Where is silver going?

If history is any indication the price will go lower before it goes higher, but there is always the looming possibility of a silver shortage which will throw conventional wisdom out the window as well. Do I see that occurring in 2014? No.

Until either a shortage or a new global reserve currency to replace the USD I don't see any reason why the exchanges can't continue to set the price fix at whatever they like.

However a lot of so called gurus are saying this will be the year that the stock market falters, and it does appear to have risen too far, too fast IMO without enough healthy correction since the Fed began QE3/QE4. The tapering to me seems to be merely jawboning, as printing $60 or $70 bn per month instead of $80 is still a net increase, not a decrease as it is often spun as.

My dad told me yesterday that he thinks the true economic indcator this year will be new housing purchases and home building between April and September. We will have to wait and see. The numbers to this point have not inspired confidence, and it seems to me all this money printing has simply gone into the financial vortex.

If the economy picks up I expect both metals and paper assets to get some support, but nothing too major.

If it does not then I would be wary of a 2008 like scenario, and keep some cash handy for firesale prices with everything possibly dropping to surprising lows, after which I would expect first gold, and later silver to start moving to new all-time highs as things shake out in 2015.

My best guess is things will stay in the $20-$25 range until mid-year.

 

Log in or Sign up to hide this ad.

C'mom Chris,

Speculation is just noise, it all get worked out in the wash

 

I'd like to point out that men were put on the moon by guys using slide rules.

That said, a new "silver dollar" wouldn't be the worst idea if it could supercede the $1 bills the government would love to be rid of. Unfortunately, it'd have to have no more than a gram (and maybe well less than even that) of actual silver content to guard against its intrinsic value exceeding its face value if silver appreciated to back above $30 per ounce (in which case, this coinage would disappear from circulation very quickly).

 

I think you mis-understood. Slide rules were great... in their day. I carried one around all through high school even as calculators started becoming affordable, but what you thought was an argument actually makes my point. Yes we did point a man on the moon with slide rules, but if we were to do it again, do you really believe we would use them again???? Same with silver.

Also it would probably be the worst idea to have a new "silver dollar". You even started in with the problems. We need to put less silver than it is really worth in case silver goes up???? Now we have a partially backed dollar and the rest is valued in fiat??? Sounds like a mess to me, and why would we tie up a valuable industrial resource in our currency that is needed for other things. Seems it would be putting upward pressure on the commodity and cut into the bottom line of those who need silver for industry for no reason. This of course would put downward pressure on the economy. What is the logic on that?

Sure, the price of silver may go up but also remember what we learned about the Gold standard. You can have Gold or the Gold Standard, but not both. It might be the same for silver.

 

Anyone who believes putting pm in circulating coinage is a good idea should study what happened to Mexico in the 80's and 90's. Massive coin hoarding, economic disruptions, etc. Yeah, let's cause $50 billion in economic damage so we can say there is half a billion worth of silver in our coinage..... It is one of the huge reasons there is not PM in coinage today, pricing is too volatile and why risk massive economic damage for no good reason?

 

There is a solution to this problem. Have the metal in your currency be the baseline for pricing instead of measuring the price of metal in an external currency. As the value of metal fluctuates so too will its ability to buy other things. This wouldn't be any different than the value of the dollar fluctuating relative to what it can buy.

That being said it isn't very practical to have metal in your pocket. I'd prefer a metal backed paper currency so that even though the pricing mechanism isn't the metal, as long as they are pegged it wouldn't matter. For such a peg to work it would require creation and destruction of the paper currency to coincide with the amount of metal entering or leaving the vaults providing the currency backing so as to maintain the initial paper/metal ratio. In the absence of a fixed paper/metal ratio there's no point since money printing from thin air can occur.

 

I guess I would just ask why? If they find a huge strike of silver tomorrow you want everything you buy to cost twice as much because the value of one single commodity has dropped? Or what if two of the biggest mines have incidents, the dollar should triple in value? What is the rational to have our entire economy tied to only one commodity? Why not copper? Why not oil? Why not double cheeseburgers, coffee beans, frozen orange juice? I simply do not understand why everything should be priced in only one commodity. Most of the country does not want to own silver, does not use silver, and frankly could care less if their coins contain silver. So why should this be shoved down their throats? I am pretty sure the orange industry would like the dollar to be tied to huge piles of inventory of frozen orange juice, too, as it would be inflationary for their industry, I simply do not think the rest of us want to give the orange growers such a huge welfare benefit at the costs to our pocketbook.

 

Which is what works best for nearly everyone except for the very small percentage of silver stackers. Why are the stackers so selfish???

 

Well, I just bought a roll of ASE's on 2/27/2014, so it will be going down. It dropped a nickel the moment I bought them.

 

Unfortunately QE3 seems to fall on deaf ears around here or most collectors simply don't care. When all is said and done we will feel the damage of printing money without anything to back it. Either we feel it or our kids feel it but either way somebody will have to pay. If you think the gov't is gonna take care of it they will, by collecting more taxes from us. Bottom line is silver has seen better days and will definitely go below $18 before the end of this year.

