Gold and silver prices are down

[Nick Fury]

I purchased some silver last night... I purchased a variety of maples, eagles, sunshine mint and generics. I have more generic than maples/eagles but think all silver is going to be valuable if shtf.

I am interested in the value of precious metals in a post SHTF scenario. Obviously I can see where these would come in handy during an economic situation due to the universally accepted value and the growth trends they follow, but in the scenarios where supply and infrastructure are compromised what place do you see precious metals having? I would think ammo, rice, and seeds would have way more value and be far cheaper to currently load up on...

So I guess my question is silver just safe position for a possible economic collapse or is there more and I am just missing it?

 

[In God We Trust]

So I guess my question is silver just safe position for a possible economic collapse or is there more and I am just missing it?

Silver is a safe insurance policy against inflation or a complete collapse of the dollar. I remember when it was about 4 bucks an ounce. It went up to fifty a couple years ago. You should have your house in order before you go nuts with PMs. Have a stock of food, water, pay down any high interest debt, etc.

The world is NOT going to go mad max unless a comet strikes or something. In that case you want food, shelter and security. As long as there is some semblance of society, PMs will have value as a medium of exchange.

Even in the dark ages after the collapse of the Roman Empire, silver and gold had value. I think that is the closest to total collapse we have evidence of in recorded history.

I think right now is probably the best buying opportunity we will have in a looooong time.

 

[enbloc]

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[Hiltonizer]

Silver is a safe insurance policy against inflation or a complete collapse of the dollar.

Nothing is safe, safe is a relative thing. We have almost as likely a case for a deflationary cycle as we do for inflationary in the short to medium term. PM's are good long term protection, but they have their own risks up to and including confiscation which would make liquidity an issue.

As soon as you think an investment is risk free, you're dead where you stand... it's one of the dumbest things you can say.

All that said, I think this is a good entry point for PM's, I got a lot in them and dollar cost averaging as they sink... but i'm still keeping cash in stand by. Nothing is safer than owning a self sufficient property outright and your lifely essentials stocked high and deep.

 

[Nick Fury]

Nothing is safer than owning a self sufficient property outright and your lifely essentials stocked high and deep.

This is what I thought. I was just trying to imagine a place for PMs in this situation and wasn't finding it...

 

[Rider]

All that said, I think this is a good entry point for PM's, I got a lot in them and dollar cost averaging as they sink... but i'm still keeping cash in stand by. Nothing is safer than owning a self sufficient property outright and your lifely essentials stocked high and deep.

Right now, gold and silver are below the low/buy threshold of many investors, and below their marginal production costs. So I am tempted to agree with you - this is a good time to buy(though the spreads make me want to vomit on the dealers).

However, based on the economic situation, policy, etc, I think it's likely that prices will come down further. I don't have a crystal ball or anything like that, but I think that we may be nearing a structural change in price ranges. The term structure of futures shows that expectations are for a slight increase in prices over the next year - for whatever that's worth.

 

[Rob Boudrie]

though the spreads make me want to vomit on the dealers

The lack of capital gains tax rates on any profit should make you vomit at well. And no, you are not going to get "precious metals brokerage company rates" if you go to Ziggy's corner shop and ask him to buy a few tens or hundreds of $K in an off books transaction.

Right now, gold and silver are below the low/buy threshold of many investors

The market adjusts prices to the point where some buy and some sell, so the above statement it tautologically true.

 

[not new guy]

Anyone have any experience with platinum bullion? I don't own any, but I stumbled upon some interesting "facts" about platinum and was thinking that it might be worth a closer look. It seems to be much more scarce than gold, but trades just a little higher than gold (and their spot prices have even crossed recently):

(1) The annual supply of platinum is only about 130 tons - which is equivalent to only 6% (by weight) of the total Western World's annual mine production of gold - and less than one percent of silver's yearly mine production. Another amazing platinum trivia is the fact that more than twice as much steel is poured in the U.S. in only one day than the total world's platinum production in one year - indeed scarce!

(2) Approximately 10 tons of ore must be mined - sometimes almost a mile underground at temperatures greater than 120 degrees Fahrenheit - to produce one pure ounce of the "so-called white gold." Furthermore, the total extraction process takes six long months.

(3) All the platinum ever mined throughout history would fill a basement of less than 25 cubic feet.

(4) Although its relative weight does not contribute to its value, platinum is even heavier than gold - one cubic foot weighs a little more than 1,330 pounds, about 11% denser than gold. THAT'S WELL MORE THAN HALF A TON. Expressing platinum's weight differently, a six-inch cube of the white metal weighs about as much as an average man!

