Why is Silver so cheap?

P

pdkbffwleo

New Member
I was reading that the "inflation adjusted silver price today is conservatively $145, and the inflation adjusted 1980s high of $50 is $543."

It seems that JP morgan owns roughly 122 million ounces of silver, and could easily manipulate the price, at least short term.

But, with an increase of population (thus an increase of actual use of silver for medical uses, cell phones, photography, etc), and a decrease in the amount of underground silver...not to mention the weakening of the dollar due to world debt...

Why in the world is Silver under $20??

To me, the inflation adjusted price of $145 seems entirely reasonable, if not conservative. We have double the population than in 1979, and yet Silver is priced substantially less...even when taken into account the relative scarcity of the metal.

It just doesnt make sense to me.

It seems too good to be true...under $20.

Is the perception of Silver as a PM so bad that the relative interest is low?
 
I think interest could be quite low.

Some long term stacker are getting scared to buy more, and there is no reason for non investors to buy now.....they buy when the prices go up.

I don't want to buy any more, but there was a time when I thought $30 silver was a bargain, and it would be nice to lower my average cost per oz so not sure what to do.
 
pdkbffwleo said:
Why in the world is Silver under $20?
Click to expand...
Because that's what the world market has price an ounce of the metal at?

It's not $145, because it's not, and no one is currently prepared to pay that much for an ounce.

Pretty simple really.
 
In simple the physical market is tiny compared to the paper market. Paper sets the price. There is a cost for silver mining melting refining and baring. Thats why the large 'spread' between spot price and actual paying price per physical ounce.

You need to look at the futures market. Understand 'longs' (which is buying a contract) and 'shorts' (which is selling) . Longs to shorts are typically fairly even (every buyer equals a seller) except in silver. The shor y s are HUGE compared to longs which tricks the market.

Now look at the available silver to what is being sold. Doesn't add up. Not enough physical to meet contracts. Search ' naked short' to get an idea

Mix this with failing enconmies not wanting confidence in anything but fiat and you have a perfect strom. When will it hit? Don't know or care. Just have a position when it hits.


Look alot more to explain but on the phone. If not already look at some of Michael Maloneys vids for quick explanation
 
Ag said:
In simple the physical market is tiny compared to the paper market. Paper sets the price. There is a cost for silver mining melting refining and baring. Thats why the large 'spread' between spot price and actual paying price per physical ounce.

You need to look at the futures market. Understand 'longs' (which is buying a contract) and 'shorts' (which is selling) . Longs to shorts are typically fairly even (every buyer equals a seller) except in silver. The shor y s are HUGE compared to longs which tricks the market.

Now look at the available silver to what is being sold. Doesn't add up. Not enough physical to meet contracts. Search ' naked short' to get an idea

Mix this with failing enconmies not wanting confidence in anything but fiat and you have a perfect strom. When will it hit? Don't know or care. Just have a position when it hits.


Look alot more to explain but on the phone. If not already look at some of Michael Maloneys vids for quick explanation
Click to expand...


Thanks! Good, insightful information. I appreciate your feedback. I'm 39 years old, and not an economist...thought my points were valid in terms of supply/demand/population, etc...but, this is good information.

Thank you.
 
RetardedMonkey said:
pdkbffwleo said:
Why in the world is Silver under $20?
Click to expand...
Because that's what the world market has price an ounce of the metal at?

It's not $145, because it's not, and no one is currently prepared to pay that much for an ounce.

Pretty simple really.
Click to expand...

Thanks for the blatant condescension. My question has some validity...in that 2013 is much different than the 1970's, and the price of silver, to me, should be much higher due to things I've mentioned.

The price "is what it is." Thanks. Sorry you're in a bad mood.

less than 4 billion people in the world 30 years ago, no cell phones, depleted in-ground silver, falling dollar, worldwide debt, etc.
 
Ag said:
In simple the physical market is tiny compared to the paper market. Paper sets the price. There is a cost for silver mining melting refining and baring. Thats why the large 'spread' between spot price and actual paying price per physical ounce.

You need to look at the futures market. Understand 'longs' (which is buying a contract) and 'shorts' (which is selling) . Longs to shorts are typically fairly even (every buyer equals a seller) except in silver. The shor y s are HUGE compared to longs which tricks the market.

Now look at the available silver to what is being sold. Doesn't add up. Not enough physical to meet contracts. Search ' naked short' to get an idea

Mix this with failing enconmies not wanting confidence in anything but fiat and you have a perfect strom. When will it hit? Don't know or care. Just have a position when it hits.


