Will the price of silver increase if there is a stock market crash?

[sammysilver]

But cash may do the trick so long as the banks don't fall over!

If your money is in the bank, then it is not cash. You need to keep it in your mattress safe. Secondly, the stock market and the banks are strongly linked, if one falls over, the other will follow, losing you 2/3 of your savings. Lastly, what part of your portfolio is in food?

 

[clear]

Exactly..
Capital was not created on the rise in prices and does not vapourish on the fall. It simply changes form or is removed from one point to be placed in another........to pay a higher price on a stock you must either borrow money, use savings or sell something to obtain the capital. Either way there is a balance to the trade.

that's good to know, so my capital didn't vaporize it just vanished into someone else possession and double entry accounting really does work.....

 

[Pirocco]

Exactly..
Capital was not created on the rise in prices and does not vapourish on the fall. It simply changes form or is removed from one point to be placed in another........to pay a higher price on a stock you must either borrow money, use savings or sell something to obtain the capital. Either way there is a balance to the trade.

No need to word it as 'removed from... one point... placed in another... point'. The capital simply changed ownership, and what you name as 'balance to the trade' is no trade at all, since one side gets capital, and the other side, loses capital. Trading is exchanging something for something, no?

 

[trew]

Exactly..
Capital was not created on the rise in prices and does not vapourish on the fall. It simply changes form or is removed from one point to be placed in another........to pay a higher price on a stock you must either borrow money, use savings or sell something to obtain the capital. Either way there is a balance to the trade.

Well ok let's use your description then

The capital came into existence by a bank lending money to a hedge fund.
The hedge fund used that capital to buy stocks.
Whoever sold the stocks to the hedge fund used those funds to buy stuff - the money has gone to China.

So the hedge fund now has no capital only stocks.

If the price of those stocks halves and the hedge fund sells, they might get some cash in but they still owe more than that to the bank.
The hedge fund doesn't have capital to redeploy - it has to repay the bank.

 

[Aureus]

Swapping silver to King Cash $9 is selling silver for $9. Quite simple I thought, but you talk about not buying?

yeah, if you're that weak minded that you panic sell at the very bottom then what are you doing investing in something?
That has to be the definition of complete stupidity surely?

And on that, I know a few people who seriously hurt themselves financially in 2008 (6 digit losses) and all of them, upon reflection, blame themselves. This idea that your money needs to work for you 100% of the time is ludicrous, but you'd be surprised how many investors cannot grasp the concept of going 100% in cash.

It makes sense more times than any of them care to admit.

Panic sell?
Heh, those 'weak minded', as you name them, sold in the idea to buy back in at $5, an idea given to them by the money for nothing club that fills its pockets with other peoples money, along fear, and greed, and as BeHereNow just said: due to lack of knowledge, data, and sufficient trading speed.
Look at those black pool markets, where governments institutionals buy/sell outside the market awareness and the price mechanism scope, using privileges granted by governments. And that's just one example. The entire financial system, from central banks to privileged Joe, is based on such a frontrunning in data acquisition and trading speed, under a government force-based umbrella.

That's exactly my point though mate, if you do not have enough confidence in yourself then do not invest.For the record, and i want to make this clear, I am not a psychopath. I really do sympathize with people that get burned - 2008 & 2011 broke a lot of people that either invested on word of mouth or invested what they could not afford to lose. I hate to hear about people getting financially hurt - as I said I know traders that have lost big time and I have seen what that does to a persons life. In some cases it even takes that from a person.

Stupid investing is stupid investing however, I see no point in sugar coating it when speaking broadly on the subject.


I hate governments, I hate banks, I hate the 1%, I hate basically everything you do but:

due to lack of knowledge

do not invest in something you lack knowlege on

due to lack of data

do not invest in something you have little data on

due to lack of trading speed

to not hold a physical asset if you are unprepared to ride the waves.

 

[SpacePete]

Anyone have some new thoughts on this topic, especially from an Australian perspective?