(5) Relative to volume mined, platinum has many more industrial uses than either silver or gold. In fact more than 50% of the yearly production of platinum is consumed (read destroyed) by industrial uses - unlike gold!

(6) Also unlike gold, there are no large inventories of above-ground platinum. Therefore, any breakdown in the two major supply sources would catapult the price of platinum into orbit.

http://www.gold-eagle.com/article/platinum-rich-mans-gold

 

[Rob Boudrie]

The annual supply of platinum is only about 130 tons

3) All the platinum ever mined throughout history would fill a basement of less than 25 cubic feet.
(4) Although its relative weight does not contribute to its value, platinum is even heavier than - one cubic foot weighs a little more than 1,330 pounds

Your math does not work. 130 tons/year, at 1330lbs/cu ft, is 195 cubic ft. - an annual production about 8 times the cited historical total.

 

[not new guy]

Your math does not work. 130 tons/year, at 1330lbs/cu ft, is 195 cubic ft. - an annual production about 8 times the cited historical total.

Someone else's math - I'll look for more reliable info.

 

[not new guy]

It looks like platinum tends to take a beating when industrial demand is down, and it doesn't have the same store-of-wealth history that gold has. Hmm...

 

[goodlife30]

When the economy picks up, but copper. Needed for all the electronic devices that consumers will be buying with bad credit. Also there is a move to make all counter tops and handles in hospitals out of copper for mersa control.

 

[not new guy]

When the economy picks up, but copper. Needed for all the electronic devices that consumers will be buying with bad credit. Also there is a move to make all counter tops and handles in hospitals out of copper for mersa control.

And bullets, apparently...

 

[Rob Boudrie]

Someone else's math - I'll look for more reliable info.

Perhaps the author meant "25 ft cube" rather than "25 cubic feet". A 25 ft cube is 15,625 cubic feet or about 78 years production at the quoted rate.

 

[Rider]

The market adjusts prices to the point where some buy and some sell, so the above statement it tautologically true.

On your first point, I was referring to Apmex' current spread of $5+ on ASE's. Gainesville is looking a lot better at $3 or so.

With respect to your second point, I think we are talking about two different things, though your point is taken. I was referring to investors who have a long term view that gold won't go much below 1200-1300 and stay there for an extended period. Of course they can be wrong, in which case they will have to adjust their story, but on a medium term basis, there is a good amount of support at 1200.

 

[Rider]

It looks like platinum tends to take a beating when industrial demand is down, and it doesn't have the same store-of-wealth history that gold has. Hmm...

Platinum and palladium are mostly used for industrial purposes and have much more limited production than any other precious metals. They are used a lot for the catalyst in automobiles, which is destructive as it isn't worth recovering the amount that goes into each one.

While plat and pall are very precious, neither has ever been used widely as a currency(AFAIK) so isn't as popular with collectors.

 

[not new guy]

Electric cars supposedly don't need platinum either - just one example of the potential for industrial demand to (some day) swing wildly.

 

[ASHDUMP]

I am interested in the value of precious metals in a post SHTF scenario. Obviously I can see where these would come in handy during an economic situation due to the universally accepted value and the growth trends they follow, but in the scenarios where supply and infrastructure are compromised what place do you see precious metals having? I would think ammo, rice, and seeds would have way more value and be far cheaper to currently load up on...

So I guess my question is silver just safe position for a possible economic collapse or is there more and I am just missing it?

Its only diversification if you must know.... I think there is a time and place for it along with other things like toilet paper. Do you have your SHTF toilet paper? If you don't have 1000 rolls you're not doing good enough job prepping*sarcasm*.

Also, for me - If I never have to use it I'll just pass it down in the family. I hope to never use any of my silver and pass it down the line to my grand kids or kids. Its also like a hobby that has a purpose...

 

[Gidge]

Gold Falls, On Track For Worst Year Since 1981

BY BLOOMBERG NEWS

Gold fell for the first time in four sessions in New York, set for its biggest annual loss in three decades, as an improving economy cut demand for a protection of wealth. Silver futures also retreated.

Bullion slid to $1,186 an ounce on Dec. 19, near this year’s low set in June, before rebounding to a one week high of $1,218.90 on Dec. 27. Global equities traded near the highest since 2007 before reports this week that may show gains in U.S. housing and manufacturing.

