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theo
Penny Hoarding Member
USA
588 Posts |
 Posted - 07/20/2009 : 22:16:15
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I read an article written by an outfit called (curiously enough) "Silver Commodity Trading" I can't copy the article here as it is a pdf file. Anyway the article makes several points:
1. Central Banks which want to backstop various currencies are mainly turning to gold as a reserve and, therefore, are holding a comparatively small amount of silver.
2. Jewelry demand is steady decreasing because of the economy. This limits the demand for silver and gold. It also argues that few people have money to invest in precious metals.
3. Silver has many industrial uses such as electronics. Although silver is much cheaper than gold it can be quite costly when used in mass production. Many companies are turning to "hybrid metals" (no specific examples given) as a cost saving measure.
As you may know, I think silver will outperform gold, however I believe its important to seek out and understand counter arguments. Points 1 and 2 are pretty easily parried, however I've never heard the 3rd point and I wonder if there is any validity to it. Anyway, I'm looking forward to hearing your thoughts.
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oober
1000+ Penny Miser Member
USA
1304 Posts |
Posted - 07/21/2009 : 07:36:36
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Silver would have to increase in price to a certain level before these "hybrid metals" would be worth producing.
It kind of the same lines as oil sands, yes there is oil there,but a profit won't be turned until oil reaches a certain price. |
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Nickelless
Administrator
USA
5580 Posts |
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Copper Catcher
Administrator
USA
2092 Posts |
Posted - 07/21/2009 : 11:31:39
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The US government has no strategic reserve of silver (since 2004 when stocks were formally transferred to the US Treasury from the Defense Logistics Agency), the only silver the government has, is held by the US Mint. According to the USGS, the Mint had slightly more than 7 million ounces of silver in 2004, also in 2005, 2006 and all the way up to 2008. Each year, the USGS says the Treasury Department, in the form of the US Mint, has slightly more than 7 million ounces. However in 2004, the Mint sold 9.6 Moz of Silver Eagles, 8.4 Moz in 2005, 10 Moz in 2006, 9.8 Moz in 2007 and 19.5 Moz in 2008. In 2008 alone, the US Mint sold almost three times as much silver as they were reported to have, according to the USGS and also began rationing of Silver Eagles because they could not find enough “acceptable” silver.
Since 2004, the US Mint has sold 57.3 Moz of silver and each year reported silver stocks of slightly more than 7 million ounces. So far this year (as of April 1, 2009) the mint has sold 7.8 Moz.
So, boys and girls, I guess the math they are using to tell us how many ounces of silver the government really has is the same math they use to tell us how much heath care is going to cost! Where is Mr. Rogers when you need him? Oh, it’s a beautiful day in the neighborhood…..
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 07/21/2009 : 11:53:57
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quote:
Originally posted by theo
I read an article written by an outfit called (curiously enough) "Silver Commodity Trading" I can't copy the article here as it is a pdf file. Anyway the article makes several points:
1. Central Banks which want to backstop various currencies are mainly turning to gold as a reserve and, therefore, are holding a comparatively small amount of silver.
2. Jewelry demand is steady decreasing because of the economy. This limits the demand for silver and gold. It also argues that few people have money to invest in precious metals.
3. Silver has many industrial uses such as electronics. Although silver is much cheaper than gold it can be quite costly when used in mass production. Many companies are turning to "hybrid metals" (no specific examples given) as a cost saving measure.
As you may know, I think silver will outperform gold, however I believe its important to seek out and understand counter arguments. Points 1 and 2 are pretty easily parried, however I've never heard the 3rd point and I wonder if there is any validity to it. Anyway, I'm looking forward to hearing your thoughts.
All of those are largely true but are arguments FOR silver imho.
for some reason, most central banks have zero silver and only a little gold. they are just starting to buy back their gold. the fact that they have almost zero silver means they WILL need to buy silver, not that they WILL NOT need to buy silver.
jewelry - this is a reason to not buy gold or plat, but argues in favor of cheaper silver. jewelry demand for silver has always been tertiary to industrial and investment demand so at worst this is a push.
industrial substitution - this is an argument FOR silver. there are few things that substitute economically for silver, and the list of silver's uses keeps growing. cheaper palladium can be subbed for platinum. something as cheap as silver has little risk of being substituted.
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Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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theo
Penny Hoarding Member
USA
588 Posts |
Posted - 07/21/2009 : 13:08:51
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quote:
Originally posted by Nickelless
Hey Theo, is this the article you're talking about?:
You must be logged in to see this link.
I posted it in a thread a couple months ago:
You must be logged in to see this link.
Yep that's it. As I said the only point that gave me a little pause was the one about silver being replaced by hybrid metals. However, the fact that article never bothered to point out what these metals are, what they cost and how they are used made me suspicious.
Point 2 actally argues for silver. As Lemon points out silver jewelry is much cheaper than gold or platinum. Also people might not have the money to invest in gold coins, but they can buy a fist full of silver dimes for $25 or $30.
Honestly, another doubt I have is the idea that silver should be considered money along side gold. I've always felt that since gold has comparatively few industrial uses, it is better suited for symbolizing value. The fact that silver's industrial uses are many and growing might preclude it from being considered a fully fledged monetary metal. Having said that I still believe that silver is a great investment, I'm just not sure that it will be the metal to back our future money supply. |
Edited by - theo on 07/21/2009 13:10:51 |
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jonflyfish
Penny Hoarding Member
USA
693 Posts |
Posted - 07/21/2009 : 15:27:07
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| Industrial substitution- Hmpf. I remember that right before the real estate bubble popped in Los Angeles, contractors resorted to aluminum wiring instead of copper for $1 million+ condo construction. Silver will soon enough become nearly as valuable as gold. |
The first panacea for a mismanaged nation is inflation of the currency; second is war. Both bring a temporary (and false) prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunities. |
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An Argument Against Silver?
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