Next step silver - over $20.00

in order for silver to reach $25.00. gold must have to go up to $1,600.00 an ounce.

 

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At the current ratio, that is correct. I'm thinking though, that the ratio will become more "nominal" over time. For one thing, silver hasn't broken about it's highest price, so head winds remain, unlike gold.

Consider, silver is used in manufactoring. Cameras, cell phones, jewelry, solar panels, disinfectants. Gold is only used as jewelry. So, once the companies that use silver start up in better/full production, I bet the ratio goes back to at least 56 to 1. If there should be an overcorrection, which many experts say there will be, the ratio might get better than 50 to 1.

If the ratio does get to 50 to 1....gold need only be $1250 to hit that $25 silver. I don't think that is too far fetched for late 2010 or early 2011.

 

Same as anything else, find a dealer with the product you want.

Cohen Mint Rhodium coin (1 gram, .999, 13mm diameter)

 

silver at $25.00

The demand for Silver will increase within the next year as an industrial metal.

Gold will also be in demand. Gold will continue to rise with some periodic pullback but will continue to climb for many reasons.

Worries of inflation will drive gold higher. Because of this people will start to protect their wealth more through gold and silver. Inflation will not only affect us here in the U.S but abroad. You can't pump trillions of fiat currency into an economy without inflation eventually being a proplem, which i believe will become more relevant this spring.

When all these things happen other countries will look at the dollar more seriously about being the reserve currency of the world. When it becomes public gold will rise.

Then we have the X-factor that could happen at anytime world unrest in the middle east. An event there would propel the metals as well.

The ratio will come down and silver will reach at least $25.00 an OZ.

My timing might be a little off but, it will be well on it's way by may, 2010.

 

Let's say that silver does hit $25....

Then what? What will all of you who bought silver at $5-10 do? sell?

If so, sell for what? USD's? Why would anyone want to be holding USD's?

Or would you sell your silver to obtain gold?

Would you pay down your home loan? etc etc??

Always interested in knowing what people will or are planning to do when they sell their PM's....

Thoughts?

 

When silver hits $25, you do nothing. There seems to be a significantly high probability that silver will set a new all time high price before this commodity super-cycle is over. But when the time comes to sell, the proceeds should be recycled into another equity-type investment depending on what has the characteristics of quality plus bargain price at the time. This could be real estate, stocks, limited partnerships, or whatever else you know a lot about. Paying down a home loan is always a good idea when economic conditions make it difficult to know for certain whether you will always be able to make payments under even the worst imaginable economic conditions.

 

I very much agree with Cloudsweeper's 'do nothing' sentiment.

What then at $25? At that point it still only matters to me if I must sell at that time. Otherwise, I simply wish to keep holding PMs and know they hold their value around the world whether one currency collapses or another takes the place of the former or anything else brings us to silver at $25. Inflation won't go away and I'm not on a mission to fight it by buying PMs, but there's a satisfaction in the value that I know I have in PMs if it ever were necessary to cash out or convert to something else. I don't really like the hassle of cashing out and waiting/hoping to buy back physical bullion again with market ups and downs. Investing in an ETF is more convenient for that activity. Also, it depends on the ratio of silver to gold because I do prefer unloading the bulk of saved up physical silver bullion for gold if/when factors align in my favor. I simply prefer to buy and hold and enjoy watching what the prices do from day to day.

Ratios published 12/18/09 on Kitco:
Gold/Silver 64.41
Gold/Platinum 0.78

 

A smart investor will have his allot amount for safe guarding his money (hedge) and another percentage to sell when the value hits what he is looking for. So, if and when the value gets to be $25, $30, $50, or whatever your target is, you should have maybe half to sell for profits and the other half to hang onto.

Look at it this way. If you buy at $18, and sell half of what you bought at $40, you will still have half of everything you owned, paid for all of it, and still made $4 on each ounce. Not bad. But, if you don't over invest....this isn't an option for you....and you end up just holding no matter what the price goes up to.

