Silver getting crushed today

correction for our readers ... Lung Disease (Cancer)

 

Log in or Sign up to hide this ad.

I have been wondering how silver "is a store of wealth" "preserves wealth" and is
a "hedge against inflation".
In round figures let's assume the person live in the US and has been buying silver at an average of $20 an ounce over a period of 20 years until he has accum. 5000 ounces. Another person just puts away a $20 bill during the same time and has accum. $100,000. The price of silver goes up and down and not even considering the premiums paid or the buy and sell commissions, the silver guy now sells his silver at $20 an ounce, and his $100,000 has 20%-30% less buying power than it did 20 years ago. Where is the hedge against inflation? Where is the store/ preservation of wealth? The cash guy has EXACTLY the same amount of money as the silver guy, and if the money was kept in the money market, while it hasn't paid much interest for half that time (the last ten years) it has paid some return. Let's say the money was kept in a decent mutual fund account. Even with some down years that money has most likely almost doubled in value. (5% a conservative and realistic return.) And so it is the cash guy who has now hedged against inflation,
retained the purchasing power of his money and kept his store of wealth, while the silver guy has lost all of these things.

 

A store of wealth is a gamble of "future risk management" for something that has a stable future value. Whether that is Gold, Silver, bullets, water, money, or some other commodity. Or even toilet paper.

Gold/Silver is considered a storage of wealth as it's been some form of money for generations.

Of course storing cash also is wealth preservations. I think I pay less for a loaf of bread today than I did 10 years ago. Orange juice and spaghetti sauce is cheaper than 15 years ago too from what I recall. I started making my own spaghetti sauce when a jar of Ragu broke $4.00 (now at $1.69). Of course some commodities have a short life and are not good at storing wealth.

Cash (as long as it's stored safely) and PM have very long shelf lives; you can even bury them and hope the cash container doesn't spring a leak.

Money (Cash) Economics has 3 basic Functions:
(1) storage
(2) exchange
(3) unit of account

(1) storage is basically hoarding. Money has storage power because of it's Purchasing Power. (2) It is the defacto medium to buy stuff, and to receive when you sell stuff. (3) is it also what commodities are rated at, defined in units of. i.e. a loaf of bread is $1.99.

Of course money is impacted during times of high inflation as it's value decreases (2) buying power. If you are (1) hoarding it though, it's future value will be different. Inflation is a "now" pressure on money that affects (2) and (3).

Precious Metals - Gold/Silver is also a (1) storage of cash although it has to go through (2/3) exchange in valuation to obtain it. So it is a step away from direct inflationary pressures that Money goes through. So it has different impact pressures than pure cash.

Although to Spend it, in most places you have to (2/3) exchange it back to (1) cash.

That is where it becomes a long term Risk Management of the Future Value of Money. Because some technicalities will raise the valuation of PMs.

Although as we have seen there are times of extreme volatility which may not be related to the basic fundamentals of it's valuation. One has to take out those extremes in using it to manage it's future value. Although many will sell during those extreme situations.

During 2011 I didn't sell all my Gold/Silver. I was asked why by a friend. I said .. what would I invest the (1) Cash into then? He looked perplexed back at me - he spent the money he cashed in. My PMs are a long term risk management for the FV of Cash. Truthfully, it looks pretty is my #1.

But is PM a long term play against inflation?
For the investor types going back in history PM were the hedge against the beginning of inflation to get them through the inflationary periods. in the early 1900s there were not many options for investments.

So Gold became the defacto security to hold against inflation if you bought it as inflation started ramping up, and sold it at it's max before inflation decreased. That is the ultimate hedge against inflation for PMs and how to use it.

Nowadays, if you really think inflation is causing a problem you can get Treasury Inflation Protected Securities. aka TIPS.
https://www.treasurydirect.gov/indiv/research/indepth/tips/res_tips.htm

"How TIPS Are Tied to Inflation
Treasury Inflation-Protected Securities (TIPS) are marketable securities whose principal is adjusted by changes in the Consumer Price Index. With inflation (a rise in the index), the principal increases. With a deflation (a drop in the index), the principal decreases."

Compared to gold history ...


So is Gold really a hedge against inflation?
TIPS is a direct correlated indicator on inflation; moreso than Gold.

