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Roy

The price of silver

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Like, seriously...

Silver is so cheap at the moment. 80:1 GSR. I can't believe these prices!!!

Wait. Put the truck in gear!

Everyone is going mad for silver. Why? Isn't it all supply and demand?

Look, every single American on youtube owns at least 2000oz of silver. And they paid 20% less than you did.

When the demand kicks in, they can sell at a lower price than you. They own a lot more than you.

You're starting from the back. Why play this game?

 

Edited by Roy

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Because people in the UK want to play the game too.

If they buy "cheap" silver from the US they get smashed with import duty + expensive shipping costs.

We pay more per oz when silver is cheap and we will pay more per oz when silver is expensive.

UK buyers were happy paying £30 oz previously and they will again.

Edited by mr-dead

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Why play the game? Because i like getting more silver. Never miss a month - get a bit - get a lot - never get as much as i wanted - never got enough. 

When silver goes up there are lots of Americans who will be scrambling to get a few ounces  - there won't be enough to go round.

i have already got 100 men's shares - tough on the other 99. :lol:

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36 minutes ago, Roy said:

Like, seriously...

Silver is so cheap at the moment. 80:1 GSR. I can't believe these prices!!!

Wait. Put the truck in gear!

Everyone is going mad for silver. Why? Isn't it all supply and demand?

Look, every single American on youtube owns at least 2000oz of silver. And they paid 20% less than you did.

When the demand kicks in, they can sell at a lower price than you. They own a lot more than you.

You're starting from the back. Why play this game?

 

If you don't want your silver, when's best for me to come round and take it off your hands?

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I would be giving it away at today's prices!

I'm told silver is worth £500 an oz so offers please.

I also have some bitcoin but that is worth £20000 per coin, I'm told.

 

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The physical comes at a fairly high cost its true, its an expensive game this poor mans metal. 

Play the game with paper or pay someone to vault, its still expensive over time and the risk is arguably higher. When JP Morgan are playing the poor mans physical game over the paper, you can bet that the risk in the paper is much higher than most think, and the price downside on physical is much lower than most think too. 

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When the spot price of silver rises I would seriously consider using the silver in a barter economy.

Using silver in exchange of goods and services may be a possible outcome

Edited by Tn21

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16 hours ago, Roy said:

Look, every single American on youtube owns at least 2000oz of silver. And they paid 20% less than you did.

Haha, good one.  I can tell you from my experience anyway that almost nobody is into silver here.  If you mention it to family or friends they look at you like you're crazy.  And falling or flat prices compared to a rising stock market means most who got into silver during the financial crisis have already sold out of their physical to get into stocks or cryptos.

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12 hours ago, Lowlow said:

Is silver cheap, or gold expensive ?

That's the question.

The way I see it Palladium and Rhodium are expensive relative to gold, silver and platinum, platinum is cheap relative to gold, and silver is cheap relative to gold, platinum, palladium and rhodium. More importantly, commodities are cheap relative to everything, but I would chose the commodities cheaper relative to each other historically, which is why silver and platinum are attractive even after the premiums. 

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15 hours ago, Lowlow said:

Is silver cheap, or gold expensive ?

That's the question.

Evidence supports the view that silver is ridiculously cheap.

A Morgan dollar  (1878-1921)  has  0.7734 ounces of silver.

A $20 Liberty gold coin (1850-1907) has 0.9675 ounce of gold.

So according to the value of real money at that time 1oz of silver was valued at $1.29 and 1oz of gold $20.67.

This creates a gold to silver ratio of 16.

This ratio is the 'traditional' ratio. This in itself seems too high as the miners tell us that 9oz of silver comes out of the ground to ever ounce of gold. Additionally there is more available gold compared to silver.

So silver is one fifth of the value it was in 1900 compared to gold.

