This is Why NO $50 Silver

Well, please file my post in your negative feedback file. As for originality, I've read most of what you post elsewhere and consider none of it original or particularly insightful. The original parts, such as the belief that there has been no economic growth since 1964, can only serve to damage those who might believe you, and I would caution them to carefully research everything you say to avoid personal harm.

 

Log in or Sign up to hide this ad.

I am in agreement with Cloudsweeper on this. It is not your viewpoint, as you are allowed as all of us, to state them within the rules. Rather it is your attitude that you have "invented" all of these "truths", and that you are somehow impossible to be wrong in your announcements of future events to occur. I have no concern as I ignore the majority of your postings' "truths, facts, will occur, etc." I am very sure you have your shipmates here, as they were saying the same things for years in their posts. As with cloudsweeper, my concern is the people new , and there are more each day, to bullion investing, and they may not research your comments as they should.

And to be fair, they should evaluate all, but your lengthy and repetitive postings, presenting every "factoid" as reality, without stating it as opinion, may slip by them in their irrational investing. IMO.

Jim

​

 

Crowd wisdom is often smarter than we realize. Any small sample of investor emotions will be completely erratic, but the sum total of the collective tends to converge on the correct solution in time and trends in that direction. The rapidly rising silver price is just one example. Using probability distributions, we can certainly front-run the crowd and arrive at the solution before they do since it takes out the cyclical periods of fear and greed which define the "wall of worry" bull trend pattern. It is the essence of value investing. The intrinsic value of silver is the discounted value of future inflation. If we believe inflation is going to go higher, then we can establish a reasonable value for silver. And based on this, we can know when crowd psychology has yet to achieve a fair value and when it has gone into a mania far exceeding fair value. With virtually any inflation expectations north of Ben Bernanke's, silver is still a good value. And I happen to think that the 6-7% base case in my calculator is far too low, so $130+ silver is almost assured. Go to 10%+ inflation, and the sky is the limit on silver.

 

Well my confidence arises from the fact that I and my "shipmates" have been right for years, and you, having apparently taken a different view, have been WRONG for years. So whose analysis is more reliable? Obviously my projections are opinions, but well-reasoned opinions from a foundation of facts and historical data. And I walk you through every bit of it. So if you still fail to understand the fundamental case for gold and silver, then it's because you have your head in the sand.

 

Then what you are saying is cotton should be worth $6.75 a Lb and crude oil $270 a barrel and etc. right now if I wanted to buy an equal amount of silver in the future?

 

+1 :thumb:

 

$130 silver is assured, I will agree with you. So is $10 corn, $8 a gallon milk, and $7 a gallon gasoline. All of these things are assured at some point in time due to inflation. However, that does not mean silver is a good value. "Cash" will go up as well, if invested. How does your model reconcile how much cash will go up, making any "gains" in silver illusury? I have problems with all future projections like this since it never tells the reader how devalued $138 worth of silver will be. People believe they will be millionaires, which they may be but it will be meaningless because a house will cost 3 million. People put $138 into a current value context, which it is not, since purchasing power continues to decline.

I don't mind your posts here, but when you throw a huge monte casino simulation out, not explain all of your input assumptions, sources, etc, (how did you get your probabilities?), throw out future values of something without discounting it to present, and then use words like "impossible", "facts", "inarguable", and not even respond to what I feel are well reasoned posts asking you specific questions, you lose credibility. NOTHING in the world is certain, and you write as if EVERYTHING you say is absolute. I really hope for your sake you really do not believe that, since even with a CPA license, MBA in Finance, teaching MBA classes, 20 years finance experience, the only absolute I can predict is that there are no absolutes.