Gold .. then becomes more of a Supply/Demand scenario affected more minutely by other impact items such as the US Dollar Index (not CPI), more of a derivative Savings platform (remember we are hit all the time about using PMs for 401ks etc in marketing) and other impact items.

PMs are no longer a passive medium for a "storage of wealth" or "hedge against inflation" like they were 100 or 80 years ago where these theories were driven and sold.

 

Of course going back in history we lack to include one SIGNIFICANT impact item in relation to a hedge against inflation.

Gold was tied to the Dollar.

This adherence of Gold/Dollar actually exasperated the Depression in the 1930s.
In the late 1920s as the Fed raised interest rates and European countries owed massive Debt to the US, this pushed a slowing of exports, thus slowing down the US economy (massively watered down here).

With the 1929 stock market crash, and subsequent bank failures, people started hoarding Gold. Normally a country would stimulate the economy by printing more money, increasing it's supply. But if you do that, you also have a double whammy as you also have to increase your gold supplies, technically. So you have to spend twice as much.

So then the US broke from the gold standard, req'd ppl to cash in their gold, etc etc etc.

I was going to make some kind of point I was driving too, but I forgot now. lol

Anywho ... if you think about it .. in history Gold was a FIXED amount. So how exactly was it a hedge against inflation ?? It was for countries that did not tie currency to gold ... they'd just cash it in for US Dollars !! which caused the US to stop that tactic back in the 1970s ...

 

Silver


Gold


US Dollar Index


CPI


and another big selloff so far



I still think don't look for leveling off/stability until the 22,000s.
Which isn't very far away now.

 

If silver gets back to $15.26 then I am dumping it. That’s my average cost and I have lost patience. my $$$ can go somewhere else like home improvement. Now gold is different. I like that stuff...

 

Now crypto seems to have a short term "hedging" leveraging going on






a few ETFs

 

"i have lost patience" .. ahh ... PMs require patience. Sometimes decades at a time.

I wouldn't mind selling a lot of my ASEs and buying specific pre1933 Gold coins with it. The numismatic value I give to those are above the repetitive ASEs.

Home improvement ... always a cash draw. Part of my monthly funds go into a cash reserve specifically for home costs.

I should just call/email one of the places I buy stuff from and ask them if they'd take a trade. I'm sure it would benefit them but hey ... at least I would get an easy and quick conversion.

 

Just venting. Yeah, I won’t do crap but I won’t keep buying. If I can break even on swapping Ag for Au I will. Might take some time though.

 

getting back to the Silver/Gold ....

One person put it in another thread that "fear" drives PMs.
So do we have anything else that indexes itself on "fear"

Yup, we do. And that is called the VIX, or Volatility Index - I've been following this for a couple years. So I did a search for a correlation of the two.

In reading this short article:
"Gold is essentially the “fear” trade. ... One of the better measures of fear is the VIX (CBOE volatility index). It is a widely used measure of market risk and is often referred to as an investment “fear gauge.” So, it shouldn't be too surprising that when the VIX jumps, gold does, too."
https://www.valuewalk.com/2016/05/cboe-volatility-index-gold/

why that is quite interesting isn't it?

I am looking for some charts to over lay them ....

and in searching a bit I found this too ... GVZ - a Gold Volatility Index ETF Fund?

"The Cboe Gold ETF Volatility Index ("Gold VIX", Ticker - GVZ) measures the market's expectation of 30-day volatility of gold prices by applying the VIX methodology to options on SPDR Gold Shares (Ticker - GLD). Like other indexes using the VIX methodology, GVZ uses options spanning a wide range of strike prices.

GLD is an exchange-traded fund (ETF) that represents fractional, undivided interest in the SPDR Gold Trust, which primarily holds gold bullion. As such, the performance of GLD is intended to reflect the spot price of gold, less fund expenses."

huh ... you learn something new every day
http://www.cboe.com/products/vix-in...ty-on-etfs/cboe-gold-etf-volatility-index-gvz

well .... just remember as "fear" retreats the # goes down .. it doesn't maintain a level unless "fear" is maintained.


@Michael K

 

Hey claw did anyone ever decide whether those ase's were worth throwing in 2x2's, Also as I read this AM folks dumping stocks for bonds does that anyway include silver as a safe haven?