Is gold too pricey? Well it certainly isn't 5x too pricey, so whatever it should be silver is massively undervalued. Silver is fundamental to modern society. On that basis we could argue a gold to silver ratio should be no more than 9 (the rate at which it now comes out the ground). I would say a ratio of 5 is probably more like it. This is why i acquire silver over gold. Maybe from the view of @KDave i am in the minority, i am a silver stacker and according to my sums i will not be swayed.

Edited by sixgun

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Maybe you'll have enough to have a statue made in your likeness and donate it to charity? :P

I'm teasing of course, I stack silver too, but every now and then I think we need to discuss whether we are making the right choice. 

I make more from the National Lottery than I do from silver!

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5aae99530d0f2_Screenshot-2018-3-18AlltheSilverintheWorld-VisualizedinBullionBars.thumb.png.b47ab850aec3ca49f1a4233546880c81.png

From about 5 years ago, i think, hence the 1:50 price ratio quoted. Puts actual physical gold to silver currently in existence approx 1:5

(Why it shows @mr-dead's house in the lower left with a delivery pulling up, i don't know. :D)

Someone is most definitely going to ask how and why and where has so much been attributed to "lost" in history, and how the guy came up with that. I can link that study he did, if anyone wants - but you might regret asking for it. :) I sort of glazed over after a while.

 

And other interesting reading here in the links below (a couple more reader friendly infographic articles which i like). A few years out of date but the fundamentals remain. Silver is now going through a period of being extra-below true value, imo, in answer to someone's question is silver cheap or gold expensive. Patience is key with silver, unfortunately, and that won't suit everyone. To the OP original questions, does it seem like everyone is going crazy for silver - sure, maybe it seems that way. As someone else said though, the general public don't consider PM the way we do. Even allowing for an upsurge in people getting on board with PM, It's still actually a relatively niche market i believe, as a percentage of PM stocks and uses. The amount of those taking actual physical possession is certainly niche, too. As we will gravitate toward forums and social media looking for PM related stuff, anyway, the perception that everyone is doing it and in huge quantities can get a bit skewed, i think.

http://www.visualcapitalist.com/silver-series-who-controls-worlds-supply-part-2-4/

http://www.visualcapitalist.com/the-silver-series-worlds-growing-demand-for-silver-part-3-of-4/

http://www.visualcapitalist.com/the-silver-series-making-the-case-for-silver-part-4-of-4/

 

 

 

 

Edited by swAgger

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If you look purely at the GSR over time the peaks and troughs have been expanding with each cycle, 100 to 1 ratio would not surprise me before it reverses, but either way its a slow process in both directions, decades long. Patience is key as swagger says.

That said we must be careful taking a metric such as the GSR on its own, silver does not need to fall in price for the GSR to continue is march to 100 to 1. We must also be careful when looking at the historic monetary values of silver in terms of the GSR - the 9 to 1 and 16 to 1 figures - silver is arguably no longer a monetary metal, its industrial use is in excess of investment and jewellery and the demand for that purpose has fallen rather drastically in recent years.

I have not seen up to date figures but early 2017 also saw the industrial demand for silver fall in every sector bar photovoltaics (e.g. solar panels) - the overall balance was maintained through high growth in that one sector but the rest of the picture is bleak. Especially for investment purposes - stacking silver has become an unpopular sport, physical demand for the range of investment vehicles, including demand from backed ETF products fell by a third last year.

Its a mixed picture - against other assets, silver is the cheapest it has ever been, against other commodities its one of the cheapest, in the same boat as uranium, the downside looks limited yet no one is interested. No body cares. Sentiment is arguably terrible for the metal - another positive indicator. Yet the silver institute supply/demand (I am out of date by a year here) is not encouraging, the GSR trend is a mixed signal depending on your context - look at the trend at widening peaks and troughs and perhaps we are early, look at the historic monetary GSR's and its a buy.  Look at the environment in terms of what silver represented for many people in the recent past, a speculative, lottery ticket like investment - the same people have sold to buy crypto. Crypto is not doing too well right now, but regardless the speculative crowd have moved on from silver for now. I am buying more silver than I am gold right now, another negative indicator? I was never much good at timing my investments ;) 

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Thank you for the information above.

