Poll: Is Silver a good investment

I don't know where you get this, but last time I read the prospectus it indicated the price of the SLV is based on the amount they have in stock.

This link goes into further detail.
http://seekingalpha.com/article/269...-questions-about-physically-backed-metal-etfs

With regard to each share having one ounce of silver held, I have posted links in the past about how they use the same serial numbered bars for multiple contracts. This is documented for anyone who wants to search it out.

If you want to you can use the usdebtclock.org time machine to see that the current rate of debt accumulation will achieve a national debt of over $22 trillion by 2016 of which income tax will increase over 250% and corporate tax will increase over 200%. That's just the next 4 years. I plan to outlive that by quite a bit. I don't plan on running anywhere. I don't collect only silver and nothing else. I don't have many preconceptions about that scenario, other than that I won't be holding worthless paper. If people want cigs and booze that's fine, but I won't be giving my food and resources for that stuff. I don't need my silver to survive. It's for keeping me from being robbed by the system and to have my wealth at my disposal regardless of what takes form in the future.

 

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As a small part of a diversified portfolio.

 

I know kids (well, all grown up now) who made great investments by not opening their original Star Wars and GI Joe figurines only to sell them later in life at a huge profit they never saw coming, so yeah, silver can be a good investment but it just all depends.

 

depending on time frame we are talking about here ... Next 3, 5, maybe even 10 years - precious metals is a MUST have in portfolio, silver included.
So, the answer is YES.

 

No, for most people it is not. If you were buying like there was no tomorrow then stopped buying it when it was $6.50 an ounce like me, then yes.

 

Short answer: YES!
A. More people are investing in silver, increasing demand
B. More industrial uses are being found/expanded, increasing demand
C. Supply is fairly tight (I believe so, though I am no expert)

 

No.
1) Noobs should not imagine Silver (and PMs generally) as an "investment" in the familiar sense: an asset class providing (presumed) capital appreciation and/or dividend/income/yield etc.
2) Noobs who think they can "flip" bullion like a stock are almost certain to get burned, worse than house-flippers? They probably know nothing of premiums or downside in Bull Mkts, etc.
3) Noobs who misunderstand SLV/GLD "trades like equities" are clueless also. PMs negatively correlate to US stocks. And (typically) there's no alpha in PMs.
4) Noobs trying to market-time PMs in Paper might also get burned, but at least they can sell quickly with no premium from a brokerage acct. Still: don't ... or, until you understand the (significant!) risks.

I do believe Silver (and other PMs) can have a very useful role in your portfolio and asset allocation IF you do your homework first. Bullion can be an appropriate Dollar-hedge, Paper hedge, real asset reserve, catastrophe insurance, etc. but these purposes are also not traditional retail "investment goals."

That's my two cents. fwiw I called Gold for clients back in 2002; it's been a great "bet" since then, no?

 

I see this is a bump. Since 7/12/2012, SLV is UP +16% the SPY UP +9.7% so in the short term, YES "Paper Silver" was a better bet than US stocks in this time-frame.
(I imagine it might be close to break-even for bullion.)

 

When the exponentially growing debt bubble eventually implodes the $1.7+ quadrillion derivatives market when (don't ask me specifically when this will happen, no clue) the ability to tax can no longer sustain deficit spending, and the only alternative that remains is either hyperinflation and/or default -> global financial reset - what else besides gold and silver will provide protection? I can agree with you that they are not traditional investments, but anybody who wants to enter the next phase without being broke when they wake up to empty accounts will need to have metals and a way to protect them IMO.

 

I have read about that 1.7 quadrillion derivatives number. Its a red herring. Net net its not that severe, its a whole bunch of counterparties that will net to zero. Its simply that there is so much activity the way they count it looks huge. If all derivative trades settle tomorrow, NET no money changes hands.

I have no idea how that is an argument concerning "investments". YES, if someone makes a bunch of bets wrong that individual can lose big, but its a zero sum game. Picture 10 people going to a weekly card game. Yes, some will win, some will lose, but net net at the end of the night those ten have the same money they started with.

 

Sure will, so what exactly are your calls? What are your investments and what are there true values?

 

I love this thread, its more confirmation that the bull market in pms is nowhere near over. So much negativity, i absolutely love ittttttt!~

 

I agree with the idea that PM provide some protection but disagree it's correct to see PMs as classical investments. Basically, the problem here is conflation: an 'insurance policy' or reserve is never an 'investment' unless it guarantees income.

GLD ( a Gold-price proxy) is an 'alternative investment' at best, a diversification/currency play otherwise. I would call a PM-backed synthetic financial instrument w/ yield (like an annuity or interest-paying credit note) an "investment" - but the bullion itself is NOT that, however.

A Soviet proposal (which failed) was mentioned in The Annual Report of the Director of the US Mint, 1921: Addenda, p.212
>>Soviet Russia To Issue Money Redeemable In Platinum Coins. [From The New York Times, Feb. 29, 1920.]
London, February 28.—The Russian Bolshevist Commissary of Finances, M. Krestinsky, has published a statement preliminary to the expected foreign trade, according to an exchange telegraph dispatch from Berlin. The Soviet Government, it says, will issue a new type of credit note in denominations of 50,100, 500, and 5,000 rubles, backed by reserves of platinum of the value of 37,500,000 gold rubles. The issue will be limited to 65,000,000 rubles and the Government will be ready on call to convert them into platinum coins.

