There seems to be a correction with the stock market. I don't know when it will end, but say it continues for another 2 weeks, and there is general pessimism about the economy (the stock market is really quite divorced with the economy right now). And suppose the central banks say that they won't do any QEs any longer. Would that be good for the price of silver or bad? My guess is that the price of silver will drop, because people will have less money to invest, and people think that the economy will slow down, so industrial demand for silver will drop. On the other hand, one can say that people won't know where to put their cash, and will put in PM, so the price will go up. What do you people think??
If the stock market crashes and there is no new stimulus... silver?
- Thread starter Cheepo
- Start date
Pirocco
Well-Known Member
Remember that the uncertainty and bad news caused people to cease spending and save more.
Central bank figures (long term savings balances) make this clear.
And it's the very reason that central banks during the past decade and especially post 2008 pushed down the intrest rate pivot close to 0.
That's one side of the story.
Then we have the other side: those in debt. These cannot or can save less. Higher intrest rates and / or dropping specific prices (products heavily lend money for like houses) would inflict them higher and higher costs on devaluing property. Failure to pay back the loan equals banks bankrupt, and that is also what QE was ment to avoid.
Those are the involved risks, that have to be judged against the risk of silver, at the moment price being under the decade average.
Stocks sit on decade term record highs (small part so far already dumped for cash / bank deposits).
Silver sits on a 4 years low.
Where do you see less money to "invest"?
Lol, it's the opposite, and every day adding to it, for the very reason you brought up yourself: people swapping stocks for... bank savings... to do.... that's the question! Waiting for suckers to sell lower whatever?
Central bank figures (long term savings balances) make this clear.
And it's the very reason that central banks during the past decade and especially post 2008 pushed down the intrest rate pivot close to 0.
That's one side of the story.
Then we have the other side: those in debt. These cannot or can save less. Higher intrest rates and / or dropping specific prices (products heavily lend money for like houses) would inflict them higher and higher costs on devaluing property. Failure to pay back the loan equals banks bankrupt, and that is also what QE was ment to avoid.
Those are the involved risks, that have to be judged against the risk of silver, at the moment price being under the decade average.
Stocks sit on decade term record highs (small part so far already dumped for cash / bank deposits).
Silver sits on a 4 years low.
Where do you see less money to "invest"?
Lol, it's the opposite, and every day adding to it, for the very reason you brought up yourself: people swapping stocks for... bank savings... to do.... that's the question! Waiting for suckers to sell lower whatever?
?? You didn't really answer the question.
"Stocks sit on decade term record highs (small part so far already dumped for cash / bank deposits).
Silver sits on a 4 years low."
Haha. What?? Silver is exiting the bubble. I think it hasn't exited yet. I think it will exit when it is at 11-12 or less. Stocks (in the US) are also in a bubble. In HK they are only 10-20 overvalued, but in the US maybe 20-30%. Silver is 40% or more overvalued. What I was wondering is whether this drop in the stock market will lead to a drop or an increase in the silver price. Of course in the longer term (1 year, who knows?), silver will drop from the present price, but in the meantime, will it go up or down??
"Stocks sit on decade term record highs (small part so far already dumped for cash / bank deposits).
Silver sits on a 4 years low."
Haha. What?? Silver is exiting the bubble. I think it hasn't exited yet. I think it will exit when it is at 11-12 or less. Stocks (in the US) are also in a bubble. In HK they are only 10-20 overvalued, but in the US maybe 20-30%. Silver is 40% or more overvalued. What I was wondering is whether this drop in the stock market will lead to a drop or an increase in the silver price. Of course in the longer term (1 year, who knows?), silver will drop from the present price, but in the meantime, will it go up or down??
Pirocco
Well-Known Member
You want an answer on the querstion where the silver price will be driven to?Cheepo said:
I gave you MY answer.
Ask 100,000 others, and put it in a chart or so?
You claimed people having a lack of money.
Take for ex the stock market.
In recent weeks, some sold stocks big time.
Remember what selling is?
It's exchanging something for something else.
What did those stock sellers receive in return?
I would say that they have the sales value of their stocks now on their bank accounts.
Where do you see lack of money?
It's your thought, but if you want something "haha", well please, reread your statements.
But remember, and again, I don't know where the silver price will be driven to.
Some people buy high.
Some people sell high.
Some people buy low.
Some people sell low.
Which "kind" will dominate?
Suppose the silver price is driven to $100.
Suppose the silver price is driven to $3.
Then what?
How long will those price levels last?
How does it matter how long they last?
I can ask a dozen questions like yours.
