Silver lows, what's the evidence ?

[Lowlow]

Numerous times on this forum people have talked about how Silver is currently at its lows, all time lows, below the cost of production, etc, but what is the evidence for that ?

SIlver is at approximately 16.60$us/oz, what evidence do we have that this really is a low price ?

Is there real evidence that 16.60$us/oz is close to the cost of production ?

I have my own thoughts on this but most of it is anecdotal and based on "feelings" I have about the markets, and I really don't think these are as low as we could see if we experience a significant drop in the equity markets, I think we could revisit the 12$us/oz range if that were to happen.

I'm just curious why this idea that we are at the lows is so ubiquitous.

[Stu]

I think Bumble posted cost of production numbers for silver from the primary miners recently which is around or just over current market price. The difficulty being, most of the silver produced is a byproduct of other other mining, mostly copper I understand. Silver is significantly undervalued. Contrary to you tube videos, I think if you informed the public that a t Oz of silver was valued at $150, they would rightly believe this to be the case. This said, I can see the price bumbling along for long enough to come unless their is some sort of economic collapse. 

[TerryGriffiths]

Agree with Stu, it is largely a byproduct of other metals and there is a lot of it in the ground. A lot of you tubers try to pump the metal to increase sales on their businesses.

I think we will see a 2008 again as majority of assets are overvalued at present.  The markets will probably do the same again, which means we will see spot prices for gold and silver much lower again before the "safe haven" factor kicks in and moves prices northward again.

Just as a side note there is the issue of premiums on the coins, some people think they will get their coins and bars very cheap if the silver price drops further.

Kman posted something in 2014 on premium differences.  He found an Apmex archive page from 2008 when Silver was $11.60, Apmex were selling 2008 American Eagles at $17.44 for 1 coin and $16.44 if you bought over 500. That is a significant mark up on the coins.

As ever those who stack and buy good quality proofs, bullion with some numismatic value etc should do well in the long run.

[sleepyshpeey]

The real bottom price is the all-in sustaining cost of the mines that are needed to meet the (short-term fixed) demand of the industry and a bit in jewelry. Most mines need to publish quarterly reports that shows how much silver and other metals the produce and what their cost of producing is. It's hard to figure out what these costs are because (as mentioned by Terry) there are only a few pure silver mines most mine silver as byproduct.

I can tell you that a lot of mines closed or switched focus to other metals because they couldn't produce silver at current spot price. If you look around you can find graphs that show All in sustaining cost from 10$ an ounce to 17$ an ounce. My guess is that the bottem is around 14$, at that moment industry won't be able to get their silver anymore and will pay higher premiums to still get their silver.  

Of-course paper silver can manipulate the market but they can't suppress the price much lower then 14$ because the physical supply will get so tiny that industry can't get their hands on silver anymore and will pay as much above spot as needed to get their silver. At this point their will be a division between paper silver and real silver. I doubt the banks will let it go that far, it's not in their interest so my guess is we won't see prices below 14$. 

[Martlet]

I have read that for some producers of silver (or other metals) their costs are effectively 0, because they are considered surplus or even waste products of the targeted mining resources. Another consideration is like any other business,  a mine can carry on running at a loss for some time to cover some fixed costs of plant and debt.  On the other hand a particular mine might shut down well before others because its uneconomic.  Also, it may be interests of a company to report small profits or loses on operations, or lower costs to justify a project etc.  So it seems quite complex to put a single number as the low, it will be a range, and people with interests will modify that range range to suit.  Reckon you have to be inside a mining company and have knowledge of other miners to know the true cost of production. 

[Lowlow]

4 hours ago, TerryGriffiths said:

Agree with Stu, it is largely a byproduct of other metals and there is a lot of it in the ground. A lot of you tubers try to pump the metal to increase sales on their businesses.

I think we will see a 2008 again as majority of assets are overvalued at present.  The markets will probably do the same again, which means we will see spot prices for gold and silver much lower again before the "safe haven" factor kicks in and moves prices northward again.

This is what I believe will happen too, I think we will have a repeat (except worse) of 2008 once the market tops, if it hasn't already.

