The price of silver

[sixgun]

4 minutes ago, Lowlow said:

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. 

Gold and silver are traded on the currency markets. It is money.

6 minutes ago, Lowlow said:

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.

Well in Steve's defence, we have heard the precious metal brigade say price is going to the Moon time and time and time again - and it hasn't. We have seen the market played like a fiddle and the bankers fiddle us. The record Fly me to the (silver) Moon has worn out especially for members here who are holding silver at much higher prices. Those lucky enough to start buying at lower prices do not feel the pain of repeated disappointments. It is easy to think it will never go up, that way you can't be disappointed.

[Lowlow]

1 minute ago, sixgun said:

Gold and silver are traded on the currency markets. It is money.

Well in Steve's defence, we have heard the precious metal brigade say price is going to the Moon time and time and time again - and it hasn't. We have seen the market played like a fiddle and the bankers fiddle us. The record Fly me to the (silver) Moon has worn out especially for members here who are holding silver at much higher prices. Those lucky enough to start buying at lower prices do not feel the pain of repeated disappointments. It is easy to think it will never go up, that way you can't be disappointed.

I have a different perspective on this because I've been a buyer of silver since it was about 5$us/oz, so to me silver has done basically exactly what I thought it would over the past 30 or so years, it's consistently gone up.  50$us/oz silver was, to me, a bubble in silver, and not a rational price at the time, and I certainly wasn't buying it then.  That's not to say I don't think 50$us/oz could be a rational price under the right circumstances - and one of those circumstances might be the banks losing control of the paper market, I'm just saying I didn't think 50$us/oz was justified at the time.  I know a lot of people here are from the UK, so I'm talking about the high that we put in a few years ago.

[sixgun]

@Lowlow many here know the $50 blow off very well. i only think of the price of silver in USD. i don't actually know what the price is in GBP or EUR. i buy coins and bars in GBP or EUR but i don't know what the spot price is.

Silver has had two voyages up to that level, the 2011 hyperbolic move and the Hunt Brothers. Imagine the Hunt Brothers again but call it Kinesis. The people behind Kinesis will have $billions to play with - they know the wholesale markets, the miners and the paper markets inside out - they have a plan and they are Hell bent on blowing the paper market sky high. They are absolutely Hell bent on taking it down and they know exactly how to do it. There is an undisclosed central bank in the wings with Kinesis which adds more gasoline to the fire. The only way i see it coming unstuck is if the cartel steal the metal at gun point - and i would not put that past them (they do all the time, it's call introducing democracy in a bomb.)

[Martlet]

15 hours ago, sixgun said:

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.

Being objective, from this starting point of 1900 and accounting for inflation, silver might expect to be around $33.  Gold might expect to be $530.

[sovereignsteve]

Nobody uses silver as money therefore it isn't money. It is used as an industrial metal therefore that is what it is. No different from copper, steel etc. I would accept silver as payment too, but only because it has a value that I can convert to something else that I can spend. Again, no different to copper etc.

The GSR will go where it will go, depending on it's price and the price of gold; obvious, yes. It could keep going up just the same as it could go down. My point is just because it was 16 150 years ago has no bearing on where it will go in the future. Nobody knows. If you want to see people using arguments to convince themselves, it's the "reversion to the mean" type historical ones that typify this IMO.

 

8 hours ago, sixgun said:

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

so do I, just in case

 

[sixgun]

4 hours ago, sovereignsteve said:

Nobody uses silver as money therefore it isn't money. It is used as an industrial metal therefore that is what it is. No different from copper, steel etc. I would accept silver as payment too, but only because it has a value that I can convert to something else that I can spend. Again, no different to copper etc.

The GSR will go where it will go, depending on it's price and the price of gold; obvious, yes. It could keep going up just the same as it could go down. My point is just because it was 16 150 years ago has no bearing on where it will go in the future. Nobody knows. If you want to see people using arguments to convince themselves, it's the "reversion to the mean" type historical ones that typify this IMO.

