I'm still new to how investing in precious metals works. So i wanted some advice. I always thought that if the value of silver raised significantly past the amount in which you initially paid for it, then you would make a profit. But i've read in a number of places that it's not that simple, because PMs go up in value during periods of inflation when fiat decreases in value and people need a hedge to protect their wealth. Does this mean that silver stays at relatively the same value or purchasing power as before, simply because the more $ it is worth buys less stuff than it could in the first place? What about the laws of supply and demand? As more people flock to buy the silver, there will be less available silver to purchase and so the price goes up. When we start to see SHTF there should be a global rush of millions of people (including billionaires) that rush to get as much physical PMs as possible. The whole situation may get even more exacerbated when people realise that not that much physical actually exists because all those funds that issue out paper silver in the billions actually have very little REAL silver in their vaults (Even perth mint has articles on this, let alone American equivalents). Should these factors not increase the actual purchasing power of silver? How is silver just a hedge when it becomes a scarce resource thhat many may want a piece of... I've also heard from many sources that silver supply is struggling to meet industrial demand for many technologies such as solar panels. Again another source of demand is industries that need silver, not just the investors like us. Also, is the price of PMs not a global thing? Sure, if silver increases against the USD which is tanking, you won't necessarily be able to buy more stuff through the worthless USD, but what about through the Chinse remnimbi or AUSD? I've heard that China won't be that much worse off in a US collapse, and the price of silver is a globally set thing.
At the moment silver is rising in value from what I can see, it's trending up against everything, gold however is staying at roughly the same price in AUD but raising against USD, etc, so I'd definately see it as a hedge at the moment. or something, I've been thinking about this today too =)
I had a dream last night that the SP rose to $1400. Silver had become what gold is now. The gold price was beyond my dreams (i.e. I didn't find out). I'd say that's my speculative side It's mainly investment for me at the moment. I'd be ready to part with it for a reasonable exchange. I see gold as a hedge against everything (inflation, depressions etc..) and will not part with it unless it was absolutely necessary. I think silver only guards against a SHTF scenario. I think such a scenario is unlikely because the sheeple will not want to let go of their iPhones and will do what they can to comply with the governments final solution in an economic crisis. Whether this means defaulting, introducing a new currency etc... However, supposing things don't play out as "nicely", any item serving a primary need will skyrocket in value - the SHTF (housing, potatoes, rice, wheat, drinking water etc.. go to the moon). Gold and silver may be used as currency to trade for those items. That's when silvers role as a hedge would activate. Something tells me it would be more convenient to use our existing cupronickel coins though. In a twist the likes no one has ever seen, everyones aversion to "loose change" and the increasing use of plastic has lead to few people holding any significant quantity of coins, thus making it a great item for trade.
I'll second 2ds - silver currently does more than maintain value. Just be aware that silver has a pretty dominant industrial vector. A big hit to industrial demand could still well and truly override the monetary demands being faced. The monetary demands at the moment are driving silver up towards its opportunity cost (which is different for each use). As price rises, industrial demand won't change much - yet. Gold is wealth, so to say it maintains value is an understatement.
Atleast for the last few years, I believe there is more than enough supply to meet the industrial demand, but the investment demand is playing a big part in price.
Wow what an amazing dream. It's a pretty funny coincidence because i think i've dreamt similar. I don't know about you but silver is on my mind 24/7 haha But thanks for the info, i'll keep stackin the silver hoping to get lucky with it and have a bit of gold as a hedge too, although I don't really think that is necessary for us in AUS, but then again i've never seen what is about to happen to the world so maybe i am very wrong.... I just wish my casual job would pay more so i could stack faster, sucks being a young uni student and having an interest in precious metals
Too me Silver is REAL money ,everything else is phoney(exclude gold of course) Its not an investment and its not a hedge........maybe it was once ,not now......... http://www.youtube.com/watch?v=SWnakZIuqd0
