Gold and Silver Dive today

Agreed. We also have a currency that has percieved lower risk than others (you don't have to outrun the bear you just have to outrun your friend) and people moving from bonds to equities which creates a sense of well being as our market moves higher. Our economy has structural issues that will keep employment high for an extended period and housing will get a lot worse before it gets better.

 

Log in or Sign up to hide this ad.

Our status as a reserve currency will permit us to print dollars, part of which will be used to pay interest and principal on the national debt. The process will take decades. The continuing dilution of our currency (and many other countries) will support PM prices.

A significant part of the structural economic issues you mention will be the inability of the available pool of workers to maintain the high degree of consumption that has promoted economic growth in the past. This shrinking pool of workers is also expected to support support the existing entitlement programs (Social Security, Medicaid,etc). By 2023, there will be one worker for every 10 retirees.

You may find the following article of interest. It's written by a PIMCO mutual fund manager who is responsible for $11 billion in the two funds under his management.

http://www.researchaffiliates.com/ideas/pdf/Fundamentals_200911.pdf

How does this relate to coins and PM's? Simply put, down the road, you will need an investment tool kit that includes a significant amount of inflation hedges. And, it will be better if you bought them earlier and cheaper before the crowd realizes they need them as well.

 

Agree again with your post, however I believe we are approaching the end game with inflating our dollars as a strategy for repaying debt. One of the danger signs I have been watching for is the Fed stepping in as the buyer of last resort for our bond auctions. This is truly creating money out of thin air and is the last bullet in the gun; as you know this is already happening. In my mind, the Fed buying treasury bonds amounts to a technical default. Were it not for the European debt crisis I think there would be much more focus on our own fiscal woes; and it goes beyond the federal deficit many states are also under water. With inflation running at around 6% but being reported at about 1.5% we have an official policy of hiding inflation and the Fed will not be able to tap the brakes to address it; they're too focused on supporting the ponzi scheme. So I believe we are within a year or so of being forced to acknowledge soaring inflation, the Fed increasing rates in response, and the economic slowing in response. The effect on our economy will take a decade or more to reverse.

There is so much more that could be said about the dramatic increase in debt service that will result from rising interest rates, the potential loss of our enviable position as holder of the reserve currency, rising tax rates to deal with the problem ... Of course I don't want all of this stuff to happen and consider myself to be a patriot but I think we have kind of lost our way and our government is not being a good steward of the things to which they have been entrusted. Stay out of debt, prepare for the future and vote as if your grandchilren's lives will depend on it. Investments in Gold and Silver is part of that strategy.

 

Morgan1878, thanks for posting the article - I just read it. I need to go for a run.

Regards,

Bluesboy65

 

Almost everyone on the bullion sites mention the declining value of the dollar, and the use of precious metal investment to preserve individual's wealth...and I see nothing wrong with that. What seems to be unsolved is " what is the supporting value of silver or gold at this time" as that is what one should use as a basis to invest ( buy/sell) to maximize their investment. Several assume that the current spot price is that support level of PM for such financial scenarios of high inflation, devaluation of the USD, but I suggest to you that it is currently several dollars to the high side. If you search the forum, you will find posts that state some have almost all of their investment funds going into PM, and others that say they "will never sell", a formula that seems strongly destined to turn out bad as an investment.

My huge concern is not the USD or the Euro, but the financial future of China. No one really knows what their internal financial situation is. The Chinese of today want to be like they see other countries on the internet and videos, more like the citizens of Shanghi or Hong Kong than the internal provinces. It is easier in a closed political system to hide financials, and strong armedly enforce inflation and currency value than in the US. Some may say default on anything by China in the future is impossible,but I would not rule it out. AIMO.

 

I'm not concerned about silver fluctuating through the first quarter 2011 . It will rebound above the $30.00 oz price. Gold , on the other hand, is another real concern for those heavily invested . But of course , this is all speculation on my part .

