Here we go! Silver under $18...

Agree. Stay Kurt........we need someone to throw darts at.

Kidding aside, the bullion forum can get rather heated at times and I must say that (while I don't always agree with what you write) I enjoy the spirited discourse........

 

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@V. Kurt Bellman "That said, I find the culture here more restrictive than I care for. I find it borderline offensive, if I'm being brutally honest. Diff'rent strokes. I do find the mere perception of personal targeting, not my gripe - mine is content specific, not personally aimed, at least worth a solid soul searching. It's probably not causal, just correlational. People do exhibit trend behaviors. But it seems to me worth a thorough ongoing soul searching."

If you really feel that way then just leave. No one is forcing you to keep coming back. This forum is for people to discuss numismatics and numismatics only. If you cannot contain yourself to those topics and leave politics out then this is not the place for you. Threads involving politics and religion absolutely do not belong here. I for one have left another forum where there was nowhere near the level of knowledgeable collectors and dealers posting truly useful information about coins and currency.

 

It's a commentary on the markets and human nature that people couldn't wait to buy silver when it topped $40. Now that it is at $17, people are staying away!

 

dp

 

Hey everybody!
Time to "slowly" accumulate silver again.
(sorry...too on-topic?)

 

I agree, but I am waiting for a bottom, and then I'll jump in. I don't know how low it will go, and don't want to try to catch a falling knife. I think this is leg 4 of a 5 leg down cycle and then silver will go back up.

 

"Investors" usually have the map upside down. They buy high and sell low. Hopefully they're not building bridges over rivers for a living.

 

There is no such thing as intrinsic value. It's one of the worst economic thoughts ever devised. All value is subjective, only in the minds of humans (and occasionally we have to compete with other animals for it, too).

http://en.wikipedia.org/wiki/Subjective_theory_of_value

 

Thanks for the podcast recommendation. I'm always looking for good podcasts and wasn't aware that the economist had some. It looks like they have a bunch of different feeds, do you recommend any one in particular. It looks like the "all audio" would contain all the audio content they produce, that one?

 

Regardless of whether or not you accept that it exists, it does.

Notice the key word in this definition from Investopedia:

The definition above accommodates subjective theories like the one you linked.

 

I think you are misunderstanding the word perception here or the subjective value theory. While it's true that we may perceive things differently, getting us to arrive at different estimates to a supposed "intrinsic value". It's only our estimates of value that are allowed to change in the intrinsic value model, the underlying real value is assumed fixed.

Subjective value isn't about different perceptions, it's about different importance or value systems. You may think that Lockheed martin's value should be based on a measure of cash flows and risks and those things inform your decision to buy the stock. Someone else may object to their business model and the fact that they profit from war, to that person the value of Lockheed Martin is decidedly lower.

Values are just opinions and observed market prices are just the clearing price at which the current supply is balanced with the current demand of the people who most desire something.

 

Full Definition of INTRINSIC
1
a : belonging to the essential nature or constitution of a thing <the intrinsic worth of a gem> <the intrinsic brightness of a star>

b : being or relating to a semiconductor in which the concentration of charge carriers is characteristic of the material itself instead of the content of any impurities it contains
2
a : originating or due to causes within a body, organ, or part <an intrinsic metabolic disease>

b : originating and included wholly within an organ or part <intrinsic muscles> — compare extrinsic 1b

When applied to coins, 2b of the definition above applies as it is referring to the precious metal included in the alloy of the coin. So, in that context "intrinsic value" is most appropriate because you are speaking specifically about the silver or gold content only.

 

sure, just tell your bill collector that you think silver is really worth 400 dollars an ounce.

