Will silver ever be cheap again?

As always I'm open to suggestions.

The stock market is a casino
any form of fiat (i.e. CD's ect) offers no inflation protection
real estate could get taxed into oblivion if the gov decides to and is currently out of my price range.
I'm not able to stack barrels of oil
stacked bread tends to get moldy

Throughout history hundreds of nations have created paper currencies that were not backed by gold or silver. Every single one of them eventually failed and went to zero. every time the government inflated it into worthless toilet paper.

Do we have 2 years or 100 years? That would be a great question to know the answer to. If I did I would not want this insurance. If I knew I were not going to have a car accident for another 5 years I would not have car insurance.


I do know that a few years ago the word Trillion seemed like a made up word. now it is thrown around with casual indifference. Millionaires are no longer special. you need to be a billionaire to really be somebody. The arc is accelerating suggesting to me that we are nearing the peak.

Does ANYONE have a plan to reduce our debt? I've not heard one. we are kicking the can and pluging the holes in the dam with our fingers. It reeks of desparation.

 

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For jcb1983 and rottenapple2, I would NEVER buy bars or rounds, I would buy ONLY junk silver, preferably dimes and quarters.

Here's why -- if and when the Crunch comes, you will have to "prove" to a skeptical buyer that your bars and rounds are really silver, not silver-plated, not Chinese fakes, etc. With old U.S. dimes and quarters, no such "proof" is needed. And why would I not buy halves and silver dollars (unless they were underpriced)? Because you want bullion in convenient denominations. If someone agrees to sell you something for a silver quarter, and all you've got is halves and dollars, there's an unnecessary problem.

I would not even buy bars and rounds now, even if I could flip them for 10-20% profit. I am suspicious of the multitude of bars and rounds, virtually none of which appear in reference books; the same goes for foreign silver, unless you are a numismatist collecting a date series, like early Canadian dimes, for instance.

Simplify your life. The only drawback to junk silver coins is that it's a pain to store, and takes up a lot of room compared to gold. Gold and silver may rise together, but what are you going to do with a 1-ounce gold coin? Who's going to make change? You already see a substantial premium for the 1/10th, 1/4th, and 1/2 ounce eagles. I might eventually buy some gold 1-ounce, but they would be my core holding, the very last thing to be sold (if necessary).

Finally, I would never buy a single coin from the U.S. Mint if you are stacking bullion. The premiums over PM value are huge, and a buyer down the line will laugh at your attempt to get that premium back. Let us say you pay $55* for some 1-ounce Mint concoction today, compared to $27-29 for an ounce of silver (as junk silver) today. Down the line, in a panic-driven bullion market, you will be offered the SAME AMOUNT for both items.

*Even higher for Proofs in fancy wood cases, etc. WHAT are you thinking? But if you're a coin collector, ignore this warning. I'm directing my remarks to stackers.

 

Sometimes I worry that we have cornered ourselves into a position where we have no other alternative but to attempt to spend our way out of debt. Quantitative easing well beyond anything seen in 2010-2011. Not to mention the entire fractional reserve banking system is shakey at best. We don't even need hyper-inflation to spur growth in PM's. The fear of hyper inflation is enough.

 

Doug I'm not anti junk silver at all. I'm more a fan of ASE's-Mapples for stacking, but appreciate junk silver. I think the heavyweights would be more inclined to purchase bars. I don't have these kind of pockets.

 

duplicate post

 

Hyperinflation comes when the ability of the economy to pay the interest on the debt has been exceeded.

On the subject at hand, I don't think silver is the best hedge against this inflation. Gold is the only metal held by governments and the bankers. This is where one should be buying if wealth protection is the goal.

 

A government that prints money indiscriminately NEVER runs out of money to pay the interest on the national debt, or bond interest, or anything else.

The viewpoint for gold over silver is valid, but each PM has some flaws. Gold might be confiscated someday (it happened once, as you all know), and silver is much more volatile. Still, I believe you must think about "transactions" down the line, where gold is hard to use efficiently, compared to silver.

In addition, the average household is much more likely to acquire silver, i.e., the "poor man's gold," than gold, thus boosting demand. Gold in meaninful quantities is the province of sovereigns and the significantly rich.

The essence of my gamble is that I will be no worse off holding silver (1. than gold; 2. than holding a bank deposit payable out in Federal Reserve notes), especially when interest rates are virtually zero.

 

I disagree sir if you do your homework. Yes, blindly choosing a "hot" stock is more akin to betting red or black, but remember common stock is the equity of firms. As such, as the company becomes more valuable, the stock is more valuable. Choosing a company you believe will grow above expectations, or its products will become worth more in the future will lead to higher valuations. Yes, daily movements can seem like they are random occurrences like a casino, but long term stock prices have to mirror company value.

I never invest short term in stock because of this fact.

 

A buddy of mine makes 175k a year. I am proud of him and what he has accomplished in such a short amount of time. But it absolutely blows my mind that he puts nearly all of his money into stocks. He blindly turns over his money to Fidelity and expects huge longterm growth. I've tried to talk him out of the paper market but he takes offense. I've even reminded him that on monday October 28th 1929 a boat left England heading for America. Onboard were a handful of millionaires. By the time the boat landed in New York they were worth nothing. Stocks = Gambling in my opinion but I suppose everything is in a way.

 

Your theory of fundamentals might have been valid two decades ago, but now with computerized trading coupled with the ability to use complex algorithms to move "in and out" in thirty seconds, it is a casino, and there's no going back.

In the PM ETFs, GLD and SLV, the fact that a few trading days see 100% of a year's production change hands suggest ultra-high volatility and many transactions based strictly on ratios, exchange rates, and financial rumors.

I have read many commentators with the view that "buy and hold" is gone forever.