I understand that the mined silver is fairly low compared to the GSR, and that there is no surplus of supply relative to demand, etc.  I also understand this argument about historical silver prices.  I'm not sure how much any of that really matters in a competitive market, really, because the market so rarely trades on fundamentals - it does eventually, over a long enough period of time, but like Keynes said "There is nothing so disastrous as a rational investment policy in an irrational world", or Shilling's version "The market can remain irrational longer than you can remain solvent".

I tend to look at it as three commodities moving in price against each other, and all three moving in price against something that I KNOW the value of.  For example, how have gold, silver, and/or the $us been moving vs. wheat, a basic foodstuff that the world cannot live without because the entire human race would teeter on starvation.  The $us price of wheat has, in my own lifetime, changed price dramatically, and a lot in the past decade.  Just about 10 years ago I could buy a 50lb (22kg) bag of wheat for approximately 16$us (11.5£gb) and today that same bag of wheat costs approximately 27$us (19.4£gb).  That's approximately double the price, and I think that is an actual devaluation of the currency over that period of time, actual monetary inflation, not an increase of price due to scarcity, manipulation, or any other reason.  Given that, I tend to think that the actual price of silver and gold, in $us terms, should be about double what it was a decade or two ago, and probably about triple or more what it was earlier in my lifetime.  By that measure, and knowing that I was paying about 5$us to 7$us for silver at a market low in the 1990's, I believe silver's "true low price" is somewhere in the mid- to high-teens, somewhere about where it is now.  I don't see how silver ever goes back below 10$us/oz in my lifetime short of revaluing $us as "nuevo" $us or something, maybe they can call it "$us reimagined" when they finally lose control of it lol, I can see the posters now .. "Trade your $us for $us reimagined, 10000 to 1 conversion" lol.

I think we're pretty good here on price, but I still don't think its a super-low can't live without it price, for me that'd be whatever price we see after a significant market downturn that drives up the value of fiat, and I think that'd be somewhere in the low teens but I won't know until it happens and the equity markets capitulate.  That said, I still don't think this is a bad price, in fact, it might be pretty low now even in terms of price over the past few years.  I'm a buyer, and I haven't been a buyer since the 2008 low, and before that not since the 1990's and early 2000's .. I'm your basic bargain shopper.

Long term, I agree more with what @sixgun and others are saying, generally.  Fundamentals do matter, eventually.

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People continue to ignore the saying "past performance is not a guide to the future" or similar.

The past levels of GSR have absolutely no relevance to the future, especially comparisions that go back to when silver was a monetary metal. Talk of what it was in the 1800s is ridiculous.

There is no reason for the GSR to go down, we may even be seeing a continuous, steady rise to who knows what level might become the norm for the next hundred years.

At the end of the day, it is supply and demand, if we ignore price manipulation of course. There are just not enough major uses of silver as an industrial metal to counter the amount that is being dug up.

 

 

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58 minutes ago, sovereignsteve said:

There is no reason for the GSR to go down, we may even be seeing a continuous, steady rise to who knows what level might become the norm for the next hundred years.

At the end of the day, it is supply and demand, if we ignore price manipulation of course. There are just not enough major uses of silver as an industrial metal to counter the amount that is being dug up.

 

About a year ago, may be a bit longer i spent quite a few days of and on attempting to work out what the supply and demand price of silver should be. i had supply demand equations, mining output, projected consumption and so on and so on. In the end it made no sense and i decide it made no sense b/c the price was not determined by anything real. The price is dictated by virtual silver (paper contracts) and making sure the right people have enough physical just in time. The nearest i could get to a price was the historic ratio. i figured even if gold were about the price it should be, silver was just stupid. Sadly for the money changers silver is both money and second only to oil, the most vital commodity in today's world.

