Gold within a hair of new record high in $s (Metal of Kings)

I'm going to go out on a limb here and say that "gold prices relative to gold" will remain approximately flat.

 

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A lot of the "easily recoverable silver" isn't so easily recoverable. Just try telling your wife that it's time to sell her jewelry for melt because the price is high, or that it's time to sell her mother's sterling silver set. It won't happen. Most of the easily recoverable silver was already melted in 1979-80, can't be melted again, and was never replaced. And try telling collectors that it's time to sell their morgan and peace dollars for melt because of an industrial shortage. Or get the people of India to turn in their silver for paper. Or get the government of China to sell us their silver stockpile for some more US Treasuries. A lot of silver is theoretically available but in practice will never be turned into 1000 ounce Comex bars to cover short positions. I don't even think most people will want to sell MS69 and PF70 ASEs for melt value -- and they shouldn't. The silver market is tiny in dollar terms compared to other markets. This is one of those cases where complacency developed over 30 years can lead to missing the biggest turn of events in silver in the last 100 years. It's something to think about.

 

My wife has a special attachment to only one piece of jewelry, and she has no particular interest in any of the silver jewelry I've given her. If she thought she could get more than what I paid for it, she just might sell it. And maybe she has.

As for the mother-in-law's silver set, I don't think she has one, but my own mother would probably sell her heirloom silver if she needed the money.

 

I think extrapolating your experience to an economic law results in faulty logic. Time will tell.

 

But the point Collector1966 is a good one. A lot of silver demand in the last few years that has unbalanced supply and demand and caused the runup has not been industrial use, its been silver coins and bars for "investors". You cannot say that these sky high mintages of ASE are for collectors Cloud. This is "excess inventory" that can come to the market at any time. I have seen it too many times to discount what will happen when small investors get bored with an investment and move on to the next thing GLen Beck or their golf partner starts talking about.

 

A valid argument most certainly worth taking into account. I previously said 'based on the current trajectory' because obviously that will change. As demand increases so will the price and skew that. However even at 50% (the numbers in Chris Martenson's silver chart in the link I posted indicate coins/bars, silverware, jewelry demand account for closer to 30% though) that is still a 50% difference from gold which is entirely recoupable.

 

I disagree with your characterization. It isn't excess inventory, and it is already on the market to satisfy investment demand. Investor demand is not inferior to something like jewelry demand. You seem to be expecting a sharp decline in investor demand. If this is the case, you shouldn't own silver since you've seen this many times and probably don't want to repeat the error. I view the situation in a more positive light and believe prices will go higher with a probability great enough to warrant investment.

 

You were the one who posed the scenario about what my wife and mother(-in-law) would do with their silver jewelry/silver heirlooms, and I told you what they would do.

 

I understand that you have to form your opinions from your personal experience. That's why I said, "time will tell" even though I disagree.

 

On another forum I visit, a sterling silver dealer was bemoaning a down turn in his business, his lesser pieces were going off to melt and his better pieces were becoming unaffordable. This was when silver hit the $20.00 mark. Has anyone gone shopping for sterling lately? I wonder how full the shelves are?

 

I predict that gold and silver are heading towards a significant correction. Reading the forums, it sounds like the shoeshine boy is giving stock advice. In my mind, an ounce of gold is worth just that, an ounce of gold. For the average investor without inside knowledge or a expert understanding of the PM markets, gold should be a place to put some assets to protect against currency fluctuations.

 

What's a sterling silver dealer?

 

Gold has gone almost straight up for awhile and it would make sense if it pulled back a bit before the bull market continues.

 

The fact remains.. we a r e in a bull market. I expect we will be for a time longer, but not forever. Our arena today almost dictates bull market for the foreseeable future. I joined this board so that I could t r y to learn the signs of the wind changing. Though you don't all agree on details, I still near basically the same message from all of you. Thanks for sharing your insights, everyone, for I am learning so many ways to evaluate for myself.Surroundednd yourself with wise counsel was what my husband instructed me to do.I believe I have done so.Lucy

 

You're very intelligent. We should all hope to be so fortunate.

 

I would also like to note the apparent brisk business that "cash-4-gold" places are doing with gold jewelry, buying it for far less than the melt value. If people find themselves in dire financial straits, which isn't too hard to do in this economy, they'll often toss sentimentality out the window if they can sell some jewelry or silverware for quick cash, especially in what they perceive to be a bull market.

 

Cloud...I guess I have to side with the "ill-informed" on this one. In my humble opinion, silver and gold rise when there's no better place to store wealth. Should that dynamic change, the trajectory of silver and gold prices will change as a matter of course.

I can see a scenario where saner heads prevail and we get our fiscal house in order. This will likely require a prolonged period of "belt tightening" resulting in low growth and low inflation. Interest rates will need to float to a point of equilibrium...which will be higher than they are now.

That will have a depressing effect on PMs, but most notably, silver. The amount of physical, above ground silver can easily meet industrial demand for quite some time. Once the "Progressives" are routed from office and the current financial "panic" subsides, it will be back to business as usual and PMs will stabilize at much lower levels...(imho).

...or we can leave the Progressives in place and stock up on can goods and ammo. :sniper:

 

progressives huh? the last 2 years have been nothing more than a continuation of the previous 8 years.

 

I agree that silver will only be good until the dynamic changes and money flows into other asset classes. But I'm less optimistic that there is any reasonable way to put the house in order. And if interest rates begin to rise, a low probability bet at this point, money will be flowing out of bonds, not into them -- that's what makes them go down in the first place. It's going to be a long time until people say, "I think I'll sell my ASE collection and buy a nice bond." I think the view that you and some others have about silver inventories are wrong. Demand will balance supply only at higher prices than prevail today. So for now, the bull market is intact. Nobody can prove this either way, so we'll have to wait and see.

 

Intelligent is not the word I would use..wary, (and sometimes weary!), and trying very hard not to get "taken" because of ignorance. Ignorance only lasts until one learns, and I am learning a whole heck of a lot. These "discussions" often send me out onto the net to do further 'investigation'. I appreciate the intelligence I witness on these threads.

So, keep discussing! There is at least one very interested student paying attention to what everyone shares here. And, though I don't have a lot of savvy for metals, I have more than I might share..I actually am finding I paid more attention than I realized (now that I need to know and there's not someone to ask). That, and of course I have every newsletter my husband subscribed to with his notes..many I have seen here!!

Back to silent..(talk lots, say little..)

Lucy