If there is an global financial crash, some possibilities:

(a) Stocks crash, and there is an immediate flight to cash (USD)
(b) USD climbs relative to other currencies due to (a)
(c) Resources fall substantially, and silver is initially dragged down (but what about gold?)
(d) AUD drops off a cliff, major falls due to (b) and (c)
(e) ... but silver does not become cheaper when denominated in AUD, no bargains in the local currency
(f) Gold starts to rise rapidly as cash is moved into safe haven assets, silver is dragged along for the ride
(g) For those of us in Australia, the gold and silver price rises are magnified substantially due to the weakness of the AUD and its slowness to recover against the USD

 

[Oldsoul]

As we all know the price of silver has been dropping but what is the long term investment potential if there is another financial crisis like the one back in 2008 or even worse, a collapse similar or worse than the great depression?

Wouldn't investing in silver have a much better return in SHTF scenarios than having money in the bank or in shares?

Sorry, if I'm treading ground that has been covered in the past but these are questions that are relevant to me at this moment in time.

1)SHTF as popularly discussed is fictional. I have lived through extreme violent unrest and economic turbulence. The survivalist conceptions are idiotic.
2)Historically silver drops and stays down after stock market crashes in 1987 and 1999. Jewellery is discretionary spending, Industrial demand drops. It is a good time to buy.
3)Gold is not a sure thing either as markets crash. Governments do not increase bullion and retail jewellery and bullion purchases drop. This is not as clear as with silver.

The great depression was not 'a collapse' the majority of people worldwide just kept going to work. society did not stop functioning as a social regulator.

History does not tell us the future but anyone who wants answers on the past can just look at the 1987, 1999 crashes and a 30 ear silver chart.

 

[Davros10]

I don't have any guesses on the effect of market corrections/crashes on gold and silver prices in the future. But I would consider the GFC to have been a longer event than most, during which silver initially dropped to $10/oz before rising to $50/oz.

At the risk of stirring up any Oldsouls out there, the XJO lost 50% in 18 months (wave A perhaps) followed by a long wave B that has recovered almost all the losses over a 5 year period and we are on the verge of rolling over into wave C that if it matched wave A would see another fairly rapid halving of the market. The difference this time is that the piggy bank has already been raided and there's no chance of $1000 cheques being sent out to pump up the market, or ongoing mining boom to rely on.

Australia dodged a bullet last time, unlikely to again. You can only rely on being a lucky country for so long.

 

[scrooged]

I don't have any guesses on the effect of market corrections/crashes on gold and silver prices in the future. But I would consider the GFC to have been a longer event than most, during which silver initially dropped to $10/oz before rising to $50/oz.

At the risk of stirring up any Oldsouls out there, the XJO lost 50% in 18 months (wave A perhaps) followed by a long wave B that has recovered almost all the losses over a 5 year period and we are on the verge of rolling over into wave C that if it matched wave A would see another fairly rapid halving of the market. The difference this time is that the piggy bank has already been raided and there's no chance of $1000 cheques being sent out to pump up the market, or ongoing mining boom to rely on.

Australia dodged a bullet last time, unlikely to again. You can only rely on being a lucky country for so long.

Nice.

 

[Pirocco]

do not invest in something you lack knowlege on
do not invest in something you have little data on
to not hold a physical asset if you are unprepared to ride the waves.

How do you quantify "knowledge"?
How do you quantify "amount data"?
How do you recognize "waves"?
Is buying a dead metal "investing"?
Some use force-based privileges to frontrun others.
What one "can" know/recognize, is just what is published.
And that's not everything.
Governments force people they wanna steal from to report everything.
The other way, reporting what they do themselves, is a quite different story.
They even go after those that publish what they don't want to see published.
See the "leaks".
And, there are quite some people out there, that have no problem seeing others losing. Rather the contrary, they do all they can to make them lose. Disinformation. Scams. To 'create' losers. I consider those just like State. Whatever they call themselves.

 

[rodmadman]

One thing to keep in mind about silver is that about 70% of silver mined is a byproduct of general industrial metals and if the economies crash so will the demand for copper, zinc etc.... This could actually give a leg up for the silver price. This brings to mind that those investing in silver mining companies might want to stick with those that have the largest percentage of silver concentration in their pay. This is just my thoughts and Im no investor so....

 

[Roswell Crash Survivor]

Source: Kitco

Take a look at what happened in late 2008, right about the time when DJIA (Dow Jones Industrial Average) was dropping ~700 points a day.

"A rising tides lifts all ships."
"A ebbing tide tide lowers all ships."

Flawed metaphor maybe, but still holds a grain of truth.

