Silver.... & Greek debt proposal due today + Chinese stocks down

What do you all think... will there be a huge jump in the price of silver if the Greek debt proposal is absent or if the Greek gov't defaults? Add to that the confluence of the Chinese stock markets losing several percentage points the last couple of days or so (I believe it was 30% loss of the Shanghai Composite Index in one month), and the US markets reacting negatively to current events. Other markets reacted negatively (even moreso by other dominant Asian markets) due to their intricate tie to the Chinese export market.

Sure, one can argue that stocks and other investments' prices take into effect such news. But, stocks also take into account any optimistic or opposing thoughts, as well as the offsets by other investors who are betting that it will go the other way. So, will there be a minimum of a several dollar increase in the price of silver due to enough investors jumping ship and out of the Euro and other currencies, and in to the safer silver (and gold) holdings? Yet, today as of now, stocks are rebounding slightly.

Now, this isn't necessarily asking whether or not to stockpile more bullion silver or gold now... but rather geared towards the (relatively quicker) exchange of buying silver/gold commodities, stocks, etc, so as to act more swiftly. Do you think this is a good time to invest (even more) in silver? And, yes, I hold silver for the long run, but I'm asking what you all think about adding even more silver now, even though the general trend over the last several years is that silver has been dropping in price (for various reasons). If you think it will continue to drop, obviously I'll hold out and buy it low. If it'll rise steeply in the near future, it's actually a good idea to buy more silver now and play that bit for the short haul.

 

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I agree people may jump out of the Euro but why won't they buy USD instead of PMs ? If they do a stronger dollar works against PMs. And no one really knows what the Chinese are doing. How much PMs are they selling off to get some liquidity in their lives? Does anyone know?

I don' t believe there can be a Greek deal unless they just keep pretending they are going to pay back their loans and the Germans, for some bizarre reason, believe them.

 

Commodities are down due to fear China might go into recession.

Concerning Greece, I believe trouble there would not help silver at all. Its effectively a liquidity crisis in Greece. Why would you spend your Euros to buy silver when its Euros you need to buy your needed supplies? In situations like this, cash is king. Did silver spike in late 2008/early 2009? No, it went down. It only went up later after the liquidity crunch dissipated. There is no distrust of the Euro here, its an inability for the Greeks to get others to give them MORE of them.

 

Yes, I've seen footage of Greeks waiting in line at banks. There is certainly a liquidity crisis in Greece, so silver would not be an effective short run investment for Greeks. So, sure, cash is king for a bit, just as in most recessions since you need cash to survive.

But, trust and distrust of the Euro is all about perception, with or without reason. So, let's say there's mass panic in China now. Or, mass panic develops later in Europe because of what people perceive of either or both markets. Won't there be a move towards buying silver now as a forecast? If Greece drops the Euro, then what does that say about the safety and "legitimacy" of adopting the Euro, and its consequent perception of the Euro, despite the other Euro nations' more stable economies?

And, Greece's demand on the Euro may mean a rise in the Euro prices, but its magnitude on the value of the Euro may be overstated (though not negligible), since Greece is a relatively smaller economy than that of other Euro countries. And, what of massive holdings by wealthy Greeks and commercial entities? Would they just leave their cash in foreign currencies or Euros, or would they settle for a less risky asset like silver or gold now.

If silver drops in price in the coming months, sure wait until then to buy, but shouldn't silver prices increase in greater magnitude in the months that follow? Even if you buy now, silver may be projected to rise in price; whereas, buying silver later may mean lower prices, but only for the short term as a more volatile rise may ensue and one may end up paying higher later if the timing's not right. And, what if the Chinese markets mean a higher price of silver today? Then, silver prices will only continue to rise in the short run. So, I can see it going both ways.

 

To me, the Euro is basically the new mark that the Germans are sharing. Due to that, I doubt there would be a marked decline in its acceptance. I guess I am just not seeing how these events playing out are going to help pm's, especially in the face of China. What pm's need right now is a good does of positive economic growth both in China and the rest of the world. That would lift all commodities. As for the economic protection aspect of pm's, that won't come into play right now. That would come when people are freaking out about national debt, something not many are talking about right now.

 

Have a look at how the euro is "composed" in terms of ECB capital shares for example. There are 19 euro area member states (plus four small countries that issue euro coins much to the chagrin of collectors who do not want to spend too much on their collection but I digress ) so that is quite different from the situation in the USD area where one government sets the standards for all others.

Sure, Germany is the biggest euro country, and thus has the biggest capital share - 27% I think. But neither politicians nor central bankers in DE can make any "euro decisions" by themselves. So while a Brexit may soon come (they are not in the currency union anyway), I do not really see a Grexit now.

Christian

 

Is a Eurozone country too big to fail? Even with it being a tiny economy compared to Germany. Germany's S&P credit rating was affirmed last Friday as AAA, Greece's is stuck at CCC-. Germany's finance ministry put forward a paper 2 days ago on Saturday demanding stronger Greek measures or a five-year "time-out" from the euro zone that looked like a disguised expulsion. Yesterday it appeared that Germany anyway is preparing for a Greek exit.

Greece has received bailouts totaling 240 billion euros in return for deep spending cuts, tax increases and reforms from successive governments. Though the country's annual budget deficit has come down dramatically, Greece's debt burden has increased as the economy has shrunk by a quarter.

Greek PM Tsipras has made much of the need for a restructuring of Greek debt, which stands at around 320 billion euros, or a staggering 180 percent or so of the country's annual GDP.