Listen, I like silver too, I was earlier than you and bought thousands of ounces in the early 90's. I was early, but it has come up like I thought it would eventually. You are not the only person in the world who thought silver would increase. However, I would never say anything that involves human markets is an absolute. I thought relative to other items silver was underpriced then. I think silver has overplayed its hand some now, and relatively is overvalued. Right now I would trust buying gold more than silver, and I love silver. You write as if all humans value silver and wish to own it. I will tell you, most people would sell silver if they owned any, and silver has absolutely no place in their life. It is a commodity, a commodity that has gone up disproportionately more than others lately, which is why some of us who own it are neervous about these price levels. Will it hit your price in the future? Of course, all commodities will increase versus nominal dollars, but maybe not against adjusted dollars, adjusted for investment. This is the point which you and your models ignore completely. You are absolutely right silver will eventually go up versus niminal dollars eventually, but you simply CANNOT prove silver will outperform adjusted dollars, and anyone saying any asset can be proved to do so is either a fool, badly misinformed, or trying to manipulate a market by getting suckers to believe him. If it can be proved the market will adjust today to eliminate the profit.

Please just stop trying to state everything in absolutes and let us try to have a dialogue. If I read one more time that something is inarguable or an absolute, I will simply stop reading, because that is silly.

 

Awhile back, I sold some Washingtons as lots on eBay. I was a bit curious as to how I did, so I went to some broker's sites to see how much they were selling them for. When I saw that Washington Quarters were either "unavailable" or "out of stock", that was information enough ! I no longer offered any Washingtons at auction and began buying all dimes that I could that were below melt at the $35 level. As all things, value is determined by supply and demand. Things in demand but limited supply carry an added value.

Statements like the thread starter of this one have a tendency to bite you in the back when the become invalid. Although there is much truth to economic theory. It is still economic theory. If in fact trends could be predicted with 100% accuracy, there would be no fluctuations nor markets. Like betting football and winning 100% of your wagers. Who would bet against you ? With underfunded markets like PMs, unpredicted events can greatly affect demand. A war for example or natural disaster. Nope, PM's are speculative in nature and should be a part of a portfolio treated as such. IMHO

gary

 

You clearly missed the entire discussion about what makes something a good store of value. No, you would never buy cotton or crude oil as a store of value so that you could buy silver in the future! The entire reason for the existence of money is to prevent everyone from having to own, manage, store, and trade massive quantities of depreciating raw materials. To make the point even more obvious, let us consider milk. You only have a limited few cubic feet of space in your refrigerator to store milk, and if you don't use it, it spoils within a week or two. So if you work hard and earn a good salary, you don't want to be paid in dozens of gallons of milk because you don't have anywhere to store it, it would spoil before you could "spend" your excess, and you'd also have a hard time bartering with people who don't need your milk. This is why you want to be paid in money. You can use the money to buy milk only when you need it and have a place to put it. Otherwise, money should be a good store of value so that you can buy just as much milk with it in a year or 10 years as you can today. You don't put milk in a bank so that you can buy silver, you put silver in a bank so that you can buy milk. Now if you don't use silver to buy milk, but fiat money, and you're keeping silver as your alternate store of value which you intend to convert to fiat money in order to buy milk in the future, then the appropriate value of silver today in fiat in order to buy milk in the future should obviously carry a premium equal to the expected level of inflation in the fiat currency so that you still can indeed buy the milk for the same amount of silver. Or looked at from the other direction, you need to discount the future buying power of fiat by the rate of inflation to determine the present value of silver which will not likewise depreciate.

 

Right there is our disconnect with your arguments Passant. The vallue of silver TODAY is what it is worth TODAY, not a future value discounted. Today's silver price is today's demand. The dollars today can be invested to grow in the future, so they will grow as well. This is the critical fact you are ignoring, that nominal dollars are valueless for evaluating future worth. You have to grow dollars as well for future projections.

If I KNOW silver is priced at $140 dollars 10 years from now, (unknowable but lets pretend), then I will NOT pay $140 TODAY for that silver. I will discount that by what I believe I can earn on my money between now and then, and pay THAT amount.