 

so do I, just in case

 

Silver is traded on the currency markets - if it weren't a currency it would not be  traded there. The banks see it as money irrespective of what they might say. The Bank of International Settlements trades gold and silver - they have a dedicated section with $trillions on the line. Silver is linked to the gold price b/c both are currencies. Aluminium is not tightly linked to the gold price, it is a commodity. No-one is doing ratio trades between gold and aluminium. The big gyrations in gold and silver with economic data and interest rate announcements is b/c both gold and silver are currencies - if silver were just a commodity there would not be the movement in price. The silver market is quite tiny, it would probably be a higher price if it weren't a currency and being suppressed.

Obviously silver is not everyday money anymore but it still has all the attributes of money. The banks have put out the idea silver is just a commodity. Silver will back cryptos coming out this year. Certainly with Kinesis you will be able to spend it on a Visa card at the shops. It will be freely convertible into major currencies. Kinesis aims to hold cash reserves as well as metal. It will be another currency except it will be backed by something tangible and valuable. David Morgan is involved in the Lode coin, a silver backed crypto - there was a recent video on the jsnip4 youtube channel where it was discussed - i only had half an eye on it but it looked like it would have currency properties. 

So there will not be circulating silver coins anymore outside a Mad Max world but there will be circulating crypto coins which are title of ownership over silver. You will be able to spend them like you do with GBP. 

The GSR was set at around 15-16 because that was how it came out of the ground at the time - in that ratio. It was a ratio of abundance. Now silver has been wasted and the best mines tapped out a truer ratio would be 9. This is the supply side of the equation. Then i factor in demand in a world that must have silver - i flex the GSR down some more and say it should be 5. It will go where it goes but when the price fixing comes to an end we are left with supply and demand so i figure we go to below 10.

[sixgun]

7 hours ago, Martlet said:

Being objective, from this starting point of 1900 and accounting for inflation, silver might expect to be around $33.  Gold might expect to be $530.

Agreed. i do not believe gold is overpriced - we have a lot more circulating currency but nowhere as much extra gold around. The money supply has gone through the roof.

This is where $60 000 gold comes from. i recall Jim Willie said that he had been told (if you can believe that) the banks had put a starting price of gold at $5000 when the reset comes. If the USD melts down and prices melt up it could be $1billion per ounce but you will need $1000's to buy a loaf of bread. 

[LittleJohnSilver]

1 hour ago, sixgun said:

 If the USD melts down and prices melt up it could be $1billion per ounce but you will need $1000's to buy a loaf of bread. 

Like the classic situation where a wealthy German in post WW1 depression era German pulled out all his DM's for a very expensive cup of coffee!

 

I think the key would be to recognise when to sell before that situation arose.

[sixgun]

6 minutes ago, LittleJohnSilver said:

Like the classic situation where a wealthy German in post WW1 depression era German pulled out all his DM's for a very expensive cup of coffee!

 

I think the key would be to recognise when to sell before that situation arose.

Big Events Coming & 1 Oz Silver Buys 6 Months Of Food In Venezuela - just when i am on a diet

[Lowlow]

8 hours ago, sovereignsteve said:

Nobody uses silver as money therefore it isn't money. It is used as an industrial metal therefore that is what it is. No different from copper, steel etc. I would accept silver as payment too, but only because it has a value that I can convert to something else that I can spend. Again, no different to copper etc.

You say ..

(1) Nobody uses silver as money therefore it isn't money.

(2) It is used as an industrial metal therefore that is what it is.

That's a huge leap from (1) to (2).

I agree, nobody uses it as money, per se (for daily transactions), but that doesn't mean it isn't money.  Bad money pushes out good money, and as long as people have $us and other fiat to use as money and it works, they'll use it.  The government says $us can be used to settle debts public and private, so that's what it is used for, and obviously you can't buy stocks and bonds with silver, get paid interest in silver, pay for your groceries in silver, etc ... but you CAN save money in silver, that's what many of us do.  We are using silver as a store of value, and that is one of the many uses of "money".

I think you are building a bridge too far when you then say that silver is only an industrial commodity like lumber, steel, etc.

