Silver price discussion and analysis

[Bron Suchecki]

Re: SILVER

I am not convinced. Ebay is not the only place, I regularly make personal visits to W. Davis and I. Wright in the Melbourne CBD. Silver is growing harder to acquire.

This does confirm your input Bron Suchecki but on reading through it only confirms that there are questions pointing strongly to the rising demand.

Google also reveals huge a debate on many fronts and the vehemance of those trying to deny the problem only confirms that there is a problem.

My post was not saying that there isn't strong demand, we have said there is on our corporate blog. We wouldn't be consolidating coin production to a few sizes if there weren't many buyers around. It is a good indicator of a strong market, but don't rely on it.

My point is that ebay prices or (lack of) supply of retail dealers is not much of an indication of real demand. Ebay and retail are minor in volume terms compared to the real physical that goes on in the wholesale markets. And I'm talking physical, not paper. Real metal in big quantities sold at the spot price.

If you can buy 1000oz silver bars, silver is not growing harder to acquire. When that starts to happen (to us) then you will know about it because we will shut down our pool allocated silver. Then you can start talking about shortages.

 

[explod]

Re: SILVER

My post was not saying that there isn't strong demand, we have said there is on our corporate blog. We wouldn't be consolidating coin production to a few sizes if there weren't many buyers around. It is a good indicator of a strong market, but don't rely on it.

My point is that ebay prices or (lack of) supply of retail dealers is not much of an indication of real demand. Ebay and retail are minor in volume terms compared to the real physical that goes on in the wholesale markets. And I'm talking physical, not paper. Real metal in big quantities sold at the spot price.

If you can buy 1000oz silver bars, silver is not growing harder to acquire. When that starts to happen (to us) then you will know about it because we will shut down our pool allocated silver. Then you can start talking about shortages.

I do not necessarily disagree. In fact I do not know the real situation. However in almost all that one reads on the many and varied mediums there is a cry of silver shortage and the shenanigans (albiet not determined in the tribunls yet), seems to indicate hugely out of proportion paper positions to any real volume of existing physical silver to them back them up.

You may puff and pant all you want but the retailers I speak to and the evidence I see on the retail side on such sites as ebay paints a vastly different story than the one indicated by the Perth Mint.

But I repeat,

you may be correct, I do not know, but I am not convinced.

 

[sinner]

Re: SILVER

If you can buy 1000oz silver bars, silver is not growing harder to acquire. When that starts to happen (to us) then you will know about it because we will shut down our pool allocated silver. Then you can start talking about shortages.

Thanks for the headsup Bron.

Assuming we completely ignore the backwardation that continues to be the norm in the COMEX silver futs market, the only problem with your "nothing to see here, move along" type statement is that many of us have already realised that by the time organisations like the Perth Mint shut down their pool allocations, it will already be too late.

Those who were sitting in the pool will now be looking elsewhere to fill their needs, in the middle of a self described shortage. Anyone who was in already will be sitting pretty, those who weren't will almost certainly chasing price, paying any price just to hold something real.

Good luck to them!

Maybe I'm wrong. If so, please explain to the crowd how we are expected to obtain silver or gold in an environment where the Perth Mint would be having trouble obtaining 1000oz silver or 400oz gold bars?

This seems to be the crux of your argument. There is no shortage, therefore everything is all good. I am wondering exactly what you will say to all the people you told not to buy (because they would be paying a premium higher than spot) if silver or gold goes into hiding. It's a pretty amusing thought.

 

[Bron Suchecki]

Re: SILVER

the only problem with your "nothing to see here, move along" type statement is that many of us have already realised that by the time organisations like the Perth Mint shut down their pool allocations, it will already be too late.

If so, please explain to the crowd how we are expected to obtain silver or gold in an environment where the Perth Mint would be having trouble obtaining 1000oz silver or 400oz gold bars?