Of course if you never sell, what profits did you exactly make.....NONE!

 

for those who owned modern commemorative silver dollars a lot. and those coins traded at bullion value. and your cost is bought directly from the u.s. mint. you have to wish that the silver spot will go as high as $30.00 or above. so you can break even.

people not realized that if they buy new modern commemorative proof at $43.95 a piece from the mint. you actually buy the silver spot at $57.075. now the spot price of silver is only $17.27 per ounce.

my advise is just buy the american eagle proof and uncirculated bullion silver dollars. two issues of american eagle with w mint mark unc silver dollars were the sleepers. the 2007w and 2008w. those should be better than the bullion eagle in the future. because the mintage were around 500,000 more or less. 2009 bullion eagle should be close at 28,500,000.

 

I definitely would like to take advantage of higher silver/gold prices to pay down my mortgage. But I also read somewhere that as PM's get higher and the USD continues to devalue. It might not even be worth paying down your home loan. I'm trying to get a deep understanding of this.

Unlike a lot of those underwater in their homes, I actually have equity and I'm tempted to purchase more PM's with the equity while interest rates are low. But that puts a little fear into me since so far I've been purchasing PM's with hard earned cash. But if I time it right, I can buy PM's, sell when they go high, pay back the loan and have some profits. But that definitely steps me out of my comfort zone.

Has anyone done anything like that around here?

Ok so your position is to hoard as much PM's as possible. Obviously have enough USD cash to go on your daily living, and to only sell PM's when you need the cash for something correct? Continue this cycle over and over and just make sure that PM's don't drop too much?
Do you have a baseline(floor) in which you will sell PM's if they drop too far?

I agree about the ETF, that's a perfect method for those looking to do a lot of selling and buying quickly...as long as you understand that you know you're not really owning any actual gold/silver....take advantage of what you think you own, sell/buy and try to make some quick profits....

Yeah this goes back to my response to Krispy. I really don't like holding too much USD but I know I have to. When prices do dip to my satisfactory, then I will have some cash to buy them. If all my money is held up in PM's, then I won't have the cash to buy PM's at a bargain when they dip....

I see that most who do own silver try to sell them and get gold. I'm trying to figure out if gold is a better ROI than silver? I'm sure that's not a question anyone can answer. I know that silver has increased (percentage wise) faster than gold but only because it's so cheap.

So that's like saying if you have a TV show with 1 viewer, and you get 2. You just doubled your viewership! Marketing folks would love that! But 2 viewers still suck!!

This is why I can't, at least right now, get into the commemorative/numismatic side of collecting. As I've said earlier, I'm a simple man. I just like to know how many ounces of something I have, calculate it's price and call it a day.

When I have to start worrying how many were printed, where, when, why and then calculate what it's really worth, it gives me a headache...

I just don't want to keep track of all that.

Example: "Yay! I sold a coin today for $10!"

Friend - "Was it the coin with the W mint or P?"

Me - "I don't know I think P?"

Friend - "Oh man you messed up! The P is worth 10x more! hahaha!"

Me - "NOOOooOOOooOO!!!"

 

I'm certainly not trying to make this sound like I really know what I'm talking about, but this is what I'm thinking about these days concerning the price of silver.

First I have no idea how many ounces of silver you guys have and I don't know if it is in lower grade coins, bulllion, or both. To make what I want your opinion on and to make it simple allow me to use say 500 to 800 ounces of silver being held right now.

This 500 to 800 ounces of silver being held was purchased for $8.00 to $12.00 an ounce over the last few years.

So silver goes to high enough price that you actually sell the silver at $25.00 per ounce, but you have to pay taxes on this profit. Also what shape is the US or world economy in that will support silver at these prices? If you sold the silver then paid the taxes wouldn't inflation soon eat up the rest of your profit? If the price of silver reached this level in a decent economy with mild inflation then great. I'm not saying everyone shouldn't own some PM for really bad times, but unless things get really bad isn't silver to pretty well stay in the current range with an occasional to or close to pop of $20.00 ounce.

