But why would silver "re-assume" it’s role as money?
Make no mistake, I’m not arguing that silver will not rise in value if inflation occurs. It is a commodity and will rise as such. I own quite a bit of it in the form of an extensive old coin collection and massive amounts of sterling silver (Thanks mother-in-law!).
But I am concerned that the small investor is mistaking silver as a store of money (because it is also used in jewlery) when the market is clearing telling us that people do not view it as such. Buying large amounts of silver now when deflation is going to punish it’s value for the next several years is just throwing money out the window.
Worse case if the market is wrong, wouldn’t dollar cost averaging and buying directly from dealers who charge a legit commission be more prudent then paying a 60% premium from ebay? I see too many investors falling into the trap that they have to buy now or they are going to miss the train. This has happened to many times before in every bubble in history. Right now we have a "physical" silver bubble and it is likely to be painful for the average investor when that bubble pops. It won’t take much more, $2-$3 more drop in the price and small investors will start bailing out in earnest.
Remember, if someone tells you "it’s different this time" - "it’s probably not different this time".
These quotes serve to remind us that the world’s monetary system is being managed by an international crime syndicate.
"If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State." – Adolph Hitler
"One should not, as a rule, reveal one’s secrets, since one does not know if and when one may need them again. The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous." – Joseph Goebbels
Thanks machine!
For the last 8 months I’ve been trading oil in Euros and the picture has been much more ‘telling’. I’m surprised no one has tried to answer my question of relative value. It seems most people on this site just want to believe in one final outcome. While all currencies may trade down from gold, the only problem I see with that is a short period of deflation which would suggest that both gold and silver will fall in price. I have traded as a hedge fund manager for over 15 years and if there’s one thing I can tell you is that anyone that tries to take longer term views than 1 year is fooling themselves. No one can see all of the variables and predict all of the changes that could force you to look at things differently. The markets give you the liquidity you need to treat each data point individually, it would be just plain wrong not to take advantage of that liquidity. The only issue arises if you are trading such massive amounts of capital that this daily liquidity is not enough. So if the USD remains strong against other weak currencies and there is deflation, wouldn’t it be best just to remain liquid, hold cash, not pay such huge premiums for gold and wait until you see better evidence of hyperinflation before you go out and take serious positions in certain asset classes?
and ship it to you… buyer must pay delivery charges. No need to find pawn shops, you want real bullion or silver bars, no problem at all. I’ll just go and buy some and charge you 40% above my cost, deal? Good, email me or post here and I will get you whatever you need and be forwarned, I’m going to get rich off you so don’t complain later.
something will take its place. i have been drinking lots of koolaid these days. professor martenson makes it very clear what started him off on this crash course. it was the creature from jekyll island.top of the list of essential books
the opening gambit started centuries ago. we are now in the end game.(endgamewatcher)
"competition is sin " jd rockefeller
we are seeing and will continue to see massive consolidation in the banking industry ( the license to steal industry)
what we are seeing now is a consolidation of countries central banks.
"give me control of a country’s money supply and i care not who its elected leaders are"
baron rothschild
we will see a one world currency in very short order i would guess…check and mate .
or there is the alternate scenario for those who dont like koolaid
read the dolllar crisis by richard duncan …also on the list of essential books.
i prefer ice in my koolaid i hope it will still be available
I second that. If anyone wants to buy 250 oz or more then I will gladly sell to you as much as you want for 40% over spot. I will even throw in shipping.
Xflies said:
That is true if you are trading. For the buy-and-hold long term investor, the safest bet anyone can make is is the complete destruction of fiat currency. Anyone who thinks otherwise, doesn't know monetary history. The price of gold has tripled what it was in 2001 while currencies and financial assets have fallen considerably. And we haven't seen a mass exodus for safety yet. If I were you, my friend, I would buy some precious metals and keep them on the side as insurance. Because I know some day you are going to need it.
if there’s one thing I can tell you is that anyone that tries to take longer term views than 1 year is fooling themselves.