4 hours ago, TerryGriffiths said:

Just as a side note there is the issue of premiums on the coins, some people think they will get their coins and bars very cheap if the silver price drops further.

Kman posted something in 2014 on premium differences.  He found an Apmex archive page from 2008 when Silver was $11.60, Apmex were selling 2008 American Eagles at $17.44 for 1 coin and $16.44 if you bought over 500. That is a significant mark up on the coins.

As ever those who stack and buy good quality proofs, bullion with some numismatic value etc should do well in the long run.

This was my experience in 2008 / 2009, and I was a buyer of silver then.  I would add this ... prices did eventually fall on physical metal, and the premiums tightened so that you could get physical silver for close to spot, but it took a while for that to happen.  As I said in another post, there was a frantic effort on the part of silver stackers to buy at those prices, and there was little inventory, and basically none at those prices, so rumors began to circulate in the immediate aftermath of the spot price drop that people were taking delivery on silver futures contracts to lock in the price on 1000oz comex bars.  I bought silver then, not immediately, but I instead waited until I liked the actual price including the premium, and I got silver for a great price.  You would be tempted to think that traders who waited missed out on the cheapest prices but I don't remember that being true, I seem to remember there was a longer "W" bottoming formation and that by the time we reached the right hand side of the "W" the premium had disappeared and you could get physical for close to spot, and I don't remember being disappointed about the price.  I would have to go back and look at notes to see exactly what my price was.

The reason I am here, in general, is to "nibble" on silver, in anticipation of being a serious buyer if/when the stock market goes to hell and we get another 2008 / 2009 style buying opportunity, the last such opportunity we will have in my opinion.  All of this is just my opinion.  That's why I was looking for some evidence that we are near the lows, more evidence than someone shilling silver.  The GSR is interesting, but not that useful for determining if silver is at its lows.

I think it's possible for the actual cost of production to fall for silver given the right circumstances.  That's what happened in the Great Depression, resources, fuels, the cost of labor, everything fell as demand dried up, and the cost of production of everything fell.  Trouble was the demand for the product wasn't there either, so it basically still wasn't worth it to produce anything because nobody could afford to buy it.

I was a buyer in the 1990's, again in 2008 / 2009, and I'm looking to be a buyer again, I'm just looking / waiting for the right opportunity.

[sixgun]

In this article the AISC (All In Sustaining Cost) of silver is given as $10.56. i have seen lower numbers than that.
https://www.americanbullion.com/what-is-the-current-cost-to-produce-an-ounce-of-silver-today/

As already mentioned the AISC of silver production will vary. So if top miners can produce at $10.56 and the rest were say $20 then average might be $15. If these higher cost miners cannot get over $20 then they will soon stop producing silver and we have a bigger shortage, so average AISC can be misleading.

Silver is used in the markets as a lever to get the price of gold down. The banks have had to do a lot of levering which is why the Gold to Silver Ratio is so high.

We see arguments that if an ounce of silver can be produced for $11 the price of silver should be a bit over that. These arguments usually come from commentators in the controlled financial media. They speak for the banks who want the price down. Stackers with smaller stacks want price down so they can get more silver. Manufacturers are happy with low priced silver but i suspect would happily pay much more to ensure they got reliable supplies.

The price of silver in my book should have little to nothing to do with AISC. Pinning price to the AISC is wrong logic. The price is what people will pay for it and the difference is the profit of the miners. Mining is high risk so there needs to be good profits.

i mentioned elsewhere about the growth of Exchange For Physical contracts. This is where longs on the COMEX want delivery but of course the silver is not there on the COMEX to deliver. The contract gets booted into the opaque London OTC (over the counter) market and may or may not get settled at a price which is not publicly visible. The EFP system is for occasional emergencies not huge tonnage as has been happening since last year. For some reason longs are now wanting delivery, they don't want to roll over into the next contract in the casino.

The tonnage in EFP's tell us the paper market is broken and its price is meaningless. It is the price of nothing b/c you cannot get real silver for the paper price. The COMEX has no silver unless you are JP Morgan. The London OTC prices could be anything $18, $30, $50 - who knows what shorts have to pay to get silver when the longs will not go away. i expect longs are being bought off for much higher prices. We must remember one SI contract on COMEX is 5000oz. If i want delivery on 100 contracts we aren't talking coin shop quantities and in volume gold and silvers are higher than the spot price - often much higher.