Look alot more to explain but on the phone. If not already look at some of Michael Maloneys vids for quick explanation
Click to expand...
http://www.cftc.gov/dea/futures/other_lf.htm
18/06/2013 5952 $21,57
Supply side:
Producer/Merchant/Processor/User Long 18066 Short 44621 Net: -26555
SwapDealer Long 37058 Short 16455 Net: 20603
Total net position of supply side: 18066+37058-44621-16455=-5952

Demand side:
LargeTraders Long 24898 Short 25323 Net: -425
OtherReportables Long 10576 Short 6247 Net: 4329
SmallTraders Long 19235 Short 17187 Net: 2048
Total net position of demand side: 24898+10576+19235-25323-6247-17187=+5952

Where do you see a difference between amount longs and amount shorts?
Every short corresponds to a long.
And both long and short are 'buying a contract'.
Dumping a long or short position isn't 'selling' a contract, it's just ending the contracts existence.
It's nothing but shifting dollars between long and short position holders, with silver as underlying.
The futures market is basically used by people that want to profit from price movements of the underlying, and others that would 'suffer' that price movement, taking the opposite positions to hedge against the loss that price movement would mean from them.
For example, I could have 15000 silver eagles and hedge a part or all of them through 1-3 futures market short positions.
So that if the silver price drops due to previous buyers selling, the loss on my 15000 silver eagles is (partly) undone by gains on my futures contracts account.
Or imagine I have stocks which typically move inverse to the silver price. I could hedge those stocks with silver position(s), so that if the value of the stock drops, the loss is (partly) compensated for by the gain on my silver positions account.
And naked short positions can only cause short time price movements. At most a couple days. So they can't bring down price for weeks. Reality is just that those that play that Comex gain/hedge game, mostly actually aren't interested in the underlying silver. They never intended delivery. So while it's true that there can be moments that there is not enough silver to meet all contracts incase they'd all request physical delivery (measured on a net basis of course, hence the 'all' before the word 'request'), it's not a problem because the positions holders didn't want the silver anyway. At least not at that price haha.
They take a long position to frontrun others that buy after them at higher prices, the bullion bank hedges against this potential to a price drop, and when those higher prices arrived, they dump that position again, upon which the bullion bank covers the short position, since it can't exist further due to lack of counterparty anyway, but mainly simply because the price drop potential disappeared with the long positions existence.
Much like a silver dealer, what happens: someone buys a monsterbox ASE's when spot is $20, then some months when the price hits $25 later the dealer gets a sell back 'order'. The deaker ofcourse would lose there $5 on every ASE, so what does he do, he hedges himself against the potential sale back, so that he doesnt have to refuse the customers sell back 'order'.
But Zerohedge / Silver Doctors like to move the focus away from themselves, by blaming Comex, JP Morgan etc. According to them every price uptrend is 'real physical' market, and every price downtrend is Doctor JP Morgan slamming the price with a hammer haha.
It would be funny, if it wasn't misleading others into losses.
 
And by the way, actually silver isn't cheap. Its price is now $19-$13=$6 more than the year average price of 2008. That's 46% more. Did most other prices also increase with 46%? I've seen 1 example so far: tuna fish. I think $18 is a price that is still very reasonable compared to other price trends. And despite the half dollar that it was moved further down, I'm happy to have ordered some ounces yesterday. It's better than waiting for the money for nothing club to add again $5 or so.
 
Never mind. Compare 2008 with 1979, take into account inflation...you're at about a 600% loss.

Silver is priced cheap. Considering the reasons I listed, IMHO, it's cheap.

It's also 60% off of it's high of $48 a few years back.

You can manipulate stats/charts all you want, but, to me....Silver is cheap..it's a bargain, and there's no logic to it.

Is it safe to say that we, as a global society, are using more silver than ever before?

I understand your need to be argumentative...just stating a simple question. Why is silver so cheap, taking into consideration my previous points.
 
Pirocco said:
Ag said:
In simple the physical market is tiny compared to the paper market. Paper sets the price. There is a cost for silver mining melting refining and baring. Thats why the large 'spread' between spot price and actual paying price per physical ounce.

You need to look at the futures market. Understand 'longs' (which is buying a contract) and 'shorts' (which is selling) . Longs to shorts are typically fairly even (every buyer equals a seller) except in silver. The shor y s are HUGE compared to longs which tricks the market.

