Silver pumpers! Are they right?

silvestor

silvestor

Member
Silver Stacker
Most of us collect gold and silver as a means of an investment, an insurance policy, preserving value or simply to collect it as we love so much.

Whilst I do subscribe to most points made by gold and silver gurus, there are some points that I have to take in with a few grains of salt as its in their interest to sell us their gold and silver.

One point most make is that silver will blow up in price. Some state $500/ounce and some above that. While that won't happen overnight, I believe there is a good chance that it may one day. But one thing that all these "silver pumpers" neglect to point out is what value of the dollar will be at that time and if the blown up spot price will only be a reflection of a weak dollar. Also if we do reach that point, will we be in a major recession, would there be global wars, would we just better be off as we are now then $1000/ounce silver?

Now my question is this:

Is silver only going to preserve value (as in a 1 silver ounce coin will buy you same amount of groceries now as it would when its $500/per ounce), in other words raise its value according to the inflation or will it significantly raise its true value? (as in if a silver ounce buys you 1 apple today it will buy you 50 when it gets to this magic spot price). Please don't account for premium of bullion in your answer.

While saying that I do believe the true value will raise as the gold/silver ratio is at its all time high, I also believe silver may be manipulated and it does have heavy usage in industries, therefore there is room to grow its true value but is it going to be 20-40 fold as some expect?
 
From what I can understand.

If silver went up at the same rate as inflation then it would never be seen as 'being cheap' or 'being expensive' unless you could remember what you were paying for it in the past, which most of us can, more so than other purchases like milk or bread.

However sometimes it seems to be cheaper than others and sometimes it feels like it is really expensive.

We know the price fluctuates a fair amount and I have heard people say that it overshoots quite a bit. I.e. if it drops below the average then it tends to drop 'too far' before it recovers and if it is going up above the average for some reason it tends to 'overshoot' before 'correcting' back to the average.

Now all you have to work out is what the average is.

I have seen that some people quote a 200 day moving average, so they just take the average over the last 200 days and then compare it with the current spot price. If it is an average day then silver will be sitting on the '200 day moving average', if silver is doing well it will be above this average and if it is doing badly it will be below.

And then you have the overall trend of silver prices, which on some graphs seems to be going up but on others it seems to be going down. Just depends on the time-frame of the graphs and whether they have been adjusted for inflation or not.

So in answer to your question, silver probably isn't going to preserve your value as it seems to be getting cheaper and cheaper. However most other things you buy tend to depreciate in value, houses, car, food, clothes etc., while silver is still around. So while you could sell your house for a profit, your car, clothes etc. will probably lose you money when you sell and all the food, beer, cigarettes and money spent on entertainment is gone for good. The silver will still be able to be sold and for about the same price you bought it, maybe.

Occasionally silver has big swings and these are the times to buy and sell if you are going to. Best not to be greedy, I waited for it to be $50 before intending to sell 50% of my stack. I waited too long and ended up making 0% profit. If I had sold all the way up my potential earnings would have been less but my actual earnings would have been a decent return.

It may well be manipulated, there is enough dodgy dealing going on with insider trading in shares and bank fraud that I would be surprised if there wasn't something dodgy going on with silver. If you think the price is being maintained artificially high then you would be mad to buy it and hold on to it.

I loosely subscribe to the manipulation theory that the price of silver is being kept artificially low in order to pump the value of the US$ and this is being done by releasing stockpiles of silver every time the prices rise a bit. Eventually they will run out of silver to sell and the price of silver will rise as it is consumed in electronics. This needs to be sometime in the next 20 years or so but I think I can outwait them, how much silver can they have :)
 
When you mention heavy usage in industry, part of the pricing equation is based on specifically how many ounces industry is using each year. I still think part of the price drop over the past few years has been failing to meet solar demand targets. Fortunately, India demand has helped offset this.

The silver institute provides data on this each year. If I remember correctly, they expect a surplus in 2015, but not by much. In addition, this could change if new usages are identified as well.

While I am happy they are finding ways to make better solar panels, I am disappointed that some of these techniques require far less solar.
 
