The recent silver market

[Carolinian]

Remember where you buried your gold coins !


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If you look at when precious metals do well and when they do not do as well, it usually tracks with what is happening with government debt. For a while, it looked like government debt was being dealt with. Then gold and silver treaded water. Now with government debt exploding, gold and silver prices are also exploding. It is not just US debt, it is most countries. Only a handful like Norway and Switzerland have government debt under control. That is why central banks are quietly but systematically decreasing their holdings of all fiat currencies and instead buying gold. It is why a lot of others are also buying gold. Interestingly, the "stablecoin" operator Tether has been massively buying gold, and now has holdings in line with many central banks.

Looking forward, I do not see the government debt problem getting any better, and probably getting worse. That means the past year is much more relevant to the future prices of gold and silver than what happened back in an era when the debt problem had not yet grown so bad.

For silver prices, industrial use of silver has increased substantially, which has a big impact on supply / demand dynamics.

And who buries gold coins? The safe deposit box rents at my Credit Union are extremely reasonable.

 

[Brett]

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.https://www.longtermtrends.com/stocks-vs-gold-comparison/

 

[Carolinian]

I have a lot more respect for people able to think and debate for themselves instead of relying on AI - Artificial Ignorance.

The key is the present, not the past. What happened when fiat currencies were stronger and were much less burdened by government debt is irrelevant. What has happened over the past year or two gives a better view of the future than what happened twenty years ago.

I have posted charts of what central banks have been doing. The price of gold is greatly influenced by what they do, and in the past few years they have been buying gold like gangbusters while reducing their reliance on each others' fiat currencies.

 

[Brett]

https://www.longtermtrends.com/stocks-vs-gold-comparison/

 

[Ralph Sir Edward]

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This is sudden news? There has been a production deficit for nearly a decade, with existing stockpiles being run down to make up the deficit.

You can make a lot of money by paying attention to the trends going on around you.

 

[Brett]

This is sudden news? There has been a production deficit for nearly a decade, with existing stockpiles being run down to make up the deficit.

You can make a lot of money by paying attention to the trends going on around you.

Those silver billionaires !

 

[Carolinian]

This is sudden news? There has been a production deficit for nearly a decade, with existing stockpiles being run down to make up the deficit.

You can make a lot of money by paying attention to the trends going on around you.

As I have pointed out before, industrial use of silver has greatly expanded from what it used to be, increasing the demand side. It used to be about 30% and is now 85% of annual mine supply. There is also military use. There is quite a bit of silver in the guidance system of a cruise missile, for example. Many countries including the US and Russia have now declared silver a critical strategic mineral.

 

[easyrider]

Those silver billionaires !

It's a true statement. All of the top silver stackers are billionaires. Same goes for most investments.

Bill

 

[Brett]

It's a true statement. All of the top silver stackers are billionaires. Same goes for most investments.

Bill

yes - some billionaires probably do own "alternative" commodity investments besides stocks and real estate and income producing assets

 

[Carolinian]

5 year change

silver UP 284.6%
gold UP 193.1%
platinum UP 117.8%
S&P UP 109.5%
DOW UP 61.7%

 

[ScoopKona]

A sack of coins in a closet doesn't pay dividends. You can't live in it or rent it out.

We're experiencing market uncertainty for one very specific, and not allowed to discuss reason. We all know it. But we can't talk about it. Once this peters out, metals will go back to being metals.

I'll bet you own every single book by Peter Schiff.

 

[Brett]

https://www.longtermtrends.com/stocks-vs-gold-comparison/

 

[Brett]

A sack of coins in a closet doesn't pay dividends. You can't live in it or rent it out.

We're experiencing market uncertainty for one very specific, and not allowed to discuss reason. We all know it. But we can't talk about it. Once this peters out, metals will go back to being metals.

I'll bet you own every single book by Peter Schiff.

Of course we all know it.

 

[Carolinian]

A sack of coins in a closet doesn't pay dividends. You can't live in it or rent it out.

We're experiencing market uncertainty for one very specific, and not allowed to discuss reason. We all know it. But we can't talk about it. Once this peters out, metals will go back to being metals.

I'll bet you own every single book by Peter Schiff.

Here's a clue you might have missed. Those numbers are for five years, not just one. That includes a broader time period than the one you are referring to. You might also look at what central banks have been gradually but systematically doing during that period, reducing each other's fiat currencies from their reserves and replacing them with gold. Most world governments are drowning in government debt and it is getting worse. Only a handful of countries like Norway and Switzerland are not in that boat. France is in terrible shape with its budget. Even Germany has found a way around its Constitutional "debt brake" to borrow money off the books. Central bank holdings of every fiat currency are going down and their holdings of gold are going up. You may think you are smarter than the central bankers of the world, but somehow, I doubt it. Central bankers have been stocking up on gold for the past five years and they just keep buying more.

What stock has paid 284% in dividends over the last five years????????? Or 193%???????

I am familiar with Peter Schiff from seeing him quoted from time to time, but I was not aware he had written books.

 

[TolmiePeak]

I have a lot more respect for people able to think and debate for themselves instead of relying on AI - Artificial Ignorance.