 

Hey there @Bman33 , I am still holding out for $22.50 I think I have my average down to around $18.00 now , When I bought the 27 - 35 silver it really wrecked my average. If By chance I do not get back to ya all , Have a merry christmas !! to all here including our Mod @desertgem

 

Don't know if it's worth it, but they would have to be 2.5x2.5's...

 

I'd throw the ASEs in their own tube.
Maybe put one on eBay identifying the error and see if it sells for more. Say $25 BIN? If not, then keep it.

Yes, market is shifting to some safe havens, at least short term. that includes Silver/gold, Crypto, and some long term bonds. Also Cash.

But only paper PMs so they can move out quickly. these type of investors do not take inventory of PMs becz that's not their reason to move into them.

Seems ppl are putting their money into Cash too. Finally. Most money Mgrs do NOT want ppl to put their money in cash as they don't make money. Cash now is getting some good APY at 2% or a bit higher if you look. I have 3 accts at 2% that I store/transition cash in.

And Merry Christmas to you too !!

 

in my opinion the price of silver should be much higher.

Less silver is mined per years than what is consumed.

Not all silver in electronics, photography, medical imaging, ect...is recoverable

and there are literally millions upon millions of people world wide saving(hoarding)silver in place of investing in an over bloated stock market. In india where gold is king(queen) to the ladies, many have switched to silver because gold is too expensive.

I believe in part, the reason why silver is so low is because investment bankers like JP Morgan are shorting the hell out of all the metals...in 2017 JP Morgan was given 10 years immunity from regulatory oversight (i.e. immunity from prosecution) so to allow them to further manipulate the price of silver and basically rip the small investor off...

Also with regards to the stock market, try to find a mutual fund which does not invest in at least one paper company such as facebook, LinkedIn, twitter. In 2006-2007 the us government passed a bill which allows employers to force you into the 401K program.
And where does your 401K go?
Into mutual funds...

who the fluff out there thinks facebook with approx. $4,000,000 in sales last year is worth $100,000,000 (one hundered million dollars). same with twitter, same with LinkedIn same with all these tech companies your 401K money props up.

The stock market is about to crash and the us government as already put in the framework (laws) for a bank bail in just like Cyprus and Greece a few years ago.
That means the banks close for a few weeks and steal a certain percentage of your money and give it to the banks to "shore them up"...all while giving themselves multi-million dollar bonuses...

My money is still on silver for the long term (10-20 year range)

thanks to all who listened to my rant and please prove me wrong.

 

It is not only the investment bankers shorting silver, it is 90% of investors. Shorting is betting it goes down further, and it has a current history in that direction. I am neutral on silver as I see external factors other than bankers that can send it even further down in the next year. Individuals such as myself or you can short right along side of JPM if we wish and make the slush off of those who think silver or gold is a no-lose option for a bad future. Mining companies are a different horse, but usually the same color. A mine has a given amount of PM and when its gone, the company has no new replacements, so if prices are down they try to cut back on excavation/refining, or they like JPM sells contracts and options for future delivery rather than selling for a low spot price.It is easy to count up what comes out of the mine, but most of PM that are traded are multi-traded, except when they fall into long term ,"never going to sell" enthusiasts, so it is impossible to know, except if there is more being offered than bought, prices will go down, if reversed, prices go up.

Some people think that if the big "Whatever" happens they with their silver will be kings, or at least well off, yet most do not take the secondary needs into account. Not trying to produce argumentation, just that some factors are not singular and independent. Jim

 

The price of Silver is right where it should be.



stock market is closed now


Now I'm at the mark that I'll have to recalculate the market. I knew (thought, guessed) that it would drop into the 22s and now it's there.

Luckily I sold my FB at 188 I figured they got maxxed out with too much pressure from potential regulation, etc etc. Was holding that since $25+.

 

I’m going to diversify with slabbed comic books and vintage Led Zeppelin posters!

 

Just heard CASH has done better than any other investments this year.
https://www.cnbc.com/2018/12/20/the-year-nothing-worked-every-asset-class-is-in-the-red-in-2018.html

 

What's wrong now with the squirrel cage now? Is it those hot nights in Paris or did someone forecast that it will be cold this winter? Maybe it would help if they listened to some episodes of J.R. "Bob" Dobbs Hour of Slack?