Greeting to all fellow bullion stackers! I don't know if the topic has been discussed before, but I want to discuss how skyrocketing of gold&silver value will transform bullion markets. Right now dealers have enough bullion in stock, people are OK with waiting a week when they order from JMbullion and companies like it (presumably, I don't get bullion via delivery, I pick it up, BTW how many of you guys use delivery?), but when (hopefully) the price skyrockets, shortages could change the bullion is sold. Do you think dealers will cut their delivery capabilities and will be opening lots of pick up places? Because if by the time an order comes to buyer the value of it could dramatically change, and dealers won't be ok with that IMO. And people will want to get desired bullion right now, not wait. What other changes could come to the market in your opinion? What wound shortages change?
I'll start a metal detector racket from the back of a truck for those who have yellow fever or ebola and feel like they are missing out.
A time in which $80 USD silver is a reality is a time when an average box of soap powder may be $75 USD and a movie ticket in the US might be $45.00 USD. It's definitely possible and could be probable under many conditions. Think about all the surplus silver there is....I've read plenty of articles lately about many, many, many tons of silver deposits that could be dug up over the next several years. Mints like the US Mint have no problem supplying millions of ounces of silver a month for the silver coins they sell....what about all the other official mints and private mints that also seem to have no real shortage of silver product on hand. Then think about the tens of billions of ounces of physical silver that already exists above ground in the form of either bullion and coins, jewelry, industrial supplies (generally in the form of large ingots?), and the silver that is readily recoverable. Then think about the sentiment regarding silver; it's no longer used as money nor is it any longer used to back a currency by any nation (that I'm aware of), Central Banks are not stockpiling silver reserves any longer, there's serious potential for silver to be replaced in some industrial applications (especially if somewhat comparable materials that are less expensive can be used), and if the GSR stays indefinitely at the high levels we see today, I'll bet that will drive plenty of people whom may normally invest their money into silver bullion to buy gold instead. Buying physical silver today in the hopes that the value will be at unprecedented high levels may be a speculators gamble. That's not to say that it's unreasonable to think that the price will head upward over the next couple/several years into the 20's or even 30's USD, it's just that silver isn't what it used to be when the GSR was about 1:16...and may never be again. That doesn't mean that I have stopped and want everyone else to stop buying silver...no....it's just that I no longer have the same beliefs I had the first few weeks I was bitten by the metal bug. $80/oz silver? Really? .
But... if soap powder is $75 USD then is it fair to say that fiat currency is rapidly losing value? If so, the the $20 you have in the bank today will buy substantially less (assuming it is not invested now in something that will appreciate as fast as the currency loses value). If you used that $20 to buy silver now then at least it hasn't lost as much value as a $20 note or $20 in the bank getting very little interest.
fiat may not be holding it's value but that doesn't necessarily mean that silver will hold it's value any better than fiat. Holding either has risk. Prized seashells and other items once seen as incredibly valuable didn't hold their value either. I understand the lure of silver and I get why some people are silver fetishists, but in the future, many things that were once highly valued could become ordinary. The world is changing rapidly...we (myself included) need to pull our thinking out of the Bronze Age. .
^ Never said it couldn't, but thus far, there have been many alleged catalysts that permabulls swore would make silver blast off tomorrow, including but certainly not limited to the massive and recurring Fed's QE heroine that's been going on for years. Besides, the reason(s) why silver had thrust up in early 2011 may no longer be valid reasons in the future to bring the price to unprecedented levels. I am one who believes silver will go up in the next couple/few years but I don't see a good argument presented by permabulls which convinces me that we will see to da moon prices as is so often claimed. The most telling thing of all this is that while I have claimed (and will continue to do so), that I am willing to concede that I could be wrong, most permabulls are so fanatical and haughty that they never submit that they have been and can continue to be dead wrong. .
Because mining company's are going to love working for 18-20 dollars an ounce for ever, right? Any industrial metal that is put into some kind of product is worthless.. no one is going to spend 80-100 dollars on acid's to remove a couple of grams of silver or an ounce at most. If there is so much silver why has the shanghai silver exchange dropped from 1150 tonnes to 50-80 tonnes? did they forget to stockpile or something? Movie ticket 40 bucks? well why didnt it become 40 bucks when there was a 10+ year bull market on gold? when gold quin tripled in value all of a sudden if silver goes quin triple the world/market ends? lol
I can recall we were told back in 2012 that mining companies couldn't stay operational if silver dropped below $34 USD (or some value very close to that). Silver's been below $21 USD since mid July...every time silver drops a couple of dollars we are told that the mines really can operate at lower costs than we were told previously...the bar magically moves down time and time again. As for this alleged Shanghai Silver Exchange's lower reserves, first of all, where's the figures you are alleging coming from? Second, maybe that exchange has simply not made purchases to keep up those levels. That doesn't necessarily mean that there isn't plenty of surplus. As for your insinuation that my hypothetical figure for the cost of movie tickets wouldn't rise if precious metals rise because previously when gold rose, tickets didn't also....that's a fallacious conclusion. Just because A didn't happen when B occurred a few years ago doesn't mean that A won't happen when B occurs some time in the future. We don't know either way and i could be wrong but are you willing to concede that if silver rose more than 400% that it's possible that most other values could also rise 400% at the same time? .