[FlorinCollector]

I assume also if deflation kicks in eventually after all of the QE silver will just go lower?

[Mildred]

10 hours ago, sovereignsteve said:

Nobody uses silver as money therefore it isn't money. It is used as an industrial metal therefore that is what it is. No different from copper, steel etc. I would accept silver as payment too, but only because it has a value that I can convert to something else that I can spend. Again, no different to copper etc.

 

Steve, it's self contradicting

What get accepted as payment because has a value that can be converted to something else = money

ergo, at least for you, silver is money

[LittleJohnSilver]

3 hours ago, sixgun said:

Big Events Coming & 1 Oz Silver Buys 6 Months Of Food In Venezuela - just when i am on a diet

Now that is interesting.

[Mildred]

12 hours ago, sovereignsteve said:

Nobody uses silver as money therefore it isn't money.

@ again Steve

1) once upon a time, in Lancashire, they used the so called Lancashire Pound.

It was 100% backed by gold, therefore 100% convertible in gold. Everybody could go to their local bank and change 1000 LP for 1000 oz of gold.

Metal could be used for transactions but nobody did it because metal is heavier than paper

Was gold money?

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2) In 2044 the 10 pounds banknote is still legal tender, but due to the digitalization of transactions (internet banking, credit cards etc.) nobody uses the 10 punds banknote any more.

Is it still money?

[KDave]

By definition of trading items for payment, anything can be money, so the idea of money can be disregarded as unimportant in regards to investing in silver, or anything else for that matter.

What is important is recognising that silver does not perform the same function it did 100 years ago. Most of the demand today comes from its industrial uses (an incredible array of uses), followed closely by its use for investment and jewellery. The demand for this secondary use is falling, drastically so in 2016/17. I see the shrinking investment demand not in a monetary context but instead as falling demand for its use as a speculative vehicle. There is a clear case for its use as a store of value in terms of maintaining purchasing power over time. Perhaps crypto is better for speculation (although investment demand for silver fell before crypto became the 21st century tulip market), and gold makes the better store of value for many reasons those who stack silver in a meaningful way can appreciate, and those who have enormous capital such as governments and the wealthy still do appreciate.

There is a monetary case to be made for many items, otherwise bitcoin would not have reached the heights it did. There are better cases to be made to invest in silver that do not rely upon the definition of money.

[Lowlow]

Approximately 40% of U.S. corn production is used to create ethanol, another 36% used for animals, most of what is left is exported or used to create corn syrup ... and only a tiny fraction is used as food directly.

But it's still food.

I don't care how much silver is used to electronic circuitry, it's still money.

[Mildred]

20 hours ago, sixgun said:

Sadly for the money changers silver is both money and second only to oil, the most vital commodity in today's world.

Exactly

If there is a shortage in oil, government will step in immediately. I don't know how. Fixing the price? Taking control of the oil infrastructure? For sure they won't go house for house searching for 10 liter tanks of gasoline.

How about silver? I can't imagine that, in case of a shortage, the government won't step in.
They won't knock at doors for coins, but beside that?
The nationalization of mining companies? Should we hold miners hoping for the gov to need a couple of weeks after the reset for figure it out, giving us the time to sell?

The etf's custodians vaults?

They will take control, either directly or through legislation, of the silver disitribution infrastructure. But how?

I really don't know, but being oil and silver, as you say, strategic commodities, in case of a shortage we can't hope for the government to step back and watch. Actually they are forced by law to intervene, being a matter of national security.

Can you imagine, we have waited for years for the shortage/reset to kick in, for the market gets finally free, no more comex, no more paper manipulation etc. etc. ... just in order to see  govs and central banks to REALLY take over
 

[STONE]

There is a difference between currency and money. And yes people still do use silver as money today. I bought firewood last month with silver.

 

[sovereignsteve]

You can argue about the definition of money and what is, what isn't etc. It doesn't really matter. Anything tangible, and some things intangible, eg cryptos, if they can be freely convertable to money, can be used as trading vehicles and hence can be useful as such.

