Pounce or stalk?

Buying at the Bank

I tried to buy from 4 different Ontario bullion dealers and coin shops.

#1 and #2 Bullion dealers were the same people with two different business names.

#2 coin shop put me on hold, then I was hung up on and never called back. Tried an online purchase with the same company, tax was charged on my invoice and only a few days later did they try to contact me.

#3 coin shop in Toronto was suppose to return my call because he, also, was to busy. After several days of not hearing from them I gave up on them as well.

So now you know why I bought at my bank.

Sure I paid a little more, but the coins arrived as per agreement.

My next purchase will also be at my local bank, only next time, I will bring my own U.S currency and not let them do the exchanging.

 

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Thats is not very nice on the dealer's part to not contact you afterward!

 

Stevie,

Not to pick on you, but the same prognisticators have talked up the same markets for DECADES. All of their "predictions" have been reiterated over and over. A broken clock is right at least twice a day, correct?

We had just as bad currency crisis', bank defaults, debt issues, etc in the 70's and it got better and PM plummeted and stayed low for a long time. I am not saying it will happen that way again, but you shouldn't make fun of someone pointing out the FACT that it could.

I see by your name here you are a fan of bullion. That's great, but everyone here is not under the assumption that PM has to go up and stay up in the future. We do not claim to know what WILL happen, just pointing out this is not the first time we have had international issues, and that a lot of this current demand is psychologically driven. Investor psychology is fickle, and works to drive prices lower and lower just as easily as it drives prices up right now.

I am just warning you that you are thinking in a very narrow way, as you were accusing Sodude of doing. To discount the possibility of lower prices is possibly setting yourself up for failure. If it was known that silver was going up, it would have already gone up much higher. The huge and growing demand from "investors" who have not historically bought silver to me is a very weak basis to form long term price gains, and as such I am not convinced silve is going up, (discounting inflation), any more than it could go down.

Like I said, not picking on you, just laying out a few historical facts about this market as I see it. In my experience, any investor CONVINCED, (like in a religious way), that an investment MUST go up is on pretty dangerous grounds.

Chris

 

Next time it hits $40, we'll see $50 before $30

 

That's a fair prediction. Remember that if nothing else happens commodities should always go up for inflation, that is why I have never said $100, or $1000 silver is impossible, its just a matter of when. Assuming inflation, I would say your prediction would be correct barring market changes. $50 silver WILL happen, guaranteed, but if you factor in the time value of money would it be a gain? That is the million dollar question. Silver at $35 is a huge gain over 1990-2000 levels, but would be a very small profit over 1960 or 1930 levels.

So many small investors ignore this. Time is also a huge modifier of gains. Worst yet, you have to pay capitol gains taxes on that gain, further eroding profits. This is why commodities have a place in portfolio, but long term relying solely on them can be dangerous to your financial health. Short term? Have fun and play with money you can afford to lose, just like any short term speculation dollars.

 

I agree with you in regards to not taking a hardline stance since I recently read that 90% of the silver market is done by day or calendar traders as opposed to those with long positions, and that the total volume of silver traded in a day is more than total physical silver produced in a year; notwithstanding the unknown of future monetary policy changes, though the track record there has been consistent. Anything can happen in such an environment especially considering some entities can accept delivery from themselves. I think demand was psychologically driven up to the $50, but that the huge drop following it was more so the inability to cover margins, and now the bull is in the process of finding its feet again ($34 looked real solid I have to say). Unless silver is in a physical shortage there probably won't be any other catalyst to diverge it from the fiat market, but if that happens I would expect things to really go up. Even if not, it's still not a bad place to be to preserve your wealth, but getting into it with the sole mindset of turning a profit can be dangerous since as I believe you pointed out elsewhere, time may be the most important factor.

 

I don't disagree that PM prices coud fall at some point, and probably will at some point. While a lot of things now are similar to the 70s, there are a couple of things that make it different. One is debt [I disagree that debt was a problem in the 70s -- at least in the USA] and the other is derivatives. The systemic risk is greater now than in the 70s. The problem is also a bit different. In the 70s, inflation was the primary problem, and tight monetary policy was the cure. Now, the debt and derivatives are the problem. and so far nobody to my knowledge has proposed a cure. None of the proposed spending cuts put even a dent in the deficit. And even a doubling of the current individual tax rates will not balance the budget. Derivatives are the accident waiting to happen for which there is no cure other than to ban them. So maybe this time around, PMs really do have their back to the wind for a considerably long period of time. We'll see.

 

Fair points, though other things like the inflation you mentioned and commodity prices like oil were in inflation adjusted dollars much worst in the 70's. We also had some budget problems pretty bad as a percent of GDP. I agree with you and Inflexion both. We are all saying its a little similar but not identical. My main point was just that investors always need to know that PM can go down, and there would be valid reasons it would go down. Too many read those damn articles the same guys have been writing since 1980 and get locked into PM being "different this time". I personally know quite a few people who lost most of their retirement putting everything into PM. PM is an easily storable commodity, no more no less. Yes, like pork bellies, you can make a ton of money off of commodities, and they do have a place in an overall portfolio. Believing they physically cannot go down, or placing all of your retirement in them, though, is simply too much. I would never do that with ANY asset at all, let alone one with as much volatility as silver has shown.

Speculative money? Go ahead and play the game. I placed my bet a long time ago, so I am not one to argue against that.

 

I think gold is better for the long haul. you can always buy more silver later.

 

If mine production were to stop today and all we had were existing supplies silver would be at least 7 times more rare than gold. As I've also mentioned elsewhere the concept of epithermal deposition implies that due to the composition of silver it primarily exists near the surface, and will become increasingly expensive to mine as it becomes less abundant and less easily retrieved. This characteristic does not seem to apply to gold.

I was thinking at first it could have something to do with the the weight and/or mass of the element during the planet's formation, but it seems more likely to do with silver being the best thermal conductor and the heat of a newborn planet boiling it to the surface. I've seen a couple sites now refer analogously to it as "froth".