You can collect a nice profit with silver, YES!

I believe the prices of various assets don't grow in symmetrically.
PM prices jumped after 2008 and reached a peak in 2011, while the prices of goods, like electronics and foods didn't become that much more expensive.

Perhaps, even if the dollar devalued a lot, PM's could gain much more in price. They could grow more than the dollar devalues and they could grow more than the prices of everyday goods.

One can even gain profit by investing in the right asset. And at this time I think silver has more potential than anything else: gold, oil... RMB.

It's a mistake to assume that prices grow according to some straight rule. They jump and fall.
Thus, it's a mistake to think (let's say) 100 $ silver would only buy you "peanuts".

Remember when silver was 47 $?
Do you remember when it was 9 $ just a few years before?

http://www.primevalues.org/investors-guide/tremendous-potential-behind-silver.htm

To see a more vivid example of how much you would have gained - if you would have invested in silver...
What's closer to us is the current and recent price of an ounce of silver. In 2008, the price of an ounce was slightly above 9 $, but in 2011 it hit a peak of 47.97 $. If you would have bought silver at 9-10 $, you would have more than quadrupled your investment if you would have sold above 40-45 $!
Click to expand...

And nor food prices, nor electricity, nor the prices of cars, nor of food has quadrupled.

More expensive silver in USD doesn't necessarily mean the dollar buys you less food or electronics, household goods etc. or even a house!

There is no symmetry. There are no rigid rules.

I look at PM's and especially silver like at assets with strong profit potential.

If you put 1,000 $ into silver now at 17 $ and it reaches the double of 35 $ (a believable price I think it will reach), then it's easy to understand you'll have 2,000 $.

Even if it reaches 40 or 50 $, it would be wonderful and 100 $ would be a tremendous gift.
200, 250 $ believable. Some currency wars and safe haven demand, major bank price pumping would be required...
1,000 $ silver sounds a bit "utopian" to me...

Let me put it this way: buying silver while it's still cheap, close to production cost levels, you won't lose much. But not calculating with the potential growth of its price and missing out on it would be the mistake of a lifetime.
 
silvestor said:
Is silver only going to preserve value (as in a 1 silver ounce coin will buy you same amount of groceries now as it would when its $500/per ounce), in other words raise its value according to the inflation or will it significantly raise its true value? (as in if a silver ounce buys you 1 apple today it will buy you 50 when it gets to this magic spot price).
Click to expand...

I've been wondering the same thing, because a lot of people into silver seem to see it as a "hedge" against currency collapse (i.e. inflation).
Who's to say that silver will magically go up much more relative to our dollar if our dollar starts to get into real trouble?
It might very well still buy you only that same one apple it does today. If that is the case, then how is it a "hedge" against currency collapse?
Talking strictly in local currency terms here, i.e. AUD.
I know that the price of metal in AUD tends to track the USD price + whatever our AUD is doing in comparison (hence the current higher price of silver in AUD at the moment because our weakening AUD). So in theory the price of silver in AUD should go up if our currency collapses, but who's to say that's a rule?
 
TreasureHunter said:
But not calculating with the potential growth of its price and missing out on it would be the mistake of a lifetime.
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Unless silver does absolutely nothing and just sits (on long term average) there for a good part of your lifetime.
 
Because in addition to being revalued in line with any currency devaluation you will have more and more people piling in to try and hedge against the currency madness. If you have now buyers the price goes up in addition to the adjusted valuation purely from currency strength or weakness. If silver is going to $500 because of hyperinflation then it will likely go higher again from people trying to buy inflation resistant assets.
 
Because in addition to being revalued in line with any currency devaluation you will have more and more people piling in to try and hedge against the currency madness. If you have now buyers the price goes up in addition to the adjusted valuation purely from currency strength or weakness. If silver is going to $500 because of hyperinflation then it will likely go higher again from people trying to buy inflation resistant assets.
 