Gold futures for February delivery fell 0.8% to settle at $1,203.80 at 1:41 p.m. ET on the Comex. Trading was 49% below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.

Gold has tumbled 28% this year, set for the worst annual plunge since 1981. Some investors lost faith in the metal as a store of value amid a rally in equities and an improving economy, which prompted the Federal Reserve to pare its $85 billion in monthly bond purchases. Holdings in exchange-traded products backed by bullion dropped 33% this year to the least since 2009, data compiled by Bloomberg show.
[From 1981 if fell for 20 years as I lived through that debacle. We are now in the same 36 year baby boom cycle position as back then so would expect to see good gold times again starting in 2033.]

The Fed will probably reduce its bond purchases in $10 billion increments over the next seven meetings before ending the program in December 2014, according to the median estimate of economists surveyed by Bloomberg this month.

Bullion is set for the first annual drop in 13 years. Holdings in gold backed ETPs declined 4.9 metric tons to 1,767.1 tons on Dec. 27, the lowest since November 2009, data compiled by Bloomberg show.

 

[enbloc]

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[enbloc]

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[FrugalFannie]

up

 

[snd1t]

Closed at $21.505 on Friday. Going Up or Down? What say you?

Me: Down

Shorter term it will waffle for as long as folks continue to believe in QEternity

The moment that confidence begins to waver the price will go through the roof and you can say hello to the same hyperinflation that plagued the weimar republic.......

You can't deflate the value of a currency that isn't backed up by anything of substance forever..........

 

[Knob Creek]

I'd like to see Silver Eagles spot drop a bit and get closer to the current silver price and then I might jump back in. Best price I see is about $24.80 or so right now.

 

[Rider]

Closed at $21.505 on Friday. Going Up or Down? What say you?

Me: Down

My .02 is that it's like trying to catch a knife. Markets can't decide whether the EM problems will spread, QE ends or stays where it is, etc. Headlines are writing stories to justify results. Stick with your plan.

If markets stay stable and growth remains sluggish, I'd think metals are flat to lower as we are still in a cyclical downturn for commodities. But ... if more countries' economies go south and fear persists, you could see some up. I sound like the idiots on TV, but there you have it.

 

[rocket500]

Economic problems in Europe will get worse before they get better. I think the US economy will continue to fare better, but that could be a relative better vs. good. I can't believe holding gold/silver will be bad in the medium term.

 

[FrugalFannie]

I'd like to see Silver Eagles spot drop a bit and get closer to the current silver price and then I might jump back in. Best price I see is about $24.80 or so right now.

I can't remember seeing eagles any closer to spot than that.

 

[boilermaker]

Economic problems in Europe will get worse before they get better. I think the US economy will continue to fare better, but that could be a relative better vs. good. I can't believe holding gold/silver will be bad in the medium term.

I agree with this

 

[Rider]

I can't believe holding gold/silver will be bad in the medium term.

And so it all comes back to why you are buying and the point of the question. If you are buying because you seriously believe the global economy will collapse in the next 18 months and you'll be trading silver and ammo for food or safe passage, then silver is a deal at any price. If you are concerned about silver as an investment for strictly investment purposes, NES' Survival Forum is probably not the best place to seek advice. If, however, you are buying silver for prepping purposes with no defined target beyond avoiding buyers' remorse if the price goes down, then the discussions here are probably most applicable, and I would tend to agree with you medium term analysis.

Our best case scenario would be for precious metals prices to plummet: that would indicate that the markets were doing well, inflation was low, and you could back the truck up waiting for the next time the world flirted with disaster. I don't see that happening, but it's nice to think about.

 

[ASHDUMP]

And so it all comes back to why you are buying and the point of the question. If you are buying because you seriously believe the global economy will collapse in the next 18 months and you'll be trading silver and ammo for food or safe passage, then silver is a deal at any price. If you are concerned about silver as an investment for strictly investment purposes, NES' Survival Forum is probably not the best place to seek advice. If, however, you are buying silver for prepping purposes with no defined target beyond avoiding buyers' remorse if the price goes down, then the discussions here are probably most applicable, and I would tend to agree with you medium term analysis.

Our best case scenario would be for precious metals prices to plummet: that would indicate that the markets were doing well, inflation was low, and you could back the truck up waiting for the next time the world flirted with disaster. I don't see that happening, but it's nice to think about.

The only problem I foresee is the cost to actually mine the silver. I've read a couple columns about how it costs just around $18/$20 an ounce to mine. Costs most likely (in the near future) go below that.