SilverPete concurs. But seriously, imagine how bad it would be if we get stuck in a disinflationary environment for the next decade with precious metals prices stuck in the doldrums (with an occasional spike on geopolitical events giving people false expectations). While this may be unlikely due to the increasing probability of a severe economic disruption, it's worth considering.
These precious metals prices, stuck in the doldrums, what are you pricing them in? If they keep printing fiat, and it's easy to keep earning, then silver is a bargain buy. As long as you maintain a comfortable lifestyle, it doesn't matter how much discretionary silver you own. I think the end game will be individually unique, so you cut your cloth to suit your own circumstances. I put my kid through 13 years of private schooling and then university, had I neglected him and stacked silver, I'd be a lot richer, but less of a parent.
I never rule out anything, so I hedge accordingly. That's a likely scenario as any. And on some levels, would even welcome it. My buying surge in the last several months had to do not only with the action in spot, but also the "need" to ramp up my stack/collection, while decreasing exposure to other asset classes. IOW, it's not something that's going to be happening very often with me in that fashion & at that pace. Spent a *lot* of time digging around to see what's out there, ramping up my knowledge, and scouting dealers/sellers & comparing prices. And although new pieces are always being produced, and I haven't explored every single nook & cranny of past stuff, I'm happy where I am. My purchases have already slowed way down in 2015, and expect that to continue for a while. Perfectly happy with just one of a certain type of bar, or a certain slabbed coin, for example.. I'm not one to pick up multiples of stuff unless they're raw 1-oz coins, or something special. And even then, still not many.. Would rather spend on variety than mass quantity. There are only so many types of items I'm interested in, and now that I have what I have, there's no need to build up duplicates of them, in my eyes. Also not much of a short-term flipper -- at least for now. Others do things differently, which is understandable. Obviously still have a shopping list, and always will, but it's much smaller these days. Thank god, heh. Anyway, if PM's stay in the doldrums for a while, then it would probably be wise for anyone to diversify within them with pieces of the (semi-) numismatic variety. Might be the saving grace during an extended period of.. flatness.. :|
Pricing them in USD, although I believe the AUD will keep falling against the USD which will impact local prices. Regarding the impact of QE, we are not seeing the hoped-for inflation. Warnings from the more hyperbolic pundits about impending hyperinflation never eventuated. During the period of unprecedented expansion of the money supply, gold and silver have dropped in price. And interest rates are way down which is effectively a transfer of wealth from one group (savers) to another (speculators), and there could lie the heart of the problem... Debates over devaluation of fiat may be irrelevant. The real problem is speculative financial asset bubbles and asset bubbles that increase consumer debt (e.g. housing), things that we are in the midst of now, and the inevitable and painful reset that will result. So don't price silver in fiat. Maybe price it in risk relative to the risk of other assets. The bigger the bubble in other assets, the more of a bargain silver becomes. Actually, I don't know, just rambling on a bit
How else are you going to value it when practically everything we do and buy and pay for in life is in fiat? The only way you wouldn't price silver in fiat is if you think armageddon is going to happen and society collapses etc and we are left bartering with silver in Mad Max Batertown. Which is course the domain of the finest crackpots on Doomsday Preppers
The key word there is "value". What is its value to you? Value is not necessarily measured relative to fiat. And the value you place on something may be more or less than the market price in a particular currency.
Even if your pricing it in Mars bars or holden commadores fiat is still the medium of exchange and when the silver price drops in fiat then it's value against pretty much everything else you can buy in society drops. It's also how almost everyone else on earth values it which means of you want I know what the market values it at fiat is pretty much your only option. Until fiat breaks down which could be next year or never in our lifetimes it's the easiest reference for a quick measure of value.
You're conflating value with market price as measured in units of fiat. Value and price are two very different things, though they are interlinked: So, if as I suggested, you (personally) price silver relative to risk, then you may come to believe that silver is mispriced (in fiat) by the broader market. You would still use fiat as the medium of exchange, wether to buy or sell.
The confusion here may be because I used the phrase "priced in X" which is not a suggestion to move to an alternate currency system, but simply is a use of something as a relative measure when thinking about value, like "priced in gold", "priced in barrels of oil" or "priced in pudding".
Sure, you can have no desire to ever sell your silver, and just collect for the sake of collecting, in which case it probably shouldn't matter what the price is apart from being able to buy more. If you buy silver as a store of wealth as many do, then that has to be related to fiat at some point. If you buy it as in investment or hedge against currency drop then it's related to fiat as well of course. If you buy silver as a legacy to leave your kids, then bet your bottom dollar it will be related to fiat at some point. So unless you are willing to be buried with your silver I'd be willing to be that everyone on this forum ultimately comes around to relating silver to fiat at some point, because fiat is how we live our lives whether you like it or not.
Again, value and price are two different things. This is a fundamental point. This is why there are two sides to a trade. Do you disagree?
I think you don't get what I was trying to say. Of course silver can have value to someone outside it's relative worth to fiat, but at some point for (I argue) everyone, silver will always come back to having a worth relative to fiat for that person. You can't live in a "non-fiat referenced value bubble" forever is my point.
I'd like to barter some stack actually ! In fact, I'd like to see what it's like not to have any contact with precious metals at all, and see how long I can last. See all these people around me, who have no idea of value, or price, and was wondering what it would be like to see how they feel. But in reality, probably get to wednesday, and shelve that idea. Too far gone. Thing is, I can't be any different from most, so it must be perception. And my perception is to trade for another asset, and have no currency involvement. Just need to agree on trivia like, ....... stamp duty !
That seems a very long bow to draw. Whilst value and price do hold different definitions in the context of perceived usefulness, utility, collectability etc., We are not at SHTF yet, so your value based on risk of SHTF scenario is little more than "belief". In this context, the risk should hold negligible weighting in any valuation.
Who said anything about SHTF? Risk is a fundamental concept in pricing. If your analysis of something indicates it may be mispriced in the market, this could also mean it is overpriced.
You are correct, risk is a fundamental concept in pricing. I'd like to see how your risk analysis of bullion arrives at a higher value than spot price.
Again, value and price are not the same things. Is silver a bargain at current prices, is it expensive, or is it "just right"? The spot price is the spot price, so it is "just right" from the perspective of the market, but your own analysis may lead you to believe the market is mispricing silver, either up or down.
I understand that value and price are not necessarily the same, however even by your own definition value can still be measured as a price, with fiat being the standard unit of measurement: So again, I'd like to see how your risk analysis of bullion arrives at a higher value than spot price, given bullion is the raw commodity.
That's from Wikipedia btw: http://wikipedia.org/wiki/Value_(economics). It's saying value is a relative concept in the economic sense. But I get your point, you think I said the risk associated with silver means the spot price is too low. What I actually suggested was to consider a relative value measurement (against stocks for example) using risk as the units, not fiat. So you'd need to evaluate the risk of both and draw a conclusion.