Platinum notes will be used in payment of foreign purchases made direct by the Government. To Russian citizens they will be paid out by the State only in exchange for commodities of practical value. Such citizens as deliver goods will then be allowed to trade directly with foreigners, using the notes as currency<<

 

That number was from MarketWatch.com, and considering that in London banks can legally rehypothecate infinitely (re-loan the same debt instrument round robin between banks to balloon balance sheets adding more counter party risk each time), there is no way to accurately estimate how large the derivatives market is. The shadow banking system isn't even on the books. Whenever they need to hide a loss they just put it there and everything looks fine. Nobody except these banks themselves has any clue how big this market actually is. But you are right that it's a bunch of counter parties that will net to zero, which is all the more reason it is dangerous and a bubble, and their appearance of solvency, and thus their credit ratings and ability to borrow depends on this artificial ballooning. IMO it's unrealistic to think that a counter party chain to infinity isn't going to have a broken link somewhere. It only takes one broken link to fail the entire thing. So I don't think it matters what the size is as much as that it's a house of cards balancing on a pinhead. It's not like a card game though, because everybody gets to take home the winnings as long as nobody asks for any legitimate collateral.

 

I also don't see PM's as classical investments, but why should that matter? My question is what investment of any kind will survive when the paper instruments implode? No classical investment will be of any value when the Fed and the hedge funds pull the plug and run, unless you count real estate as a classical investment. Even then, who is going to be buying a new house after they lose their 401K?

 

For the same reason it makes no sense to insist a "top hat" and "workboots" are interchangeable, simply because both cover part of the body. 'Clothing' has very different uses/purposes - NOT identical nor the same. That's hardly a pedantic distinction!

Plus: while I agree 'paper investments might implode in the near future' (next ten years or so) and bullion should provide some protection, that's by no means absolutely certain and guaranteed.

People need to understand the concept of a deep reserve asset before they "invest" in bullion. Otherwise - almost certainly - they WILL overpay, panic and get burned by PMs in the short term.

Realistically, those retail "investors" WITHOUT PMs and attracted now probably have a time-frame of 3 years or less! Noobs really should pause & carefully assess the bunkum of "Silver as a Investment." Volatile (risky) Ag is probably NOT suitable for them, I think, and bullion only makes sense longer-term for other reasons.

 

Nothing is guaranteed of course, though I have little doubt, obviously. But my point is if that happens, what else can protect your investments as well as metals can, if at all? This is a rhetorical question, as there is nothing except for possibly guns and ammo, food, water, liquor, essentially full on barter supplies which are even less traditional investments than physical metal. If someone wants the protection that metals provide they will have to have physical metal in their hand, not in an ETF or mining stock, not in a safety deposit box which will be the first place to get hit if there is a confiscation. The paper markets are buoyed because of monetary policy that cannot possibly last forever. The only way that I can forsee paper investments not imploding is if the economy is strong enough to fill the void left when the Fed stops the printing presses and when hedge funds and banks are no longer allowed to commit fraud (rehypothecation) as their business model. In order for the economy to become that robust it would require free enterprise, which is contrary to that very business model. In addition spending would have to be cut roughly in half to stem the exponentially growing national debt (note that GDP grows linearly even at its best) which 47% of the population relies on for handouts, and so that 47% would not be able to contribute to any sort of economic recovery. I think the odds speak for themselves. Take delivery, don't mess around with your future.

 

Reality was the USSR State Bank did not actually issue platinum coins until ca. 1977 and only for sale to foreigners. The RSFSR government did issue the Chervonetz in 1923 in gold, and then of course the silver coins - but it was only a temporary measure that was included with the NEP(New Economic Plan) that was largely abandoned by late 1920s.

 

Scottishmoney-
Where's the population data for the 1923 chervonets? ~62?
I'm not seeing the SALE PRICE but a few of these have sold in 2012: http://www.numizmatik.ru/price/moneta-rsfsr-1-chervonec_cpc2173_cpr2173_pcn6.html

Is this better, in your opinion? http://www.mcsearch.info/search.html?search=similar:164785&view_mode=1#0

A significantly poorer example sold for $4,000 on 2/3/2012 (POG USD$ 1,734 >> $431.5 intrinsic) for a premium over 'melt' of 828%
Another sold back in late May 2006 in Euros for a premium over 'melt' of 612%, but it seems these REALLY fetch a premium in Russia (+1,050%) ... for obvious reasons.

I don't know when this one was sold, ~$4,000?

 

Curiously enough the 1923 RSFSR chervonetz used to be worth a percentage over melt when nobody collected Soviet coins. There are enough of them to support the price they are at now - but the 1925 is another story. About the same time Goznak was minting these they were also minting Russian chervonetz dated 1911 for international trade - since nobody trusted the new Soviet coins.