 

It's funny how hypocritical you and your ilk can be. The whole top paragraph is full of aboslutes on your part. I understand them to be opinions, but you state them as absolutes, so if you think an "attitude" of stating opinions as absolutes without prefacing them with "I think" or "I belive", which I consider a waste of space since that's to be assumed in all cases, is silly, then take your own medicine.

Firstly, my calculator reconciles and discounts the ability to invest versus save silver through the "opportunity cost" line, which is user configurable. If you think that you could earn more than 10% on your investments when the inflation rate is at 14%, then by all means enter your own value and see whether silver is still a good inflation hedge. Secondly, the value that is output is in fact the PRESENT fair value of silver, not the future after-inflation value, which will hedge inflation such that your wealth today still buys the SAME amount in the future. So long as the current price of silver is less than this value, then you will earn a profit if the inflation assumptions are realized.

Well I'll ignore the arrogance implied and the ignorance displayed in that sentence and simply suggest you read the text that is found within the blog surrounding my calculator and see if you can't find everything you're looking for and accusing me of not supplying.

Indeed, but there are very high probabilities which are asymptotic to absolutes.

Based on what?

I write based on a great deal of research into prior hyperinflations during which real things became very highly valued, especially metals in general and precious metals in particular. People may not care about an old sterling necklace today, but they will soon be ripping fixtures off of walls and guard rails off of highways in order to possess something that doesn't lose value overnight.

As noted previously, you are aboslutely wrong. I have accounted for that.

Not so long as people such as yourself don't care to look at the evidence. The market is not efficient. It takes time for the crowd to converge on the correct answer.

Indeed. You first.

 

For everyone except Passant, please note that the above comment is factually incorrect. The comment displays no knowledge of value investing or intrinsic value.

 

I'm already accounting for that, as I've said before. Your disconnect with me is that you assume I'm an idiot and you're wrong. Please do click through to my calculator and you'll plainly see that for any given inflation expectation, the future price of silver is discounted for opportunity cost and also balanced against the benchmark. The "effect" on silver given the assumed inflation rate is constrained so as to not produce a premium outside of historical bounds. You can adjust this as you see fit. You can also input your own opportunity cost from the alternative of investing the same amount of funds. The result is the discounted present fair value.

All of this is explained in Paul Tustain's excellent video which is linked below the calculator. It is from his work trying to value gold that I derived my silver calculator.

 

Isn't it interesting that you assault the comment and commentor without providing even a hint of argument or data to refute either.

 

Passant, the only absolutes I refer to are that future performance is unknowable, and that assuming any inflation that eventually all commodities will rise to X dollars. My reference of relative value of silver is versus other commodities, something Justafarmer has talked about and has been ignored. If those are refutable then please do so. If you can foretell the future then please become a billionaire, I sure as heck would. Your Monte Carlo simulation is complex, cumbersome, and created to deliver an expected result which you already had in your head. I could point out at least 5 things I disagree with, but why bother. You will simply skip over it or tell me its irrefutable. It all essentially boils down to your assumptions and "knowledge" that silver will outperform other investments. I wish you well with all of this, and hope you buy a Caribbean island with all of your cash. I have seen these charts, looking all impressive to anyone without proper background to scrutinized them since at least the late 70's. Busywork created to sucker investors to believe that a given performance is "proven".

Chris

 

Anyone suggesting that this board is overly bullish when it comes to silver investing should stay away from boards like zerohedge.com and tfmetalsreport.blogspot.com.

Actually, I HIGHLY recommend everyone frequent those boards to get a true understanding of what is going on in the metals market. Increased demand, market manipulation, unknown physical availability, and a dying dollar are all topics of debate.

You can also learn about mis-information agents. People paid by those currently manipulating the PM market to talk down gold and ESPECIALLY silver. These people have been making the same arguments since silver was in the teens, and continue to do so today. The hope is to get others to sell their PMs, which will decrease the price and create more people to be bearish on PMs. It's natural human psychology that once you sell an investment, you want the price to drop and will look for ways to continually justify it. Even if the price is blowing up in your face, as it is with silver.