The take home message is, if you can get silver at near the paper price the story from EFP's is you should buy until your hands bleed and you have spent up. The explosion in the volume of EFP contracts tell us ideas about the right price for silver being something less than today are way out.

i expect we will be able to get retail coins and bars at nearer spot until to paper market implodes.  The price of mint output is part of the illusion. If there were shortages and price jumps the public might realise something is up. It would not take much of a realisation and dealers would be out of stock, then we have panic buying and price gaps up to who knows where.

[Lowlow]

4 minutes ago, sixgun said:

The price of mint output is part of the illusion. If there were shortages and price jumps the public might realise something is up. It would not take much of a realisation and dealers would be out of stock, then we have panic buying and price gaps up to who knows where.

Great post.

This, again, was my experience.  It wasn't that you couldn't buy 1000oz bars of silver at close to spot, it was that the mints couldn't keep up with demand for smaller bars, rounds, and coins.  Silver Eagle monster boxes, for example, you couldn't get those anywhere because every dealer that got one would have so much demand for it that they simply weren't available unless you paid a terrifying premium on them.  I have little doubt that you could have gone to a miner and bought silver from them, and as I said above rumor was people were taking delivery on comex bars, and I remember comex bars on dealer sites that were available.  I also remember people buying silver shot and other items just for the silver, because the premium on rounds and eagles (if you could even find them) was very high.

[vand]

From a fundamental perspective, any economics textbook will tell you that production costs do NOT put a floor on the short-term price. In the long run production will contract until a new equilibrium is found. 

That is why I prefer a technical-analysis approach. You can put support levels in and say that while price does not go below this level then I believe we are in an uptrend (bull market) and therefore work on the assumption that we have seen the lows. If the support is violated then it invalidates this theory. 

[Lowlow]

12 minutes ago, vand said:

From a fundamental perspective, any economics textbook will tell you that production costs do NOT put a floor on the short-term price. In the long run production will contract until a new equilibrium is found. 

That is why I prefer a technical-analysis approach. You can put support levels in and say that while price does not go below this level then I believe we are in an uptrend (bull market) and therefore work on the assumption that we have seen the lows. If the support is violated then it invalidates this theory. 

I appreciate this, especially for people who are trading in and out of silver.  I'm more of a stacker, in general.  Not much of a difference, really, both are looking to buy the lows.

Edit again ... have you seen marked up charts online that support the idea that we've already seen the lows ?

[sovereignsteve]

1 hour ago, Lowlow said:

I was a buyer in the 1990's, again in 2008 / 2009, and I'm looking to be a buyer again, I'm just looking / waiting for the right opportunity.

Interesting. I've never come across an individual who has been a stacker for so long. I am interested to know when you will be a seller, or have you been already?

[sovereignsteve]

7 hours ago, Stu said:

I think if you informed the public that a t Oz of silver was valued at $150, they would rightly believe this to be the case.

This has been my experience. The public in general has a mindset that thinks silver is much more valuable than it is; almost a collective memory of the days when it was much closer to gold in value.

[sixgun]

17 minutes ago, sovereignsteve said:

This has been my experience. The public in general has a mindset that thinks silver is much more valuable than it is; almost a collective memory of the days when it was much closer to gold in value.

Yes this is true. The videos put out by Mark Dice where he offered a gold coin for a pack of chewing gum and similar is quite illuminating. i do not think the average person has any idea what an ounce of silver or gold would fetch. Silver is certainly seen as less valuable than gold but not 1/80 the value. With that in mind the public perception has the capacity to pay much higher prices for silver b/c they [rightly] believe it is much more valuable than the current paper price offer in the COMEX casino.

Edit - i just asked someone what they thought an ounce of silver and gold is at spot price. They didn't know. They had a stab at £25 for silver and £120 for gold. If i had said that is the price they would have accepted that. In their mind silver is worth over twice the current paper price and gold 1/8 the current paper price. Interestingly their GSR is 5. i believe that a GSR under 5 is where we are ultimately heading.

