This is my first post here. In 2008 when the equity markets tanked and people ran to cash precious metals also dropped in price. I think that is likely to happen again, maybe soon, maybe years from now, and I'm curious what others think the price might be if/when that happens ? Silver is now hovering around $14, if the markets dropped precipitously, what do you think the price could go to, $12 ? $10 ? sub-$6 ? I'm a bug in the sense that I "think in silver", so lower silver price = good.
I just noticed that most of the people here are in AUD, so I should point out that the prices above are in USD.
Australia, I have heard, is the centre of the universe. To answer your question, very good case for sub US$10 silver. Watching the retail market start to dry up before then however will be interesting to say the least.
Could be that this time when the equities market tanks many people will run to precious metals. That's the beauty of it all, the past is not a guarantee of the future and no one knows for certain what will happen when other markets crash.
Now if silver reaches sub $10 then I truly believe that amount the public will spend on silver would increase along with getting more silver for their dollars. You'd expect a massive retail shortage to occur. Miners go out of business once their current hedging runs out and can't be added to. Already at these prices, it's incredibly cheap. There's panic selling too but far more buying.
I smell a fish being prepared... diametral tendencies from demand/ output and quite some geopolitical doubts, and: PM are moving +/- sideways... remember: Silverprice is fixed daily by a few human beings. deception is within human nature and by keeping prices artificially low you wont awaken the human tendency of panic and clustering around a source of potential wealth... just feed a dove or pigeon etc, as soon as the pulk takes notice, things go wild. KEEP ON BUYING TILL BOB N DAVE N SUE N JIM N JILL N XYZ JUMP ON THE SILVERTRAIN...
I agree with mmissinglink. In 2008 when stocks tanked, investors and such started dumping PM ETFs and other paper plays because they needed to cover margin calls, etc, on their losing equity, etc, positions and because said paper PM positions had been doing well before then. Today, how many of those types of investors are into PM's and such, probably zilch since the prices have been crappy for so long. For the few years before 2008 PMs were kicking a$$. I don't think the large paper market investors are holding PMs today like they were in the mid to later 2000s. Thus, if equity markets and such crap out now, these guys will need a new place to park their money (besides or in addition to bonds and cash). Just my opinion. Jim
If one day the USD ever crashed beyond repair and another currency like the Chinese yuan was replaced as the world's trading currency, does that mean PMs would be in yaun? And if so, how would that translate to AUD silver price? If it happened today, what would silver spot price be in AUD?
The new reserve currency could be the yuan, the euro, or maybe the SDR, Bitcoin, or something brand new, who knows? In the past nobody ever imagined that the reserve currency would be something called USD. Then it will depend on the amount of that reserve currency that buys you one once (or gram), and to have the AUD price you just look up the AUD/reserve currency exchange rate. Edit: ok, maybe not Bitcoins. They will want to maintain the power to print as they like.
I think silver will drop when the equity markets tank, like they did in 2008. Another way of thinking about a drop in equity market prices is by looking at it from the other side of the trade, a rush to cash, a desire by people to own cash so they can cover their mortgage, pay for retirement, etc, when they sense that the stock market game isn't going the way that they thought it might, and they start to worry. I think that moving into precious metals at that time is the last thing on their minds.
PM price floats like any other currency, so it shouldn't change anything if/when the Yuan replaces the USD, in Australia the price would still be expressed as AUD, and in the U.S. it would still be expressed in USD, just like it is now. Oil is a different matter.
You assume large institutional traders/hedge funds/etc OWN PM's now- these are the folks that move markets, not local little folks with their stashes of real PMs (like me). Even some folks on pro PM blogs hate PMs now. Back in 2008, PM's had just had completed several GOOD years of upward price movement that had attracted all kinds of buyers to jump in and enjoy the gains along the way ($4 or so to $20 or so-- 500% gain by 2008 since early 2000s), especially in the ETF's, mining shares, and such. These were sold when things started falling in equities, etc. around 2008. But today IS different. These same hedge fund types have been more short than long, at least via the Comex, ETFs, etc. People/traders/hedge funds can't dump their PM's if they aren't holding them to begin with. Maybe you mean the hard core PM stackers are going to sell if stocks drop? I doubt that will happen. The PM market is in a far different place now than it was in 2008. I suppose new "shorts" could get involved in PMs if equities crash again to help push PMs lower. Maybe PMs will be ignored if stocks crash further, I guess that is possible. Just my opinion. Jim
That's an interesting point of view. I don't know. In 2008 everything sold, when stocks sold so did PM, oil, commodities like corn, everything but U.S. bonds of course which are a proxy for cash. Even junk debt sold. Cash was king at that point. I didn't mean to infer that individual investors were that big of a deal, I really meant in general everyone ran to cash, even institutional investors.
I wish I could edit my posts so I wouldn't have to keep responding to my own posts to fix something. I should note that what I wrote above was in U.S. I really don't know how Australia fared during the 2008 downturn, but I would assume investors there ran to cash too. What is the deal with this edit function being like some kind of special privilege ??? Edit helps everybody, it helps keep the forum clean, keeps posts spell corrected, etc, I don't get making it some kind of special privilege you have to purchase/rent and/or go to great lengths to figure out. Our posts here add content to this site which increases traffic and thus the site's value, not the other way around.
Your observations of the charts are correct. What the future trend will be ... I don't know. But as for the past, you have seen what happened, and it is correct. As a "long term store of value" methinks bullion is a definite goer. The rest has proven complete BS for me.
I'm from the US too. Everything you said about 2008 is correct. I would not be surprised to see an initial hit to PM's if stocks tanked, with those big boys who are holding getting out and going to cash. With interest rates so low, those who have responsibilities to investors and such (like hedge funds/ pension funds, etc) always need to have the $$$ in something that is making some profit, even low amounts. So they can only go to cash or low yielding (but safer) bonds for so long before they have to deploy the $$$ again. Maybe some day they will cycle again into PM's? Right now I am a few clicks from becoming a bear myself on PMs (just sort of kidding) so my ability to make predictions is nil on these topics. Jim
If you compare the following 100 year charts I think things might explain themselves: gold vs silver vs DOW vs any major western world stock index.
Wow, I haven't been around bugs in a while, it really sounds like you all need a hug! I guess I hadn't thought about the fact that people may have been losing money as PM declined. If it boosts anyone's spirits, at least I can be a data point. I'm here after a LONG time away from PM, I haven't bought any PM since the 2008 lows, and I'm back because the price is starting to look attractive again. I don't have a chart to post, but go look at the long term trend line running along the bottom of a 10 year chart touching the low in 2008, we're pretty much touching that line, or close to it in $us. I think that's a good place to start buying again. I'm psyched for PM long term. I'm just waiting around for the equity markets to take a nose dive.