This site seems pretty well stocked with posters who continue to advise people not to move heavily into Silver. Too bad we can only go back 3 months in the post history, because it would be interesting to see just how much money you could have made by ignoring them from the beginning. Even three months ago, Silver was $27 an ounce and they were warning you about buying in. If you had $10K to invest, you would have an extra 132 ounces if you had bought in January compared to today.

Remember that the number if ounces is the only thing that matters right now. The price in US fiat toilet paper dollars doesn't matter. No one knows what the dollar price of silver will reach because no one knows how far the corrupt Federal Reserve Corporation will devalue our money. If they continue QE to infinity, then the dollar will go to $0 and you won't be able to buy a single oz with all the $$$ in existence.

Do your own research and make a decision soon. Premiums for physical are going up and there may come a day when you won't be able to get it at any price. The mines will all be nationalized and the hoarders will have the rest.

 

And that, in a nutshell, is why I spend very little time on the sites you mentioned -- the rampant paranoia. Paranoids have been screaming about government conspiracies (and anti-government conspiracies) since, well, since there have been governments, most likely. Yes, sometimes they get it right -- a broken clock is right twice a day, unless of course They keep manipulating the hands with sufficient skill.

 

Get in while you can. Pay no attention to the haters. Sites like ZH and TF provide fair information and will be around to help you get out when the time is right. The reason they are overly bullish now is because it's SO edited~forum rules OBVIOUS that PMs are a GREAT investment at their current price.

It's only a matter of time until all central banks stop selling PMs. Decreased supply = increased price.

http://af.reuters.com/article/metalsNews/idAFLDE73E16O20110415

MINSK, April 15 (Reuters) - Belarus' central bank has stopped selling gold to local retail customers for Belarussian roubles BYR=, it said on Friday, after demand for precious metals soared due to expectations of a currency devaluation.

 

passantgardant...are you saying that over an extended period of time that the price of silver will significantly outpace the median increase in wages? :kewl:

 

Go back and re-read your last five posts... your claim to absolute knowledge far exceeds the claim that the future is unknowable. And of course even that is wrong. Our entire brain is specifically built to ensure exactly the opposite -- that the future is knowable and predictable. If all we needed was to respond to immediate stimulus, we'd be no different from amoeba. Actually, strike that, even amoeba do some amount of anticipation. OF COURSE the future is knowable. It's just a matter of induction from the past. The problem with those such as yourself who claim that the future is absolutely unknowable is that you fail to learn about the past. For those of us who do, the future is quite transparent.

If what are refutable? You haven't made any arguments! What relationship does silver have with other commodities? Is that what you're asking? Silver has a constant value because it is nonperishable and mostly not consumed (this is more true for gold). Other commodities such as those previously discussed here must be produced continually as they are used up or spoil otherwise. Therefore, other commodities besides gold and silver are dependent upon the economic inputs at the time they're produced in the future, whereas gold and silver have already been produced (except for a small marginal amount compared to the total going forward). This is why gold and silver act as an inflation hedge while other commodities do not. You cannot save up milk for future consumption.

I intend to. My calculator certainly does not presume any bias. I specifically illustrated this by inputting Ben Bernanke's assumptions as a test case, and these assumptions produce a value of silver less than today's. Thus the calculator is not in any way weighted to automatically produce prices higher than today. It only does so if you assume inflation rates much above the Fed's target rate. I'll admit that fully understanding what is being calculated is somewhat complex, but it is well within anyone's capacity to do so, and then it is very intuitive.

Why bother indeed... nothing you've said so far has been an argument at all. The only thing you've done is berate me without any reason besides your emotional appeal that silver has gone up "too fast". Too fast compared to what? Your limited experience without researching history?

If you have nothing further to add, then why do you bother responding? Allow us rational adults to have a conversation about where silver is going without poo-pooing it based on your wisdom of having been completely wrong so far.