Next step silver - over $20.00

silver prices

I hope silver spikes over silver....it seems to be 10% to 50% behind gold prices...and I mean as gold prices climb so should silver prices..:hail:

 

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Silver prices versus gold price

Not necessarily-- there is a lot more silver being mined than gold, and these days silver is more often than not a by-product of lead, zinc and copper mining. If their main operations are profitable, owners of these base metal mines can sell their silver at a relatively low price because it is just "gravy" from their main operations. Also, with the current price ratio of approximately 64 to 1, you would need 64 ounces of silver to equal the value of one ounce of gold, so that poses problems for transport and storage.

 

I haven't done a much analysis, but it seems that silver does track gold and on this latest run up has done better as a % than gold. I am seriously considering cashing out my junk silver to take a little bit off the table but keep the bullion and better grade dollars around for future appreciation either due to spot price increases or economic turn
around favoring collectables.

 

Gold pass $1,100.00 per ounce again in asia. The central bank of sri lanka is buying gold. See gold trade over $1,100.00 next week.

 

Everything I said was totally original, I've never seen the articles to which you refer. But, of course the dollar is going to zero. Do you think there is a limit on how high things can cost? If not, then you believe there is no lower limit to the value of the dollar. That's what "going to zero" means.

I believe that is the contra-positive of my belief that the value of silver (and gold) remain constant. Saying that gold and silver track inflation is saying that they basically keep their original value, in spite of inflation, which was my point.

Thank you for your detailed analysis of the price of junk silver vs the price of gasoline for the last 50 years.

I'll summarize what you said in a little chart:

Year --- Silver / gas ratio
1968 --- 5
1972 --- 10
1987 --- 10
1979 --- 21.3
1984 --- 4
1989 --- 3
1990 --- 3

I calculated it for 1979, you said gas was .75/gal and junk silver was 16 times face value. That was the peak of the hunt brothers cornering the market, when silver was over $50. That, of course, was an abberation.

You proved my point. The gas / junk silver wants to be 4. Sometimes it goes above it, as much as 10 (the Hunt brothers notwithstanding), but it comes back. Sometimes it goes below 4, but never lower than 3, and it comes back to 4. Lots of things affect the real price of gas, like supply and demand, hurricanes, wars. Clinton tried to lower the price of gas by dumping the strategic reserve on the market. Lots of things affect the silver / dollar ratio. Both these factors affect the junk silver / gas ratio. BUT, the junk silver / gas ratio is MUCH MORE stable than the price of silver or the price of gas.

The conclusion of my earlier post was:
So when silver gets to $100, don't get to excited. It will still get you 4 gallons of gas, or 10 cups of coffee, or 25 postage stamps.

I haven't seen anything to refute me.

 

Sri Lanka? Real threat there.....Where in heck are they gonna get the scratch to buy the gold....?

 

Thank you for your detailed and well written analysis. Its good to hear the point of view of an investment professional.

My training is in math. There are different ways to look at things mathematically. I'm a gold bug, so I look at events with the view that gold is the measure of the dollar, not the other way around.

What do you think the feverish activity will drive the price to? What do you predict will be the "top of the gold market"? What will happen then, a major correction? How major? 30%? 50%?

Suppose gold just starts going nuts, and it spikes to $2,000. I wouldn't think my gold was worth more, its the same gold. I'd think that the cash I have, and the stocks, are all worth less. And if the stocks don't go up in price faster than gold, they're actually going down.

I think the stampede could take another form, i.e. other countries holding our money could all try to spend it on real assets. In other words, they could "stampede" over here and start by buying all the gold they can. They're holding lots of our money, and nervous about it. The amount of gold they can buy with our money keeps going down. Finally they start buying our gold. I see the stampede being a stampede to redeem our ever decreasing dollar.

 

Gold traded $1,102.00 in asia. $0.30 short of all time record high.

 

$1102.60.....

