Silver Price and Beliefs

[Charles Thorn]

Silver Price and Beliefs

Its amazing how much belief plays in to the price of silver. I wrote about this a while ago. But it is true even today as silver is hitting recent lows.

http://www.choosingsilver.com/silver-coin-value.html

I have 3 beliefs about the price of silver that are global and macro in nature and no matter what happens to the price of silver I always keep these in mind.

1. The population of the planet will be growing for the foreseeable future.
2. The quantity of silver on this planet will be the same for the foreseeable future.
3. The interaction of 1 and 2 above will eventually cause the price of silver to rise.

What are your beliefs?

 

[SpacePete]

1. The population of the planet will be growing for the foreseeable future.
2. The quantity of silver on this planet will be the same for the foreseeable future.
3. The interaction of 1 and 2 above will eventually cause the price of silver to rise.

What are your beliefs?

Regarding point one, what is the rate of change for ounces of silver vs. population growth? How many ounces of silver is there for each person on Earth, and how rapidly is it changing?

 

[SpacePete]

On the topic of remaining viable reserves, there is maybe 20 to 30 years apparently.

From VisualCapitalist: http://www.visualcapitalist.com/forecast-when-well-run-out-of-each-metal/

See link for description and discussion. Obviously we wont "run out", but there will come a time when each metal will no longer be economically viable to mine. As someone pointed out, a better title would have been: "how long before each metal is uneconomical and difficult to mine".

 

[Silver bullitt]

In regard to point 1, I believe it is actually more likely the population will decrease dramatically in the not too distant future.
Humanity is long over due its regular cull.

 

[Jislizard]

1. The population of the planet will be growing for the foreseeable future.
2. The quantity of silver on this planet will be the same for the foreseeable future.
3. The interaction of 1 and 2 above will eventually cause the price of silver to rise.

I don't see any relationship between 1 and 2, even though they are both probably true, so 3 does not follow.

You assume that all the new people will want silver, that is not the case now, so why should it be the case in the future? More electronics, solar panels, drone strikes? That would assume that all future electronics are going to use silver.

People now have less silver than people in the past, probably, I haven't counted but with the loss of sterling silver cutlery and serving ware, black and white photography and silver in the coins, all that most people have is in their electronic goods which they throw away anyway.

 

[SpacePete]

...You assume that all the new people will want silver, that is not the case now, so why should it be the case in the future?

Gotta manufacture desire . Do to silver what Debeers did for diamonds.... associate it with desire and emotion to overcome logic.

 

[mmissinglink]

Silver Price and Beliefs

Its amazing how much belief plays in to the price of silver. I wrote about this a while ago. But it is true even today as silver is hitting recent lows.

http://www.choosingsilver.com/silver-coin-value.html

I have 3 beliefs about the price of silver that are global and macro in nature and no matter what happens to the price of silver I always keep these in mind.

1. The population of the planet will be growing for the foreseeable future.
2. The quantity of silver on this planet will be the same for the foreseeable future.
3. The interaction of 1 and 2 above will eventually cause the price of silver to rise.

What are your beliefs?

1. The percentage of people who are interested in silver as an asset is probably increasing at a slower rate than the population is growing.

2. The quantity of above ground available silver is outstripping the demand thanks in part to improving technology.

3. The interaction of 1 and 2 above will not necessarily cause the price of silver to rise. For the price of silver to rise, there need not be any new people buying silver; rather the price could rise when a few wealthy speculators or hedge fund heads who are in charge of massive investment funds, buy silver, I believe.


We can not reply on an increase in numbers of people buying silver to necessarily have the affect of the price of silver to rise. More people buying doesn't necessarily mean more silver being purchased.


.

 

[Charles Thorn]

1. The population of the planet will be growing for the foreseeable future.
2. The quantity of silver on this planet will be the same for the foreseeable future.
3. The interaction of 1 and 2 above will eventually cause the price of silver to rise.

What are your beliefs?

Regarding point one, what is the rate of change for ounces of silver vs. population growth? How many ounces of silver is there for each person on Earth, and how rapidly is it changing?

Ooooh, very interesting! You are trying to help me with my beliefs. Nice... Challenge accepted. Over the next few days I will try to put together some "back of the envelope" data for your review.

