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Does the recent price dip confirm....


ChrisF

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Does the recent price dip confirm silver is no longer a PM but an industrial metal?  Despite gold rising to record highs during the coronavirus silver has tanked losing around 10% of its value in less that 7 days.  Productivity is dropping around the world, is this causing less need for silver hence the price drop?  In the future will silver prices be more closely linked to stocks, shares and commodity prices jumping on their rollercoaster rather than that of gold?

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I am more silver sceptical than most on here but I still accept it is classed as "money" along with gold. How much of that perception is purely historical and mental habit, it is unclear. I am totally convinced that the status of silver has and will continue to change over time, toward a more industrial metal commodity rather than money.

what is clear, is that people who continue to rely on the historical GSR as a basis for future mean reversion are mistaken IMO. Such studies take no account of the changing status is silver over the last xx years, you pick a number.

A valid question would be; do we actually need silver as money in this day and age? Surely gold fulfils that role and doesn't need a supporting cast?

The GSR continues to rise and may well continue on that path until it finds its true value. What that will be we can only guess. It may well come down, no doubt the silver bugs will see any such occurrence as a vindication of their beliefs.

I continue to hold silver just in case I am wrong, but I am close to ditching it completely. I'm just not quite there yet😜

Profile picture with thanks to Carl Vernon

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8 minutes ago, sovereignsteve said:

what is clear, is that people who continue to rely on the historical GSR as a basis for future mean reversion are mistaken IMO. Such studies take no account of the changing status is silver over the last xx years, you pick a number.

This, Totally - Its why I only buy silver with value as art as well - not bullion rounds or scrap. 

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Collect silver, stack gold.

There is money to be made with silver but it's not by its weight. It takes a bit of skill and application (or flipping RM products).

Some coins are beautiful and collectible but stacking weight? Nah (IMHO, of course)

Technically, alcohol is a solution..

'It [socialism] poses a growing threat, however unintentional, to the freedom of this country, for there is no freedom where the State totally controls the economy. Personal freedom and economic freedom are indivisible. You can’t have one without the other. You can’t lose one without losing the other.'

"There is no such thing as public money, there is only taxpayers' money"

Let not England forget her precedence of teaching nations how to live.

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Silver will have its day. It's laughably undervalued. There's a reason why people in antiquity were paid in silver and they weren't paid much in ounces. 40 to 60 ounces a year was a well paid person. Keep taking advantage of these historically abnormal times.

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They were paid in salt too.

Technically, alcohol is a solution..

'It [socialism] poses a growing threat, however unintentional, to the freedom of this country, for there is no freedom where the State totally controls the economy. Personal freedom and economic freedom are indivisible. You can’t have one without the other. You can’t lose one without losing the other.'

"There is no such thing as public money, there is only taxpayers' money"

Let not England forget her precedence of teaching nations how to live.

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8 minutes ago, AgCoyote said:

Silver will have its day. It's laughably undervalued. There's a reason why people in antiquity were paid in silver and they weren't paid much in ounces. 40 to 60 ounces a year was a well paid person. Keep taking advantage of these historically abnormal times.

I rest my case:rolleyes:

Profile picture with thanks to Carl Vernon

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that's the problem with silver,

many of it's buyers are 'it can't possibly drop much more

than this, but I will not hold it long term'.

where as gold's buyers are 'this is good to hold onto

long term'.

(silver stackers are always looking for the greater fool

to buy their silver)

 

HH

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I reckon that in this age silver is hands down an industrial metal. Which is why it has superb investment potential.

I think silver will be a solid investment for two reasons. This can also somewhat apply to platinum.

1. If the economy declines then people will flock to gold, causing a spike in the price. gold is very expensive and that’s where silver comes in. It’s far cheaper and therefore more within reach for more people. It is also seen by many as a PMs alongside gold.

2. If the market recovers then the price is likely to go up as silver is a critical metal, especially for new technology and also due to the costs of mining it.