Great replies guys. You have answered many of my questions. As I have only began having an interest in silver couple of months ago I had to really research the history of silver and look up charts retrospectively. The reason why I got interested is because I saw it as a great opportunity as it seemed to be cheap and it appeared to have hit the bottom. I too think silver has the greatest potential for growth over other assets. Having read many websites, watched many videos claiming that silver will hit $500+/ounce, I really don't want to get my hopes up that much, therefore I want to be realistic about it and create an achievable result. In saying that, it really might be the reality one day and silver stackers will have the last laugh(wouldn't be nice).
 
the eventual fall in the U.S. dollar could mean that $300 silver is only $150 Aussie silver. This will probably occur as the same time as $200 oil and $20 gas and some high price for wheat, rice, soy beans and pork bellies. When it jumps, they are all going to jump. It will be the rush into tangibles. It is where the deflationary spiral manifests into the inflationary spiral...but only when the U.S. dollar breaks....after it has gone to an all time high first.
 
phrenzy said:
Because in addition to being revalued in line with any currency devaluation you will have more and more people piling in to try and hedge against the currency madness. If you have now buyers the price goes up in addition to the adjusted valuation purely from currency strength or weakness. If silver is going to $500 because of hyperinflation then it will likely go higher again from people trying to buy inflation resistant assets.
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That is a great point phrenzy. I never thought to myself about the high demand for silver during periods of hyperinflation. It makes perfect sense for an additional value increase of silver over the initial inflationary increase.
 
SilverDJ said:
silvestor said:
Is silver only going to preserve value (as in a 1 silver ounce coin will buy you same amount of groceries now as it would when its $500/per ounce), in other words raise its value according to the inflation or will it significantly raise its true value? (as in if a silver ounce buys you 1 apple today it will buy you 50 when it gets to this magic spot price).
Click to expand...


It might very well still buy you only that same one apple it does today. If that is the case, then how is it a "hedge" against currency collapse?
AUD.
Click to expand...
This in my view would be the VERY DEFINITION of a hedge.
It would have preserved your spending power.
 
I've currently lost hope for silver. I will still hold onto my silver...but watching these graphs depress me. It's like the price of silver never changes.
 
I wouldn't get too excited though, I personally think you might (MIGHT) see 2011 highs even possibly 1980 inflation adjusted levels some time in the next 10 years but if your buying sliver hoping for a return to the historical GSR or $500 silver in today's dollar terms I think your going to be sorely disappointed.

Doesn't mean you can't do well with silver though, particularly compared with having your money sit in a savings account with a pathetic interest rate.

The trick is to make intelligent choices with the profits from selling your silver if the price does go wild. This goes double if it's a time of economic turmoil. Sure, someone who got into sliver in 2008 and got out in 2011 did pretty well, but if they parlayed that moneyin to the right depressed stocks or cheap housing or even collectibles that suffered terribly during the GFC they would be sitting very pretty right now. Today would be a good time to start that cycle all over again, selling what you bought and getting back into silver. Economic crisis of the type silver and gold do very well in present great opportunities (though also great risks). If your looking for a big payday then you should be focusing at least half as much on what you'll do the day after you cash out your sliver as you are on what silver will be worth on the day that you sell it.
 
rara200284 said:
I've currently lost hope for silver. I will still hold onto my silver...but watching these graphs depress me. It's like the price of silver never changes.
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Then I jump over to the gold charts and my smile reappears ;)
 
Phillibuster said:
rara200284 said:
I've currently lost hope for silver. I will still hold onto my silver...but watching these graphs depress me. It's like the price of silver never changes.
Click to expand...

Then I jump over to the gold charts and my smile reappears ;)
Click to expand...


I think I'm just really impatient and what is causing that is by looking at the silver/gold charts every morning. Hoping for some financial relief.
 
rara200284 said:
I've currently lost hope for silver. I will still hold onto my silver...but watching these graphs depress me. It's like the price of silver never changes.
Click to expand...

And you've been here for like a month?
Not sure this is the right thing for you if you have already lost hope and patience.
You probably got Balooneyed. :/
 
phrenzy said:
...you should be focusing at least half as much on what you'll do the day after you cash out your silver as on what silver will be worth on the day that you sell it.
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+1.
 
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