Silver the industrial metal

[Lowlow]

45 minutes ago, savoyard said:

Can we please rename this forum into thesilverhaterforum.com?

I've never seen that much ant-silver sentiment as on this very site!

How so ?

I'm buying silver!

[HawkHybrid]

1 hour ago, savoyard said:

Can we please rename this forum into thesilverhaterforum.com?

I've never seen that much ant-silver sentiment as on this very site!

 

nothing is perfect. so is it now unreasonable to list the cons of

silver on the forums when you have valid data to back up your

claims?

(there's no need of me to add to the pros of silver. there's

enough of those empty promises floating around the internet.

the fact is silver has done nothing for holders in the last 3

years unless you were lucky enough to call the 2016 high.

I'm not exactly thrilled by it's performance so far. 3 years of

not being able to keep up with gold on rising gold prices.

outperforming gold, let's see when that actually happens.

if there's a problem with silver then people should be told?)

 

(let's be fair silver prices should start to improve soon'ish,

I think chris is wrong about more downside breaching the

lows)

 

HH

[KDave]

Savoyard I understand the sentiment but if we don't discuss the negative we could be sat in delusion blind to reality, waiting for the moon shot all the way down. Best to discuss all aspects. 

[Lowlow]

6 hours ago, KDave said:

Savoyard I understand the sentiment but if we don't discuss the negative we could be sat in delusion blind to reality, waiting for the moon shot all the way down. Best to discuss all aspects. 

And what negativity ?  Falling silver prices means we get to buy more, it's like being upset that we are excited food is getting cheaper, or gasoline, or health care, or housing ... I'd LOVE for silver to drop to 1$us/oz.

[KDave]

The hypothesis is that Silver has become an industrial metal akin to Platinum and has lost its monetary capacity going forward, not ideal for silver if true. If it gets cheap it will stay cheap and follow the commodity complex rather than following gold in appreciation. There is growing evidence to support this idea, though as others have pointed out sentiment is a good indication that this idea is wrong, and that the price action is reflective of price action in the previous decade. No one really knows of course. 

[vand]

Try telling citizens of Venezuela that silver is just a commodity...

There is no doubt that a lot of silver is consumed in industry and that the price behaves like a commodity for the most part... but then so too does the price of gold. Silver has always been more volatile than gold both to the upside and downside. It is when other assets fail that it becomes money. It has a good track record throughout history of being a chosen safehaven and store of value; if you think this won't happen in the future then you are right to consider it to be just a commodity. However if you believe that people will revalue it in times when paper asset and currencies fail then you are wrong to just dismiss it as a commodity.

 

[Lowlow]

As far as I'm concerned we live in a silver buying utopia, with all of the following things being true at once

• So much debt nobody can fathom it
• On the eve of a currency crisis world wide
• Silver priced as an industrial metal
• Silver to Gold ratio at historic(sort of) highs
• Physical silver trivial to buy (okay maybe not in the UK), widely available
• Silver is inexpensive right now, and might even get more inexpensive if/when the equity markets tank

Those things are not always going to be true, especially at the same time.  Someday people will look back and think omg I was there, I could have bought as much precious metal as I wanted and stored it away for hard times.  The economy was doing great, everyone had jobs, all I would have had to do is take some of the money I had and put it into silver ...

[KDave]

Very good points both. In the right scenario silver will do well, history rhymes.

But what about platinum? It has almost all the characteristics of silver, will that do well? What about nickle. Has platinum historically done well when silver and gold go up? If not why not and what makes silver different. Both pt and ag almost look the same on paper right now, both precious commodities are very similar in almost all aspect; why will one be different than the other in the future.

Why is gold different right now?

I see that in Venezuela, food is king. Best appreciating asset, people wish they had bought more when everyone had jobs, the economy was good, and the food commodity was priced as, well, food.  If we are preparing for such a scenario then literally anything is a buy right now except cash. It's not an argument for or against silver it's more just an argument to save in stuff. 

