Recalculated (official rate) inflation adjusted via http://www.rba.gov.au/calculator/annualDecimal.html Assuming a 1985 silver price of $8.50 AUD, this would be the equivalent of $22.43 AUD in 2013.
At first glance that kind of makes sense, although silver didn't experience massive population growth, or deliberate government intervention - both of which were combined with favourable monetary policy for shits and giggles I personally love shiny things (and very much respect them and their history). They don't have a yield though, and the OP would have been even more telling if the chart went back another decade or so.
Maybe 10 $ is the new 5 $? It's closer to production costs. It's also possible that it'll hover horizontally for a loooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooong time before spikin' :/ But don't worry, by the time you get 75 years old, silver will reach 100 $ (or higher). ...in the distant future... Then, the BRICs will be the new global power, children will all be learning Russian and Chinese (Jim Rogers would be delighted to witness the latter happening), cars will be running on water and they'll be flying like in Back to the Future II, high-end divas will have 3 breasts, dogs will be walked by drones, our meals would consist of pills and we'll also have band-aid like stick-on meals instead of fast food... ...toilets won't have a flushing system, but instead they'll have a teleportation system for flushing - teleporting what needs to get rid off right to the biogas power plants, we'll be watching 3D TV and enjoy the smells of films too... ...Antarctica will be the new green continent, but unfortunately the penguins will have become extinct, ocean water so filthy it'll be dangerous to swim in it, and we will no longer have jetplanes, because there will be no more petrol left! Provided that someone will still want your silver in 2055, keep stacking!
If silver goes down to four bucks, I will sell my car and ride my bike to work. Much to the missus's dismay, hahahaha.
Worth mentioning is THIS: [imgz=http://forums.silverstackers.com/uploads/1798_netmonetarybase.png][/imgz] This is the source document, being a (very interesting correlation) study about recessions: http://one-salient-oversight.blogspot.be/2010/12/using-monetary-base-as-recessionary.html See, it's not the amount dollars on balances that determines general price risings. It's the amount of these dollars that is spent, that circulates. And that shows no such big peak, rather the contrary, the monetary base minus the excess reserves is more of a continuation of the pre 2008 trend. And the EU equivalent case (and probably all worlds central bank cases) is nearly exactly the same. And why is this? Well, simple: the central banks increased the required reserves together with the excess. And this explains why prices didn't rise with the balances. That whole monetary base 'explosion' is just a scam. A scam to trick people like us (they consider us evil speculators that try to evade their fiatcurrency based theft) into wrong decisions that cost us a big enough part of their savings (which are their real problem, they can't rise interest rates due to it). And it worked, I among many others stepped into this scam. The old USD baseline is still relevant.
That is interesting. Of course, if the money velocity picks up, then all those reserves will be mobilised and your graph will catch up with MZM. Also, I'm not sure I agree with his statement that it doesn't matter what the net monetary base is, but its rate of increase each year... I think he's over-differentiating here... Yes, inflation may be dependent on the rate of increase of net base money, but because that is rising linearly we should be seeing an arithmetic rise in prices. The rate of increase of net base money might determine the rate of increase in inflation, but not the change in prices - that's the integration of the inflation - it's a principle of calculus that you have to treat the terms the same on both sides of the equation. So 1985's $5 might will be today's $15, even with a flat rate of inflation. But it's still very interesting... It says to me we are still sitting on a time bomb of money. If velocity goes up, we're headed to hyperinflation.
All the figures in that website end in 2010. I would be very curious to know what happened since then. But yes, you are correct. The amount of money is irrelevant. It's the money in circulation that is important. And this obviously hasn't increased, or we would have much higher inflation.
