Photonaware said:
Disagree on the former, agree on the latter.
Silver has already increased in price from <$5 to $30 in the last decade - that's a sixfold increase. Not a stretch to see it ~triple again to $100.
The historic ratio of gold to silver predates the US dollar being decoupled from gold - so gold has effectively been "floated", which IMO is why we've seen ratios of up to 80oz silver to gold. Silver price rises are probably more a case of speculative investment demand rather than industrial demand at the moment, which means there's some price bubble risk. I think we're more likely to see a ratio of 60 again than a ratio of 35 or less. 40 might be visited though. Just my WAG.
Silver on a parity with Gold (maybe higher ) - It has been my belief for many years that this will happen, that's what got me into silver. It may not happen in my lifetime, but some way down the track it will happen.
As pointed out, silver deposits are usually shallow and most of the easy silver has been discovered and mined. A large part of Silver today is produced as a byproduct , it is a very small percentage .of some other Primary Ore, so I wouldn't expect this production to increase much.
To double the amount of silver byproduct, produced they would have to double the amount of their Primary Ore - And if the mining companies did this they would be over producing on their Primary Ore and driving Price Down. So amount of Silver coming out of these mines will be controlled by the demand for the Mines primary product.
As pointed out, silver deposits are usually shallow and most of the easy silver has been discovered and mined. A large part of Silver today is produced as a byproduct , it is a very small percentage .of some other Primary Ore, so I wouldn't expect this production to increase much.
To double the amount of silver byproduct, produced they would have to double the amount of their Primary Ore - And if the mining companies did this they would be over producing on their Primary Ore and driving Price Down. So amount of Silver coming out of these mines will be controlled by the demand for the Mines primary product.
I think we will likely see $100 at some point. This is why I have heavily invested in Silver. However, I believe it is going to be speculative and will drop back down. This is the nature of silver, due to it's duel monetary and industrial nature. Hence, you need to know when to get out.
What I am seeing a lot of now is instead of "house prices double every 7-10 years", it's "silver can only go up in the long-term" or similar. Dangerous thinking in my opinion, it's falling into the trap that most people seem to. We live in a bubble economy. Accept it and play it to your best advantage, but don't expect the price of anything to just keep going up.
Parity is a pipe dream.
What I am seeing a lot of now is instead of "house prices double every 7-10 years", it's "silver can only go up in the long-term" or similar. Dangerous thinking in my opinion, it's falling into the trap that most people seem to. We live in a bubble economy. Accept it and play it to your best advantage, but don't expect the price of anything to just keep going up.
Parity is a pipe dream.
Turk
Active Member
As Auspm correctly observed above, never before have we had such a shortage of silver on the planet. Compared with silver, gold is in abundance! The silver stockpile shrinks each week, as both investment and industrial demand grows - thus the "natural abundance" GSR of 15:1 is less relevant today. We can expect the GSR to continue to plummet in 2011 - with an increasing velocity over time. Silver however, is unlikely to ever reach full parity with gold because the primary driver of today's growth is the (relatively) 'elastic' investment demand, not the (relatively) 'inelastic' industrial demand.
As the silver price approaches the gold price, new silver buyers (who know silver's volatile character!) will gradually taper off, thereby weakening the price and allowing the fundamentals of supply and demand to reassert themselves. Gold will always be the king, but BOTH (in fact ALL) monetary metals will skyrocket when the various western fiat currency collapses are initiated. For silver however, the moonshot caused by the currency collapses will be a much bigger price driver than the GSR correction that we are witnessing today.
(Of course, with today's western fiat currencies we must be 'careful' when we discuss price expectations, such as "$200 per ounce". Under the hyperinflation that will arise as part of the fiat dollar collapse, all prices will tend to go 'up' numerically - and gold at $50,000 per ounce would not even be blinked at - but such prices would not necessarily mean what we might naturally think they means today. See "When Money Dies" by Adam Fergusson to better understand this.)
As the silver price approaches the gold price, new silver buyers (who know silver's volatile character!) will gradually taper off, thereby weakening the price and allowing the fundamentals of supply and demand to reassert themselves. Gold will always be the king, but BOTH (in fact ALL) monetary metals will skyrocket when the various western fiat currency collapses are initiated. For silver however, the moonshot caused by the currency collapses will be a much bigger price driver than the GSR correction that we are witnessing today.
(Of course, with today's western fiat currencies we must be 'careful' when we discuss price expectations, such as "$200 per ounce". Under the hyperinflation that will arise as part of the fiat dollar collapse, all prices will tend to go 'up' numerically - and gold at $50,000 per ounce would not even be blinked at - but such prices would not necessarily mean what we might naturally think they means today. See "When Money Dies" by Adam Fergusson to better understand this.)