[Lowlow]

57 minutes ago, sovereignsteve said:

Interesting. I've never come across an individual who has been a stacker for so long. I am interested to know when you will be a seller, or have you been already?

Steve,

I started stacking in ... let me think, I can probably figure out the exact year, or close to it.  Uhh. MMmmm.  CRS, can't remember &^%$.  It was about ... 1991, I think.

The time period I remember the most (in precious metals) was leading up to the crash of 2000 in the Nasdaq.  I remember how people were saying silver was dead, and I remember internet stock investors taunting gold bugs, silver was an obvious buy at the lows if you were thinking clearly at the time and not frothing at the mouth for internet stocks, all the usual signs, the arrogance, "this time it's different", all of that.

I was a buyer and stopped buying once the price of silver started into an obvious incline, it wasn't that I didn't want it (silver), it's just that I like to buy things at an obvious bargain, I'm more of a long term value investor.  I will trade a market if I see an opportunity, and I'm currently watching for a good time to buy PUTS / options vs. the S&P once we touch a shoulder on what I believe is a head and shoulders pattern (probably get into PUTS in the summer and trade the decline assuming it materializes into autumn).  Anyway, that's beside the point, the point is I stopped stacking into the mid-2000's because I just thought the price was getting too high, I didn't see an obvious opportunity after we went over about 15$us/oz, I felt it was just FED money sloshing around and that it just happened to be sloshing into commodities.

Once we topped in 2008, which I was looking for because of the obvious housing bubble, I traded the hell out of that decline, I thought the game was up at that point and that we would enter into a sustained deflationary bear market.  I bought the silver lows and the longish trade I missed was buying for the new highs on the S&P, I just didn't believe we would see 25000+ on the Dow after 2008 until after we put in new highs and it was obvious we were going higher.  The bounce from the lows was obvious, but trading above the 2008 highs was surprising to me, I misjudged the level of irrationality.  I have believed for a long time this market was a bubble, and that the bubbles keep rotating through sectors, so I've been mostly leaning on low debt dividend stocks and waiting for the top since 2008.

Anyway, have I been a seller ?  I'd rather not say except to say that I felt that anything over 30$us/oz was too expensive for anyone to buy unless they were actively trading.

I do think there will come a time that it will be obvious that people should get out of precious metals.

The obvious sell in my opinion would be what I feel is a coming debt collapse, similar to 2008 but leading to a currency collapse.  I think the buy is the collapse, and the sell is once the government decides it has to go back to honest money but the entire world is skeptical that they can do it, that would be the time to get out of precious metal I think, at a time of maximum pessimism.  I don't know if that would happen in my lifetime as I am getting older, but I am confident it would happen in the lifetime of someone in their 20's or 30's.  I'm not saying there wouldn't be any opportunities to sell and trade in and out of positions before then, of course, I'm just saying that's the only really obvious time to sell, just like the 1990's were a really objectively obvious time to buy.  It's rare that the markets make fundamental shifts in directions that are so profound that you can trade them for 20+ years, but I think we could be headed for that now.

In short, I think all these silver bug stories about currency collapse that hard money people have been talking about for the last 50 years might finally, actually, happen, I think we might be on the eve of that.  Of course the usual voices for it have been wrong so many times that nobody is listening, but that'll just make it all the more spectacular.  Hell, Ron Paul for example has been talking about it for most of his life.  The difference this time is debt to GDP, there's just nowhere left to run in my opinion.  I think the trade is out of the S&P and into cash in anticipation of a dollar bull / deflation, and then watch for that bottom and get out of cash into precious metals as the deflation comes to a close.

Of course I don't have any more insight into it than anyone else does ... there is no crystal ball ...

[Lowlow]

1 hour ago, sixgun said:

Yes this is true. The videos put out by Mark Dice where he offered a gold coin for a pack of chewing gum and similar is quite illuminating. i do not think the average person has any idea what an ounce of silver or gold would fetch. Silver is certainly seen as less valuable than gold but not 1/80 the value. With that in mind the public perception has the capacity to pay much higher prices for silver b/c they [rightly] believe it is much more valuable than the current paper price offer in the COMEX casino.