 

I hear people/analysts talking about support levels and I sort of get it but as soon as we hit that level the price goes below that and they start talking about the next support level. Many tiers on the way down. At this point the money I have to invest is based on my pay cycles so I try to keep informed (listening to those who talk about support levels) of where the market is going and buy at what I judge to be a pullback in the current price structure. I made a significant investment at $16.50 and at various places on the way up to the $28 range. There are too many landmines out there to keep us under $30 this year. When we see capitulation from the Fed and the economy sours I believe silver will go significantly above the $40 range and at that point everyone who bought in the $20's will look like an investing mega hero.


Those who "will never sell" are collectors, not investors. Nothing wrong with that but hopefully people are not confusing the two.

 

By the way, I realize that under normal circumstances a Fed tightening would have a negative impact on the price of both gold and silver. So if they had tightened much earlier and Washington had reigned in spending and unfunded mandates early on, I would not be in PM's. I think it will play out with the Fed tightening after it is way too late, then PM's will temporarily pull back, then inflation will keep marching forward and metals will make a bull run.

 

PM's are volatile. If you don't like volatility don't invest in them.

 

My prognistication, FWIW, is that inside China there are massive problems with state banks hiding debts, propping up failing industries, etc. We saw this clearly on smaller scales with other Asian economies in 1998. This is all hidden from view right now, but if anything severe ever happened economically it would quickly come to light. Rising tides raise all boats, (and hide all faults), so right now its not visible.

I buy assets with exposure to China, but not exclusively. I would be very scared of owning any Chinese stocks, both because of my fears and their lack of investor protections. I am with Jim, China is not a bed of roses potentially.

 

I too concur with this this thought and response.

 

I agree !
I think PMs in general will be strong for the future. Until we can get our own house in order , paper is paper and debt is debt. We have done little to quell the imbalance .

 

Paper is only the ghost of money. Gold and Silver is the only money that is allowed by our Constitution. I am an investor and I will continue to hold my physical gold and silver. Why? Think back to the Weimar Republic. I am sure there were people who sold their Silver for a 1,000,000 Marks. They probably thought they had made off pretty well until the Weimar Republic started printing 2,000,000,000,000 (Trillion) Mark notes. Then your 1,000,000 (Million) Mark note suddenly doesn't sound so valuable. We are all on the USS Titantic. The Federal Reserve as "Federal" as Federal Express will keep printing the "Owe"bama bucks in order to try to patch up the gaping hole on the ship. The one thing that is certain is that the ship is going to sink (USD). I will keep buying Silver because I like to collect it. I don't smoke, gamble, or really drink that much, I have to have one vice and that is investment coin collecting. The manipulators are trying to shake the weak players out. Don't get shook out of this. Unless you need the money to be liquid hold your positions and keep stacking.

 

You fit a lot of internet cliches into one post. "Paper is only the ghost of money," "Gold and Silver is the only money allowed by our Constitution," references to Weimar, "USS Titanic," "Federal Reserve is as federal as Federal Express, etc...

Well, the Federal Reserve is a creation of Congress and exists only with their permission. The Constitution gives the government the power to borrow without stating what, so borrowing Federal Reserve Notes is probably Constitutional. The economy is largely electronic now, not paper, so maybe you need to coin a new phrase such as, "Electrons are only the ghost of money." Weimar was a special case that may or may not apply to the US. Time will tell. Central banking is a lot more sophisticated now than it was 90 years ago.

Most importantly, you should recognize that much of what you say dates back to the late 70s when a lot of folks held gold and silver for the same reasons you state. They lost a tremendous amount of money and didn't regain it for almost 30 years. Gold and silver are not buy and hold forever investments, and a lot of people have gone broke betting against the USA.

 

I always thought 'buy low sell high' was logical.
PMs still seem high to me right now.
BTW_ this has become quite an informative thread since it's humble beginnings.