The coal industry is a good example. Energy is the linchpin of growth and prosperity, but many coal companies have recently made new lows, notably Walter (WLT) this past week. But a year ago, you would have heard a radically different view about coal; fundamentals do not support this kind of random sector rotation.

 

There was nothing said about the government running out of money. Hyperinflation, by definition is indiscriminate printing of money by the government. Hyperinflation is not possible if the government did run out of money.

The question is "when does it start?" (which I was responding to). It starts when interest payments on the debt exceed that of the economy to pay said interest. In a futile attempt to address the issue, the powers to be attempt to inflate their way out of the problem but it doesn't make any difference. It's pretty simple mathematics and happens to any system, monetary or not, when a system is grown at a constant linear rate.

Silver has no monetary properties and you might even stand to lose wealth in a noninflationary environment. If it's true value is in industrial demand, and that demand falls off the cliff, then so does your wealth. Silver will only gain back its role as a monetary metal IF governments restate its value in terms of gold's value.

 

Yes indeed. It's nice to see a few people who pay attention to what is really going on and not blindly listening to euphemisms about the stock market. The US stock market has almost nothing to do with the real economy these days.

 

Is a stocks value in any way pegged to the companies actual value? I know little, but presume it to be based on buyer/seller sentiment. If a companys profit's increase a billion dollars the share holders do not see a penny of that (excluding possible dividends) correct? The potential buyer has to GUESS that this increased profit will improve buyer sentiment and offer to buy your stock from you at a higher price than you bought it for you to see a profit. For you to agree to sell you would have to GUESS that the buyer is wrong and that the wise choice is to take his money and run.

In each case you are both GUESSING. educated guess or not. each time one of you will have to be wrong.

I'm not advocating 100% pm here. I do hold a mutual fund and an IRA. My household income will double at some point if my wife ever FINISHES grad school. At that point I can better diversify.

For now I consider building up a core stack a priority. If inflation hits really hard I may be able to avoid the soup lines and keep my little girl clothed. If inflation does not hit really hard I will be able to carry on just fine with my regular salary and the price of silver will not hurt me(other than opportunity cost), no matter how low it goes.

 

OK, but please keep in mind that this is just an argument for how it could happen, not a prediction.

First of all, the reserve status of the dollar is a far greater advantage than most people realize. Martin Armstrong [love him or hate him, he is an independent thinker and researcher] has pointed out that hyperinflation has never occurred in the primary or reserve currency. It is always a secondary or fringe currency. When times get tough, money will flee to the reserve currency just as money from Europe is flowing into the dollar now, despite the problems.

Also, at some point the servicing of debt, even sovereign debt will become a problem. When this happens, the demand for dollars will increase to pay debt service, and the value will rise. This is why the present central banking system, for all its faults, may help prevent serious inflation. Deflation may be a bigger threat. Remember crashing debt markets is deflationary, not inflationary.

So that's the possibility. Fixating on inflation may be just as bad as ignoring inflation. Things could go either way.

 

Inflation destroys households; deflation destroys commerce. Two bad choices, inflation much more likely.

 

Really...?

Consider this scenario. Investor A has $100,000 and buys 100 shares of stock XYZ. He holds the stock for 5 years and it goes up 8% per year. At the end of 5 years he decides he and his wife need a very nice vacation so he sells his 100 shares for $15,122.00 netting himself $5122.00 and takes a real nice vacation.

Investory B now buys those 100 shares at 15,122.00 and the stock continues to rise at 8% per year. After 5 years he decides to cash out and now sells his shares for $22,867.00.

So who was wrong?



Now I understand why folks (especially younger folks) feel that stocks are a bad investmnet. For the last 10 years or so stocks have shown little or no growth. That 10 years is the entire adult life of the younger generation. Also during that same time, PM's have soared. So it is logical to think, that is the way it is going to be since the younger generation have seen no other way.

But to quote the late great Roger Miller, "Good ain't forever and bad ain't for good"

Ya see, nothing remains the same, all things change, PM's have had their run. Stocks (equities) are out of favor right now and they are cheap. Nobody knows for sure, but IMHO now is the time to buy. You need to be one step ahead of the crowd.

Mike

 

You always have to wonder about a self made millionaire at 15 years of age in 1960's money.

 

Let not get too carried away with debt issue as the IMF chief just pointed out, as long as there is sucker willing to give us literally nothing to buy our debt America is fine as long as we allocate the money we have wisely! and make changes to bring forth growth. Rather panic and try to slash everything and end up digging our own graves.

 

That's nonsense. Just because interest rates are at historic lows, that's NO REASON to keep piling on debt. And we do NOT allocate the money wisely -- we waste an enormous amount of national treasure on reprehensible causes. This is a whole new can of worms, let's stick to silver, and which of the PM's is best, and is it smart to buy them at all...

By the way, it is now mathematically impossible to EVER pay off our national debt, as that requires GDP growth over 8% per year, forever. There are some reasons not to pay off the debt, at least entirely, but a return to 1990 levels would greatly benefit this country as well as coming generations.

 

If deflation happens it will be harder/impossible for Uncle Sam to service his huge debt. As long as he owns a printing press he will fire it up to prevent deflation and even encourage inflation as to make the debt easier to pay. As usual the irresponsible will be rewarded and those that have stayed out of debt and saved will see thier savings inflated away.

Deflation may be a real threat, but I would expect it would be a temporary one that would be quickly corrected and likely over-corrected.

embracing deflation would be excepting out fate and allowing the reset to begin. All Sam's money would go to servicing the debt which means no entitlements, which means no reelection. Inflation equals less and less value in the dollar until it becomes so worthless noone will accept it anymore. We can take the short path or the long path but they both end at the same cliff. Maybe it will be a hundred year walk, but I think a lot of really wonderful things would have to happen to give us much more time.