The average silver price during the last decade was higher than today.
That's the "main" comment I made.
You think silver hasn't exited a bubble.
How do you judge a bubble relative to an average?
Is 10 years too short?
Do you want 20? 30? 40?
Silvers price was USD $1.635 in 1970.
It's now $17 in 2014.
Today is 10 times the 1970 price.
44 years later, price x 10. 70% of this increase the last decade.
That's like a bank account that received 5.5% intrest every year, for 44 years long.
Is that good? Bad? How to judge?
One thing I know: bubbles and longer term averages tend to NOT go together.
mmissinglink
Active Member
It's a good question Cheepo and it actually begs an equally important question....will gold and silver prices finally become uncoupled if that does happen? Why have gold and silver prices been moving in sync with each other anyway (to a lesser degree the greater the GSR becomes)? One, silver, is mostly an industrial metal (industrial demand is more than 1,000% greater than all physical bullion and coin demand combined) while the other, gold, is sought after as a metal which holds value (jewelry demand) and as an asset by Central Banks and institutional investors but with little industrial demand.
The two metals should be uncoupled and then that would be interesting to see where prices would move in a scenario like that which you present.
I don't know where the prices will go but I do think they will remain range-bound for a while until investors/traders figure out if the metals are a good or bad place to invest their money.
.
The two metals should be uncoupled and then that would be interesting to see where prices would move in a scenario like that which you present.
I don't know where the prices will go but I do think they will remain range-bound for a while until investors/traders figure out if the metals are a good or bad place to invest their money.
.
missing link makes a good point about decoupling silver and gold, but I think the bonds that bind them are stronger than those that differentiate them. That said, both offer a safe haven from both stock and bank collapses which I feel is near. The question will be in how do we measure their value? Certainly not fiat, more so essentials like food, oil, shelter, medicine etc; but outside of barter, what will be the medium of exchange?
the oil price would be dropping, so it is with the US$
the gold price has gone up and down, but now the large hoarders could not take the price display on the exchanges.
most likely we would see two giant markets setter for the world gold price. and the reality is physical to settle it, since arbitrage is the fair of that challenge.
it is impossible to win on both games in comparative terms. so one must give ways.
if oil price is to drop, you can not force the gold price to drop, since they are the anti-thesis on each other.
if one has trillion of USD and 30ktonnes of gold, how can China goes bankrupt for hoarding these too much??? war will never defeat a nation whose time has come.
the western markets can crashed all they wanted, the eastern economy will continue to proser without any new stimulus. so it is possible to have two internets, and two divided world economically.
silver, keep buying them while there are plenty of them for sale. when the sale ended there is no more on the bargain counter.
the gold price has gone up and down, but now the large hoarders could not take the price display on the exchanges.
most likely we would see two giant markets setter for the world gold price. and the reality is physical to settle it, since arbitrage is the fair of that challenge.
it is impossible to win on both games in comparative terms. so one must give ways.
if oil price is to drop, you can not force the gold price to drop, since they are the anti-thesis on each other.
if one has trillion of USD and 30ktonnes of gold, how can China goes bankrupt for hoarding these too much??? war will never defeat a nation whose time has come.
the western markets can crashed all they wanted, the eastern economy will continue to proser without any new stimulus. so it is possible to have two internets, and two divided world economically.
silver, keep buying them while there are plenty of them for sale. when the sale ended there is no more on the bargain counter.
Pirocco
Well-Known Member
The key to a future price trend is not production and demand on a per-year basis, but how much of the product got stockpiled. The size of the current stockpile.
So in order to find the future price trend, we'd need to have a chart that shows the stockpile evolution over the years.
The fluctuation in that evolution, compared to the price fluctuation, then delivers a ratio, which in turn can be used to determine how much years the current stockpile can remove price dollars, resulting in conclusions like we can have an average price of $X over a time period Y.
To determine the stockpile addition / removal rate, GMFS data can be used.
As example, let's take jewelry.
(in Moz, the A > B shows how much it was revised later on, so the right column is the corrected)
1990 -116.2
1991 -114.8
1992 -136.8
1993 -171.8
1994 -150.7
1995 -153.6
1996 -146.4
TOTAL1990-1996 -990.3 RATE -141.471/YEAR AvgPrice $4.47 <<< REFERENCE
1997 -150.6
1998 -140.6
1999 -159.8
2000 -170.6
2001 -174.3
2002 -168.9
2003 -186.8
TOTAL1997-2003 -1151.6 RATE -164.514/YEAR AvgPrice $5.07 >>> RATE +23 Moz = +16.3%
2004 -187.6 > -187.1
2005 -188.4 > -187.9
2006 -176.5 > -176.0
2007 -183.8 > -183.2
2008 -179.1 > -178.2
2009 -178.7 > -177.3
2010 -192.8 > -190.6
2011 -186.5 > -183.4
2012 -185.6 > -181.4
2013 -198.8
TOTAL2004-2012 -1659 RATE -184.333/YEAR AvgPrice $17.88 >>> RATE +43 Moz = +30%
The jewelry RATE difference is +30%.