Edit - i just asked someone what they thought an ounce of silver and gold is at spot price. They didn't know. They had a stab at £25 for silver and £120 for gold. If i had said that is the price they would have accepted that. In their mind silver is worth over twice the current paper price and gold 1/8 the current paper price. Interestingly their GSR is 5. i believe that a GSR under 5 is where we are ultimately heading.

Yeah but who cares what they think, what are you going to buy from them, their beach towel ?  The half empty liquor bottle they have in the trunk of their car ?  Their kid's rusted bicycle ?   What does it matter what Joe and Suzie six pack think the price of silver and gold is, they don't have any, and they aren't planning on getting any.  Might as well be talking about the price of rocket fuel with them, or solar panels, or the average salary of a chemical engineer with them, they don't know, and it's just as well they don't know because it has nothing to do with who wins the television celebrity dance contest.

Edit, btw, funny story ... I did this same experiment in an airport once while waiting for a flight and eating food at a restaurant.  Once the meal was over, I laid out two foreign currency notes with whatever denominations on them (I want to say one was Japanese Yen but I don't remember), and I put a 5$us note, and a silver eagle.  I told the waitress she could choose one of them for her tip.  SHE GOT THE BETTER OF ME by immediately picking up the 5$us bill and then studying the rest of the items to choose between them, so what was I going to say, no you can't have the 5$us, that is one of the items you have to choose between ? LOL.  So I let her get away with it, mostly because I just assumed she didn't realize that the 5$us note WAS one of the items (maybe she was playing 4d chess on me and knew that and actually smarter than me lol) and because I wanted to see what she would chose of the remaining 3.  Would it be the high denomination note (again, I think it was yen), or the one with the pretty animal on it, or the silver eagle.  She chose the one with the pretty animal on it and never even looked at the silver.

[sixgun]

@Lowlow the person i asked is someone who is old enough to have used silver coinage, someone who has used silver items. This is someone who i have acted as a 'buying agent' for precious metal and they just have precious metal as a store of wealth without i guessed [correctly] knowing the current price. They have quite a few kilos of silver and certainly more gold than me. i have heard this person talk about silver in terms where they seemed to hold silver as much more valuable than the current price suggests. My little experiment showed they had no idea what precious metal prices are and they viewed silver as a much higher price relative to gold.

There will be people who have no clue. i have family members who have no idea and no interest.  They have been brainwashed. If blood weren't thicker than water i would let them sink when their ignorance bites them in the arse.

[vand]

4 hours ago, Lowlow said:

I appreciate this, especially for people who are trading in and out of silver.  I'm more of a stacker, in general.  Not much of a difference, really, both are looking to buy the lows.

Edit again ... have you seen marked up charts online that support the idea that we've already seen the lows ?

 

We haven't gone below the 2015 lows so it supports the theory that we are at least not still in a bear market, in which case we must be in the early stages of a bull market or at the very least a long consolidation period. IMO the gold market supports this theory much better. Silver tends to lag gold during this early phase of the bull.. we saw this in 2001-2004.

Regardless of whether we are in a bull or bear market, does it change the reason for holding physical PMs? My answer is no. I hold PMs because I like the safety blanket they provide in a profligate and unpredictable world. The day that I see governments and the public becoming truly fiscally responsible is likely the day I think that I do not want to hold more precious metals.

[Lowlow]

1 hour ago, sixgun said:

@Lowlow the person i asked is someone who is old enough to have used silver coinage, someone who has used silver items. This is someone who i have acted as a 'buying agent' for precious metal and they just have precious metal as a store of wealth without i guessed [correctly] knowing the current price. They have quite a few kilos of silver and certainly more gold than me. i have heard this person talk about silver in terms where they seemed to hold silver as much more valuable than the current price suggests. My little experiment showed they had no idea what precious metal prices are and they viewed silver as a much higher price relative to gold.

There will be people who have no clue. i have family members who have no idea and no interest.  They have been brainwashed. If blood weren't thicker than water i would let them sink when their ignorance bites them in the arse.

That's really interesting

I literally moments ago performed this experiment again, this time the waitress had the choice between 5$us, 100 mexican pesos (approx 5.52$us), or an ounce of silver that clearly said 999 fine silver 1 troy ounce on it.  I told her I didn't care how she chose, but that she could only choose one of the three.  She said "I'd rather have the pesos" and took the 100 peso note, but never so much as picked up the silver round to look at it, maybe because it was a little bit tarnished.

