Since I'm apparently just a loonatic for thinking the price of silver will (eventually) be much higher than it is now, I obviously need help understanding the current GSR. The historical ratio was about 12 to 15:1 because that's the ratio it came out of the ground. Okay, there is MORE gold than silver out of the ground right now so why in the world is the ratio 65:1? Yeah, I'm crazy for thinking an eventual $100/oz silver is definitely within reach, if not more. But if the GSR went back to historical norms (which it should, at the very least, unless I'm missing something, hence this post) at CURRENT gold prices, which will probably also rise in the future, that alone would put silver at around $100/oz. So really, why is the GSR 65:1 and how is this an illogical viewpoint?
Gold is a better buy than silver. It is less volatile. It's safer and becoming more so, as the economic situation deteriorates. I can see a point where gold goes up and silver goes down.
I wouldn't call it illogical, but it fails to consider the factors that drive silver's price - ie. supply and demand. Gold price does not drive the price of silver. Demand and supply of silver drive the price of silver - and ATM silver is on the nose.
Part of it is the massive reduction in silver held by national financial systems. For most of human history silver was currency and more recently held to back paper money but that's no longer the case. Although you won't find an audit to prove how much exactly is there, there is still hold held at Fort Knox as well as London and all over the world. If you believe some people (including a few serious people) China and Russia are buying physical gold AND silver in very recent times do this may change things to put the GSR a little closer to historical levels. There are a few other important factors though, the vast increase in production of metals that produce silver as a byproduct being notable. To a lesser extent there is less demand for silverware and silver jewelry relative to production.
You planning on buying buggy whips too? Those were being used the last time the GSR was around 15-1. Heck, millions of years ago, carbon dioxide levels were far higher than today and most of the earth was tropical. 10,000 years ago we had the Little Ice Age. Things change. Gold is a Tier 1 Basel III asset, silver is not. IE., banks demand gold, not silver. I certainly hope we don't go back to needing buggy whips and I have yet to see any rational explanation as to why the GSR should go to 15-1. Don't take these numbers as gospel but look at rhodium vs. gold. http://en.wikipedia.org/wiki/Abundance_of_elements_in_Earth's_crust If you only consider supply, rhodium is far rarer than gold and should be far more expensive. Yet are similarly priced. Demand is just as, if not much more important than supply. In 2003 rhodium was $500. In 2008 rhodium was $9000 at its peak and $1000 by year's end. Did the supply of rhodium change that much during this five year period? No, but there were great changes in demand. During the 2008 GFC, silver and platinum dropped 60-70%, gold dropped 30%. Why the difference in price drops? Demand. Silver & platinum are mostly as used industrial metals, while gold is mostly used as money. Despite what silver sheeple will tell you, there is still a significant amount of silver in the ground. Show me why the demand for silver will greatly increase and we can talk about significant changes to the GSR. Don't use information from Stephen Leeb. He has already been caught falsifying data before.
So it is not true that the price of gold is a factor in silver? The first rises and the other follows? I know I've read that from a few people, but I haven't really studied the charts, and numbers don't lie, if that's the case. Dccpa your ancient times reference is irrelevant to the discussion, which is about WHY the GSR is so far from the historical average. "That was a long time ago, there was an ice age at one point too" is hardly a reason.
What I was pointing out is that things change and the ancient ratio of 15-1 was set in a different time when silver was money. That ratio has no relevance today. Instead of seeking confirmation why silver will return to the 15-1 GSR, you might ask what relevance does the 15-1 GSR have in a time where the use of silver has changed from money to mainly an industrial commodity. I have yet to read an answer to that question. Most of us accepted that 15-1 GSR argument when we got into silver. Some of us have learned to think for ourselves and no longer blindly accept what the Telescamgelists tell us. Yes I made that word up yesterday. But I like it and will continue to use it. I can make a better argument for the return of the use of the buggy whip than you can make for a return of the 15-1 GSR. As far as numbers not lying, Mark Twain is quoted as saying there are lies, damn lies and statistics. As nonrecourse or renovator said, learn to think for yourself. Good luck. I never see any new ideas on the return to the GSR, so there is no reason for me to continue to look at threads on it.