Now look at the available silver to what is being sold. Doesn't add up. Not enough physical to meet contracts. Search ' naked short' to get an idea

Mix this with failing enconmies not wanting confidence in anything but fiat and you have a perfect strom. When will it hit? Don't know or care. Just have a position when it hits.


Look alot more to explain but on the phone. If not already look at some of Michael Maloneys vids for quick explanation
Click to expand...
http://www.cftc.gov/dea/futures/other_lf.htm
18/06/2013 5952 $21,57
Supply side:
Producer/Merchant/Processor/User Long 18066 Short 44621 Net: -26555
SwapDealer Long 37058 Short 16455 Net: 20603
Total net position of supply side: 18066+37058-44621-16455=-5952

Demand side:
LargeTraders Long 24898 Short 25323 Net: -425
OtherReportables Long 10576 Short 6247 Net: 4329
SmallTraders Long 19235 Short 17187 Net: 2048
Total net position of demand side: 24898+10576+19235-25323-6247-17187=+5952

Where do you see a difference between amount longs and amount shorts?
Every short corresponds to a long.
And both long and short are 'buying a contract'.
Dumping a long or short position isn't 'selling' a contract, it's just ending the contracts existence.
It's nothing but shifting dollars between long and short position holders, with silver as underlying.
The futures market is basically used by people that want to profit from price movements of the underlying, and others that would 'suffer' that price movement, taking the opposite positions to hedge against the loss that price movement would mean from them.
For example, I could have 15000 silver eagles and hedge a part or all of them through 1-3 futures market short positions.
So that if the silver price drops due to previous buyers selling, the loss on my 15000 silver eagles is (partly) undone by gains on my futures contracts account.
Or imagine I have stocks which typically move inverse to the silver price. I could hedge those stocks with silver position(s), so that if the value of the stock drops, the loss is (partly) compensated for by the gain on my silver positions account.
And naked short positions can only cause short time price movements. At most a couple days. So they can't bring down price for weeks. Reality is just that those that play that Comex gain/hedge game, mostly actually aren't interested in the underlying silver. They never intended delivery. So while it's true that there can be moments that there is not enough silver to meet all contracts incase they'd all request physical delivery (measured on a net basis of course, hence the 'all' before the word 'request'), it's not a problem because the positions holders didn't want the silver anyway. At least not at that price haha.
They take a long position to frontrun others that buy after them at higher prices, the bullion bank hedges against this potential to a price drop, and when those higher prices arrived, they dump that position again, upon which the bullion bank covers the short position, since it can't exist further due to lack of counterparty anyway, but mainly simply because the price drop potential disappeared with the long positions existence.
Much like a silver dealer, what happens: someone buys a monsterbox ASE's when spot is $20, then some months when the price hits $25 later the dealer gets a sell back 'order'. The deaker ofcourse would lose there $5 on every ASE, so what does he do, he hedges himself against the potential sale back, so that he doesnt have to refuse the customers sell back 'order'.
But Zerohedge / Silver Doctors like to move the focus away from themselves, by blaming Comex, JP Morgan etc. According to them every price uptrend is 'real physical' market, and every price downtrend is Doctor JP Morgan slamming the price with a hammer haha.
It would be funny, if it wasn't misleading others into losses.
Click to expand...

You win. Good information here. Thank you for your insight...
 
pdkbffwleo said:
Never mind. Compare 2008 with 1979, take into account inflation...you're at about a 600% loss.

Silver is priced cheap. Considering the reasons I listed, IMHO, it's cheap.

It's also 60% off of it's high of $48 a few years back.

You can manipulate stats/charts all you want, but, to me....Silver is cheap..it's a bargain, and there's no logic to it.

Is it safe to say that we, as a global society, are using more silver than ever before?

I understand your need to be argumentative...just stating a simple question. Why is silver so cheap, taking into consideration my previous points.
Click to expand...
You have a valid point, the qs you've asked.
Truth is, until the "paper" side of silver is abolished, the "market" cannot be real.
Hence your current silver "spot" price of eighteen "dollars".

*words in quotations are subject to change. Confide in them at your own risk.
 
It's cheap indeed. But I was wondering how much more ETF's have been added to the market?

Silver ETF's are creating a fiat-silver effect - are inflating the market into a huge bubble.

It's the ETF's that are moving and shaking silver and gold. Unfortunately physical has too little influence on the price.
 
TreasureHunter said:
It's cheap indeed. But I was wondering how much more ETF's have been added to the market?