You guys obviously haven't been to the movies in Australia lately. Silver is at $18.50aud and you already have to take a home equity loan out to see a new release. One thing that doesn't sit right with me and the chatter I hear about mines is this idea that there is a fixed rate of cost for extracting silver. The costs vary wildly at different mines based in a whole load of factors. I'm sure that there are already plenty of mines extracting silver at a loss and plenty that will happily keep producing at a profit ask the way down to $5-10. Problem is there aren't enough of those $5-10 an ounce mines to supply current demand much less the huge increase in demand coupled with drop in recycling when prices hit that level. I'm sure there is some absolute fixed minimum cost of extracting silver, some mine somewhere has to have the best combination of easy to access high quality ore / low wages / low energy costs, id be curious to know what that is but it wouldn't really matter in terms of the market because it would be a wild outlier. What does matter when it comes to miners is what the median cost of all the cheapest miners combined that it takes to supply current demand (including reclaimed and scrap silver, mining people's jewelry boxes). I'm guessing we're getting fairly close to that number and given that there is a shortfall of production vs demand possibly past it but that could so change in a moment with a change in demand it energy prices.
Interesting. Do you think consumers won't see shortages in case of run for PM's? Is there massive surplus of gold as well?
Just buy in smallish quantities at a time and ride the rolling average and avoid the buyers remorse. Even if spot is going to the moon, buy staggered and steady, hold long term for wealth store and you cannot go wrong.
I agree with this. The rise in silver doesn't ALWAYS have to rise in paralle with inflation. Look at palladium. It has quite a rise from X to almost 1,000 in a short period of time, without inflation going thru the roof. It is more of an industrial metal, so is silver. So, who really knows if slver hits 30, 80, 100, or a 1000. No one here knows, but maybe Turk does, or better yet try Butler, or maybe Morgan? Yeah, ask them, heck, I think you may hear a million an ounce from them by end of year. LMAO.
The reason I asked the question is that like many others here I want I bet on skyrocketing of value of PM's, and aside from stacking some bullion, I want to invest in bullion-related things, like marketing assets for bullion dealers. By my logic, if price of PM's rises 3x, interest of general public in physical metals could rise 10x/20x or more. Do you think run for gold/silver will dramatically increase the share of bullion dealers in advertising industry? Do you think PM's will become a thing talked about in social media like the new iPhone now? Thanks
I think that would be a necessary part for a large run up of silver. It seems that is how it works, once it starts to rise and media catches on the fuse is lit and it goes up from there. The more it rises the more the media starts going crazy and reporting it and the more people buy, eventually it reaches a level too high to maintain and falls back down like the 2011 run up. Until it becomes the center of attention I don't think much will happen, right now it appears to be being avoided buy news stations since it isn't sexy when its falling.
Thanks for answers guys. I just want to clarify the question, how do you think the bullion distribution system would change? Will local dealers with physical stores/pick up places get way more business than online delivery guys (people will want the stuff NOOOW)? Will people go for paying extra for same day/overnight delivery (for the same reason)? How would the market operate during the New Gold Rush? I'd like to hear your hypothesis. Is anybody here old enough to remember the 1979 Gould Rush? What happened back then? Thanks
Why would the market structure be different? It would be just... bigger. More people, more money. Until the opposite happens again. Simply because every ounce extra bought now will be an ounce extra sold later.
If bullion turns from something we buy to something nearly everybody buys, (I've been reading about 1979, when even construction workers in work clothes stood in new iphone-like line to get some) market will change. Has smartphone distribution changed when they evolved from tiny laptops for sending emails to iphones? Now they can be bought on every corner, not in few specialized stores. For example where I like there was a exceptionally hot summer a few years ago, and AC systems and simple cheap Chinese fans skyrocketed in price (like 5x), and customers saw serious shortages. I remember a lot of not AC-specialized stores sold fans that summer, with great profit. Has market changed that summer due to Fan Rush? Yes.
