The recent silver market

[Brett]

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[Carolinian]

1980 was the Hunt brothers scheme to corner the market in silver, not normal market forces.. It is thus not a normal level for comparison.

In 1980, commercial use of silver was about 30%. Now it is over 65% and rising. That is a different market. Silver is now used more as an industrial metal than as a precious metal and jewelry. That creates different dynamics.

In 1980, most silver refining was in western countries. Now 60% of silver refining, both of their own mine production and that of other countries is in China, and China has just seriously restricted export of refined silver. That includes all refined silver regardless of whose mine it originated from.

The number one country for silver mining remains Mexico, but the last Mexican government made some minor anti-mining moves and the current government is considering more drastic ones that could seriously impact mine supply from Mexican mines.

Silver is traded on the spot market as actual metal and also on two major exchanges as paper contracts, the Comex in New York and the LBMA in London. Those were designed on the expectation that almost all traders would cash settle instead of standing for delivery. Both are set up where their stores of bullions are a small fraction of outstanding contracts. Over the last six months, there has been a big increase in the number of contract holders who are standing for delivery, resulting in the vaults of both the Comex and the LBMA getting drained. If that continues, and it seems to be doing so, both will reach a point this year that they no longer have the bullion to deliver. I am not sure about LBMA rules, but Comex has a rule that they can declare force majuere and compel cash settlement at a price they determine. I suspect LBMA is similar. If that happens, they have blown up "paper silver" and watch spot silver go vertical without the paper market on hand to manipulate price

There is a similar problem with silver ETF's which hold only a fraction of the metal to back the positions their customers hold. A big New York based ETF is regarded as particularly vulnerable. A large Canadian based ETF is regarded as most secure in its backing with actual metal.

There may be more far reaching consequences of either Comex or LBMA or both having to declare force majuere since that would be a huge event destroying trust among financial organizations. It could easily ripple through the derivatives market and beyond.

 

[Ralph Sir Edward]

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Will the S&P 500 to GDP ratio ever get back to its 1929 high?

 

[easyrider]

It's been posted that gold and silver are hoarded. In a way, this is true because of the way gold and silver is taxed as a collectable by the IRS. Capital gains on collectibles are taxed at 28%. Some States add a tax. Instead of paying the tax, many collectors leave it as an inheritance that receives a cost basis of the value of the collectable at the time they inherit it. This is why gold and silver is a generational wealth.

Ways to avoid capital gains are owning US Eagles which for some reason are not considered collectable. Selling less than the 1099b reporting requirement. Roth Ira. Private sale. Borrow against it.

Bill

 

[Carolinian]

Here is something to consider on silver over the next few weeks. It may create buying opportunities.

 

[Brett]

Will the S&P 500 to GDP ratio ever get back to its 1929 high?

I just want to know if silver will ever get back to the 1980's (inflated) prices - w/o a DeLorean

Maybe I'll bury a few old silver dollars for my children to dig up

 

[Carolinian]

Brett, reposting the same chart 5 posts later is nothing but spamming the board.

 

[easyrider]

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It's a crazy price when adjusted for inflation. My bet is it won't hit $200 soon but should hit $150+ here in the next few months. Japan is paying $132 now for physical silver. I wouldn't be surprised by $300 spot in 2026.

Bill

 

[ScoopKona]

Brett, reposting the same chart 5 posts later is nothing but spamming the board.

Step 1: Write facts.
Step 2: Attach facts to a metaphorical croquet mallet.
Step 3: Whack the willfully obtuse (metaphorically) with said croquet mallet.

 

[Carolinian]

It's a crazy price when adjusted for inflation. My bet is it won't hit $200 soon but should hit $150+ here in the next few months. Japan is paying $132 now for physical silver. I wouldn't be surprised by $300 spot in 2026.

Bill

Silver is back up over $80 this morning, and gold back up over $4,500. Glad I deployed a good chunk of change to buy the dip.

That Hunt Brothers figure represents an unusual situation. A couple of really rich guys trying to corner the market in a rather small market. It is not normal market mechanics. However, silver is a strategic mineral. There is quite a bit of it in the guidance system and otherwise in a cruise missile. The geopolitical struggle between the US and China could be a huge factor in ratcheting up the market price.

 

[Ralph Sir Edward]

While we're looking at the metals complex, copper is over $6.

 

[Carolinian]

It's been posted that gold and silver are hoarded. In a way, this is true because of the way gold and silver is taxed as a collectable by the IRS. Capital gains on collectibles are taxed at 28%. Some States add a tax. Instead of paying the tax, many collectors leave it as an inheritance that receives a cost basis of the value of the collectable at the time they inherit it. This is why gold and silver is a generational wealth.

