After having put sunglasses on. My point was the production cost of silver, relative to the production cost of other products alike fiatmoney. Why? Because any currencies prime property is trust. That's where it begins, and where it ends. Where does trust origin from: from the knowledge that its production cost is high and that "watering" it is much harder because comes at a big cost, unlike fiatcurrency. There, a wall of text answered with a nutshell of text. And I said that!
Good point. If you couple the notion of "silver is insurance" when buying into an "alleged manipulated market", then this would be a little contradictory, and not a smart move in terms of buying insurance. If, however, the view was that one day the cartel will lose control, and silver price would rocket, then this would have to mean "speculation".
Market manipulation - if it exists - if no reason to avoid participation. It is simply another factor to consider. After all, they would be conspiring to improve their own standing, not to cause me to lose. There is no scenario where they profit, and everyone else loses. Sports of various kinds have been 'rigged' over the years, most notably horses and boxing, but others as well. Common knowledge of this was very little discouragement to those making wagers. They simply took it into consideration. Friends have told me this as long as I can remember. If it works for the ponies, it must work for silver. What are the choices? The stock market? Yeah, nice clean operation there, no chance of manipulation. Money and power control everything. No escape is possible, if you think you are free.
I agree 100% with what you say. However, when an analogy is made to sport or punting on the ponies, then it would surely back my view that silver is most likely well-informed speculation.
Analogies are imperfect forms of argument, best used to not convince, but to give a similar example. It does not follow that what is true for the ponies must be true for silver, based on my argument. It should be obvious that wagers on the ponies are short term, very short. Buying into silver, on the other hand, can be an even shorter event (milliseconds), or much longer, longer than the life of a horse. "well informed speculation" Now there is a loaded term. I say if I give my children tubes of - SMLs - They will be worth more than $35 per ounce, in real terms, adjusted for inflation, before they die. It would be speculation to say this will not happen. That would be the opposite of what you say. Buying silver to make a short term profit - right with you, "well informed speculation" (as opposed to merely 'informed speculation', I suppose) - whatever that may mean. Understanding that silver has utilitarian uses, now and undoubtedly new ones not yet known, and that the market value of silver is volatile, with relatively large swings up and down, and that the in-ground supply of silver is limited, buying silver long term, expecting to make some small margin of profit, in real inflation adjusted dollars, is not speculation in my mind. You are free to disagree.
It seems I may already have a convert. Will anyone disagree with this: I put $50k into the stock market, via mutual funds, and say that I plan on that money increasing in value beyond inflation so that it gives me financial profit for my old age, and in a couple of decades I will take it out to make like easier. My evil twin puts a similar $50k into his own selection of mutual funds, and says that he expects that money to double by next year, as that is the money for his $100k boat. He will be taking it out to buy the boat regardless, but the intentions are that it will double in value. I am investing, my evil twin is speculating. We do the same thing with our money, make his selection of mutual funds the same as mine, still speculation based on plans and expectations. What it is called is dependent on our expectations, as well the probability of events happening as we expect. As I understand stocks, some are short term speculation, long term investment. If you want to make money in a hurry (R&D coming to fruition), maybe yes, maybe no, but solid as a rock long term, if anything is still standing, this will be one. Generally speculation has an element of risk, may actually lose money. On the short term (18 months) my mutual funds lost all new contributions, and many thousands of current shares, "current balance" dropped each month, despite new contributions. I was just about to figure out when my balance would be Zero - of course that point was years away, but the slide was in one direction only. Thankfully the market picked up. Short term, not only 'could' I lose money, I lost money! So please do not tell me my evil twin was investing, because his money was 'safe'.
There's no guarantee whatsoever of this. Supply could very easily and SIGNIFICANTLY outpace demand for a whole host of very real and plausible reasons. The truth is you don't know and I don't know but your beliefs are based on presumptions (which is not necessarily abnormal or reckless) - my point has been that we just need to start calling these things what they are. Most if not all investments have a component of speculation....there's nothing mysterious or spooky about that....it's just the nature of investing in things like commodities (metals) and assets. Silver is NOT insurance because it does not supply the most important characteristic of insurance. .
There is no guarantee for anything. Doesn't bother me. Take tomorrow for example. I've go no guarantee tomorrow will ever happen. The likelihood of some things are so likely, that it is not only reasonable to expect them, it is unreasonable to not expect them. Nothing unreasonable of me expecting tomorrow is going to happen, and nothing unreasonable of me expecting silver will gain in absolute value within the next generation. Even so, we agree that speculation and investment are on the same linear scale, just at different points, and what separates them is very subjective. Still, there are some things no reasonable person would call investment - the roulette wheel, for example - that can be considered speculation. Similarly, some things no reasonable person would call speculation, 'blue chips stocks' are by definition, sound investments - relatively speaking. IMO ~ ~ Friend: Aren't you afraid of taking a long trip like that on those rough roads, lots of people get flat tires. Me: I've got insurance. Friend: Huh? Me: I've got two spare tires in the trunk! Friend: Oh. Good thinking. Even if you never need to use them, great insurance for a successful trip. That's the way it is with me and silver. A back up plan. Insurance in my mind, a back up plan in your mind.