The global "stock+options+derivatives" markets is the largest known pool of capital (except maybe sovereign bonds).

Abrupt shock devaluations, like stock market crashes, are deflationary. Deflation=decrease in currency supply, antonym of inflation

Also don't forget that other than its role as a monetary metal, silver is traded as a commodity like WTI/Brent crude oil, copper or soy beans.

Large volumes of commodities, as futures contracts and other derivatives, are traded on leverage with margin loans.
When credit tightens (which they do during stock crashes), commodity positions are liquidated. Also bearish for silver price in the immediate short term.

Here's the kicker, these are broad stroke generalizations, all the factors interact with each other, nothing stays still. Throw in psychology of human motivation and crowd behavior.

The complexity is mind-boggling.

So when it comes to economics or market behavior, I don't pretend to know nothing. I understand that 'I know nothing'.

Don't let anybody fool you otherwise, no Nobel laureate, no hedge fund, no elected politician, no reserve bank officials, actually understands 100% how an economy works.

I doubt even the Top 0.01% have a complete picture beyond their own patch.

 

[sterling-nz]

Guys and Gals,

If Stock Market collapses and SHTF (opening post)........ my opinion is to keep it simple. What do you have to offer, if such situations came to be, to stay alive? We all need to eat, drink, have clothing and protection from the environment.

Precious metals may not be the total answer for people who want to trade something for food, drink or clothing.

In the Great Depression and in wartime, it was the black market.....unfortunately only the fittest survived.

I don't get involved in long conversations about what would I do if such and such happened. We can't predict the future, but we can try and be prepared with whatever means are available to us according to our means/ability to cope. So I invest 1/3rd in cash, 1/3rd in precious metals, 1/3rd in stock market.

I lose out if the stock market crashes completely. I lose out if no-one wants to barter with precious metals. But cash may do the trick so long as the banks don't fall over!

Is there an easy answer? Not really. But precious metals have stood the test of time, haven't they?

If i were in your shoes i would not be feeling very comfortable at all.
Having your wealth in just three separate allocations would scare the heck out of me.

 

[JB3]

I agree.

In the absence of an ability to see the future better than anyone else, preparedness really means diversification.

So, for me that's no more than 1/3 of my wealth in any one asset class, no more than 3% in any one place (account, or stock holding). I'm not there yet; my house takes up too much of my 'portfolio' but, even excluding the house, I could do with more 're-balancing' and spreading it all a little more thinly.

 

[oscarheem]

Never understood why commodities fell, but stocks have not.
So when stocks fall, commodities fall more?
I guess this time it is different, maybe commodities will remain flat or even rise.
Maybe gold and silver will see a panic buy, while other commodities go down.

 

[SilverDJ]

Here's the kicker, these are broad stroke generalizations, all the factors interact with each other, nothing stays still. Throw in psychology of human motivation and crowd behavior.
The complexity is mind-boggling.
So when it comes to economics or market behavior, I don't pretend to know nothing. I understand that 'I know nothing'.
Don't let anybody fool you otherwise, no Nobel laureate, no hedge fund, no elected politician, no reserve bank officials, actually understands 100% how an economy works.
I doubt even the Top 0.01% have a complete picture beyond their own patch.

You hit the nail on the head.
Not only do they not fully understand how the economy and the system works, they can't predict it.
Those that get rich through the system have either:
1) Gotten lucky
2) Road a massive bull market
3) Rigged part of the system to their advantage
4) Just Buy'n'hold (the Buffet method) and ride out any storms over many decades.
5) Are an integral part of the system

No one does it by consistently picking winners and the direction of the market at any given time.

 

[SilverDJ]

If there's a global stock-market crash, oil could become cheaper.

If so then I'm backing up the tanker.
Oil is a sure bet long term and is currently already seriously CHEAP.
People are seriously addicted to oil, become a drug dealer

And remember this...folk who had their super looked after by the so called gurus lost about 30% of their capital in the last GFC; I'd rather have a lump of Ag tucked away in a vault than have it invested by fund managers.

Indeed.
At least pick the stocks you want to be in. Those leeches make money regardless of what your portfolio does, they don't care.
For those who don't have a self managed super fund, you really should, it's trivial to set up online.
It's even more important if you are approaching retirement age, to make sure you don't crash'n'burn at the final hurdle.