Hence silver has the rare ability to perform  during a bull market aswell as a bear market.

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I dont by into the idea that gold is to expensive and so silver will be what people buy. 

You can buy fractional gold, a half sovereign even with a large price rise is still going to be affordable to most, and even if you cant who says you have to buy .999 or 22ct gold? there is an abundance of 9ct jewellery - in nice small weights - readily available.

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I'm hearing the same arguments from the same people over and over again.

It's undervalued, 95:1 GSR, it's so cheap right now.

Do you @Wonger why?

Technically, alcohol is a solution..

'It [socialism] poses a growing threat, however unintentional, to the freedom of this country, for there is no freedom where the State totally controls the economy. Personal freedom and economic freedom are indivisible. You can’t have one without the other. You can’t lose one without losing the other.'

"There is no such thing as public money, there is only taxpayers' money"

Let not England forget her precedence of teaching nations how to live.

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Its enough to make one pause and reconsider things. One thing I find troubling with silver in particular (though its also seen with gold to some degree) are the amount of people promising that it is just about to break out with a massive correction that will send the price soaring. Years tick by and the price is still what it is. Things happen that should send the price soaring and the price is still what it is. I just don't personally have the level of faith in anything required to cling to those thoughts when evidence suggests one probably shouldn't bother.

I bought a bunch of silver that I am sat on. I'm happy having it but I've bought very little of it since last spring/summer when the gold price steeply went up and silver didn't follow it. When that happened I decided to hold all purchases and just watch things play out. When I started buying again this past autumn I bought gold. I've bought a lot more gold since and very little silver. I suspect that is the direction I will keep moving in.

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1 hour ago, HawkHybrid said:

 

how does this explain the multi decade rising gsr?

it can't be doing that well on both bull and bear

markets?

 

HH

It does not. I never claimed it had anything to do with the GSR. Yet the reasoning for both bull and bear success is quite reasonable.

@Madstacks

Gold is great, yet its weakness is that it is expensive and locks in a lot of cash in one or a few coins/bars. People will also quickly realise that: smaller coin = higher premium. Silver is somewhat more accessible because you can spread a not too big sum over many coins and bars.

An important thing to remember is that people can barely tell a real gold coin from a chocolate candy wrapped in gold paper. The knowledge they have of precious metals is next to nothing. They can go years before they even realise that a gold sovereign even exists or for that matter can be modern and not old.

Because of this I believe what will be good to have is what will be presented as good to have when people turn to Guru-Google. Which will likely be both gold and silver in their most simple form: bullion from the big mints, be it RM, RCM, Perth, US Mint etc.

 

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@Platinum I think it varys country to country.

Here in the UK with silver having VAT a once ounce coin has a much higher premium than the small fractional gold coins. and whilst the public understanding of gold coins is minimal, one thing most people are very aware of is gold jewelry. We have a standardized mandatory hallmarking process in place to so anyone can verify what is in their hands as long as it weighs more than a gram. (and all shops selling jewellery must display this info)

Coins is just one way to invest, many people investing in gold will buy heavy gold chains and such. and if you want you can buy a light gold ring of 9ct second hand for very little. 

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I don't think possession of PMs will ever be apparent to the masses until it's too late to take advantage. I expect that to take a long time and by then silver will have continud it's fall from grace.

The only scenario I see where it comes into it's own is if the great reset happens fairly quickly and the world goes back to some form of gold backed currency. The price of gold would have to be astronomical to cover that and the case could be made to going back to silver for circulating currency to back this up.

Profile picture with thanks to Carl Vernon

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19 minutes ago, Platinum said:

It does not. I never claimed it had anything to do with the GSR. Yet the reasoning for both bull and bear success is quite reasonable.

 

if silver has been losing to gold over the multiple

decades is it not more accurate to describe it as

'limited success' ?

 

(over the time frame mentioned, at best it's second

to gold?)

 

HH

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As i understand it the current fiat system is very near its end. The USD is breathing its last. This is why we saw the stock market falls. The cases of coronavirus in China are falling away and the Chinese stock prices which initially took a beating are recovering. 