 

[Charles Thorn]

On the topic of remaining viable reserves, there is maybe 20 to 30 years apparently.

From VisualCapitalist: http://www.visualcapitalist.com/forecast-when-well-run-out-of-each-metal/

See link for description and discussion. Obviously we wont "run out", but there will come a time when each metal will no longer be economically viable to mine. As someone pointed out, a better title would have been: "how long before each metal is uneconomical and difficult to mine".

Thanks for this... Its the most recent I've seen. So should we start buying silver in 19 to 29 years? Kidding (mostly).

 

[willrocks]

Rare earths suddenly don't look that 'rare'.

 

[Charles Thorn]

1. The population of the planet will be growing for the foreseeable future.
2. The quantity of silver on this planet will be the same for the foreseeable future.
3. The interaction of 1 and 2 above will eventually cause the price of silver to rise.

I don't see any relationship between 1 and 2, even though they are both probably true, so 3 does not follow.

You assume that all the new people will want silver, that is not the case now, so why should it be the case in the future? More electronics, solar panels, drone strikes? That would assume that all future electronics are going to use silver.

People now have less silver than people in the past, probably, I haven't counted but with the loss of sterling silver cutlery and serving ware, black and white photography and silver in the coins, all that most people have is in their electronic goods which they throw away anyway.

hmmmm... I really didn't think anyone would challenge my 3 top beliefs regarding why I buy silver (strange but true). You rightly attacked what appears to be the weak point of my beliefs... (#3)...

You assume that all the new people will want silver, that is not the case now, so why should it be the case in the future? More electronics, solar panels, drone strikes? That would assume that all future electronics are going to use silver.

But you didn't kill off my beliefs entirely . I never said "all people will want silver". But for you I can be more specific with #3... How about this?

3. Assuming the current dynamics, the interaction of 1 and 2 above will eventually cause the price of silver to rise.

 

[tolly_67]

I would worry more about how many potatoes or kilograms of rice there are per head of population.
Every population, including our own will follow the graph of exponential growth and decay when unchecked. The application of modern farming methods has increased productivity to match the population growth but in time, this will fall behind.
You are assuming that silver will fill the role of money in the future to tie your 3 statements together.
What we are really doing is simply hedging our bets that silver will become a desired product such that we may profit from it through trade or conversion.

 

[tahutimphh]

On the topic of remaining viable reserves, there is maybe 20 to 30 years apparently.

From VisualCapitalist: http://www.visualcapitalist.com/forecast-when-well-run-out-of-each-metal/

See link for description and discussion. Obviously we wont "run out", but there will come a time when each metal will no longer be economically viable to mine. As someone pointed out, a better title would have been: "how long before each metal is uneconomical and difficult to mine".

http://i.imgur.com/EGNxH0o.png
http://i.imgur.com/1lralLv.png

There are massive untapped rare earths in the US midwest (Dakota's).

 

[thatguy]

Silver stackers version??
[youtube]http://www.youtube.com/watch?v=ku7ZaHVZlWo[/youtube]

 

[alor]

silver prices and beliefs would lead to falsehood, if we talk about ounces, everyone would agree on how to count.

there are always enough metals for all of us here, considering all our combined holdings, there are plenty left over for some more who have the metals but not here. so never belief we are running out of metals, stolen may be but never runs out. boat accidents again, piss on the lake's face.

the center of the financial universe is always gold & silver, so paper will burn after 40 odd years, they just don't live that long. the hardware never break, only the software got erased.

 

[Stroctor]

My worry, and I hope it's just a needless worry, is could they possibly decouple silver from gold as a type of financial currency and have it strictly be a industrial commodity? The GSR seems to point in that direction with the ridiculous spread . Thoughts?

 

[Stroctor]

Was just reading Zerohedge about a story on silver and i thought one of the commentators stated it pretty well...

theTribster


"Funny stuff - soaring they are! After being crushed day after day after day...This is a buying opporutnity, a red-tag sale on most commodities including PMs and other critical consumables like copper, oil, etc. Regardless of a global slowdown, China can still develop its economy without the US and Western Europe - slower, yeah but it will happen regardless. The partnerships between China and the other BRICs as well as their new (and old) relationships in Africa and Indonesia - well, Asia generally means they can sustain themselves and grow without the west - and they are preparing for that. The west is a cancer to real growth and the Cinese know that, its purely about financialization of everything - basically make Wall Street richer absolutely FUCK everyone else - we get the crumbs. As most Zhers know, this is going to end badly and a relocation plan to somewhere independent of the west isn't a bad idea - I don't think that means Mexico or Canada which will die too.