I was just playing devil's advocate and trying to show how irrelevant this constant reference to the historical GSR, is. There is no fundamental reason to assume that gold and silver will continue to move together in perpetuity. The two metals are different animals to what they were in the past. They continue to do so today, to a degree, because they are still tied together in people's minds. However, this link is loosening and as time goes on, the gap will widen.

 

[LittleJohnSilver]

16 minutes ago, STONE said:

There is a difference between currency and money. And yes people still do use silver as money today. I bought firewood last month with silver.

 

How much did you get?

[tbone]

1 hour ago, sovereignsteve said:

There is no fundamental reason to assume that gold and silver will continue to move together in perpetuity. The two metals are different animals to what they were in the past. They continue to do so today, to a degree, because they are still tied together in people's minds. However, this link is loosening and as time goes on, the gap will widen

That movement is based on paper contracts in a rigged game played by insiders.  My assumption is that when the time comes for that rigged game to end, both metals will move straight up in dollar or any other fiat terms. I also think silver will move up faster than gold.  That said, I used to think the end of the manipulation was right around the corner, now I wonder if I'll see it in the next 10 years.  Not sure, but the more crazy things get on the world stage the closer I feel we get to a breakdown in the paper markets.  Either way, my current strategy is to hold both silver and gold bullion, and diversify with some numismatics.  More fun that way too

[sixgun]

Anything real and tangible, even electronic digits can be exchanged for something else. As long as there is 'consideration' from both parties this is sufficient for contract to exist. This does not necessarily make the payment offered money. Money needs to have the elements covered in the Mike Maloney video.

Money is a store of value. In the short term fiat currencies have that quality but we know there is deliberate intent by central bankers to inflate the value of currencies away. This does not happen with gold and silver, which is the real reason they are no longer part of circulating currencies.

Gold and silver are different creatures but they are both money. They are in effect barter currencies but i am pretty sure they will never be part of any physically circulating legal tender ever again. This does not mean they will never be part of circulating currencies. Indeed i will say it is certain they will be part of circulating currencies, barring a major slip. This will be as the backing for cryptocurrencies where the currency is title of ownership, divisible to multiple decimal places, bankable, tradeable, transferable and spendable in outlets taking Visa. The re-monetisation of gold and silver will be what radically changes the situation and this year. i expect gold and silver will then move back to the time when they were part of circulating legal tender. At that time the GSR was 16 and approximately their relative mining output. This is why the mining output and the GSR are relevant. When both are currency they are on the same playing field.We will see but i say what has happened in recent times will cease to be relevant and what was the case 150 years ago more equivalent to the cryptocurrency situation.

[Lowlow]

6 hours ago, sixgun said:

Money is a store of value. In the short term fiat currencies have that quality but we know there is deliberate intent by central bankers to inflate the value of currencies away. This does not happen with gold and silver, which is the real reason they are no longer part of circulating currencies.

This.

This is the root of why we don't have silver and gold currency, because the politicians felt like their hands were tied.  This is the whole reason we have fiat currency in the first place, not because gold and silver is heavy, or anything like that.  We have fiat currency so that the government can control how much of it is in circulation.

[Mildred]

On 19.3.2018 at 15:00, sixgun said:

Silver is traded on the currency markets - if it weren't a currency it would not be  traded there.

The banks see it as money irrespective of what they might say.

Central banks "hold gold as one of their reserve assets. Any gold held by a central bank as a reserve asset is classified as monetary gold." 

https://www.bullionstar.com/blogs/ronan-manly/worlds-central-banks-hold-gold-words/

 

 

[Mildred]

Six, money as "store of value" vs. as "what get accepted as payment because has a value that can be converted to something else".

I prefer steve's definition because it addresses more than yours the peculiar properties of what we call money, namely medium of exchange  and measure of value, but that's not the point. The point is, discussing if gold is money or not is useless when we have a different understanding of what money is.

Steve, you didn't answered my questions because yes would contradict your statement, no would be absurd, but you are over 6,000, I'm 12, I respect that 

I'll close my contribution to this issue with the good old argumentum ad verecundiam