My view is the coronavirus is a cover story for the real reasons the stock prices have collapsed as they have. The real reason is the stock indices are massively over inflated and were pumped up. This support appears to have been withdrawn and a fall in stock prices almost encourage to get money to move into US bonds which are not otherwise being bought (except by Dark entities like the Exchange Stabilisation Fund). What the powers that should not be do not want is value to move into gold and silver. 

In all the chaos the price of gold should be going through the roof - it should be on its way to $2000. But the powers that should not be can't have this - they want the cash to go into US Treasuries to support the USD-Treasury complex. So we see the usual price suppression. i repeat - In all the chaos the price of gold should be going through the roof - it should be on its way to $2000. As it isn't there is price suppression as part of a psychological operation against precious metals.

China is recovering from coronavirus - silver demand is not going to tank - China is sucking in silver as are other nations. i have seen video inside the Russian vaults and i have seen silver. Scroll down the page - there is certainly one image and probably 2 images showing large silver bars. What would silver be doing in the Russian vaults if it isn't money?
https://www.silverdoctors.com/gold/gold-news/move-over-fort-knox-heres-an-actual-look-inside-russias-gold-vaults-at-their-gold-reserves/

The Western financial system is dying - i would say it is dead, just not certified as such. China, India and Russia for sure are big on silver. It is what they think about silver that will matter not the price suppressors in the West. Their days are coming to an end. If China - no i will say when China has a chat with Russia and says the price of gold will be 100 X Yuan and silver will be 8 X Yuan (example prices - a 12:1 ratio say) - that will be the price. End of story. China with Russia will reset the prices and that will be the prices. 

The Bank of International Settlements runs an options book on LBMA OTC silver options - it is $billions - what is the bank of banks doing running an options book on silver if it isn't money? The BIS manages currencies. Why is silver a currency on the FX markets if it isn't a currency - if it isn't money?

This is part of the psyop - we are told silver is not money - it is not a currency - it is just an industrial metal. This is all just some stuff from the past, its not money - move on people , nothing to see here. It is a mind game. The financial markets trade silver as a currency - the BIS runs a multi-billion dollar options book - we can see silver is in the Russian vaults - China will be the same except we don't get to see. The facts are there in plain sight for those who care to look.
i do not expect silver to be in your pocket - but i expect crypto which is title of ownership over vaulted gold and silver to become the new money. Would you have a plastic £5 or would you have vaulted silver?

Always cast your vote - Spoil your ballot slip. Put 'Spoilt Ballot - I do not consent.' These votes are counted. If you do not do this you are consenting to the tyranny. None of them are fit for purpose. 
A tyranny relies on propaganda and force. Once the propaganda fails all that's left is force.

COVID-19 is a cover story for the collapsing economy. Green Energy isn't Green and it isn't Renewable.

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14 minutes ago, sovereignsteve said:

The only scenario I see where it comes into it's own is if the great reset happens fairly quickly and the world goes back to some form of gold backed currency. The price of gold would have to be astronomical to cover that and the case could be made to going back to silver for circulating currency to back this up.

Why are certain countries buying gold (and silver) like it is going out of fashion? Why is the price of gold and silver being suppressed? They are suppressed b/c absolutely gold would be going through the roof - we would only need a few percent of investment capital to go into gold and it would rocket. 
These countries are not collecting gold and silver for fun - it is to back currencies - to use in international trade. Silver was the metal of China - these people have century long memories and century long game plans. They will be setting the prices and we won't have anything to say in the matter.

Always cast your vote - Spoil your ballot slip. Put 'Spoilt Ballot - I do not consent.' These votes are counted. If you do not do this you are consenting to the tyranny. None of them are fit for purpose. 
A tyranny relies on propaganda and force. Once the propaganda fails all that's left is force.

COVID-19 is a cover story for the collapsing economy. Green Energy isn't Green and it isn't Renewable.