[Lowlow]

5 hours ago, KDave said:

Very good points both. In the right scenario silver will do well, history rhymes.

But what about platinum? It has almost all the characteristics of silver, will that do well? What about nickle. Has platinum historically done well when silver and gold go up? If not why not and what makes silver different. Both pt and ag almost look the same on paper right now, both precious commodities are very similar in almost all aspect; why will one be different than the other in the future.

Why is gold different right now?

I see that in Venezuela, food is king. Best appreciating asset, people wish they had bought more when everyone had jobs, the economy was good, and the food commodity was priced as, well, food.  If we are preparing for such a scenario then literally anything is a buy right now except cash. It's not an argument for or against silver it's more just an argument to save in stuff. 

I've said it before, when I run my fingers through some 90% Mercury Dimes I'm thinking ... chicken, bag of sugar, container of salt ... silver and precious metals to me are simply food that stores a long time.

Some food can be stored - sugar, honey, salt, wheat, they can be stored practically forever.  Wheat, especially, is the perfect SHTF food.

I know most people who invest in precious metals aren't really doing it for SHTF reasons, but it's an interesting thought.

I like platinum and I see your point about pretty much any hard asset if SHTF - definitely food and precious metals, some would add a few things to that list.  That said, I'm not actually buying platinum just because it's not money to me ... it could be to others, but I'm only interested in silver and gold, the metals with a really long history as money.

Edit .. I bumped a wheat thread that I wrote some time ago ...

[vand]

As you know, I like Platinum at lot at these prices. It does share many of the characteristics of gold & silver, but it was only discovered a couple of centuries ago, so in terms of historical precedence has a few thousand years of catching up to do. But even in common parlance, the term "platinum" is used to denote something of rare and high value. Platinum sales are a thing. Platinum card is a thing. Copper sales/copper card isn't.

It should however be pointed out that its physical characteristics traditionally made it less suitable for coin mintage than the other 2.. maybe today that might not matter so much, but many societies would rightly ask why change something when its not broken.

I personally still see the "Precious Metals sector" as as just that - this includes Gold, silver, platinum & palladium. You can argue about the true merits of each on and how suitable they are as money, but generally they behave the same in terms of price movement to varying degrees. I'm not going to argue that palladium is now more suitable than gold as long term store of wealth just because it has recently outperformed (see how ridiculous that argument is..)

 

Also, belangp made a video on Venezeula that showed that gold & silver have gone up far more than food prices... why stack food or toilet paper when PMs would have been far better?  The currency collapse was deflationary if you held all your wealth in precious metals. Silver has fulfilled its role as a store of value far better than anything else. That is the very definition of money.

[KDave]

I need to find that video did silver really out perform gold? I was rewatching his one about the perfect monetary system, gold and fiat together functioning on Gresham's law and thought about the responses here. Are people in venuzula valuing silver more than gold now? Trading their gold for goods and hoarding their silver? 

Agree that the precious metals sector are very similar in a crisis but again is not a good case for one over the other. I think the monetary label only applies to gold, based on price action, above ground stock and historical attributes. Silver only has history to back the claim that it is money. Platinum as you say has no claims at all. It is a commodity. 

[vand]

Quote

I checked out silver and it did nearly as well as gold. So much for the FOFOA thesis of silver doing nothing. I was also shocked to see Pd and Pt right up there with Au & Ag.

Silver went from ~170 to 3.6M for  a multiple of about 20,000.
Gold went from 13,000 to 300M for a multiple of about 23,000
Palladium went from  11,000 to  230M for a multiple of  21,000
Platinum went from  10,000 to 200M for a multiple of   20,000
The Caracas stock market went from 2000 to 388,000 for a multiple of only 200.

 

 

[KDave]

Much appreciated on the link. Do you have material on the other metals such as copper maybe other commodities that would be interesting. Perhaps it's just real stuff going up in value?