 

Explain *why* intrinsic value is "one of the worst economic thoughts ever devised" in your opinion. The idea of an intrinsic value incorporates the aggregation of "subjective values" when applied to the concept of commodities. Marginal utility of stores of wealth is fairly useless as a concept. If an individual has no use for a 400 troy ounce brick of .999 good delivery gold in their vault, that doesn't result in a $0 subjective value to the owner. It doesn't even result in a subjective value of 75% of spot. In fact, it results in a value defined as the highest bid price on the bid-ask spread for daily gold spot. It's a fixed value, regardless of the subjective value or marginal utility to an individual. The only times that this isn't the case is outside of the market, where liquidity and scarcity issues might come into play. If someone needs gold *today* (literally within two days), they might be willing to pay a premium for physical gold, since they don't have the luxury of waiting three days for their physical gold to be delivered to their custodian or warehouse. If someone needs to sell gold *now*, they might be willing to take a slightly under spot price to avoid dealing with seeking out a willing buyer. However, under normal circumstances, individual utility doesn't change the underlying value of the metal.

Maybe I used the wrong word, when I said intrinsic, since I didn't mean spot price. I meant the marginal production cost of one troy ounce of silver, if it were possible to extract silver at the same cost, regardless of the number of units being produced. This number is based upon costs of labor, energy , research, refining and marketing. It excludes the costs of opening a new mine (acquisition of machines and land leases), and assumes a mine is already producing.

Regardless of my choice to incorrectly use the word intrinsic, it doesn't change the fact that both a producer's value (my definition of intrinsic) and delivery value (Investopedia "spot" definition of intrinsic) do exist, even if you don't think they do.

 

Yes Sir,
I'm old enough to remember silver @ $1.29 & when it broke above $48. I awoke to a surprise coming off my meager vacation. It was silver, breaking lower. I started to buy from my 2 favorite sources. I'll continue since I Admire the coins I buy, period. Not a stacker , just a lil guy enjoying upgrading sets & continuing series !
lil Jim

 

Hey Kurt please stick around, maybe they'll start on a 50 yr collector

No witty Repartee, I just understand human nature & sparring

Y'all have a fine evening
Lil Jim

 

You're referring to cost of production which has a pretty wide range. Besides, there are other factors you're not taking into account. Maybe, some big miners have unionized workers? They can't just fire a bunch of people just because prices are down and they want to close some mines. Also you can't just wake up one day and decide to shut mines. It takes time to shut them down and re-open them. What if prices spike up again? Companies have to take this into account. They're slow to close mines. They don't worry too much about short term pricing. What about contracts for future supply that they may have signed? Someone else is taking the hit and the miners are still producing.


And even if none of this applied, prices can still trade under cost of production for extended periods of time. Happened in the past and will happen in the future.

I'd be lying if I said that low prices don't bother me. The lower prices go, the more I can buy. I want to see sub $1000 gold prices.

 

I disagree VPR. If price of production exceeds market price, even if labor is unionized, resources would be reallocated or consolidated. If contracts were in place to fill orders, orders would be filled on the open market. There's no reason to pay $40 to fill an order that will pay $25, when you can fill the order for $17. You're right that it takes time to shutdown a mine, but that's why they hire geologists and forecasters. You don't start the process to shutdown a mine when the price is below the cost of production, you start the process while the mine is still economically feasible, so that you have the option to close when it's no longer the case.

 

There are a lot of long term contracts in the mining ( including PM) some as long as 5 or more years, so that the company doesn't have to worry about short term fluxuation in spot . You can look at the yearly SEC or the Canadian SEDAR site for a gold producer and see from the yearly report that most are safe ( balanced CALLs and PUTs action )unless PM were to be very level for 5 + years. Companies I am familiar with produce gold for currently around $1000 an ounce, but they wouldn't close shop if gold dropped to that, as they have some paid contracts to supply it at $1250 for a period and 'put' contracts that gain value as physical gold loses. But it does give many large companies possible hard luck cases of companies that are operated with very low margins to overhead, and the richer company can purchase those mines ( especially if close to another of their operations). So deep drops for several months may bring some consolidation.

 

This definition is more applicable to bullion. Thanks for posting it.