The price difference is exactly +300% (quadrupled price).
So, the price change is 10 times the jewelry demand change.
Conclusion: jewelry didn't drive the price, and can be ignored, no reason to take it into account for the price.
Simply because changes matter, not amount % of a total demand.
Then we have industrial demand.
GFMS recently combined industrial demand with photography demand.
These combined figures show that both compensated for eachother.
Industrial increased:
1990 -272.6
2004 -430.0
2013 -536.2 >>> 2004 +106.2 Moz
Photography decreased:
1990 -209.8
2004 -178.8
2013 -50.4 >>> 2004 -128.4 Moz
So industrial and photography can be ignored too, especially since Silverware's 23.5 Moz drop sits close to the difference, washing it out nearly entirely.
It's clear what DID drive the price: that REAL investment demand.
1.
The Coins and Medals RATE was 31 Moz/YEAR over 1997-2003
It increased to 68.5 Moz/YEAR over 2004-2012.
Bar (not including ETF's/Exchange) demand fluctuated wildly:
2004 -10.6
2005 -11.5
2006 -8.9
2007 -11.5
2008 -122.4
2009 -9.1
2010 -46.7
2011 -94.3
2012 -46.6
2013 unknown, total coin&medals&bars was -245.6
Total2004-2012 Coins&Medals: -616.4
Total2004-2012 Bars: -361.6
Total2004-2013 Coins&Bars: 1223.6
2.
ETF's.
ETF Inventory Build (positive = DEMAND, negative = SUPPLY)
2004 0.0
2005 0.0
2006 157.8
2007 54.8
2008 101.3
2009 153.8
2010 132.6
2011 -24.0
2012 55.1
2013 1.6
Conclusion: in terms of CHANGE, ETF's were the Big Capital price driver.
They were the absorbers and the reason for the mining increase (600 Moz in 2004, 800 Moz in 2013)
From nothing (nonexisting) in 2005 to 157.8 Moz in 2006.
Most of their total 633 Moz in 2013 bought in 2006, 2009, 2010.
They ceased big buying in 2011, and that's indeed the year that the price started to drop again.
And it may also explain why the shareholders, despite the big price drop, still hold: they aren't in the red.
What is next? Well, obvious, production will adapt to the dropped demand. 2013 already showed a big recycling drop, mining should follow.
And, some price-sideways, with some coin and ETF selling from existing stockpiles thrown up to meet eventual extra demand.
Until a next crisis hits the fan, and a new generation suckers gets tricked into paying prices again bloated up.
Nothing new under the sun. Probably the previous generation suckers will try to find their break-even in mathematical terms.
So in order to find the future price trend, we'd need to have a chart that shows the stockpile evolution over the years.
The fluctuation in that evolution, compared to the price fluctuation, then delivers a ratio, which in turn can be used to determine how much years the current stockpile can remove price dollars, resulting in conclusions like we can have an average price of $X over a time period Y.
To determine the stockpile addition / removal rate, GMFS data can be used.
As example, let's take jewelry.
(in Moz, the A > B shows how much it was revised later on, so the right column is the corrected)
1990 -116.2
1991 -114.8
1992 -136.8
1993 -171.8
1994 -150.7
1995 -153.6
1996 -146.4
TOTAL1990-1996 -990.3 RATE -141.471/YEAR AvgPrice $4.47 <<< REFERENCE
1997 -150.6
1998 -140.6
1999 -159.8
2000 -170.6
2001 -174.3
2002 -168.9
2003 -186.8
TOTAL1997-2003 -1151.6 RATE -164.514/YEAR AvgPrice $5.07 >>> RATE +23 Moz = +16.3%
2004 -187.6 > -187.1
2005 -188.4 > -187.9
2006 -176.5 > -176.0
2007 -183.8 > -183.2
2008 -179.1 > -178.2
2009 -178.7 > -177.3
2010 -192.8 > -190.6
2011 -186.5 > -183.4
2012 -185.6 > -181.4
2013 -198.8
TOTAL2004-2012 -1659 RATE -184.333/YEAR AvgPrice $17.88 >>> RATE +43 Moz = +30%
The jewelry RATE difference is +30%.