[quote=jgreco]But I am concerned that the small investor is mistaking silver as a store of money (because it is also used in jewlery) when the market is clearing telling us that people do not view it as such. Buying large amounts of silver now when deflation is going to punish it’s value for the next several years is just throwing money out the window.
[/quote]
I’m not sure the short-term market fluctuations over the past few weeks can tell us anything about what is likely to happen in the next few years. The price of gold tanked at the end of last week, but there are still plenty of people (including Chris) who think it’s likely to rise even in a deflationary recession/depression. Then there are those who see the disconnect between the paper price and the supply/demand discrepancy in physical metals and claim that such a disconnect cannot last for much longer. Finally, as I said in my previous post, if people lose faith in paper money and central banks it’s possible that silver would come to be viewed as a store of value - even if is not right now.
It doesn’t really matter to me because I’m in it for the long haul, and I definitely think that inflation is the final outcome, whether deflation lasts for a year or five years. I certainly agree with you that it is probably not wise to be paying 60% over spot and buying large amounts at once for that price. People are freaking out because the supply is so limited, and they probably figure that if they don’t buy it now they won’t be able to buy it in the future. That’s why they’re willing to pay so much over spot.
trade for the short term… it will sharpen your analytical abilities and force you into a realism mode that will allow you to see things for what they truly are. It’s fine to have a longer term view and prepare for radical changes but while you’re focusing on building up stocks of canned goods and buying firearms, depressing yourself and those around you, there are opportunities you will miss by trading the short term. Successful trading in the short term (1-6 months) will help you in the long run as you can build up capital and stay focused on changing issues always looking for that catalyst that will kick start your longer term forecasts. I caveat this with that as long as there is good liquidity, you should take advantage of it. If I had listened to all those who thought the USD was doomed, I would have missed out on great opportunities that I capitalised on with the Euro and AUD. For now, it is a relative value game… The risk/reward metric of this trade has resulted in me unwinding a bit but I still don’t see a clear view on where things like gold and oil will go so I will wait paitentily until something shows me otherwise. My focus has now shifted to equity markets and the rebound we will see but will be prepared to take quick profits. The next big data point now that the G7 has guaranteed interbank loans (everyone could see this one coming) will be the price at what the gov’t pays for mortgage backed assets for. A high price will put more risk of loss to the taxpayer and a greater increase of a real rise in money supply but it will also mean a lot higher valuations for banks and thus the markets… a low price will put much less risk of loss to the taxpayer but may spook confidence. My bet is that they will sacrifice inflation to keep up confidence so you should see higher than marked at prices paid by the gov’t… I would stick my neck out and say 60-70% of face value would be their first purchases.
and those who are panicking to buy it… why haven’t I got one response from someone who’s willing to buy my gold bullion at a 40% premium? How about 30%? And I haven’t heard a peep from those who say there is a conspiracy over gold hording and the secret societies that are stopping people from buying physical gold… more evidence of people who refuse to see the truth. I may be being a tad harsh with my comments but then again, I can afford to be… I’m the one with the gold sitting in my safe 
Xflies,
I really don’t see what the confusion is about. A few weeks ago I was searching for gold online and had absolutely no problem taking my pick of Eagles, Krugerands and Maples at any size (1 oz, 1/2 oz, etc). For the last couple of weeks, and last week especially, I’ve been checking those same sites. They have absolutely nothing. Zip. Zero.
There’s nothing controversial about that. The fact that people here don’t want to buy gold from some guy on a forum they know nothing about isn’t exactly proof of your assertion that gold is readily available. Hardly.
Please show us a reputable online gold dealer that has decent stock of bullion and coins and we’ll all be satisfied that you’re correct.
As Ludwig von Mises noted, "The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
this was quoted from http://mises.org/story/3146
It is time for change, not to socialism, but to a true free market economy, which we do not have.
