The price of silver and gold goes up, time to buy Generic bullion

It's not my assertion. Silver Institute numbers speak for themselves.

The fact remains that yearly demand exceeds mining supply. Note how I did not say total supply, but rather mining supply. Obviously demand cannot exceed supply because price is the mediator. Also note how I did not say industrial demand, but rather yearly demand, as in total demand.

The definitions I've used were accurate. I did not say silver has disappeared. You may choose to ignore investment demand as being part of demand, but that's not what I choose to do. Supply quantity may be restricted by recoverability, but the law of supply and demand is not impacted by that.

To exclude any available supply or any demand from the equation will lead to inaccurate price discovery. Yes, I am excluding investment supply from my scenario, but not for the purpose of price derivation which is an automatic market function; rather to highlight that mining alone cannot sustain the silver market at current price.

If it is too costly or difficult to recover for whatever reason whether buried in a landfill, floating in outer space, or stacked in a safe somewhere by strong hands it is simply not part of the supply equation until price is sufficent for it to be recovered by the market.

Even commercial disappearance is not gone. Metal can and will be recovered at the right price. Just as it will come out of investor hands at the right price. Just as it will continue to come out of the ground at the right price.

Investment demand is as relevant to supply as any other kind of demand, and mining + recycled supply is insufficient without investment supply at the current price. Therefore the only way for the price not to rise is either for investors to be willing to sell at or below their cost, or for total demand to abate to less than yearly mining + recycled supply, but I wouldn't count on either of those things in the current environment. The trend is consistent and clear.

As long as total demand exceeds mining supply the silver market will be dependent upon recycled metal and to a greater extent upon existing positions parting with their metal. As long as they are willing to do so at the current price there is no need for price to rise. If the price rises then we will see more come to market and that is what it would take to reverse the trend.

Time will tell how the supply/demand story unfolds. However, it doesn't take a rocket scientist to understand a skewed metric.

 

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No offense meant, but maybe it does. I disagree with your assertion because you usually then say that this "fact" then proves that "scrap metal" which is used to meet "demand" is a limited resource which eventually will dry up. Your view is that all of the jewelry, coins, inventory in warehouses, etc are owned by people who believe silver is innately more valuable, and any scrap silver has to be old stuff which will eventually run out.

My view of the world is more silver is mined every year than needed for industry. Coins, jewelry, silverware, etc is made with this excess silver. But, make no mistake, every single year there is more silver above ground in human hands than EVER before in human history. We simply continue to have more and more and more of it in our possession every year that passes. Now, some of this product people lose interest in, the coins are not valuable collectibles, the silverware is out of style, etc, so we scrap it. That is where scrap comes from. There is a heck of a lot more coins scrapped evey year than you might think, because they are not worth much over silver and the owner needs money, (real money). Bottom line, every year there is MORE silver, not less, and every year there is MORE potential scrap to come onto the market than the year before.

Kind of different perspectives that both can derive from your statement sir. That is the only reason I bring it up, for others reading this. We both know each others position on the issue. No offense meant.

 

Please focus on what I did say, not what you think I used to say. As an adaptive human being I am entitled to grow and learn and adjust my perceptions in light of information, some of which is thanks to you I might add. Clearly I did not say now what you think I used to say, which I may very well have said in the past (I think the truth is somewhere in between our two perceptions on that one).

I will defer to my previous post for additional clarification on that, but would simply add that increasing supply in the face of demand increasing at a greater pace is still a decrease in the supply/demand pendulum. Price does not exist without both of them, and comparing current supply to previous supply without taking demand into consideration does not yield any value added conclusions with regard to price discovery.

I do understand that what you are talking about is potential supply. The potential is continually increasing, but potential supply does not impact price unless that potential is realized. Potential is not something that can be easily measured, if at all. There is plenty of potential demand as well.

 

Not disagreeing about demand. Demand very well can be higher than mining output. From my own view it had really better climb, since i am a shareholder of a major copper producer and they are planning on tripling their production in a few years. I think these high prices of the last few years will see even more expansions.

I apologize if I assumed you would again make the argument that scrap is a finite resource.

For full disclosure, I am still a still a buyer of silver in the teens. I do not necessarily think its overpriced at these levels, just not a "deal" imho. This last summer was more fun.

 

Hey, I give both of you credit for presenting your opinions in a compelling way. I have watched and read statements on CT that have deteriorated into some very nasty situations. It's nice to see the respect both of you have for the other's argument. I always read your posts with interest. I only have a few ancient coins, for novelty sake, and only keep the standard 5% to 6% of my net worth in PM's. So, I'm not the most serious follower, but I appreciate the more thoughtful insight you two offer the members here.