Why is Silver Priced at its Price and Gold at its Price

I'm not sure who I heard it from, but he said that most of the silver used for industrial purposes are very small making it pretty hard to recycle. So he looks at those as lost silver. Perhaps you can recycle silver ktichen sets and silver jewelry, but you can do that with gold too..

I've heard the silver recycle arguement in various places, I wonder if he's right about silver being to small and too much effort to be recycled from the industrial side.

My friends an electrical engineer and they use silver for a lot of their parts in circuit design but he said the same thing, it's very very small amounts...

 

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It depends on the situation at the time. The best option might be stocks, bonds, bank CDs, foreign currencies, or who knows what. It isn't a decision that can or has to be made now. Sometimes people can get carried away trying to plan for the unknown. It is sufficient to just try to do what makes sense at any particular time.

 

When an electronics firm goes to replenish its silver inventory for fabrication in the next two or three quarters, or the US Mint wants to buy more silver for the ASE program, it must, by necessity, come from silver in storage that is available for sale. That is the only silver that matters in the investment decision. If you start counting jewelry, numismatic coins and granny's tea set, the picture gets distorted because this silver won't come to market at anything close to the current spot price. It might come to market if the price of silver is much much higher. And that is exactly the point. There is a high probability that the market will have to offer higher prices to acquire the silver needed by users to balance supply with demand. It isn't an agenda or nonsense. It is solid analysis of the silver market and the supply/demand characteristics. You are entirely correct that more silver has been mined than gold, and that a lot of silver remains in the ground. But it takes years to bring a new mine into production, environmentalists can block or delay many projects, and many deposits only become economic at silver prices higher than today's price. However, I think your view is probably more widespread than mine. If it wasn't, the silver price would already be higher. But for me, I don't think it is being gullible to believe that the likely outcome will be higher silver prices a few years from now as all of these factors play out in the market. Everyone has to decide for themselves.

 

I stated pretty clearly earlier in this thread that inventory plus current production was the key, so your guess at my premise is wrong. And while you recognize that annual silver production is greater than gold, you don't give credit to silver demand which is also greater than gold. Rarity isn't the key to price change. Availability is. Time will tell which one of us is correct about the current investment potential of silver. My guess is that we will repeat this discussion at higher prices, just as we have repeated it at lower prices.

 

I feel a lot more confident that silver prices will rise than I do about the change in the ratio, so maybe we can both be correct.:smile

 

Like I said earlier in this thread, when the idle silver mines go back into production, there will be so much silver floating around that the silver price can only become depressed again. Not taking this into account could be considered short-sightedness.

 

It just isn't that easy. Read about the problems getting the Sunshine mine back into production. It's been going on for years without success. I can't think of a significant primary silver mine that has been successfully put back into production during this bull market, and the price has already tripled.

 

Probably because the price is still too low to make it a profitable enterprise.

 

Ted Butler has been touting silver for MANY years, and he's still wrong.

 

what's he been "touting" about with silver exactly?

 

He's been touting that silver is grossly underpriced and should be skyrocketing any day now. This has been going on for YEARS now. How many of his reports have you read?

 

I haven't as far as I know but I do know silver already hit around $21/oz last year and because of the economy slowing and/or stopping the silver usage silver dropped like a rock down to $8-$9/oz and when the economy speeds back up I think we will see silver go to that $21/oz or higher

I also think it will depend on if any major silver mines can reopen it will affect the price of silver but with all the eco-nuts thinking anything we do to the enviroment is damage I wonder if mines that have closed will be able to reopen...

 

I think the real reason is that there are tremendous technical difficulties in dewatering a mine, replacing the infrastructure, and hiring a crew in a way that actually makes money.

 

Everyone's guestimating that gold's new floor is $1000.

Do you guys think that silver's new floor is somewhere around $16?

What major event needs to happen for silver to drop like a rock? I guess the Fed's raising interest rates right? Is that the only event?

 

The 'major event' needed to drop the silver price like a rock, is simply over-mining it.

 

uber deflation would drop all the pm's like a rock
but the president doesn't want that with all the debt the U.S. is in
inflation is key to solving all the national debt to china
also once said debt is paid off I think deflation is going to happen and then you better have sold all the pm's you wanted to profit on or you will be left with rapidly dropping prices in pm's

keep in mind I'm not trying to be political in this post

inflation and deflation are key words in eliminating national debt without alot of work and then restoring the value of the U.S. dollar
also they are key words in how PM's are able to climb and crash in the future so long as pm's are measured in U.S. dollars...
hope it continues I don't like basket currencies...

I also hope some of this above doesn't happen I really do not want $6 milk/gallon with all the other increases in prices that would be around with $6 milk...

 

True, I should have figured that after what everyone's been talking about in here. I think according to cloudsweeper or someone else, they said that it's not very easy to do this? Or the profits aren't worth it?

So that can only be good for the value of silver for the time being correct?

No don't worry, I tend to go off on political rants myself. hahaha....

If the USD ever gets involved in the basket of currencies, it would make me concerned when it would EVER be a good time to sell my PM's?

I guess it would depend on how strong the USD is with other currencies.

I suppose the only GOOD thing about rates shooting up are savings rates. But it's kind of a catch 22 since everything else costs a lot more too, it's almost misleading to anyone who's saving their USD in bank account.

I think I trust PM's much much more...

 

Both metals are in powerful uptrends. I don't think round numbers and "floors" have any meaning. There is nothing different about the metal's bull market compared to any other and it will continue until something changes in the supply/demand situation. Silver is a tiny market by world standards and just about any large seller or buyer or speculator can influence the price short term, but industrial users and bullion investors control the demand side, while mining companies control the supply side over the long run. Interest rates are overrated as a cause for metal fluctuations and are usually a coincidental indicator, not a cause for the fluctuation. Neither gold nor silver are very popular right now among institutional investors, so the path of least resistance seems to be up as more converts jump on the bandwagon.