Would erasing debt save Greece? Virtually all markets are affected by large fluctuations in a major market. Would the Euro lose value? If it does, and the US$ goes up, commodities go down, don't they?

On the edge of my seat either way. Bought another 62 ounces of silver this morning.

 

While I know that in Bullion Investing people do not focus on coins anyway but on various forecasts and "scenarios", it may make sense to not judge prematurely. As I wrote, the euro setup is quite different from the dollar setup - what "Germany" (which translates to the current government) wants is not necessarily what the euro area decides. We do not know the details of last night's agreement for example ...

Christian

 

Yes Christian, still waiting on the details. I expect Greece can not meet all of the 12 demands in the time given. The demands are:

1. Streamlining VAT
2. Broadening the tax base
3. Sustainability of pension system
4. Adopt a code of civil procedure
5. Safeguarding of legal independence for Greece ELSTAT – the statistics office
6. Full implementation of autmatic spending cuts
7. Meet bank recovery and resolution directive
8. Privatize electricity transmission grid
9. Take decisive action on non-performing loans
10. Ensure independence of privatization body TAIPED
11. De-Politicize the Greek administration
12. Return of the Troika to Athens (the paper calls them the institutions… for now)

Greece has been given until Wednesday to pass all of the legislation necessary to implement all of these conditions or demands. I don't see how any government could achieve this in the time given. I wish them well, but this could be the end, and Germany, if this is really what they want, might just regret getting their wish!

I can't imagine a European neighbor being abandoned!

 

Skynews reports "Greece Secures New Bailout Deal from Creditors".

Details are not much, and the Euro value's mentioned don't sound like a full deal by any means.

Extending and growing the debt is all I can see from the press release.

 

Not sure what kind of "full deal" you expected. The most important point is that the 19 countries involved found an interim position that they could agree on. Maybe only because everybody finally wanted to get some sleep.

Christian

 

As I said, time is not on their side for doing any deal. This is just buying time. They will get some rest for now.

 

here's my 2 cents: IF Greece jumps out it will increase the value of the dollar world wide. Other nations will seek its refuge (the dollar), due to its history and security. The Chinese Yuan is pegged to the dollar! The Euro will sink but slowly stabilize, (due mostly to Germany). Our resources are strong, our military is strong, our technology is strong, our pharmaceuticals are strong, we "own" China, and we are the now world's largest producer of petroleum. We have vast reserves of coal and natural gas, fracking is producing more oil than we can use, we now export. The only negative is our own debt. With good leadership and some tightening we can manage the debt in time. Hence, the dollar should remain strong. Biblically speaking, (and I do deep studies of the Scriptures, and may offer an opinion, just an opinion!) -- gold and silver will remain very valuable even to the end, this is revealed in the Biblical text. If the U.S. is the Babylon of Revelation (with all of its riches) then we will continue to dominate world economics for at least another decade. However, if a particular religion is the Babylon, then we will simply ride her coattails, and be subject to famine and who knows what. Our moral decline is a major issue, if we decline much further, I really fear some coming judgment (much greater than 9/11). However, God is patient, and such judgment may be several decades away. Our food and environment is slowly killing us (additives, pesticides, herbicides, antibiotics, over processing, radiation, EMR's, etc). SO........gold and silver should remain attractive, but I see no big windfalls on the near horizon. Greece does not impact our economics directly, it is all filtered through the EU, which filter will enhance the dollar as insecurity mounts for awhile within the EU. Let's see if in the next election we can tighten our OWN belts, and control our own budget. (Which I really think does not influence our macroeconomics much, more on a national level). If we tighten our "belts" silver should increase. As in the days of prior depressions (or economic "tightenings") silver and gold increased, the paper sank. Only the good Lord knows what will transpire. It is kind of interesting, is it not? I am out of breath. Thats my 2 cents.

 

Deep thoughts!

 

yeah, sometimes I lie awake at night, unable to sleep. Coin hunting is very relaxing, YES.

 

Agree!

 

Concerning the Yuan and the US China relationship (and economics) is the following: In 2011 a neat paper was written by a Chinese fellow and posted on the internet, within fair use, I reproduced a portion of it below, in the attached file -- yeah another PDF, the author is Sam Chee Kong, and again it was written 4 years ago. Remarkable!! The pdf is titled: Economics_102.pdf it is only 2 short pages.

 

Very interesting article from 2011 and his prophecy has become reality. Another interesting point to note about middle-east oil - is that the US has purchased less than 10% of what was produced between 1976 and 2010 and spent US$8 trillion in defense budget protecting the Strait of Hormuz during that time.

The United States and The United Kingdom in particular finance the security of Persian Gulf oil that goes to the countries that in the past 40 years have taken much of the manufacturing capability away from Anglo-American shores, and built economic power houses that now surpass both of the former. This in terms of national debt and development for their respective populations, or regression in the developed world. I moved to the developing world 30 years ago and still live in it. It is far easier to make a good living where growth occurs and there is still a lack of a certain type of educated work force.

Interesting times now with the US self dependent on oil and gas. So the US and UK subsidize oil that goes to China and the rest of the developing world to create low cost consumer goods? That's a race to the bottom that can only end one way which is not sustainable. In the short term, the developed world benefits from low cost consumer goods until the developing economies develop, or become industrialized nations. Then the cheap labor is gone and then what? Push it on to Africa for another 40 years? Maybe!

 

Now THAT's something that this country is lacking in.

 

jmccarty You are in Thailand. Do you collect Thai coins (off topic). But I am curious.