The price difference is exactly +300% (quadrupled price).
So, the price change is 10 times the jewelry demand change.
Conclusion: jewelry didn't drive the price, and can be ignored, no reason to take it into account for the price.
Simply because changes matter, not amount % of a total demand.
Then we have industrial demand.
GFMS recently combined industrial demand with photography demand.
These combined figures show that both compensated for eachother.
Industrial increased:
1990 -272.6
2004 -430.0
2013 -536.2 >>> 2004 +106.2 Moz
Photography decreased:
1990 -209.8
2004 -178.8
2013 -50.4 >>> 2004 -128.4 Moz
So industrial and photography can be ignored too, especially since Silverware's 23.5 Moz drop sits close to the difference, washing it out nearly entirely.
It's clear what DID drive the price: that REAL investment demand.
1.
The Coins and Medals RATE was 31 Moz/YEAR over 1997-2003
It increased to 68.5 Moz/YEAR over 2004-2012.
Bar (not including ETF's/Exchange) demand fluctuated wildly:
2004 -10.6
2005 -11.5
2006 -8.9
2007 -11.5
2008 -122.4
2009 -9.1
2010 -46.7
2011 -94.3
2012 -46.6
2013 unknown, total coin&medals&bars was -245.6
Total2004-2012 Coins&Medals: -616.4
Total2004-2012 Bars: -361.6
Total2004-2013 Coins&Bars: 1223.6
2.
ETF's.
ETF Inventory Build (positive = DEMAND, negative = SUPPLY)
2004 0.0
2005 0.0
2006 157.8
2007 54.8
2008 101.3
2009 153.8
2010 132.6
2011 -24.0
2012 55.1
2013 1.6
Conclusion: in terms of CHANGE, ETF's were the Big Capital price driver.
They were the absorbers and the reason for the mining increase (600 Moz in 2004, 800 Moz in 2013)
From nothing (nonexisting) in 2005 to 157.8 Moz in 2006.
Most of their total 633 Moz in 2013 bought in 2006, 2009, 2010.
They ceased big buying in 2011, and that's indeed the year that the price started to drop again.
And it may also explain why the shareholders, despite the big price drop, still hold: they aren't in the red.
What is next? Well, obvious, production will adapt to the dropped demand. 2013 already showed a big recycling drop, mining should follow.
And, some price-sideways, with some coin and ETF selling from existing stockpiles thrown up to meet eventual extra demand.
Until a next crisis hits the fan, and a new generation suckers gets tricked into paying prices again bloated up.
Nothing new under the sun. Probably the previous generation suckers will try to find their break-even in mathematical terms.
Pirocco
Well-Known Member
Worthy to add to above figures is this: GFMS revises recent X years ALOT.
This means that drawing conclusions from those recent X years, can seriously deviate from reality. The more recent, the less the figures are reliable.
Especially 'investment' related data seems to be revised. Apparently, GFMS lacks alot data. Or, knows it, but for some reason decided to not take it into account.
A red line I noticed over the years is this one: they assume(d?) every inequality between supply and demand as investment (read: stockpiling/destockpiling), causing the 'implied investment' figures (based on the unknown/inequality) to be consistently higher than what they later get revised to.
This has had serious consequences, which can be identified by comparing the World Silver Survey in that year released figures with subsequent years released figures:
First column = year
Second column = original figure Moz
Third column = (so far) revised figure Moz
2000 87.1 > 94.7 >>> error -7.6
2001 -11.4 > 1.9 >>> error -13.3
2002 12.6 > 24.9 >>> error -12.3
2003 -6.0 > 7.8 >>> error -13.8
2004 -37.4 > 67.9 >>> error -105.3
2005 -67.6 > 0.7 >>> error -68.3
2006 -64.0 > 24.9 >>> error -88.9
2007 -22.0 > 53.5 >>> error -75.5
2008 -48.2 > 48.1 >>> error -96.3
2009 -136.9 > -61.9 >>> error -75.0
GFMS told us investors in those years, that there was X Moz investment (negative = stockpile adding/investing, positive = stockpile selling/disinvestment).
But apparently, as indicated by the later revisions, those figures had an error.
Now look at the evolution of that error.
I should collect all the individual SilverSurvey's for every year as to have a complete picture but this isn't evident.
So I'll use what I found.
During 2000-2003, when the price hung flat at $5, the average error was 11.75 Moz.
During 2004-2009, when the price tripled to $15, the average error rose to 84.88 Moz.
