One thing that has always bothered me with silver as a investment is that there is also such high rates of use as an industrial metel. Which is great while everything is charging along and there is still high demand for smart phones and other things. If there is a economic collapse, wont this dry up? Will investor demand in that case be enough to drive up prices and take over the lost driving factors from industry? Will silver revert to just a store of wealth and drive prices up at the same time in a worst case period? It seems industrial demand is quiet high as a % of silver market as opposed to gold which seems to be purly investment driven. Or will it be that the gold market is so small reletive to $ world wide that silver will just naturaly be where the excess flows when looking for security if everything fell apart?
I have sometimes wondered myself about what will happen if a very serious global economic crisis takes place. Dollar collapse would likely mean major production of some or many things come to a halt (or at least a massive slowdown). This would impact industrial demand for quite some time I think. But mining would stop in all likelihood as well and you wouldn't have new virgin metal coming into the market....only what can be recycled. Demand in silver anything would likely go up on the investor side though. This would create a shortage and would drive up the value I believe. BUT, the black magicians at the Central Banks and the paper markets can push a few levers to engage all sorts of schemes to artificially "stabilize" the economy for a very long time perhaps. After giving this some thought earlier this year, I am no longer one of those doomsday believers....at least I don't believe in my lifetime that doomsday scenario will come to pass. Of course I could be wrong...my crystal ball went on the fritz last year. "-)
A dollar collapse will simply mean that all the money which has speculated on a higher U.S. dollar, all the money that was safehavened from the Euro and Yen and pound wipeout, will be looking for a home elsewhere. This will mean a massive shift of capital out of U.S. dollar and U.S. bonds which is the largest sink of all investments in the world. This money will rush into anything considered safe and tangible. Stockmarkets, farmland, precious metals, copper, wheat, rice etc will all rise. But as a consequence, inflation will roar as oil moves up. We will be suffering stagflation in its worst form and the Federal reserve will be powerless to stop it. With a collapsing dollar, higher interest rates and high inflation, any attempt to print money will be met with a further weakening of the dollar and higher inflation. The fall of the U.S. dollar is not the fall of the world. It is the start of something different thats all. Forget about industrial use etc. It will mean very little when the time comes. So much money has been created and it is floating around the world in different forms and the true measure of it will not become apparent until panic strikes and it begins to move.
tolly, in such a time of crisis, why would stocks rise? Assuming that the Fed doesn't continue to buy all those assets (like they have been) that helped the devaluation of the dollar (as you suggest, that would weaken the dollar further), what incentive would there be for investors to gobble up stocks? I have seen it said here and elsewhere that diversification of investment is the smartest hedge. Some precious metals, some stocks, some bonds, some Futures, some buying and selling on FOREX, property / real estate, etc, etc. Is that the soundest advice you think and is there a best or favored ratio for such investments for below average and average income investors?
Diversification is easier said than done. Many of the current assets you list are in fact strongly linked so if there is a major correction they will all collapse. To me the only diversification is PM (Au, Ag, Pt, Pd) , real estate and collectables Vs the rest. i.e. stocks, bonds, forex are all fiat levitated by money printing and Central Bank purchases. They are just different compartments on the same ship. RMS TITANIC.
Trying to foresee the outcomes of unimaginable and unpredictable events like global economic collapse is as sensible and productive as trying to make plans based on what would happen if a comet hit the earth and knocked it 8 degrees off its axis or what would happen if all the glaciers and polar ice caps melted and raised sea level by 8 feet. You can beat your gums about it until doomsday but you'll never figure anything out, prevent anything bad from happening or accomplish any worthwhile objectives.
to mmissing link, The global bond market is something like 10 times the size of all world stockmarkets combined. Most of this is sovereign debt. The stockmarket represents private debt. Most sovereign debt is unpayable and as such a lot of this money is going to find a home somewhere else and one of those homes is the stockmarket. It will make no sense with unemployment rising and economies failing....but understand that there is an enormous amount of money/credit floating around the world looking for the safest place to park money with the possibility of a return of sorts.
I forgot to mention that there can still be corrections in the market during all this......and in the end, even if the dow goes to 30,000 it will be on the back of raging inflation
RT I've always thought that, even with an economic crash, the world population will keep booming along and to be honest, I think we are at stage where the use of PC's and hand-held technology is going to be used by every Tom Dick and Harry. There's people that would rather go without food than to lose their personal tech gadgets. People who once walked or rode a bike to work, now drive a car; people who once had no electricity have solar panels out in the middle of the bush. Even with an economic crash or world-war, silver is going to be sought after and... because it's the best conductor of electricity, demand is here to stay regardless. People won't stop making babies. Those babies are not going to go without their consumer goods that consume silver. H
Holdfast, Interesting angle. Do you not think that at some point, people will begin to understand that the important resources on this planet are very finite and running out at an alarming pace? Clean water, agricultural land, and many forms of energy. In parts of the world, deadly violence has been and is taking place over clean water and energy as just 2 examples that come immediately to mind. Will 7.5 billion people struggling for these things be enough to wake us up? What about 8 or 9 billion people competing for dwindling resources? Won't pumping out babies by the nearly half million per day and increasingly lower annual death rates in the world be enough?