The key is the present, not the past. What happened when fiat currencies were stronger and were much less burdened by government debt is irrelevant. What has happened over the past year or two gives a better view of the future than what happened twenty years ago.

I have posted charts of what central banks have been doing. The price of gold is greatly influenced by what they do, and in the past few years they have been buying gold like gangbusters while reducing their reliance on each others' fiat currencies.

Why is the price of gold pegged to a fiat currency?

 

[Carolinian]

Why is the price of gold pegged to a fiat currency?

It is not pegged to any currency. It has a foreign exchange cross in the FX market with every fiat currency, as does silver, because gold and silver are considered money.

Gold and silver are both monetary metals, but silver is also an increasingly important industrial metal due to its electrical conductivity properties. Gold is held by central banks as a monetary reserve, but only one central bank is known to hold silver for that purpose. The Bank for International Settlements also holds gold in its reserves. A number of countries, including the US, have recently declared silver a critical strategic mineral and are acquiring reserves due to its military uses. There is quite a bit of silver in the guidance system of a cruise missile, for example.

 

[Brett]

https://www.longtermtrends.com/stocks-vs-gold-comparison/

 

[Carolinian]

So, Buffett would turn down 284% appreciation over 5 years??????????

I will go with the central bankers of the world on this one. In fact, I have and made lots of money following their lead. Of course our single family rental properties are doing quite nicely, too.

And, Brett, the future is shaping up to be more tike the last 5 years than the situation 30 and 40 years ago. Your ancient history is meaningless.

 

[easyrider]

We're experiencing market uncertainty for one very specific, and not allowed to discuss reason.

There isn't anything politically driven about what is happening with silver. The main reason silver prices have increased is because the price is manipulated by paper trading short sellers that were caught in a short squeeze caused by demand in both industrial and consumer sectors. Demand in both sectors are projected to increase.

About the only thing about silver that might be considered mildly political is that many nations have designated silver as a critical mineral.

Bill

 

[easyrider]

Why is the price of gold pegged to a fiat currency?

Precious metals aren't really tied to any currency. There isn't any currency backed by gold. Gold values are only priced in currency.

Bill

 

[Brett]

There isn't anything politically driven about what is happening with silver. The main reason silver prices have increased is because the price is manipulated by paper trading short sellers that were caught in a short squeeze caused by demand in both industrial and consumer sectors. Demand in both sectors are projected to increase.

About the only thing about silver that might be considered mildly political is that many nations have designated silver as a critical mineral.

Bill

silver prices are more than 1980 prices ......... GREAT !
Nothing to see here .. no uncertainty .. ... move along, Bill ...


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[Ralph Sir Edward]

Yes I see your link. However I have not yet read that the max benefit of 130% is taken away. I stand by my original statement that I will benefit from taking the max benefit of 130% minus the automatic cut vs taking earlier benefit minus automatic cut.

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Since you are going to parrot the same chart ad infinitum , I guess I'll have to show my response ad infinitum:

For everything there is a season. . . even every sort of investment. I am going to break up the chart that Brett repeats over and over, into periods of investment changes.

1975 to Date

This date was not chosen at random - Jan 01 1975 was the first date that gold could be owned in the US without government approval.
Overall rate was stock +6500% - gold 2300%. Of course for this period to matter you would have to be at least 70 years old and most likely more.

Now we will break this period into sub periods.First 1975 to Feb 1980.

Overall rate for the period. Stocks 20% - gold 250%. Advantage gold for this period.

The next period is Feb 1980 to Jan 2000.

Overall rate is stocks +1150% - gold -64%. Stocks outperformed gold by +3200%.
A unique period, where stock out performed everything, due to the revaluation of financial assets with the ending to the great US inflation.
There's been nothing like it before or since. But it only mattered if you were around and investing at that time - i.e. you have to have been
over 65 for this whole period to apply, and over 50 (as of now) for it to apply at all.
To get a feel for it, the stock-to-GDP ratio went from 40% to 130% over that period, or 3 fold.

The next big period is Jan 2000 to date.

Overall rate is Stocks +320 - Gold +1080%
Gold outperformed stocks 3 fold over this period.
But let's break this period up.

First, Feb 2000 to Feb 2012.

Overall rate Stocks 70% - Gold 475%. Roughly 6X better performance for gold.

Next Feb 2012 to Dec 2019.

Overall rate Stocks +120 - Gold -15% Net advantage to stock by around 150%

Finally Dec 2019 to date.

Overall advantage - Stocks +60% - Gold +160%. Net advantage is to gold - +100%.

Summary. If you look at the stock gain vis-a-vis gold, you find that all that gain was in one period 1980 to 2000, when inflation
cranked down from 18% to 3-4%, inflation which had caused stock to drop in real value (as opposed to nominal value) for the 15 year before 1980.
(This the very period that made Warren Buffet and Charlie Munger look so good for so long.)

Q.E.D.

 

[Brett]

https://www.longtermtrends.com/stocks-vs-gold-comparison/

 

[TolmiePeak]

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Gold has not been a poor investment for the scammer gold dealers selling it.

 

[TolmiePeak]

Precious metals aren't really tied to any currency. There isn't any currency backed by gold. Gold values are only priced in currency.

Bill

But why is the value of gold priced in a fiat currency? Why isn't it pegged to something that has inherent value?