Silver ETF's are creating a fiat-silver effect - are inflating the market into a huge bubble.

It's the ETF's that are moving and shaking silver and gold. Unfortunately physical has too little influence on the price.
Click to expand...
ETF's were one of the biggest, if not biggest reason behind the post 2008 price uptrend.
But it's not like fiat silver / fractional reserve, because they DO have a stock of the underlying, from which they sell and to which they add, upon silver price movements, with a 1:1 ratio, whle fiat fractional reserve is a ratio much bigger (ex 100 to 1). They have to, otherwise the ETF's share value wouldn't track the silver price, effectively discoupling it from the silver price, rendering it into an intrinsic zero sum game: any gain has to come from another same ETF shareholder. It would quickly cease to have anything to do with silver.
So in the case of the ETF's holding such a silver stock, it's not like you say, and the biggest ones do hold/control such a stock, with published silver bar serial lists.
The only thing that IS true, is what Ag specifically said about futures positions / the Comex, at some moments/during some periods, the net futures market position is so big that it's just impossible that it can be delivered, IF requested (and it isn't, as proved everytime). Take for ex the most recent position peak, in september or october 2012, a total net position of almost 60000, which is 60000x5000=300 Moz, which is 30% of a worlds annual total silver supply. Certain ETF's don't use a silver stock, and instead use futures market positions as coupling between silver price and share value. In those cases, they could be described as 'fiat silver / fractional reserve'. It isn't exactly the same, but it could be compared. The main difference is just 'time'. Futures positions are, as the name suggests, future purchases, but that can get cancelled anytime. Yet, the spot price is arbitrated in such a way that todays price already reflects those future purchases, as alike they happened now. It's for this reason that every position holder has an account on which he has to put some dollars (the margin), with from then on, either dollars removed or added, depending on his position (short or long) and the silver price direction (up or down).

And about silver ETF's specifically, if I take the biggest one, some monthly samples of their stock in ounces, since april 2012:
http://us.ishares.com/product_info/fund/overview/SLV.htm
2012/04/12 308,370,469.900
2012/05/11 304,309,376.700
2012/05/14 305,959,277.700
2012/06/13 311,741,101.700
2012/07/12 312,823,227.900
2012/07/13 311,756,579.900
2012/08/15 312.935.630,400
2012/09/13 314,077,053.600
2012/09/18 316,402,423.200
2012/10/11 318,118,072.400
2012/11/12 323,306,047.100
2012/12/13 317,369,318.700
2013/01/15 326,759,768.600
2013/02/15 338,276,212.400
2013/03/15 345,095,059.100
2013/04/15 336,007,785.800
2013/05/15 334,121,683.000
2013/06/11 321,473,111.500
2013/06/20 320,990,547.500
2013/06/21 323,885,835.500
2013/06/25 317,709,349.100
Do you see any 'bubble inflation' relation to the silver price trend?
I don't.
And what does 'bubble inflation' mean anyway?
If I think there will be a price uptrend, and I buy a monsterbox, with the intention to sell it as soon as I think a next price peak is reached, then my monsterbox purchase was as 'bubble' as an ETF's administrators adding 1000 ouncer bars, or Comex futures long positions, after shareholders were willing to pay more for its shares.
The thing is, in case silver then, that ETF's were remarkably hold fashioned so far. In the highdays of the 2008 wide market drop, they added. And in present times, the mid april big price drop, the silver ETF's also held, as above IShares example shows. While the same IShares, but the gold trust, dropped/sold about 1/3 of the entire stock gold it had. And it's still dropping, not one sample shows an addition, 6 months in a row:
2012/11/29 11.390.401,627
2013/01/24 10.951.823,486
2013/02/14 10.819.794,343
2013/03/08 9.863.758,707
2013/03/27 9.279.432,999
2013/04/04 9,273,449.210
2013/04/15 6,653,361.502
2013/04/17 6,445,378.670
2013/04/18 6,342,845.752
2013/04/19 6,333,127.072
2013/04/22 6,308,830.472
2013/04/23 6,299,112.012
2013/04/24 6,287,449.980
2013/05/02 6,286,061.007
2013/05/06 6,262,738.383
2013/05/13 6,243,789.627
2013/05/14 6,224,355.467
2013/05/15 6,204,921.427
2013/05/16 6,167,997.131
2013/05/20 6,104,838.191
2013/05/22 6,095,607.535
2013/05/23 6,056,741.695
2013/05/29 6,019,334.223
2013/06/03 6,009,618.363
2013/06/04 6,008,292.566
2013/06/12 5,990,805.350
2013/06/19 5,965,547.286
2013/06/21 5,912,117.866
2013/06/25 5,804,774.550
And then you claim that silver ETF's are "moving and shaking silver".
Well, it's right for gold, but wrong for silver.
Even the Comex side (thus including the ETF's that work along futures positions) didn't cause the mid april price drop. They have helped abit of course, but weren't the main reason. By far not.
Could be a question for all those here that hold IShares silver shares. Who sold shares? Who held? Hello? :)
And those 1000 ouncer bars in market based stocks, are as 'physical' as 2 monsterboxes ASE's. The only difference is that they remained in their vault, instead of being shipped to someones boat that is ment to sink later on. :p
 
