I've been thinking (don't panic, it's something I do every now and again). Imagine the paper and physical markets had completely separated. What spot price would you guess physical would be at right now?
Don't ask me why, but I think $70.00 is a good point for silver. But what would I know? I thought that sugar diabetes was a greek boxer....
Its kind of the case already. Next to impossible to get .999 for spot. Last time I bought it was 35 and I paid 38.50ish an oz. I think about 3 dollars over spot for generic and 5-7 for govt issued and about double - triple spot for sought after limited mintage pieces.
At least 3 digits in price I reckon. Many people think that Silver is very expensive and then when I tell them the spot price they are surprised at how cheap it is :| (when compared to Gold)
It would be at whatever someone felt like paying for it. In a purely physical world, there's no 'spot' price - only supply and demand.
Hey Lurkalot, Well the futures market was a great concept for creating additonal supply (virtual not real) so from the onset of a futures market there needed to be additional demand or the price would of dropped like a rock with all the new supply (paper contracts). This of course put a dampaner on commodites prices and unrealisticilly gave false supply.. If we were to remove all futures commodoties markets and investors could only invest in todays finite supply of silver.. you would see supply constrict by 20:1 or so... they would be a rush to by up the only real silver in the world... This would be a MASSIVE MASSIVE price adjustment. Industry would buy as much as they could. Mining stocks would quadruaple over night.. you would see new miners come on in the long term to increase supply. Without futures there would be no oversupply of silver to invest in. in fact there would be a huge amount of paper money looking for a place to park and without conjured up paper contracts youd see a natural equilibrium price. Id say this would be in the vicinity of $250 but then again the destruction of a futures market could mean hyper inflation as SOOOO much paper would be chasing a relatively finite amount of commodities IE: silver... this would be the end game when youd not actually want to be selling silver. Futures contracts are the artifical supply keeping the shortage of silver TODAY under wraps... how long can the game last? 1for1
I think it would be around $100 today . But hoarding for security could take it higher in the future, without the paper trading it would be all down to real supply and demand and looking at Ebay and premiums on there it looks like people are already prepared to pay much higher prices for it in the physical. If people are willing to pay these prices for it now I imagine they would pay a lot more just to get hold of the physical if the banks began to fail and panic set in - so possibly up to $300 during economic uncertainty (I am being conservative!) Edit -I was writing this at same tiime as one above - interesting that he says $250 which is close to my $300!
Thanks for your input fellow stackers. It's such a stupid situation the way we operate at present and it pisses me off immensely. I put my cash in to physical, so why the fek should an entirely different entity (paper) have any bearing whatsoever on my stack??!! Still... I knew the rules of the game when I started. Surely there must be, why do you say there's no spot price?
1 for 1 You view sounds very sensible and logical, but I cannot see the paper/digital market being removed, or why it would be removed. It would probably be in conjunction with the same situation in Gold. In my view the price of Gold and Silver would rise by a factor of 10 or (much) more. After a total collapse perhaps? At which point a gold backed Reserve currency would be simple. OC
John aka stellaconcepts tackled this in his recent video. He suggested that in a 1:1 or 2:1 paperhysical market, it is the SPREADS that would be massive on buying physical.