So the average error in the GFMS data over 7-folded since 2004.
Anyone want to make an attempt to explain this?
And this isn't peanuts, because 1) the yearly stockpiling / destockpiling is an accumulating element with equally great impact on the future and 2) an error of 85 Moz is 10% of the annual supply / demand.
And I noticed over the years quite some of those "glitches" in the released silver data. Ex a comparison between the 2012 and 2013 data leaves an unexplained gap of about 200 Moz. Then a funny coincidence of nearly exact same over the years totals of coins&medals and implied investment, as like for every ounce sold as a coin, there is another ounce sold as bar outside fabrication (so exchange/ETF depositories).
What explanations are out there?
- Somebody is messing with data deliberately?
- Some registered/official entitities are able to trade without reporting duties? Institutionals along black pools?
- Some claimed silver simply doesn't exist?
One may also wonder why GMFS, after all those years, finally revised its "Implied Net Investment", only this year (figures for 2013), while they apparently DID have the specialized older data (as illustrated by Coins & Medals having been replaced by Coins & Bars), and ETF / exchange inventory added.
Especially this last is remarkable: they DID have the figures, yet inserted them in what was basically nothing but an error category, as alike they didn't want "investors" to know.
Then, post $50 $40 $30 $20, post mortem, they finally publish the original data.
If GMFS / Silver Institute considers it their job to inform silver market people, well lol, apparently that goes only as far as it fits their vested interest.
This means that drawing conclusions from those recent X years, can seriously deviate from reality. The more recent, the less the figures are reliable.
Especially 'investment' related data seems to be revised. Apparently, GFMS lacks alot data. Or, knows it, but for some reason decided to not take it into account.
A red line I noticed over the years is this one: they assume(d?) every inequality between supply and demand as investment (read: stockpiling/destockpiling), causing the 'implied investment' figures (based on the unknown/inequality) to be consistently higher than what they later get revised to.
This has had serious consequences, which can be identified by comparing the World Silver Survey in that year released figures with subsequent years released figures:
First column = year
Second column = original figure Moz
Third column = (so far) revised figure Moz
2000 87.1 > 94.7 >>> error -7.6
2001 -11.4 > 1.9 >>> error -13.3
2002 12.6 > 24.9 >>> error -12.3
2003 -6.0 > 7.8 >>> error -13.8
2004 -37.4 > 67.9 >>> error -105.3
2005 -67.6 > 0.7 >>> error -68.3
2006 -64.0 > 24.9 >>> error -88.9
2007 -22.0 > 53.5 >>> error -75.5
2008 -48.2 > 48.1 >>> error -96.3
2009 -136.9 > -61.9 >>> error -75.0
GFMS told us investors in those years, that there was X Moz investment (negative = stockpile adding/investing, positive = stockpile selling/disinvestment).
But apparently, as indicated by the later revisions, those figures had an error.
Now look at the evolution of that error.
I should collect all the individual SilverSurvey's for every year as to have a complete picture but this isn't evident.
So I'll use what I found.
During 2000-2003, when the price hung flat at $5, the average error was 11.75 Moz.
During 2004-2009, when the price tripled to $15, the average error rose to 84.88 Moz.
So the average error in the GFMS data over 7-folded since 2004.
Anyone want to make an attempt to explain this?
And this isn't peanuts, because 1) the yearly stockpiling / destockpiling is an accumulating element with equally great impact on the future and 2) an error of 85 Moz is 10% of the annual supply / demand.
And I noticed over the years quite some of those "glitches" in the released silver data. Ex a comparison between the 2012 and 2013 data leaves an unexplained gap of about 200 Moz. Then a funny coincidence of nearly exact same over the years totals of coins&medals and implied investment, as like for every ounce sold as a coin, there is another ounce sold as bar outside fabrication (so exchange/ETF depositories).
What explanations are out there?
- Somebody is messing with data deliberately?
- Some registered/official entitities are able to trade without reporting duties? Institutionals along black pools?
- Some claimed silver simply doesn't exist?
One may also wonder why GMFS, after all those years, finally revised its "Implied Net Investment", only this year (figures for 2013), while they apparently DID have the specialized older data (as illustrated by Coins & Medals having been replaced by Coins & Bars), and ETF / exchange inventory added.
Especially this last is remarkable: they DID have the figures, yet inserted them in what was basically nothing but an error category, as alike they didn't want "investors" to know.
Then, post $50 $40 $30 $20, post mortem, they finally publish the original data.
If GMFS / Silver Institute considers it their job to inform silver market people, well lol, apparently that goes only as far as it fits their vested interest.