 

Gold break all time record high again at $1,105.90 an ounce.

 

Guess my site's got jet lagg.....

 

The thing is, if silver does go to $100 in the near future, it will be another aberration, like in the 1979-80 era. I am closely involved with the metals industry, and I have seen nothing to suggest that natural demand alone will push the silver price that high. For example, the use of silver in photography has greatly diminished, there will always be mines with silver as a by-product that will gladly sell their silver for less, and junk/scrap silver will flood the market long before that price is reached. Furthermore, the big players are not interested in silver for storage and transport reasons, among others.

 

I doubt if we'll see another Hunt Brothers event, but who knows. If silver goes to $100, and oil goes to $400 or $500 a barrel, does that mean one should trade his silver for cash? I don't recall the exact timeline, but during the Carter years the price of gas was artificially low, so low that even though it was cheap, you couldn't buy any. There were gas lines. So the real price of gas was not what you saw on the pumps. Next to the sign that said ".75/gal" was a sign that said "out of gas".

 

Without any REAL data, my guess is we will see $400/bbl oil when the world no longer uses oil for fuel. Fixed production costs will be spread over fewer barrels which will be used for making other petroleum based products.

Silver over a $100....only if/when the world goes of the dollar-standard..

 

There are a number of people on this forum that that are very good with respect to "working the market". They are not investment professionals and are likely better at it than many so-called "market pros".
If you do your homework and put a leash on your emotions, you will succeed more times than not. No one bats a 1.000. Hit for good average.

I don't know the price at which gold will top out. Even the best prognosticators can be very wrong (even though few of them will admit it after they've been proven wrong) Personally, I watch the mega-trends, the macro-economics that will affect the price. The big trends, like inflation are like super-tankers that take time to turn around. So too, is the decline of the dollar. As well, so is the trend of countries and their central banks to diversify their assets away from the dollar. I started to establish gold positions in 2004 based upon the recommendations of legendary money managers (Jean Marie Eveillard & Barton Biggs to name a few). I've added along the way as it became clearer that gold as a form of insurance was desirable due to the uncertain financial climate.

Today, the G-20 indicated that there would be a no lack of monetary stimulus for the immediate future. This sent gold and commodities up, but markets and paper assets worldwide also went up. The G-20 announcement is inflationary in tone since lots of money will be available at very low interest rates. While some of this money is buying gold & precious metals, it's also buying other assets that are considered cheap.

So for now, the price trend for gold is up. But as with any other asset, there is a ceiling. So far, there are not signs of a "frenzy" or "frothy" top where there is indiscriminate buying. Time is not full for a resolution of where gold will end as far as a price top. So for now, I will wait and watch.

 

I think I am going to dollar cost average into this market to establish a defensive position...I have to agree with Morgan, the macro trends are pretty ominious.

 

(Note to Elaine: you may want to cover your ears)

The puzzle with the global macro-trends right now is that you can make good arguments for precious metals going up or down.

Rising inflation, dollar decline and central banks diversifying their assets are all macro-elements that support the idea that gold will go up.

Underutilization of factory capacity, a surplus of cheap labor worldwide, competitive pricing in most consumer categories and the absence of ways to leverage capital (easy borrowing, goofy loans) in the "new" global economy are all macro-elements that support the idea that precious metals have seen their best days.

Because of this, I consider my precious metal position (around 8% of total portfolio) to be insurance. The big distinction here is that I am not buying this asset to make money. I am buying this asset to protect the rest of my portfolio in case an unlikely set of calamitous circumstances (called a "Black Swan" event) should occur.

 

Silver high today at $17.72, gold break again the all time record high at $1,118.20 an ounce.

 

Curious what everyone is experiencing in terms of dealer purchase of loose silver (bag). The 4 dealers in our immediate area are paying 11x face...vs roughly 13.5x intrinsic silver value.

 

I'm curious too, although I think silver has a way to go before it tops, so for the meantime, I'll sit on it..