Given that Silver is consumed and cannot be replaced with anything other than Gold for technology, which all technology requires Silver, it has a huge upside - in percentage terms much much more than Gold even if the fiats die. Silver is the best PM to own because it can be transactional as well as a store of wealth - Gold traditional isn't a transcational metal whereas Silver is. Couple that with the fact that it is being consumed on an increasing scale and recovery isn't practical until the value is somewhere around $1500/oz, at least with today's recovery technology, and Silver is likely to see incredible gains very quickly. This may take 10 more years of course but I think the fiats death will drive it much sooner than that.

The manipulation can't last forever, its on sale - that simple. China's consumption alone is great than what is produced and sold globally every year! That's incredible and their appetite is increasing along with Russia and India - both huge consumers, even with a dying Ruble. There is no doubt they are accumulating this to hedge against a fiat death and be in a position to come out with a new global currency that is backed by a basket of PMs and natural resources - oil, nat gas and even lumber. There isn't enough Gold on the planet to underwite a global currency in today's terms so either the terms change (which they will at least a little) or a new system is put in place with real backing for real confidence. This isn't a new idea of course, read Currency Wars from Jim Rickards - excellent read (or listen). A link:

http://www.amazon.com/Currency-Wars-Making-Global-Crisis/dp/1591845564/r...

By the end of the day Silver will likely be down again or at a minimum will give up most of its gains...(already has actually). I've been buying Silver for almost 30 years and have never sold a single oz, from $8/oz to $30/oz and everything in between. Given the real reality of Silver consumption - forget about currency BS, just pure supply and demand - Silver is the shit! and at <$15/oz its literally a steal. Everybody should be buying whatever amount they can afford - even a few oz's at a time is worth doing! I've been buying on the big dips for the last few years, before that (before outrageous manipulation) I just bought so much every month.

Do it, buy physical Silver and hide it somwhere because at some point it will be in high demand by everyone!"

 

[sterling-nz]

...You assume that all the new people will want silver, that is not the case now, so why should it be the case in the future?

Gotta manufacture desire . Do to silver what Debeers did for diamonds.... associate it with desire and emotion to overcome logic.

Smart Pete
That would be a fantastic idea.
Lets just wait a few more years though and then ill help you with the advertizing.

 

[mmissinglink]

My worry, and I hope it's just a needless worry, is could they possibly decouple silver from gold as a type of financial currency and have it strictly be a industrial commodity? The GSR seems to point in that direction with the ridiculous spread . Thoughts?

A very, very, very tiny percentage of people in the world treat silver like money today because for all intents and purposes, in the vast majority of places in the world, silver does not function like money. In the (distant) past, silver functioned like money for most people.

Is silver treated as an asset? Sure, by those who invest in it or those who buy physical with the perception that it will some day function like money again. Do Central Banks treat silver like an asset? No, not any more.

I doubt that any time soon (not for generations to come) silver will not be considered precious enough to be be considered only an industrial metal. In other words, silver will have a fixed daily spot price for a long time to come still. But the GSR will never, I believe, return to 15 as some permabulls have long claimed it will.



I like polished silver....it's shiny!



.

 

[Charles Thorn]

1. The population of the planet will be growing for the foreseeable future.
2. The quantity of silver on this planet will be the same for the foreseeable future.
3. The interaction of 1 and 2 above will eventually cause the price of silver to rise.

What are your beliefs?

Regarding point one, what is the rate of change for ounces of silver vs. population growth? How many ounces of silver is there for each person on Earth, and how rapidly is it changing?

Ooooh, very interesting! You are trying to help me with my beliefs. Nice... Challenge accepted. Over the next few days I will try to put together some "back of the envelope" data for your review.

Mr SilverPete, as a start I can say...

Current estimate of above ground silver: 1 billion ounces
http://www.sprott.com/precious-metals/reasons-to-own-silver/

Current estimate of population: 7.2 billion
http://www.worldometers.info/world-population/

So currently we have approximately 1/7th of an ounce of silver above ground per person.