There are several reasons to expect the GSR to go down. i would count on moves in the next 6 months rather than 100 years. The Kinesis currency kicks off on 1st October. The low key buying of physical is likely underway now. Most of this will be in gold but it would not need much in silver to break the paper market. Kinesis has made no impact at the moment but when the buying starts it will. The finely balanced supply demand of physical will be upset - badly upset.

Andrew Maguire did a recce in Switzerland a few months back. Touching base to see where the silver is, how much and who would sell. He said there is 2500 tonnes - 80 million ounces. That does not seem much to me. David Morgan would have it there is a billion ounces. The biggest pile is held by UBS and that is not for sale (at any price). That is it - there may be piles dotted here and there but at what price are they for sale? Not today's price i wager.

We have not seen the paper market break before - it has been stressed but it has held together. This paper market was invented to manage prices. When it breaks price will no longer be manageable but as long as there is enough physical for the mints and the electronic giants the price can be kept down; as long as the miners are tame everything will be cool. If we see a big buyer sucking metal out of the market, if we see miners having a venue to sell their silver at a much better price, it will break. As soon as one of the electronic giants has to stop a production line in their just in time delivery system they will pay whatever it costs. i am convinced there will be a glitch. A glitch in silver sending price north of $50. Such a move will send gold higher and the banks cannot allow that to happen unless they do it. JPM has been stacking silver and Goldmans have been stacking gold. There will have to be a cash settlement of all the gold outstanding, a button will be pushed and the cash magically will appear and then there will be a reset. i expect to see this over some not too distant weekend within a year. Past performance will be absolutely no guide in this case.

Let's see but in the meantime i continue to buy silver.

Edited by sixgun

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7 minutes ago, sixgun said:

We have not seen the paper market break before - it has been stressed but it has held together. This paper market was invented to manage prices. When it breaks price will no longer be manageable but as long as there is enough physical for the mints and the electronic giants the price can be kept down; as long as the miners are tame everything will be cool. If we see a big buyer sucking metal out of the market, if we see miners having a venue to sell their silver at a much better price, it will break. As soon as one of the electronic giants has to stop a production line in their just in time delivery system they will pay whatever it costs. i am convinced there will be a glitch. A glitch in silver sending price north of $50. Such a move will send gold higher and the banks cannot allow that to happen unless that do it. JPM has been stacking silver and Goldmans have been stacking gold. There will have to be a cash settlement of all the gold outstanding, a button will be pushed and the cash magically will appear and then there will be a reset. i expect to see this over some not too distant weekend within a year. Past performance will be absolutely no guide in this case.

Let's see but in the meantime i continue to buy silver.

I think the market will hold together until there is a currency collapse, and there will be, eventually.  Could be a month, a year, a decade, who can say, but it's out there.  At that point, I don't think that there will be a return to any kind of gold or silver standard, but I do think that it will be involved.  War could be another reason - and not these little regional conflicts, but actual war, because when governments stop trusting each other gold and silver becomes one of the few currencies that everybody will accept as payment.  Not hopeful that any of that would happen, of course, but .. history.

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Also, I keep hearing people say that silver isn't money ... it sounds to me like they're trying to convince themselves.  It's money to me, and I would definitely accept it as payment, no question, as long as I could verify that it was, in fact, silver.  History isn't over just because we have the Internet and microwave ovens.  Silver has been money for at least 2500 years, and was in circulation as common currency up until about 50 years ago, so there's no reason to think history has ended just because we aren't spending silver at stores today.  Today is the outlier, and I don't think anyone would be that surprised if silver had to be relied upon again in the future.

Someone above said that the GSR could go just keep going up, but offers no reason that might happen.  I don't like these relativistic kind of points, a kind of "well, anything could happen ..." view of the world.  If the GSR is going to continue climbing in favor of gold, why would that happen ?  There must be a reason.  If not then we might as well just say that cowry shells could make a comeback.

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