To be fair there are lots of people who feel the current GSR is out of whack and that silver should be closer to gold. How much exactly is hotly debated but I think as has been pointed out 15 to 1 is not a realistic number in todays world.
Last time I checked (within the past week), the GSR was close to 72...it is climbing and may not stop any time soon. It could stay at above 100 indefinitely. Sentiment drives prices which is, for all intents and purposes, the general perceived value of a commodity like silver. There is much more above and below ground silver than gold and silver is generally a lot more abundant and accessible in mining. Add to this the fact that silver's use industrially could take a big hit depending on new technology and materials, and it's even a bigger nail in the coffin of silver in regards to the mythical and very far fetched 12:1 / 15:1 return of the GSR. .
So dccpa admits that he believed in the 15:1 GSR return when he first got into silver and then criticizes newbies for believing in the same thing. I DO make up my own mind, why do you think I'm asking these questions? If I was dead set on it then I wouldn't ask any questions about it. One of the reasons I ask is I want to see if people have legitimate reasons or if they are just emotionally invested and unwilling to consider the possibility that they threw a lot of silver away if that ratio ever does return. With some people, you can tell this is the case, because they actually get mad when people bring stuff like this up, they really do NOT want silver to soar because a) that would make them wrong and b) they probably sold a lot of silver when it was low.
Why buy then mmissinglink? Honest question. Are most people seeking to make little profits here and there, more as a game than actually making real money? Also, it seems like you've done some research into this. Could you provide a link or at least give your opinion what you think the probability of silver being replaced for different materials is? With what products are we talking about other than solar panels, etc. thank you
Hey Sonic, many of us initially fell for the many silver permabull claims we heard being spewed...myself included. After all, many of the snake oil silver salesmen making those pitches are relatively smart people...and the rhetoric comes off sounding really good....until you start to investigate their claims. I think that dccpa is just frustrated with the apparent tone of your convictions and that's why he may have come off as a little curt....but I can not really speak for anyone else. I can get very frustrated too when I see folks toting with great conviction the laughable claims of the silverbulls. Just like dccpa, I have seen no sound argument whatsoever for the return of silver to anything close to a 15:1 ratio. If anything, I think that ratio will widen indefinitely (with fluctuations of course). I could be wrong but you will rarely if ever see the permabulls admitting that they could be wrong....and they have been monumentally wrong so many times. .
Well I have that tone with him for other reasons, him attacking me for no good reason on another thread when I was trying to keep a peaceful discussion, it doesn't have anything to do with the topic at hand here. He's just determined to come in and bust my balls now no matter what I say. It's not really my conviction that resulted in that tone, but rather the attitude I got from him and a couple others, but mostly him. I knew he'd read and respond to this thread, hence part of the tone. I apologize for being childish in that regard. I find it ironic though that he told me to think for myself. So I'm not a free thinker because I don't agree with him? If I did agree with him then that would be thinking for myself? Damned if I do and damned if I don't. But like I said, my mind is not made up, so I wouldn't say I really have a conviction. That's why I've been asking so many questions. I did quite a bit of reading before joining here and I suppose it was mostly permabull theory, so I'll admit it leaves a bad taste in the mouth when I come here and find out all of the real silver stackers think it's all nonsense. I already don't have faith in the dollar, now I'm told to not have faith in silver. I don't have the money for gold right now. So whatever, I guess it's all for nothing. I'll probably take a break from here, I think I've asked enough questions for now. Thanks for all the advice mmissinglink, you're one of the good ones.