More important than the question of why is silver so cheap, would be the question of is that you in your avatar photo? :lol:
 
pro$pector said:
More important than the question of why is silver so cheap, would be the question of is that you in your avatar photo? :lol:
Click to expand...

Awesomeness :)
 
pro$pector said:
More important than the question of why is silver so cheap, would be the question of is that you in your avatar photo? :lol:
Click to expand...

you know the saying, "if its too good to be true......."
 
"Because that's what the world market has price an ounce of the metal at?
It's not $145, because it's not, and no one is currently prepared to pay that much for an ounce.
Pretty simple really."

Whether or not you felt some sort of offence from this - it is in fact quite true and getting truer as time goes on.


People often ask why? - well, that infers there are some sort of fundamental reasons and that the market price logically follows - this is not the case - at Least a lot of the time.

Some of the time in the short and medium term, fundamentals do drive price - but, more and more these days - less so.

Often prices of stocks are driven by institutional buying, selling without any regard for fundamentals.

So to, pm's.

Remember who it is that tells us what gold is worth every morning - a handful of shady bankers in London - a world away from producers or end users.

If these people get out of bed and decide gold is worth $2.00 - then that's it, or if the decide that it is worth $2000 - well, ditto.

It is a bullshit game, just like the Tulips were.

If you want to be in the game on fundamentals then gold is a no go and in silver you would have to think long term and there are too many unknown future variables.


The only thing gold and silver really have going for them is history and that they are durable - very in gold's case and fairly in silver's.


The way to have a very sad portfolio is to look for why - retarded really was telling you not only his truth - but fact.


Have a great day all

Gazza
 
gazzahere said:
"Because that's what the world market has price an ounce of the metal at?
It's not $145, because it's not, and no one is currently prepared to pay that much for an ounce.
Pretty simple really."

Whether or not you felt some sort of offence from this - it is in fact quite true and getting truer as time goes on.


People often ask why? - well, that infers there are some sort of fundamental reasons and that the market price logically follows - this is not the case - at Least a lot of the time.

Some of the time in the short and medium term, fundamentals do drive price - but, more and more these days - less so.

Often prices of stocks are driven by institutional buying, selling without any regard for fundamentals.

So to, pm's.

Remember who it is that tells us what gold is worth every morning - a handful of shady bankers in London - a world away from producers or end users.

If these people get out of bed and decide gold is worth $2.00 - then that's it, or if the decide that it is worth $2000 - well, ditto.

It is a bullshit game, just like the Tulips were.

If you want to be in the game on fundamentals then gold is a no go and in silver you would have to think long term and there are too many unknown future variables.


The only thing gold and silver really have going for them is history and that they are durable - very in gold's case and fairly in silver's.


The way to have a very sad portfolio is to look for why - retarded really was telling you not only his truth - but fact.


Have a great day all

Gazza
Click to expand...

Offense? None taken at all. It's actually a good question. There is increasing demand for silver, and a decreasing amount of recoverable supply. Take into account inflation, twice the population, a historical increase in world debt that can only be fixed by printing more money, an increase in a technology-driven need for silver, and you see silver at a 1000% discount than in the late 1970's? So, the question IS feasible. The price "is what it is" and "isn't what it isn't." Got it. Understood. At a 65:1 GSR, I find the price of Silver VERY cheap...possibly at the cheapest it's been in its history (when taking into account my argument). The paper, ETF game is one thing...but, please don't forget that Silver is a much needed commodity for a whole host of reasons, and it's virtually unrecoverable, i.e., it's "used." Much like Oil. Long term? Silver is WAY undervalued. Short term, there are factors involved that have nothing to do with supply and demand.

Offense? Not even close.
 
You must log in or register to reply here.
Back
Top