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2 hours ago, sovereignsteve said:

I am more silver sceptical than most on here but I still accept it is classed as "money" along with gold. How much of that perception is purely historical and mental habit, it is unclear. I am totally convinced that the status of silver has and will continue to change over time, toward a more industrial metal commodity rather than money.

what is clear, is that people who continue to rely on the historical GSR as a basis for future mean reversion are mistaken IMO. Such studies take no account of the changing status is silver over the last xx years, you pick a number.

A valid question would be; do we actually need silver as money in this day and age? Surely gold fulfils that role and doesn't need a supporting cast?

The GSR continues to rise and may well continue on that path until it finds its true value. What that will be we can only guess. It may well come down, no doubt the silver bugs will see any such occurrence as a vindication of their beliefs.

I continue to hold silver just in case I am wrong, but I am close to ditching it completely. I'm just not quite there yet😜

Good post Steve, I agree.

I don't know why people keep repeating this gold-to-silver ratio nonsense.  It's like some sort of confirmation bias.  They've heard it from somewhere (probably from one of the thousands of silver pundit youtube channels) and have taken it as fact without bothering to do any research simply because it aligns with their beliefs.  There are so many freely available historical charts which would show them it is complete nonsense but they are not interested in facts; they have heard a silver pundit with an affiliate link tell them it's cheap and that the "correct ratio" should be 15:1 so you must back up the truck while it's cheap, before it's too late! /s

How do these silver "experts" explain the GSR when the gold price was fixed prior to 1971?  The gold price was fixed at $20 and $35 for very long periods of time, but the ratio to silver moved between 97:1 to 15:1 throughout that period.  It's meaningless!

The 15:1 GSR that is often referred to dates back to the early 1800s when in the US there was a fixed GSR of 15:1.  In 1834 Congress adjusted the ratio to 16:1.  But by 1850 silver (as currency) all but disappeared in the US and gold became the principle form of currency.  So the GSR effectively ended 170 years ago.  The Silver Standard ended globally in the early 20th century, with Hong Kong and China being the last to ditch it in 1935 and for most of the past 100 years its use case has changed from being a precious metal to an industrial metal.  The price of silver has no relevance to the price of gold.  The price of silver will go up when there's additional demand for it in the industrial market.  If there's no additional demand for it then the price stays where it is.  If we're not producing or buying anything because everyone's sat at home due to some fear about a virus pandemic then the demand goes down and so does the price.  It's really quite straightforward to understand.

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15 minutes ago, sixgun said:

Why are certain countries buying gold (and silver) like it is going out of fashion? Why is the price of gold and silver being suppressed? They are suppressed b/c absolutely gold would be going through the roof - we would only need a few percent of investment capital to go into gold and it would rocket. 

26 minutes ago, sixgun said:

This is part of the psyop - we are told silver is not money - it is not a currency - it is just an industrial metal

 

Who is saying that? I haven't seen much of that. There was an effort to denigrate gold but the status of silver is just slowly dying of it's own accord.

Yes of course gold and silver are manipulated but why has the value of silver gone down disproportionately to gold? If silver was such strong money, the GSR would have kept pace with historical values.

The fact that countries still stack silver could purely be based on historical habit. It is money but not as important as gold. They could simply be hedging their bets.

So what you are saying is that silver stackers are gambling on the Chinese and Russians coming to their rescue.

Profile picture with thanks to Carl Vernon

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I'm astonished no one has brought this up yet, so I will:

In the 2008 finanical crisis silver lagged behind gold, didn't it and now we only saw a massive rise of gold for a few days before it dropped again. So, there wasn't enough time for silver to catch up. And yes, gold rose a lot since last summer but there was no perception of a crisis, in the masses, thus naturally there were not a lot of additional silver buyers, if any.

The argument that everyone can afford a small gold coin - well, maybe in the UK but what about the poorer countries? For many there silver will be the only realistic option.