I’ll take 250 oz. of American Silver Eagles for 40% over spot thank you. I’ll even pay for shipping. contact me at dcy3@yahooo.com
robbie,
I’m no expert and I don’t have a lot of time, so here are my feeble answers…
In my opinion, I won’t buy local for 1 reason… taxes 
I refuse to pay taxes for money. It’s like going to the bank, handing the teller a $20, asking for change and she gives you $18 back and tells you $2 tax! Depending on your state, gold and silver (which are money according to the US Constitution) are money and should not be taxed, yet they are.
Credit card – Only if you can pay it off without any interest.
I buy 70% silver, 30% gold. If you’re buying for an eventual hyper-inflation, then buy mostly junk-silver.
Disanvantages… Gold & Silver may still go down, but consider this. 1964 gas prices were around $0.30/gallon (3 silver dimes). Today, a silver dime is still worth about $1.10 and $3.30 will still buy you a gallon of gas. The stock market and oil have still gone down in comparison with gold lately. They do flucuate on a daily basis, but gold and silver are for holding your wealth, not about making profit, even though they probably will make you a profit in the long run.
Dollar-cost-averaging… I wouldn’t mess around with it. Don’t use all your money for gold and silver. Buy the 3 B’s (Beans, Bullets, Bandages) first. Make sure you have enough food for whatever emergency you see coming and the means to protect yourself and family. Then buy gold and silver. Watch out for the IRS $10,000 rule (Form 8300). Research it.
Richard
If there was a better way to read through the posts, you’d see that there is indeed a LOT of confusion over the actual supply of gold and silver… I can totally understand why anyone would not want to buy from some guy they don’t know over the internet and it was more of a joke but I guess during such sensitive times, people don’t get it. I do have physical gold if anyone wants to go through the diligence period of coming to trust me or having lawyers involved to ensure a transaction so my offer does stand but I never expected anyone to take it. My posts have been a call for people on this site to remain OBJECTIVE. Take what people say, go out and prove it, if it’s validated, makes sense and material, then consider it, process it and change your thinking. I posted a while ago as did someone else that we got our gold from Scotiabank in Canada. What else did you want me to do? I offered physical gold, gave my source… also one other point… when you go and buy coins, jewelery, etc… anyhting that has a processing element to it, I would expect that you would pay a premium over spot… that can be more than any ‘tax’ as another poster was complaining about. This premium could also be higher than the bid/ask spread banks charge when they quote you the prices. Also, the bullion bars are stamped with their purity and will be much easier to sell or use in trading unlike junk silver or jewelery.
It is possible that we have both effects at the same time. We could have falling house prices, and an increasing money supply - which until house prices stop falling could go unnoticed - since they would cancel eachother out. When house prices hit bottom - then we’d get hyperinflation.
250 american silver eagles. contact me at dcy3@yahoo.com 40% over spot.
Yeah, I didn’t think so. Bunch of blowhards. Not one e-mail from either one of you jokers.
From machinehead’s post:
"But the "deficit" is the difference between income and spending. In
February, the OMB projected $2.7 trillion in 2009 receipts. I’m going
to guess that the revenue picture has darkened, such that 2009 receipts
may be only $2.5 trillion … about the same as 2008.
So a $2.0 trillion deficit means that Usgov takes in $2.5 trillion, but spends $4.5 trillion – 80% more than its income."
The $2.7T and $2.5T figures are revenue. The $4.5T is the spending amount. That gives the $2.0T deficit.
All the best.
Yes, relative to other currencies, the US dollar would remain strong. That is the key - when you only measure in currency, the picture stays about the same with that 50% devaluation. Where things change is in the price of tangible goods. They retain their value, but their price will rise - 50% devaluation in the currency means 50% more currency units chasing the same number of goods, so prices are bid up overall around 50%. Good old fashioned supply and demand, just looked at another way.
All the best.