This seems to be the crux of your argument. There is no shortage, therefore everything is all good. I am wondering exactly what you will say to all the people you told not to buy (because they would be paying a premium higher than spot) if silver or gold goes into hiding. It's a pretty amusing thought.

I am not saying not to buy. I am saying don't base your decision on the fact that ebay prices are much higher than "spot".

What I am saying is why pay big premiums on ebay when you can lock in normal premiums and current spot price from Perth Mint and we deliver later. That is always an option. We would not allow back orders if we are unable to source the raw material.

So continue to buy, just don't be so desperate about it that you'll pay unnecessary premiums. If you buy from us on back order we will deliver, we are not some fly by night operation. The rumors going around now are same as in 2008 and guess what, everyone who ordered metal got it and the Mint is still here.

As to the situation where Perth Mint may not be able to obtain wholesale metal, if that happens it won't happen overnight. We will see signs of real tightness in the wholesale market before it locks up. When you see me talking about wholesale tightness, then you can panic. Until then keep stacking but chill out

 

[cynic]

Re: SILVER

and just to rub tothemax nose in it, here is a fresh photo from the silvergoldsilver blog,


From http://silvergoldsilver.blogspot.com/2011/06/sandpoint-idaho-population-6835-and.html

Was it my imagination, or did I see the words "silver coin" in this post?

 

[cynic]

Re: SILVER

MR Z, I owe you my sincerest apologies for certain "cheap shots" I took at you in my previous posts. As many of my friends (yes - I do still have one or two of them left) will attest : "I have as much subtlety as a flying (silver) brick!"

I acknowledge my arrogance which just happens to be one of my many redeeming features (Yes I am actually somewhat proud to be arrogant!).

On the topic of precision, I will readily and humbly accept your precise definition if and when I experience it as having been embraced and widely accepted in my business dealings with the English speaking populace.

I understand that the "dumbing down"/"smarting up"/"bastardization" of word definitions by the lexicographer might be seen as a contributor to the evolution/involution of the English language.

Until then I shall continue to subscribe to my AWARD dictionary definition as previously posted, simply because it has been largely consistent with the understanding and expectations of all parties to contracts arising from my business and financial dealings to date. To act in accordance with your "precise" definition of "natural money" may prove to be confusing and counterproductive to the "uninitiated" for whom adaptation to your more "precise" definition may not be practicable.

I know you're intelligent enough to understand the value of a dictionary of terms that supports my communication and interpretation of business terms whilst dealing with these "uninitiated" individuals.

In closing, may I wish you all the best, as I have now come to recognise the importance of your more "precise" definition of natural money in your business activities.

 

[Logique]

Re: SILVER

...there are pointers to big market problems to be led by Wall Street, so on that basis alone cash (and silver as safe money) is king for me at the moment...

Indeed Explod. A waxing moon and a waning Bernanke, plus some ordinary looking weekly charts. And June tax selling. So for me, discretion is the better part of valour. The discontinuation of US QE needs time to work through markets. I'll hold a couple of specs, but basically out, awaiting some firm direction.

 

[Bullion Money]

Re: SILVER

Had to show this video off..

Australian Company with a new Silver Bar to rival the Perth Mint and PAMP...

 

[tothemax6]

Re: SILVER

and just to rub tothemax nose in it, here is a fresh photo from the silvergoldsilver blog,

Hah, nice one, sinner .

I concede that, at that diner, silver is used as money (although probably rarely).

 

[tothemax6]

Re: SILVER

No... no I am not. LOL Yeah the AUD has been a great store of value hasn't it? What does that 1970 dollar buy you now?

Not too worried, I get paid with 2011 dollars.

We use a currency... it is not really money! Mind you they have checked off most of the boxes, all but one and that is an important one

OK given that currency seems to just mean 'the medium of exchange', whereas money means 'medium of exchange; unit of account; store of value', your claim is that fiat money is not a store of value relative to gold. However, since fiat money bears interest (and gold cannot), I would have said this is incorrect. Also, since gold is not used as currency, it is thus logically also not money, at least as far as the word 'money' is defined in the English language. We are using the English language, yes?