I'm looking forward to any comments, again not saying I'm right, just some thoughts on it.

 

This is a frequent mistake in thinking. If you sell or don't sell, the gain is always the difference between cost and fair value. If you are preparing accounting statements, it is called unrealized gain or other consolidated income. If you are preparing a tax return, it is taxable income only when you sell. So if you are measuring wealth, it is a real gain. If you are preparing C corporation financial statements, it is unrealized and booked as a change in equity until you sell. If you are preparing a tax return, it is profit when sold.

Selling doesn't create a gain. It locks the gain at a certain dollar amount and requires a tax payment in the quarter when sold. By the definition above, Warren Buffett doesn't have an economic gain in his Berkshire Hathaway holdings. The nonsense behind this thinking is evidenced by the fact that banks will lend him money based on his shares, which some people insist have not been a profitable investment.

 

Cloudsweeper, you and I are definitely different types of investors. While I respect your opinion, I don't agree with it. I think that is a very bullish mentality. If Silver only goes up, up, up to the moon, your idea is fine. But, how did you feel last year, when silver plummeted all the way down to $9, and you were still holding.

Thing is, this is silver we are discussing, not gold. Silver is subjected to the market. Market crashes so does silver. Why not sell when you're at the top, wait for the crash and rebuy?

Elaine.....Modern day commemoratives aren't for bullion investing. A modern day commemorative with packaging and certificate of authenticity is a long term investment for your children. Think of what those coins that have mints of just 500,000 will be worth when they are over 100 years old. If you are investing in them for yourself, in your lifetime, agreed, the value isn't that good.

 

you don't make your profits when you sell...you make them when you buy...and let's say this as an example
you bought silver at $20/oz and milk costs $2.50 a gallon and gas is $2.50 a gallon as well


silver hit $60/oz because of inflation and you sell...milk now costs $7.50 a gallon and gas is $8 a gallon

silver hit $100/oz because of even more inflation...milk now costs $12.50 a gallon and gas is $13.50 a gallon

how do you feel now about making that $35/oz profit? or if you sold at $100/oz and made $80 you feel like you got ahead?

what if after you sold at $100 and even more inflation bumps silver to $150 and you still haven't sold... do you sell now?

selling isn't what matters...

what does matter is you have a commondity or currency of sorts that doesn't lose it's value or have inflation such as the above

 

If inflation were the only driver in the price, I would agree to that. Don't forget about the industrial uses of silver. As the economy picks up, inflation or not, silver will benefit. Cell phones, batteries, solar panels, disinfectants, all of these will be using much more silver in the near future. Supplies for these companies have been depleted or haven't been acquired yet.

The thing about silver is, it is finite. We can always breed more cows. As for gas, we are looking for alternative energy sources....so gas is going out, and natural power is coming to be. Silver is going to play a big role in this energy take over.

 

The price of silver has never followed inflation or vice versa.

I have no idea what these remarks are about.

 

Silver will follow the dollar, dollar down silver should be up and vice versa.

 

No it hasn't and won't.

 

In the very long run, silver will move significantly higher if the dollar moves significantly lower [just like every other physical asset], but there is no evidence that silver follows the dollar in the way you suggest. Gold does a better job of tracking the dollar with a correlation of about 80%. The primarly reason for investing in silver has to do with the world-wide supply/demand situation for silver, not inflation. If you bought silver as an inflation hedge, you bought for the wrong reason.

 

Silver is Money

I totally agree with 2coins comments. Your money is made when you buy not when you sell.

Silver and gold for that matter have always been viewed as money. It's only when we think in terms of dollars(fiat currency) we begin to look at gold and silver as an investment not money. Gold and silver never inflate they just go up or down in relationship to fiat currencies

Just because you buy silver at $20.00 an OZ and it goes to $40.00 an OZ
doesn't mean it is worth any more then it's intrinsic value then it was at $20.00 an OZ. It just means it has risen in relationship to fiat currency or what it can be exchanged for according to the open market.

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