It's good to know that they all do well in that situation. Over time though say we get to retirement without such an event, which metal would you rather hold. Gold or the precious metals that act like commodities most of the time. If silver is a commodity for 90% of the time making broad commodity complex gains and gold outstrips it, then in a crisis scenario gold still out strips it, why even bother with silver? I think belangp has a few videos on average appreciation over time comparing silver and gold, over decades and gold is quite a bit higher. Why will that be any different on the upside for silver in the future? Why will it not get worse like I think it will. 

[HawkHybrid]

1 hour ago, vand said:

I checked out silver and it did nearly as well as gold.

 

this sums up my current opinion on silver. always 2nd to gold.

with the added risk, unless you can find a situation where it

out performs gold, why choose silver?

 

HH

[Lowlow]

Part of that Venezuela equation, I'm sure, is that silver is simply easier to use as a currency for small purchases.  You can't easily go out and buy some toilet paper on the black market with a 1/10th ounce gold eagle, whereas a 1oz Mexican libertad is much easier to use as a currency.  That's part of the reason preppers prefer U.S. "junk silver" (old silver currency) because it comes in such small denominations, with pre-1965 dimes being less than 1/10th ounce of silver.  They imagine that when it came time to get a loaf of bread they would have the change in silver to make a purchase.

[Lowlow]

5 hours ago, KDave said:

Much appreciated on the link. Do you have material on the other metals such as copper maybe other commodities that would be interesting. Perhaps it's just real stuff going up in value?

It's good to know that they all do well in that situation. Over time though say we get to retirement without such an event, which metal would you rather hold. Gold or the precious metals that act like commodities most of the time. If silver is a commodity for 90% of the time making broad commodity complex gains and gold outstrips it, then in a crisis scenario gold still out strips it, why even bother with silver? I think belangp has a few videos on average appreciation over time comparing silver and gold, over decades and gold is quite a bit higher. Why will that be any different on the upside for silver in the future? Why will it not get worse like I think it will. 

With the UK VAT situation, I don't even see how this could be a topic of conversation.  I prefer silver in the U.S., but if I had VAT exposure there's no way I would buy silver, I would naturally move to exactly the same kinds of government minted coins that avoid these VAT charges as you guys gravitate to. You can't fight city hall.  If they are taxing silver, and not gold, dealing in gold is the obvious solution.

[vand]

10 hours ago, HawkHybrid said:

 

this sums up my current opinion on silver. always 2nd to gold.

with the added risk, unless you can find a situation where it

 out performs gold, why choose silver?

 

HH

Your argument is circular. It's the perma-bull argment that stock investors cling on to - don't worry about price as stocks outperform everything in the long run, hang on through the dips. Yes it may work OK, but I also believe anyone applying some discipline and valuation analysis can do much better than these layman tactics.

There are periods where gold outperforms silver, but also periods where silver outperforms gold. You absolutely NEED one set up the other. I can find you plenty of situations where silver has outperformed gold.. just look at the GSR chart lol. 

The scatter 10yr scatter chart shows that fair historical value has beeb roughly ~63-64 for spot prices, however given the high spread on physical silver and the lifetime tendency for gold to outperform, I calculate a better estimation for fair price at GSR 68-69 - a price we are currently well above. 

[vand]

11 hours ago, KDave said:

Much appreciated on the link. Do you have material on the other metals such as copper maybe other commodities that would be interesting. Perhaps it's just real stuff going up in value?

It's good to know that they all do well in that situation. Over time though say we get to retirement without such an event, which metal would you rather hold. Gold or the precious metals that act like commodities most of the time. If silver is a commodity for 90% of the time making broad commodity complex gains and gold outstrips it, then in a crisis scenario gold still out strips it, why even bother with silver? I think belangp has a few videos on average appreciation over time comparing silver and gold, over decades and gold is quite a bit higher. Why will that be any different on the upside for silver in the future? Why will it not get worse like I think it will. 