It's more complex to draw the post 2010 story, since the Fed ceased the EXCRESNS balance, but it's still possible, I explained it in post #64 in thread "Mundus Argentum" http://forums.silverstackers.com/message-558136.html#p558136 Like it was a couple months ago, the "Net" Monetary Base did about +50%, after having been +30-40% for a couple years. There is (as usual when lotsa variables alike with the weather) more to the story though. The +50% circulating money would suggest +50% price rises. But it seems to not have been spent. Instead, it seems to be due to people hoarding cash. And the BoE data http://www.moneyfactory.gov/uscurrency/annualproductionfigures.html seems to confirm this: FY 1999 285491200000 FY 2000 67462400000 FY 2001 57081600000 FY 2002 102496000000 FY 2003 153523200000 FY 2004 127782400000 FY 2005 156819200000 FY 2006 130316800000 FY 2007 181651200000 FY 2008 154169600000 FY 2009 219468800000 FY 2010 239648000000 FY 2011 109670400000 FY 2012 358867200000 FY 2013 472896000000 To take into account: this is just production, a part of it is replacing existing, so it's not only "new". Yet there is no reason why notes would need more replacement now than in the past, and more especially, the increase is largely due to $100 bills, which supports the hoarding cause. I also talked about this in that post. And another element in the story is this one: new money, even when spent, doesn't imply 1:1 price risings. People are able to produce more at a same cost, thus increase the production together with the amount circulating money increase. Of course, this is much harder than creating fiatmoney, and has limits, and the REAL question is whether 2008 was a run into those limits. I think that was the case. If I look at todays industrial level and automation, it's hard to expect a progress alike the one between 1980-2000. This would have a consequence: prices didn't rise much due to decreased spending relative to pre 2008, and if people think the crisis is over, and start to spend more again, general prices may leap forward at a high rate. If one looks at all market data, it does appear like we are approaching some major turnaround. Alot market segments closed in on multiyear boundaries (upper and lower) and a 2008 style crisis re-manifestation wouldn't surprise me. The question then is: how many people will make panic/wrong decisions this time? Look at 2008, where people sold whatever including stocks at bottoms. Look now. The less people make this wrong decisions, the more the central planning runs into trouble, because if they fail to make people wasting their savings, they have to show their ugly fascist faces again more openly, and considering how far they went in this today, some ugly times may be ahead. Nevertheless, I care less than in the past, because I dumped alot dependencies on them (albeit the silver part of it came at a hefty cost so far, due to my spot $30 average). I'm no quitter though, I just continue that way, with more care than in the past. It's quite sure that in such major turnaround, silvers price may be better (for a buyer) than today, and I hope to also find some coins at a price according to it. If it doesn't happen no problem, it would at most be just a few % of my stack more. If that wasn't the case, I'd already have bought this weekend, now I can take the risk without much at stake. On the other hand, the short term indicator shows we're at or past the bottom, so either this short term indicator ceases to be valid, either that major turnaround is not within 3 months. As always: future will tell. World won't end. I have stocks of various stuff, won't need to buy much common stuff (except food) for some decades, so I'm not prone to specific price changes of those. Just to make clear: general price increasings (consequence named as cause inflation) and amount circulating money don't have a fixed relation. There are various other elements involved, and the outcome depends on what these all do together as a total net result. And all those elements, start from people like us, that speculate to avoid the central planned drain. Our success is their end and vice versa. Wishes and hope don't change a thing. Only actions do, and not just any, but only the right ones.
There are two ways to change the velocity, one is the spending, the other is the balance. Something to NOT overlook.
That linear rise is not some force of nature. It's the central planners' target for general price risings. It's only speculators that can make them fail to meet their target. IF they make better decisions. If they don't, then their money just goes in the destruction machine, the new dollars don't face competition, and no price risings, just more poverty and dependency, the seeds of State. Inflation of the amount circulating money, without more production of stuff people will and can buy, leads to price increasings. This 'essential' is important, and the very reason that central planners sticked the name "inflation" on general price increasings. To make one not think that step further in the chain from consequence to first cause. This is an article from Mar. 14, 2011 about such targeting (EU/ECB case): http://seekingalpha.com/article/258120-is-the-ecb-actually-targeting-the-monetary-base?source=feed Look at what happened since: http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=123.ILM.M.U2.C.LT01.Z5.EUR See how that big bump passed? See what it is today? Everything under control Jim. Earlier this year the Euro was considered too strong. They did something about it. Now it's the opposite. Why do they do this? Simple: they try to induce cycles of error. To make speculators waste their bank savings. The key to defeat them is not stepping in those cycles. Your 'velocity up > hyperinflation' scenario is nothing but a speculators win. So far they failed. With many thanks to some vested interest clubbers out there, that think of themselves and screw the other speculators.
So do you mean < --------- SIDEWAYS ------------ > now where have I heard that before. For the last year and a half ..... hrmmmmmmmm