[Lowlow]

5 minutes ago, vand said:

 

We haven't gone below the 2015 lows so it supports the theory that we are at least not still in a bear market, in which case we must be in the early stages of a bull market or at the very least a long consolidation period. IMO the gold market supports this theory much better. Silver tends to lag gold during this early phase of the bull.. we saw this in 2001-2004.

Regardless of whether we are in a bull or bear market, does it change the reason for holding physical PMs? My answer is no. I hold PMs because I like the safety blanket they provide in a profligate and unpredictable world. The day that I see governments and the public becoming truly fiscally responsible is likely the day I think that I do not want to hold more precious metals.

I agree with this, because even if silver goes lower, really, how much lower can it go ?  12$us/oz ?  I cannot imagine it going to 10$us/oz unless everything goes to hell and we have a very severe deflation.  16.60$us/oz seems like a safe purchase price, because in my lifetime it's hard to imagine it doesn't break through that.  When I say I'd like to buy lower I mean like a floor of about 12$us/oz, probably more like 14$us.

[Lowlow]

5 hours ago, Lowlow said:

That's really interesting

I literally moments ago performed this experiment again, this time the waitress had the choice between 5$us, 100 mexican pesos (approx 5.52$us), or an ounce of silver that clearly said 999 fine silver 1 troy ounce on it.  I told her I didn't care how she chose, but that she could only choose one of the three.  She said "I'd rather have the pesos" and took the 100 peso note, but never so much as picked up the silver round to look at it, maybe because it was a little bit tarnished.

I ran the experiment two more times.

First was in a small cafe, offered the waitress the choice of 5$us, 100 mexican pesos (approx 5.52$us), 20 thai baht (about 0.64$us), or an ounce of silver that clearly said 999 fine silver 1 troy ounce on it.  I told her I didn't care how she chose, but that she could only choose one of the four.  She said "I'll take the coin" and took the 1 ounce silver round.  I said "Clever girl, it's worth about 16 dollars" to which she responded with excitement, "Really ?" and smiled proudly.  Since she didn't even look at the coin closely before choosing it, and seemed so excited upon learning it was worth 16$us, I can only assume she had no idea what it was worth and chose it because it had the statue of liberty on it, but I really don't know why she chose it.  Waitress was a young woman, thin, smart, probably 20 years old.

Second was a taxi driver, offered him the choice of 5$us, 100 mexican pesos (approx 5.52$us), 20 thai baht (about 0.64$us), or an ounce of silver that clearly said 999 fine silver 1 troy ounce on it.  Now, this time I was hopeful he wouldn't choose the silver because all I had on me was an Englehard and I didn't want him to take it lol, but after paying the fare and giving him a generous $us tip, I said he could choose one of the four items.  Edit, oh, forgot to mention, this one was different because the driver actually asked me what the four items were and I told him "This one is thai baht, this one is 100 mexican pesos, this one is U.S. currency, and this one is an ounce of silver" while pointing to each before he made his decision.  He chose the 5$us and seemed super excited to have it, though tentative about taking it directly out of my hand without me handing it to him.  I asked him where he was from because his accent was very thick and he obviously hadn't been in country very long and he said he was from Africa, then I asked where in Africa, and he said he was from Ethiopia.  I guess they don't trade in  a lot of silver in Ethiopia either.  Driver was a young man, well dressed, fit, probably 20 years old.

So ... three experiments in one day, 1 took 100 pesos, 1 took 5$us, and 1 took an ounce of silver.

Make of that what you will.

[Martlet]

42 minutes ago, Lowlow said:

...

So ... three experiments in one day, 1 took 100 pesos, 1 took 5$us, and 1 took an ounce of silver.

Make of that what you will.