Hey Sonic, I do understand your sentiment; I've been there and still struggle at times with trying to get a sense of whom I can trust to tell me the truth and what things I can own that will maintain its value over a period of time. I actually think that it's a good idea for people to regularly take a step back and assess their current beliefs. Too many times people allow their emotions to rule over them and that doesn't usually make for sound decisions whether that is in the form of where to invest your money or whom to get involved with in business or personal relationships. As for investing money in metals, it's not that different than investing your money in property...there are inherent risks to both, there are scammers / pumptards in both, there are many good people who get fooled by the pumptards, and there can be rewards for those investing their money into property and/or metals. Everyone is different and has different circumstances in their life, so not all ways to invest your money are the same for everyone. But when I talk about an expanding GSR, or the fact that silver is not money, or that the only value silver has is extrinsic (subjective value), or that upcoming/future technology can kill some of the industrial demand for silver, this is meant as a cautionary perspective in order to help others become aware of the bigger picture (which is never as rosy for the future of the products they push as the picture painted by the pumptards who have a vested interest in making the sorts of outlandish claims they make), not as a dire warning to run as far as possible from metals. The more informed you are, the more open to all sensible and honest perspectives you are, the better decisions you can make. If all I was to do was to heed the rhetoric of the permabulls who regurgitate the scary stories of the imminent global currency collapse/end-of-days scenario, then does anyone really think that the choices I make based on this will really be the best choices I could possibly make? I don't think so. Also, I'm not meaning to insinuate that all end-of-days/global currency collapse permabulls are evil people with only malice intentions...no. Some or many might be but some are just not very good at thinking things through and being more objectively realistic....in other words, they are going with too much emotion and not enough reasoning. I personally know people in my life like that...well intentioned, decent people....just stuck in their little vortex of emotions. .
I already don't have faith in the dollar, now I'm told to not have faith in silver. I don't have the money for gold right now. So whatever, I guess it's all for nothing. ..... If yourve got the money for silver, you've got money for gold. You get less gold, but its more valuable.
Different horses for courses. We have three intangibles, gold, silver, and fiat, that we choose to measure them against each other is where the debate lies. If you where in Cyprus two years ago, cash outside of the banks would have held you in good stead; gold and silver would need to have been sold to get cash. If you had silver three and a half years ago and traded for gold before the crash, you'd have double the value today. It comes down to personal choices and circumstances, but the overlying principle is stay outside of the banking system.
Thing of it is that silver liesin a no man's land nowdays as investors at large go back and forth on whether it's still primarily an investment metal, a poor mans gold or if that's the past and now it's a volatile industrial metal. If you believe as some foo that China and Russia are buying silver for their national banks to back their economies then you might see a little return to the first way of thinking and by extension more stability and a closing of the GSR, though again, almost certainly not to 15/1 but for the moment silver's volatility reflects it's place in no man's land between gold and copper.
It's good (extremely important actually) to have people to balance out the permabulls. Some permabulls truly believe what they are saying (these are the honest guys who genuinely care about what will happen but their outlook may not match the facts on the ground), but some permabulls are really just touts for silver and don't give a shit about misleading new stackers. An added complication for those of us outside of the US is the local currency exchange rate. Even if silver stays flat in USD, economic conditions (in the US and locally) may cause the price to rise or fall when denominated in the local currency. So you can be a bear or bull on silver, and also a bear or bull on your economy relative to the US economy and the exchange rate which leads to 4 combinations. Maybe you could also separate out two further diametrically opposed viewpoints: the doomers and the radical abundance technological singularitarians.
I suppose technically I could buy gold right now but at the amounts I'm currently investing in silver it would be very insubstantial and I would question the tiny pieces of gold I'm collecting. I do want to buy gold though, I'm hoping for it to drop below a grand and then I might consider it more seriously. Is there reason to believe gold will shoot up? If not what's the point? Just a way to save money I guess. It's only a hedge against inflation if the value of it continually rises. I think I'll still buy silver. Not because I'm playing the lottery, but like the lottery, there is still that possibility, no matter how slim. But maybe I'll play the game of trying to buy low and sell high. I think I stumbled in at a very good time to do that. If nothing else this will help me save money. Sort of like having my own little bank at my own house. With possible interest growing on it. One thing is for sure I'm not going to sell at a loss. It's so low right now but even if it drops lower and stays low I'll just sit on the silver, that's kind of my plan anyway. Maybe it will be a good gift for my kids some day. Teaching them how to manage and keep up with prices for their precious metals, could build a good investment mentality in them. Now all I need to do is have kids. But I might want to find a female to impregnate first. Priorities man...fuckin priorities.