 

I think they should re-introduce fractional reserve banking where the money we spend is backed by 10% silver kept in a vault like they used to do. Unfortunately that disappeared a long time ago. I think PM's have intrinsic value, and that fluctuates, but at least it never drops to nothing. I'm sticking to silver, even though I am less enamored with it than I used to be when it was going up every year...

 

I wish I could like this post twice.

 

I wonder when that "dip below $18" is going to hit us?

 

Considering silver is now well below $20, maybe sooner than you think. I would say sub $18 silver is much more likely than the $100 silver scenarios I have read about on coinflation, at least near term. Of course long term silver will be $100, question is when and what will its value be relative to other values.

 

I don't think it'll drop below $18, maybe $19 though. Hopefully.

 

Silver at 19.76 as I write this.... time to start accumulating again. I've been waiting for it to go below $20....

 

hmmm.... maybe i should wait until it goes back down to $7ish....

 

Metal backed currency cannot be printed out of thin air. The alternative being that corrupt politicians get to control our money and we suffer the hidden tax of inflation. It's not much of a question in my mind.

Disregarding that epithermal deposition ensures that silver will continue to be mined in lesser quantiies and lower grades per equivalent labor and energy expenditure, no matter how much metal that could be found it still requires labor to get it out of the ground and refine it, and thus being a representation of labor any inflation in the money supply is offset by services (which money is a representation of in addition to goods) so the value wouldn't drop as much as you purport, because there was cost involved to procure it. It's not like silver would rain from the sky and suddenly dilute the supply with nothing to offset its appearance.

We started out with a bi-metallic standard of gold and silver, and those were the actual dollars. We ought not to measure metals in dollars, but dollars in grains of metal, and other commodities by that standard as well. So it's not tied to one commodity, and more importantly the measurement of price is BY the metal as opposed to measuring the price OF the metal. So most of your questions are moot were things have remained as the founding fathers intended. I never said our currency should be backed by a single metal.

We could just as easiliy add copper or the PGM's for a weighted basket, any metal would suffice, because they all fulfill the requirements of a unit of exchange and a store of value; fungibility, durability, portability, and divisibility, and being elements they cannot be fabricated or reproduced. Oil does not meet these requirements, namely portability and durability, nor does OJ or the other non-metal commodities you've described. Even oil is reproduceable on a long enough timeline, but metals are not.

Honestly I'm surprised at your questions. I thought you would have known that only metals are real money, and that people need not own or desire to own metals in order to have a currency safe from manipulation. If we all got what "the rest of us wanted" we'd be even deeper in debt than we already are. I for one am tired of the ignorance of others impacting the well being of everyone else. The fact that this is your concern highlights that you represent the popular opinion which got us into this quagmire. You would make a good socialist politician, but I find you to be an enemy of true patriots personally, as I find all those who support the power structures that oppress us, whether directly or indirectly, by promoting the usurious money they use to do so. There is a reason that the founding fathers placed the ultimate punishment on debasing the currency. They took it very seriously. We see now today the negative results of straying from that.

 

I don't disagree. IMO we are approaching another Lehman moment, as shadow banking defaults in China are ever increasing, and their QE dwarves even ours. 10 years ago it took 1 renminbi of debt to create 1 renminbi of growth. Today it takes 4 of debt for that same 1 of growth. The global economy is approaching the limits of debt saturation, and the US/EU is already beyond the point of generating any growth. China is the only driving force left, and they are about to run out of wiggle room. I would not be surprised to see silver drop to single digits when the financial system implodes, but I also wouldn't expect anybody to be selling it either. By then you will either have the bird in hand or you will be up a creek. Paper price means nothing when it's time to pay the piper.

 

"You would make a good socialist politician" and I am an "enemy of true patriots"? Calling me socialist anything is about the greatest insult someone could say to me short of insulting my heritage. As for being an enemy of true patriots, I served in a war for this country, what have do done for it, since I am such an enemy of true patriots?

Getting back to the topic, so if you like a pm backed paper currency, doesn't that eliminate all of your other objections to things other than pm? If the paper can be backed by pm, why couldn't paper be backed by the national oil reserves? Why not, you know, all assets in the US that technically US currency is backed by? If you want paper backed by an asset, then fungibility and many other attributes you argue money must have are irrelevant, no? You are arguing against yourself.

You seem so hung up on having "real metal" behind your currency. You do know at times the silver in a dollar of coins was worth like 30 cents, right? A dollar of nickels is worth like $1.20 today, so today is much better than 50 years ago for those who want "real money".

People PREFER paper money, and do not care about pm. Those are the statistics, and we are a democracy, so why do you believe a tiny minority has a right to dictate what the majority wants? If people cared they would have actually used gold coins instead of paper money when they could, but almost no gold circulated. Almost no one wanted them or cared it was "real money".

The USD is a medium of exchange, not a store of value. Use your USD to buy silver and be on your own private silver standard, problem solved.

Sorry for the rant, but pm extremists remind me of that quote from Game of Thrones, "they would see the world burn if they could rule the ashes".

Edit: It had been a while since I looked up the price of nickels. I guess a dollar face now only melts for $.88, so I misspoke earlier. Still, its higher than what silver coins were for much of their existence, so the point still stands. Anyone who wants "hard money" should simply ask for their pay in nickels.