Personally, I have pretty much stopped buying silver but only because of the space it takes. I have enough silver already but not enough gold.

 

Edit: Not even in the UK everyone can afford a small gold coin. How many households don't have any savings whatsoever - is it one third? It's a considerable share of the people here, for sure. What about the welfare recipients - how many are there - a million, two millions, three millions? What about the people that get a tiny pension? They could all buy a silver coin or two but not a small gold coin.

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In the pre-1919 UK coinage a shilling weighed 5.65g and was 92.5% pure silver. So a shilling was 0.925 x 5.65g = 5.23g pure silver.

So £1 = 20 shillings = 20 x 5.23g = 104.6g of silver.

The £1 coin, the sovereign, has 31.1g x 0.2354 of gold = 7.32g.

All the gold coins were in multiples of the gold weight and so were the silver coins. So a florin was twice the weight of a shilling and so on. The currency was money and the money was real - it was gold and silver. The coins had to be in ratios of weight according to value.

The ratio of gold to silver in the UK currency up to 1919 was 104.6/7.32 = 14.29

There was a GSR in the UK currency of 14.29.

Why do we see the GSR today? - the last circulating currencies with silver in them pretty much disappeared in the 1960's (on the grounds it was important for the silver to be available for industrial uses - not the real reason that governments could start printing money to infinity, in which case the coins would rapidly become more valuable as silver than as coins).

There is a GSR because it is a currency cross. It is a traded currency cross on the FX markets right up to today - XAU/XAG currency cross.

But better not get people thinking silver is a currency - that it is money. Silver is a currency - $billions and billions are traded as a currency - this is what the Bank for International Settlements is doing trading silver b/c it is a currency.

Always cast your vote - Spoil your ballot slip. Put 'Spoilt Ballot - I do not consent.' These votes are counted. If you do not do this you are consenting to the tyranny. None of them are fit for purpose. 
A tyranny relies on propaganda and force. Once the propaganda fails all that's left is force.

COVID-19 is a cover story for the collapsing economy. Green Energy isn't Green and it isn't Renewable.

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30 minutes ago, sovereignsteve said:

Who is saying that? I haven't seen much of that. There was an effort to denigrate gold but the status of silver is just slowly dying of it's own accord.

Yes of course gold and silver are manipulated but why has the value of silver gone down disproportionately to gold? If silver was such strong money, the GSR would have kept pace with historical values.

The fact that countries still stack silver could purely be based on historical habit. It is money but not as important as gold. They could simply be hedging their bets.

So what you are saying is that silver stackers are gambling on the Chinese and Russians coming to their rescue.

Well we are told silver is not money, it is an industrial metal - but i will return to the fact, XAG is a currency which is traded in $billions and $billions and the BIS which manages currency crosses is very active in this market. We only need to see import/export figures and the amount of silver on the Shanghai Gold Exchange to see silver is not viewed simply as something to make iphones with in Asia. 

Now i agree it would be extremely important for a country to stack silver - it is a strategic asset but central banks don't stack something for fun or tradition (despite what Ben Bernake might say to Congress)- they stack it b/c they view it as money. When the USD collapses - that day is very fast approaching - it will be the people in the Kremlin and Beijing who decide and if they view silver as money then it will be money whatever anyone here thinks. That gold is seen as 'more important' doesn't matter - a £50 note is more important than a £5 note but they are both viewed as 'money'. 

i very much doubt the majority of silver stackers are gambling on the Russians and Chinese coming to the rescue. i suspect few of us are thinking on the lines i am. But how i think and how the average stacker thinks doesn't matter b/c they won't make any difference to the outcome.

Always cast your vote - Spoil your ballot slip. Put 'Spoilt Ballot - I do not consent.' These votes are counted. If you do not do this you are consenting to the tyranny. None of them are fit for purpose. 
A tyranny relies on propaganda and force. Once the propaganda fails all that's left is force.

COVID-19 is a cover story for the collapsing economy. Green Energy isn't Green and it isn't Renewable.

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