Ways to avoid capital gains are owning US Eagles which for some reason are not considered collectable. Selling less than the 1099b reporting requirement. Roth Ira. Private sale. Borrow against it.

Bill

Bullion coins like modern gold eagles are treated differently than monetary gold coins under US tax laws. Monetary gold coins are considered numismatic. Under British law, gold sovereigns, with a technical face value of one pound, but obviously no longer spent that way, are statutorily defined as money and are taxed the same way any other money would be.

 

[easyrider]

While we're looking at the metals complex, copper is over $6.

I read that some solar panel maker is planning to switch to using some copper instead of silver. The panels would use more copper than silver.

Bill

 

[easyrider]

Bullion coins like modern gold eagles are treated differently than monetary gold coins under US tax laws. Monetary gold coins are considered numismatic. Under British law, gold sovereigns, with a technical face value of one pound, but obviously no longer spent that way, are statutorily defined as money and are taxed the same way any other money would be.

Im not opposed to the 28% capital gains tax. Especially if the asset creates enough value to pay it. That being said, allowing it to be inherited gives it a steped up basis to the heirs which would escape the 28% capital gains tax. Its about the same thing as real estate when depreaction is added on top of capital gains.

Bill

 

[PigsDad]

Im not opposed to the 28% capital gains tax. Especially if the asset creates enough value to pay it. That being said, allowing it to be inherited gives it a steped up basis to the heirs which would escape the 28% capital gains tax. Its about the same thing as real estate when depreaction is added on top of capital gains.

That's a pretty major difference in the Federal capital gains rates between long term precious metals and long term equities. 28% for precious metals vs. 15% (for most people, max of 20% for couples making over ~$600K). So any comparisons of returns needs to cut down the precious metal returns by at least 13%, and then add the additional transaction costs / spread for buying and selling.

We never see these costs figured in when all those charts and graphs are presented here. Gee, I wonder why?

Kurt

 

[Brett]

That's a pretty major difference in the Federal capital gains rates between long term precious metals and long term equities. 28% for precious metals vs. 15% (for most people, max of 20% for couples making over ~$600K). So any comparisons of returns needs to cut down the precious metal returns by at least 13%, and then add the additional transaction costs / spread for buying and selling.

We never see these costs figured in when all those charts and graphs are presented here. Gee, I wonder why?

Kurt

And the fees

 

[Brett]

 

[TolmiePeak]

Silver is back up over $80 this morning, and gold back up over $4,500. Glad I deployed a good chunk of change to buy the dip.

That Hunt Brothers figure represents an unusual situation. A couple of really rich guys trying to corner the market in a rather small market. It is not normal market mechanics. However, silver is a strategic mineral. There is quite a bit of it in the guidance system and otherwise in a cruise missile. The geopolitical struggle between the US and China could be a huge factor in ratcheting up the market price.

Why don't you sell silver and buy copper?

 

[easyrider]

That's a pretty major difference in the Federal capital gains rates between long term precious metals and long term equities. 28% for precious metals vs. 15% (for most people, max of 20% for couples making over ~$600K). So any comparisons of returns needs to cut down the precious metal returns by at least 13%, and then add the additional transaction costs / spread for buying and selling.

We never see these costs figured in when all those charts and graphs are presented here. Gee, I wonder why?

Kurt

You never see the figures because you dont have collecables is my guess. Collectables are taxed at the regular income tax rate when held less than a year. The long term capital gains tax is at least 28% which for many people doesnt mean anything because they are never going to sell it anyway. When someone inherits the collectable the cost basis goes to zero which eliminates the capital gains tax.

I dont have enough to worry about. Its just fun to have, imo. Same thing for our art. The main metal in my metal collection is brass and lead.

Bill

 

[ScoopKona]

Why don't you sell silver and buy copper?

Because zinc is where it's at. The zinc market is about to go nutty. Just you watch!

 

[TolmiePeak]

Because zinc is where it's at. The zinc market is about to go nutty. Just you watch!

I just made a big purchase of Polonium.

 

[ScoopKona]

I just made a big purchase of Polonium.

You fool! Everyone knows Big Polonium has that market rigged! You should have bought Bismuth. Bismuth is going to skyrocket when people who read this thread find out it's great at calming upset stomachs.

;-)

 

[easyrider]

I think that Kona Gold is very nice. Mild with a fruity flavor.

Bill

 

[TolmiePeak]

I think that Kona Gold is very nice. Mild with a fruity flavor.

Bill

Sound like a great flavor to try next time at Lapperts.

 

[easyrider]

Sound like a great flavor to try next time at Lapperts.

Idk about lapperts but for sure at uncle ike's.

Bill