Gold is actually no longer suitable to back currency due to the way that our modern credit systems work. We will not be likely to ever see gold backing again on a permanent basis. It would be very deflationary and would make our credit system all but unworkable. I don't pretend that gold is the best currency that a nation can use, that in fact is a well managed FIAT. The problem lay in the way FIAT is managed, I think we are yet to see the best way to achieve that. Still, that does not take away from the fact that gold & silver are money that tend to come to the fore when the FIAT system runs into trust issues.

I am going to have to disagree with you on this too (albeit on the 'other side', if you will). Our banking system is not fundamentally different (ignoring the nature of the monetary base) to banking back when we a gold standard. Credit has always been extended to a multiple of the monetary base. Indeed, during the Scottish free-banking era, the reserve ratios of banks was typically around 2-3%. A gold standard remains the best form of monetary base a nation can use, the only difficulty is the momentousness of trying to return to such a standard without causing an unacceptably massive 'jolt'. Fiat is a terrible system. Central planning of anything is terrible, but central planning of the money supply is by far the worst and most market-distorting form of 'management' there is.

 

[TabJockey]

Re: SILVER

Max:

What evidence do you have to support your claim that Fiat is a terrible system and a centrally planned system of money supply is the "worst there is". Certainly the era of fiat currency has coexisted with the fastest advancement and most productivity of society ever?

 

[damien275x]

Re: SILVER

Max:

Certainly the era of fiat currency has coexisted with the fastest advancement and most productivity of society ever?

Yes - and that prosperity is being borrowed out of the future. The future will be the present eventually, then what? Keep kicking the can down the road? Bailout again? It almost came down in 2008 if it weren't for all these bailouts. What will they do to solve the next slowdown?

 

[TabJockey]

Re: SILVER

What does that have to do with the fiat argument?

Are you saying that governments should not be allowed to borrow money? or that if they borrow it should be secured by gold?

Personally I think it makes allot more sense to borrow against the future earnings of the country than to borrow against a single arbitrary commodity with limited practical use. There is a real problem there with the short term democratic focus spending the month earned by future generations, but this is a governmental scientific problem. Fiat is not to blame and a change away from fiat will not fix it.

 

[tothemax6]

Re: SILVER

Max:
What evidence do you have to support your claim that Fiat is a terrible system and a centrally planned system of money supply is the "worst there is". Certainly the era of fiat currency has coexisted with the fastest advancement and most productivity of society ever?

It is difficult in economics to point to evidence of a singular cause and a singular effect that are directly linked. This is because in economics (which is effectively a term we use to refer to 'interactions between men in aggregate'), everything is dependent on everything else. One could point to the 1907 crash and say 'this was caused by a gold standard and no central bank', the 1929 depression and say 'this was caused by a gold standard and a central bank', or point to any economic malais after 1971 and say 'this was caused by fiat money'.
It is far superior to use logical deduction, that is - starting with basic principles that can be determined with high certainty to be true, and build up from there. The use of logical induction on singular factors in a system with such a high level of complexity and such a large number of factors, i.e 'seeking to build rules on evidence such as statistics', is clearly less likely to yield a satisfactory working model.

But if I must address your points directly, centrally planned anything is terrible because of a) the nature of central planners and the kind of people that gravitate towards this role, b) the fact that central planning is effectively reducing the number of market agents which can act based on information, without reducing the number of agents or amount of information to be processed (therefore leading to massive resource misallocations such as seen in the USSR and Maoist China).
Also, regarding the era in which all this occurred, I see your information age and raise you an industrial revolution.

 

[TabJockey]

Re: SILVER

Errrr, what are you trying to say? I am not seeing your point.
What benefits will there be if we go back to a gold standard?

