How did you get those figures? Volatility. Ha! I laugh at volatility. What's the worst that can happen? Go to $5? If it did that it would clear evidence that price discovery is broken.
Yeah .... don't get your hopes to high my friend. Would be nice though, no doubt. Just can't see it happening.
If that became possible, the quantum jump in demand would shoot the price through the roof. As it stands, there is a shortage of housing in most Australian cities.
So you reckon that there are many people who own > 500oz of silver? Or do you think it will be easy/affordable to buy it in the above scenario? Shortages disappear pretty fast once migrants start to move back, because of no jobs/other conditions. But hey, it's different here, right? It's a lucky country after all.
We've got to stop thinking in terms of spot. If (when) fiat collapses, we won't be measuring in dollars per ounce, but just plain ounces. So what is the natural "purchasing power" of silver or gold? Historically, how many oz is a median house? Median wage? Big Mac Another way to do it might be to take GDP/(market cap of silver * velocity of circulation) which would give you the "natural" price of silver in today's dollars if we were to go to a fully silver standard. It'll be easier to find the numbers for gold to do a back-of-the-envelope. Wikipedia reckons there are 2.2 billion ounces of gold in investments worldwide, that 2013 US M1 money velocity is 7 (close to the average of recent decades) and that world GDP is 70 trillion. Knock nine zeros off the billion and trillion to make the numbers easier and you've got: Price of gold = 70,000 / (2.2 * 7) = $4,545 Sounds reasonable-ish. Does anyone know if a proper study has been done along these lines?
Not so hard to find silver numbers after all. Wiki reckons silver reserves are 530,000 tonnes = 530 billion grams = 17 billion ounces. Doing the same as before gives: Price of silver = 70,000 / (17 * 7) = $588 Six hundred dollar silver!!! Not so fast, gold would also be money under any such system, so the actual number would be lower. But it gives us a GSR of: 4545/588 = 7.7 Implausibly low. Not surprisingly given that the number above is just the amount of silver in the world divided by the amount of gold. But to bring it back to topic, silver is actually, on those numbers, somewhat more than six times more common than gold.
The more I learn about silver, its well established and widening uses (that includes amazing medical findings which I find fascinating), its importance to the technologies we rely upon, the overall increasing demand for it while at the same time it is becoming more rare, etc... The more convinced I am of just how incredibly undervalued it is and how precious it is. I'm not sure we should think of silver in relation to gold though: Oil might be a better comparison. In terms of its value and importance to our society, silver is not like gold, it is like oil, people just aren't as aware of this. I believe with its increasing rarity and importance, it will rise much as oil has. Silver seems to me to be where oil was when it was $17 a barrel, before its rise to much higher prices. We will not see $17 oil again in our lifetimes, and likewise I believe that at some point the sheer weight of the cold hard reality of the physical market will cause the paper game to collapse. Not necessarily in a dramatic fashion but more like the relentless advance of a glacier, it will just push short term speculative trading and manipulation to the side. Silver will rise, and $19, $20, $30, $40 silver, like $17 oil, will also be a thing of the past that we will not see again. The global economy doesn't need to crash for silver to rise in coming years. It's going to rise anyway, because it must. I believe a time is coming when bullion banks and traders will not be setting a ludicrous 'Alice in Wonderland' price for silver based on a speculative paper market that doesn't deal in reality, but the producers will be setting the price and the world will just have to accept *that* reality.
You seem to have a back to front argument. How is a shortage going to rapidly disappear? I would have thought migration would add to that shortage. My original assertion was based on 500 oz or equivalence (on today's price) though on second reading I am wondering if valuecreator meant that the value of the metal was going to be a thousand per ounce.
IMO purchasing power of RE will go down by at least by half, and Ag purchasing power will raise more than 30x (more than a ten bagger in price) - that's from today's numbers. In the next decade. So in the next ten years you'll be able to buy a $500K property (2013 australian price) for 500oz Ag (give or take 100 oz). Prices are always hard to predict, but purchasing power is a lot easier, in the long term. but then in ten years a lot of things will be different. Interesting times. the main point is that most stackers will be overwhelmed by the volatility. This is one violent, pissed-off bull. The banksters has been letting us know, for almost two years now, that they will get out of this mess by a Gold re-peg (at least $7 000 USD). They need to loot the pensions and bank acct before doing that (pensions are $17 trillions in the US alone). You need to decide if the GSR will then be lower or higher than now... 30 year trend says way way lower. at this point, a break above GSR 65 for an extended period ( more than a year) would mean the 30 year trend is over. Another way to look at it is: 100 years ago, a good wage was around 1oz of Ag a day. Today in Australia it's not that hard to earn between 10-15 oz a day. I believe "silver wages" will be going down dramatically in the next ten years, specially when you consider what 75% of the rest of the planet earns.
http://mercuryreliance.files.wordpress.com/2012/01/silver-gold-ration-600yrs.gif Note log scale. And this doesn't even include the last 15 years.
