

We harvest energy from our nearest star every day it's shining. It's called solar power and it works. I don't know what it will do to the price of gold, but I know they use a lot of silver manufacturing typical PV panels!

 

Actually, that sounds about right, but that is one of those statements that may be technically true, but is totally meaningless and is absolutely worthless to predict the future of the dollar. There are a lot of fiat currencies that are no longer with us but did no fail. The DeutchMark is an example. It ceased to exist in 2002, but of course it did not fail. I am sure it was just thrown in the pile with the rest of the "bad fiat" which of course skews the calculation. Each fiat currency needs to be looked at on an individual basis. I think the Pound Sterling is the longest surviving fiat at over 300 years old.

Mike

 

One important distinction is that QE has only been in effect for 5 years. Even if the shelf life of fiat currency was 1000 years, at this point the law of exponents takes precedence. But let's not focus on that, or the leverage. Let's pick out the least important point and beat it to death and distract from what really matters.

 

Happy new year everyone.

 

The main thing sir I would say to be careful of is this accidental pricing coincidence. Its not at such a round number in Euros, or Yuan, or baht, or rupees, etc. There is nothing magical about a coincidence in dollars for silver pricing.

Just pointing out humans love to find patterns or importance in numbers, numbers that many times do not have any special significance.

 

How was the Pound Sterling fiat 150 years ago, or 100 years ago or even 50 years ago?

 

You are correct, I was referring to 1694 when paper notes were issued by the bank of England. The paper notes were backed by gold and were not fiat. My bad....

 

How was it not? You do know that most currencies frequently traded at much higher rates than any value of the metal in them, right? Even in the "good old days" of silver dollars in the US there were times the silver in them were worth less than fifty cents. Maybe we are living in the good old days today. Maybe our grandkids will never believe we could buy all of the nickels we wanted for face value when melt was much more than five cents. Think about it. Today each dollar can be exchanged for over a dollar melt of nickels, yet 100 years ago four quarters only melted for about 70 cents. Why are they the sound money days, and today worthless fiat?

 

As far as I know, that still doesn't qualify a currency as a fiat currency. Theoretically, though the prices of metals could fluctuate and differ from nominal values in coins with their content, the currency in previous times was backed by and redeemable in gold. Though currencies could fluctuate in value somewhat, they were anchored, I believe, to the amount of gold supposedly held by the nation. It seems demand for the physical ("phyzz") was sufficient to cause Nixon and other politicians before him to alter the terms so that more paper could be printed.

 

You know what I don't get? How people continually wish to talk about the disadvantages of fiat currency versus pm. "Money" historically been a medium of exchange and a store of value. I understand that. But in the modern world there is nothing that is both of these things. In the past this was mainly true but that is besides the point. So today you either can temporarily have USD to facilitate trade with a minimum of depreciation risk and exchange fees, OR you can own an asset which will be a store of value. PM might be that asset, but so could hundreds or thousands of other assets. However, any asset will have greater risks of loss and much higher buy/sell fees associated with it, so assets are very bad short term or trade facilitating solutions.

So, against this backdrop, we KNOW pm will be higher in terms of nominal dollars in fifty years. How high I have no clue but frankly do not care. What will be important will be how much will pm go up versus other assets, not against the dollar. Leaving your assets in currency we know is the stupidest long term move that you can make. However, this has been true for almost the entire history of the US. So nothing has changed, so any comparison between pm and currency long term is a rather silly, intentionally misleading argument. Its ALWAYS been better to keep your wealth in assets, pm or not, than currency long term. Its a given. This does not, though, mean then that pm is the solution. It may be, or may not.

I just thought I would bring that up since I read over and over how pm is better long term to hold than USD. DUH. However, usually the author then uses this obvious logic to "prove" pm should be purchases. The two points have nothing to do with each other. Its like a car salesman saying driving is faster than walking, therefor you should buy my used car. The first part is true, but that does not make the second statement necessarily true.

 

Here is how Gold and Silver stack up against other commodities over the last 20 years

Oil
an ounce of gold buys 34% less now
an ouce of Silver buys 3% less now

NatGas
Gold Buys 132% more
Silver Buys 241% more

Corn
Gold Buys 79% more
Silver Buys 164% more

Beans
Gold buys 67% more
Silver buys 145% more

Wheat
Gold buys 83% more
Silver Buys 169% more

Cotton
Gold buys 143% more
Silver buys 257% more

Lumber
Gold buys 208% more
Silver Buys 352% more

Beef
Gold Buys 140% more
Silver Buys 252% more

Pork
Gold buys 148% more
Silver Buys 265% more

Copper
Gold buys 19% more
Silver Buys 75% more

Aluminum
Gold Buys 163% more
Silver Buys 287% more

HR Steel
Gold buys 88% more
Silver buys 258% more

This has me leaning towards the opinion that other commodities in general have a sizeable upside or Gold and Silver still have a long drop ahead. I just don't believe the economic value and/or real demand of gold and silver have increased this much in relation to other commodities over the last 20 years. But keep in mind throughout all my years of farming - I have never hit the market perfect.

 

That's not harvesting, it's just chipping. I am talking orbiting power plants and other advanced methods that right now might sound science fiction.

 

Your numbers have a simple explanation to my novice mind. Precious metals prices are more strongly correlated with oil prices than with other commodities, given that mining is very energy intensive.

On the contrary, I think, ultimately, the price of gold and silver will be dictated by the price of oil. Of course, top analysts differ greatly in their predictions of oil prices a decade from now. It seems, to me at least, the peak oil theory has merit. (Though I hope transhumanists, who are much more optimistic on the future of humanity, will be vindicated in their forecasts on the success of renewable energy).

 

These threads always fascinate me. People fear money and stocks and swear on gold and silver as the only safe investment. Yet, how many here, or anywhere for that matter, have retired on gold and silver, or made their fortunes from it? I'm willing to bet none. Yet many have done just that with the dollar and with stocks. Funny...such an unstable thing to many people, yet it fuels the vast majority of the world's wealth, unlike gold and silver.

 

Take a look at my list again. Natural Gas is energy. Row crop agricultural production and lumber are highly energy intensive. Hot rolled steel, aluminum and copper - aren't these commodities also a product of mining?

 

The man makes a good point, you gotta give him that

 

I agree. My caveat would be I believe pm was suppressed 20 years ago by government sales, whic skews these results. If you took a larger timespan I believe it would even out more, for everything save row crops. What is happening there is greatly increased production per acre. Maybe modify row crops by increased production to standardized it per acre yield.