Thanks to things like lifestraw, clean water is now readily available anywhere there's water for <$35 per year for a family of five
Perhaps the average person cares but...people don't change until they are physically affected. What I mean is, Earth's resources are finite but people will continue to consume until there's no more wood to put on the fire, they'll scratch around for twigs, they'll burn what ever they can until eventually the fire goes out. How many people can the planet sustain? Too many critters in one spot = Death! I think nature has the answer. The transition from type 0 to type 1 https://www.youtube.com/watch?v=6GooNhOIMY0 7 minutes 30 secs
Missing Link, "Will 7.5 billion people struggling for these things be enough to wake us up? What about 8 or 9 billion people competing for dwindling resources? Won't pumping out babies by the nearly half million per day and increasingly lower annual death rates in the world be enough?' No matter what, the population will NOT stop at 9 billion, but continue upwards until Mother Nature steps in and wipes out 75% of the population, almost certainly in the next 50 or 60 years. And then the demographics will start all over again. JMO OC
So you dont think the next depression will be like the last one? I do believe there would probably be a population explosion if it happens because if people dont have money to entertain themselves they just end up having unplanned kids. Eg- like at the moment, third world countries and Logan Wont these types of actions feed back in though and stretch the state even further at a time when it can least afford costs? Then those that are in hardship will have even less to buy consumer products. I know things have changed a lot in the last 80yrs but you dont think it could revert back to where people actually had to watch money and save and forgo what are really luxury items? I here people say they couldnt live without their new smartphone etc, but everyone did 15yrs ago. Tolly I would like to hope that it would shift money around the world and cause new markets to open and boom but I cant help but feel peoples greed to retain what they have would win out and they would look for the most security but really provide little chance for others to survive let alone prosper from their investments in the short term. If it is the bond market that fails, wont this just wipe out large amounts of capital that will just cease to be? Or is it there just arent enough of these safe investments in the world anymore to allow this to happen?
RT, Not sure about extra kids, but in the last depression the birth rate did not increase all that much. Dad was often banished to the back room, if they HAD a back room, as was common in the 1800s also. Reliable birth control is almost universal now, unlike the 1930s. Nevertheless, I am VERY pessimistic of the next 5 years. OC
Thats what makes me worry about things, I listened to all the old boys stories about growing up and they would get 1 toy a year between them if they were lucky, his dad HAD to work away and he had to start work asap. He had it better then his parents and my generation has had it bloody easy really. This newest generation gets everything handed to them and doing it tough has faded from the collective memory. Everyone expects that someone else will solve all the problemsand we cant have a depression. Maybe we wont but history suggests otherwise. One other thing I ment to ask, where would housing prices go in a worst case? I think someone above said they would be a good asset to hold to store wealth? Wouldnt these drop in a big way because of the debt that most people carry on them? If people cant service the debt and it forces a sale but there is no money to get loans, wont the prices drop and then you loose value in the asset even if your not one of the ones selling?
RT, "One other thing I ment to ask, where would housing prices go in a worst case? I think someone above said they would be a good asset to hold to store wealth?" I was born in early 1939, so all my stories are 2nd hand. Housing did slump and landlords even put in tenants at little or no rent, just to cover costs and have the place occupied instead of derelict. BUT a house is a house, just like silver is silver, and we all need a roof over our heads and that house will be worth something after the storm passes. When I win Powerball, I will be buying apartments as fast as I possibly can, both in OZ and the USA. Eventually, the demand for housing will go through the roof in the years after the Crash. Millions of people will be looking for a home then. ....and if anyone wants to know what it was REALLY like in the Great Depression (and will be WORSE this time) go to the library and get hold of a copy of 'Weevils in The Flour' by Wendy Lowenstein. A VERY sobering book. OC
This is directed at both Holdfast and OldCodger as you both have made similar points. I truly hope that you are wrong although my fear is that you may be right. If it takes running out of resources to change the way most people think, then you can count on it that there will be untold levels of completely preventable suffering and misery that will unfold. Maybe that will be humanity's fate....I don't know....I just hope it's not.
