The price of one, three, or five ounces of Silver is about the price of one fill up with gas, depending on what vehicle you drive. This means that almost everyone can probably afford to buy a few SAE. The current price of Gold is approx. 68 times the price of Silver. I don't recall exactly where I read this, but I believe that over the long term the ratio of Silver to Gold has been approx. 54 to one. This would indicate that Silver is under valued when compared to the price of Gold. US Mint Sales after only 7.5 months in 2010: 2010 bullion ASE unc one ounce silver sales report - 22,255,500 Annualized is approx. 35,000,000 + ounces. I have reviewed several eBay auctions of 2010 SAE and the premiums being paid over the Spot price in many cases is much higher than local dealers charge. Some auctions look like a feeding frenzy, where the Spot price is not relevant. With all the bullion coins that the US Mint is producing and selling is the Mint effecting the market price of Silver? Is the Mint depressing the spot price because of the enormous supply of SAE that the Mint is producing? :yes:
interesting thought i remember back in 1980 when silver was $50 an oz and gold was $800 ... that's a 40:1 ratio (and marked the top of the silver bubble of the 1970s ... gold was also in a bubble here and fell all the way back to $250 or so back in 2001 certainly the metals take wild rides sometimes
The mints effect on silver prices is more a reflection of the awesome liquidity of ASE's than a demand-based effect... the demand is there, but it wouldn't be as big if ASE's were't so easy to sell.
...if the demand is there, as you agree, and IF there were "only" 10 Million ASE's produced per year (the average prior to 2008) then wouldn't that demand drive up the price of the available units in circulation? What is the reason for a 350% increase in annual production if not to keep prices down? Here are the annual production figures from Elaine1970: 1986----5,393,005 1987---11,442,335 1988----5,004,646 1989----5,203,327 1990----5,840,110 1991----7,191,066 1992----5,540,068 1993----6,763,762 1994----4,227,319 1995----4,672,051 1996----3,603,386 1997----4,295,004 1998----4,847,549 1999----7,408,640 2000----9,239,132 2001----9,001,771 2002---10,539,026 2003----8,495,008 2004----8,882,754 2005----8,891,025 2006---10,676,522 2007----9,028,036 2008---20,583,000 2009---30,459,000 2010---21,888,500 (not final)
I don't understand how the mint selling millions of oz of silver a year could depress the spot price of silver considering the mint has to BUY those millions of oz. That demand should result in an increase.
The amount of silver that is sold by the US Mint is but a tiny fraction of the total amount sold worlwide every year. I doubt it has much effect at all one way or the other. There is only one thing that has been affecting the price of precious metals in recent years - fear. If it were not for fear gold and silver would be where they were 10 years ago.
Which came first, the chicken or the egg? I'd have to say the mint is producing so many ASE's because of demand, not the other way around, as happens with many marketing schemes. I'd have to agree that this demand is fear based and will not last forever. I'm no expert in analyzing "bubbles", but doesn't it appears silver & gold have reach a plateau, with prices oscillating between 1200 & 1100 and 18 & 17 respectively, for the last 10 or more months, as the economy slowly improves? Has the "pyramid" been built?
I think to simply chalk all the ASE sales up to fear is oversimplifying things, respectfully. Lots of people are bulking up on these, and some of them are smart and not given over to hysteria. People remember the Weimar inflation stories: wheel barrels full of cash in Germany buying one loaf of bread. I see cash from retirement funds being switched into highly liquid hard bullion assets, eschewing paper. Play money ain't gonna cut it during the next bank run.....which by the way is starting last year. Five more failed TODAY. Smart money buys stability. That's rational, not fearful. As more bidders go after bullion, Keynes says prices SHALL rise.