There is a big difference between Maoist central planning and the central planning China uses today, looking at the way things are planning out its not a bad system, it could be the best system for China. And I don't think any credible person would try to argue that the financial system of today based on fiat money and central banks is centrally planned in a Maoist fashion. Wouldn't you say it more resembles a restricted free market? where rates are slowly tinkered with to guide the economy in a specific direction but not to specific place?

The boom bust cycle stability of the monetary system under fiat has vastly outperformed the monetary system of a gold standard. Booms and busts, runs on banks and depressions where so common in the industrial age, but those where just growing pains. Society had to learn the hard way before it could accept the technological advance of fiat money.

I would like it if you could use that "logical deduction/induction" that you mish mash together and tell me what do you think the gold standard can improve in the financial system? Why do you think almost all of the participants in the financial system would not even consider a gold standard?

Do you think its a conspiracy?

 

[tothemax6]

Re: SILVER

A 'restricted free market' is an oxymoron. It is either free, or there are restrictions. You can't be 90% pregnant.
Regarding China, no the change is merely a slide along the socialism-capitalism scale. Mao was a full-bore communist, Deng was half way on the scale (famous for making the very un-communist phrase "to get rich is glorious"). If one is to follow the correlation mantra, if it keeps sliding that way then the economy will keep improving even more. In the mean time, their construction bubble has yet to burst (youtube 'china empty cities').

Regarding the boom-bust cycle, no the central bank is just as effective as creating booms as a free-market, if not better (such as the 1920s expansion leading to the 1929 crash). Fiat has 'vastly outperformed' nothing of the sort. The Scottish free banking era, the purist example of free banking (no central bank, minimal government interference in the banking system, gold standard), was not known for boom and bust cycles at all. The only notable incident was the collapse of the Ayr bank, which overextended its credit, and blew up. No financial crisis ensued, and the rest of the banks were relatively unscathed.

It is precisely the tinkering with the interest rate that causes broad economic malais. Price controls have always shown up as shortages, gluts, over and underinvestment in whatever product was under the control. Since the interest rate effects the entire economy, one would expect its control to have similar injurious effects over the entire economy. And it does. In 2003, the US interest rate had been depressed to 1% by Greenspan and held there. Does a -2% real rate sound like a free-market interest rate? Would you pay someone to borrow your money? Is it any surprise that a massive housing bubble occurred, given that houses are heavily financed by credit and dependent on the interest rate? What would have happened under free banking? The demand for credit would have raised the rate, acting as a natural dampener on demand for further houses.

The benefit of the gold standard is that the monetary base is outside the control of government. It cannot be centrally planned, tweaked, twisted, inflated, contracted, or whatever, and no government created distortions of the market can ensue. The government cannot finance its debts by printing money, and inflation is not an issue.

Your claim of the technological superiority of fiat money is bizarre. Most of the worlds gold is still sat in banks, as it was under the gold standard, so there is no technological difference. If we still used gold as money, there would still be electronic transfers, banknotes, cheques, credit cards etc etc.

Why do financiers not like the gold standard? Well why would they? Wiki 'greenspan put'. You can't do that under a gold standard.

 

[lrodgers]

Re: SILVER

Ratio is running 5:1 nowadays.

 

[silverhoarders]

Buy Physical Silver! Robert Kiyosaki Warning Economic Collapse Is Coming

Robert Kiyosaki Warning Economic Collapse Is Coming
http://www.silverhoarders.com/conte...-Kiyosaki-Warning-Economic-Collapse-Is-Coming

 

[tothemax6]

Re: SILVER

Any updates on silver? I am always interested to hear the latest developments in the mad metal.

 

[adamim1]

Re: SILVER

Any updates on silver? I am always interested to hear the latest developments in the mad metal.

Silver is still holding strong after the debt deal announcement. Price has dipped in USD due to USD strengthening, but the losses were sucked up by a weaker AUD.

Not sure how August is going to play out but silver is always much stronger in the last quarter of the year.

All the fundamentals of precious metals are still in tact.