 

The prices were, of course, a result of currency disintegration of the bolivar, so just holding your assets outside of the bolivar would have been enough to preserve your wealth and purchasing power in this particular case. I would expect the relative prices for other commodities to have remained intact against the bolivar, so US stocks would have outperformed gold if you had priced the SP500 in bolivars. 

The interesting question is what happens when the dollar fails? The dollar is effectively the world currency... so everything priced in dollars ie, literally everything - goes up to a greater or lesser extent.. a lesser extent for paper assets, and a greater extent for hard assets. OK, you may want to hold your wealth in Yuan or CHF and hope that these survive the apocalypse, but both these and every single other fiat currency has the same fatal flaw of infinite elasticity...

[KDave]

The video is excellent as expected.

I laughed when he pointed out that eggs had risen 16000 times, that is incredible.  Nearly as good as gold. Wine 7000 times. Beer 5000 times. 

Silver 20,000 and gold 23,000.

It made me wonder, if we had no access to had precious metals but could store our wealth in wine and beer, given what we know in hindsight - why would I pick beer to store my wealth when I have access to wine? 

[HawkHybrid]

40 minutes ago, vand said:

and the lifetime tendency for gold to outperform,

 

people stick stubbornly to silver for the whole duration of the

cycle, claiming how it's such a good investment. the facts are

that silver outperforms on a smaller time frame than when it's

underperforming.

even on that chart the larger circle(not too sure why it's larger)

when gold outperforms silver it's by up to 10%. when silver

outperforms gold it's by up to 5%.

the odds of winning are smaller and the payout is half, why

would I make that bet without a working crystal ball?

 

 

 

HH

[Oldun]

https://m.youtube.com/watch?v=TJPZ3DJ-zfA

[vand]

1 hour ago, HawkHybrid said:

 

people stick stubbornly to silver for the whole duration of the

cycle, claiming how it's such a good investment. the facts are

that silver outperforms on a smaller time frame than when it's

underperforming.

even on that chart the larger circle(not too sure why it's larger)

when gold outperforms silver it's by up to 10%. when silver

outperforms gold it's by up to 5%.

the odds of winning are smaller and the payout is half, why

would I make that bet without a working crystal ball?

 

 

 

HH

 

There is nothing at all contradictory to say that there have been better times to be in silver while overall it has been better to be in gold. If you were forced to lock away your PMs with no option at all to sell for another 100 years then gold is probably the better bet. If you look at a 10 year timeframe then silver is a better bet. I personally think 10 years is a very generous timeframe to be given for any asset to prove its worth, and what's to say that the GSR can't halve some time before then and give your the option to swap your silver for twice as much gold?

Yes there are more points on the scatterchart where gold outperforms, but clearly we are not at one of those expected points right now. Nobody has a crystal ball and you don't need one to make smart decisions, you just need to do your homework and follow the lines on the bloody chart. 

And FWIW, I'm actually indifferent between gold and silver, I merely favour what offers the better value. I actually own 1.5oz of gold which I bought during 2016 when the GSR briefly fell into the mid-60s based on the sort of modelling that I've just presented. I'll switch back to gold if and when the GSR goes back there in the future, and I'm willing to swap my gold for silver and vice versa if the ratio reaches extremes (<48 silver for gold, >88 gold for silver). As I said, I'm truly indifferent, I will just move my resources to what I consider the smartest place to be.

 

[vand]

Also, regarding the OP and the original question: Is silver just a commodity... I find it slightly ironic that Chris Aaron is asking this question when he himself says that his analysis is completely technically-based, - ie, charts, not fundamentals!

 

[KDave]

True but he tells a story then backs up the story with data. No different to what many others are doing.

I believe some of the data presented here in this thread backs the story that silver will do well if we get the timing right, rather than proving that silver is money. Same could be said for any commodity if we get the timing right.

[KDave]

But will silver outperform gold over time regardless of timing. The answer is not historically. 

You know I share your sentiment though, let's just drop these labels they are a distraction, money, commodity, who cares. Is the thing in question cheap and compared to what. That is more important.