I don't think speculation is differentiated from investing based on time-frame. IMHO speculation is differentiated from investing by the risk:reward expectancy. Speculation involves high risk in return for high reward, and could result in large percentage losses if the payoff does not come to fruition. This is why silver would seem to fit this category.
Time frame not required, but used in my example. Not prohibited. If I said my evil twin expected his money to double in 20 or 30 years, probably not speculation, just normal. We would have to increase the factor of payout, like to ten fold. That would be speculation. Payout is directly proportional to time frame, for speculation. What determines the characteristics of the 'reward expectancy'? I expect to double my money in two months. What possible unrisky venture can tell you to expect that? So the risk is high, the payoff high. I expect to double my money in 100 years. Kidding? Sure not speculation. That is a low reward expectancy, only because of the time frame. For an observer to know if speculation is occurring, they have to know the length of time, not just the payout. Time frame is very relevant, but it does not have to be a particular length of time. Subjective and relative terms. "high risk" Many ways to quantify risk, with as many results. "high reward" How can this be determined without a time frame? 'large percentage losses" - can you give a number, or is it a gray area? "does not come to fruition" - Like, ever?, or like in a long time?, or like in a short time? If you are in for the long haul on silver, a generation is generally considered to be 25 years, so in for 25 years, at some point it is going to be possible to cash out for a profit. That is just extremely likely. Low risk, low gain, certainly not speculation. In for the short haul, expect to double your money, high gain certainly, and who is to say if the risk is great or small - except the investor.
There's lots of things that are guaranteed. With my home owners insurance as just one of many examples, I am guaranteed protection against suffering financial loss ("Guaranteed Replacement Cost Coverage") for specific damage delineated in the contract. Your "back-up plan" (blobs of metal) is rife with risk. That's not necessarily unusual as most people's retirement savings in the form of stock market-tied paper is also rife with risk....but I have to call silver what it is and what it isn't. Silver is NOT insurance....period....and anyone who argues that it is, is truly misguided I'm convinced. Buying silver is a form of speculative investing, not a form of insurance. .
No matter what anyone else thinks or says, I'm buying silver as insurance. If there were a monetary collapse, silver would act as insurance. You can tell me until you're blue in the face that I'm investing in silver but I know why I'm buying it.
^ In that case, I've got a nice bridge to sell you. I don't want to be accused of suggesting that someone jump off a bridge or whatever else, the above tongue and cheek expression references this: http://en.wikipedia.org/wiki/George_C._Parker .
Why do you still continue to shove YOUR beliefs down our throats? Who are you to tell me why I buy my silver? I don't think you're going to stop until everyone on this forum admits that silver is an investment. Ok, so we're all truly misguided. Happy?
Okay, so a 'guarantee' is a written piece of paper. If it is a piece of paper you want, I will sell you some ASEs and give you a written guarantee that if you keep them for 25 years they will increase in value. Problem solved, now they are insurance. If there is no guarantee tomorrow will exist, how can you believe your insurance company must exist, and pay a claim, that they may dispute? I have a family member who works for an insurance company, claims are often denied. You have certain expectations concerning your insurance, and the company, that may occur, or may not occur. I have certain expectation concerning silver, that may occur or may not occur. We do disagree but I understand what you are saying. Using the terms 'insurance' and 'guarantee' in a certain way, silver has neither of these. I will continue to buy silver for the piece of mind it gives me, just like my insurance. Please don't forget, after all those years of paying insurance premiums, a couple of thousand a year, if I make no claims, I lost that money. That guarantee for replacement of loss, also guarantees you will lose money if you make no claim. Because of this some people 'self-insure'. They buy no insurance, have no guarantees, but have equity to replace financial loses. (In some cases the law gives them no such choice.)
@ mmissinglink - to add on to what BeHereNow said: you claim that silver is not insurance because it's not a guarantee that someone's wealth is preserved when an economic meltdown occurs. Now you claim insurance is only valid when there is a guarantee. Lets use car insurance for example. Hypothetically, if everyone on earth had car insurance and got into a car accident all at once, I will GUARANTEE you that not everyone will get their claims fulfilled. It's not possible for any insurance to reimburse a higher total amount that they receive. Similar to how banks running a fractional reserve on fiat, if everyone came in to withdraw their whole balance at once, the bank will not be able to pay out to everyone. There is no such thing as a 100% guarantee. Holding physical silver is an insurance against an economic collapse, vaguely speaking, but it's just not a 100% certainty.