You haven't said were you are, i'd reckon US state bordering Mexico.  They took what ever had currency, except the one that took silver because it looked purdy.  They can use it, trade, buy things with that dollars or pesos, its recognised as money.  Silver just doesn't register for people as money, because its not used.  If you put a £2 Britannia alongside a £2 coin I reckon most would take the common £2 simply because they recognise it rather than real sense of value.  I think this partially proves Sixgun's point, but i'd go further and say its simply down to familiarity.  A short while ago I wouldn't have given you ~£230 for a sovereign even though i'd have a notion of the value of gold, because i wouldn't really know what it was supposed to be worth. 

[Lowlow]

2 hours ago, Lowlow said:

I ran the experiment two more times.

[snip]

So ... three experiments in one day, 1 took 100 pesos, 1 took 5$us, and 1 took an ounce of silver.

Make of that what you will.

Last experiment, this time person was delivering food, offered the choice of 5$us, 100 mexican pesos (approx 5.52$us), 20 thai baht (about 0.64$us), or an ounce of silver that clearly said 999 fine silver 1 troy ounce on it as his only tip for the delivery.  I told him I didn't care how he chose, but that he could only choose one of the four.  He looked at all four, then focused on the silver round, examined it closely and said "I have never seen this" in broken English, then after examining it more "Is this American money ?", and I responded "It is an ounce of silver", and he said "I have never seen this, is it worth 5 dollars ?", apparently wanting to insure that it was worth at least as much as the 5$us note that was one of his choices, and I said "Yes".  He said "I'll try this" and kept the silver round.  Thick Chinese accent, male, jeans and t-shirt, probably early 30's.

[swAgger]

24 minutes ago, Lowlow said:

Last experiment, this time person was delivering food, offered the choice of 5$us, 100 mexican pesos (approx 5.52$us), 20 thai baht (about 0.64$us), or an ounce of silver that clearly said 999 fine silver 1 troy ounce on it as his only tip for the delivery.  I told him I didn't care how he chose, but that he could only choose one of the four.  He looked at all four, then focused on the silver round, examined it closely and said "I have never seen this" in broken English, then after examining it more "Is this American money ?", and I responded "It is an ounce of silver", and he said "I have never seen this, is it worth 5 dollars ?", apparently wanting to insure that it was worth at least as much as the 5$us note that was one of his choices, and I said "Yes".  He said "I'll try this" and kept the silver round.  Thick Chinese accent, male, jeans and t-shirt, probably early 30's.

Interesting. The upshot of it is that out of the four, none recognised the value of the silver round. Even the two people that took it. I suspect too, that even if you had come across someone who knows silver to have A value - if offered the same choice it would be the weight that would throw them off. They would think, yeah i know silver is worth ....something.... but just how much of it needs to be here before it is worth more than that $5 bill.

For the last one, i wouldn't have confirmed to him it was worth at least the same as the $5. He had nothing to lose then. Shrug and best poker face.

[vand]

On 16/04/2018 at 01:49, swAgger said:

Interesting. The upshot of it is that out of the four, none recognised the value of the silver round. Even the two people that took it. I suspect too, that even if you had come across someone who knows silver to have A value - if offered the same choice it would be the weight that would throw them off. They would think, yeah i know silver is worth ....something.... but just how much of it needs to be here before it is worth more than that $5 bill.

For the last one, i wouldn't have confirmed to him it was worth at least the same as the $5. He had nothing to lose then. Shrug and best poker face.

 

I don't really think this tells us anything other than that most people don't have a clue what the metal cost of silver is. $5 is a throwaway amount so I'm not surprised that some people would trade it for a "mystery silver coin". If you up the stakes to, say, $100 and put up 10 or 15oz of silver I bet there are very few who would take the silver because $100 is non-trivial to your average pizza delivery guy.

[Pipers]

What it tells me is the vast majority of the population have not got a clue about the value of silver metal and they do not recognise the silver coins from their own country.

Anyway,  the price of silver.  

IMO  the all in costs of silver is around $8-$10 if you take into account Nickel, zinc, copper mines etc. Plus there is an enormous above ground stock of silver because of over mining,  if the price of silver did get to $20 i can imagine lots of scrappage  coming on line.  

Anyone who thinks they will be able to by silver coins for anything near those price are deluded as the dealers and mints have a bottom price, this happened last time the price bottomed some on here were a bit disappointed and HT started a thread  on 'premiums above spot that day' which i am sure long term members will remember.