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Anyone else happy about silver prices?


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I really don't care. I don't think that it really matters that much to most people. If you have a lot to sell, you can make some money - good. If you're buying the prices will be up some - you'll adjust because you're probably cost-averaging anyway. Now if we had a Hunt Brothers type run-up that would be different.


This is just the worldwide reaction to the terric US debt. We'll spend more money in IRAQ than the US spent in total in most of it's history.

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Just what is it that we are thinking here?


** If you sell your Canadian coins on eBay, the news about silver will help them get a good price. Do you have some profitable use for the money you will earn? Will you invest the principle and profit in different activities or in the same venture?


$$ The reason I ask that if Congress declared that there are now 10 inches in every foot, with the new foot being 84% of the old foot, I would not "feel good" about suddenly being "taller."


## Silver and gold (and copper and petroleum) are fixed quantities. We can grow more lumber. We can raise more cattle. We cannot make more silver. How much we produce is not arbitrary, but is defined by market drivers. If you owned a gold mine you could not be any richer than the general economy would allow and you could not make more money than the market could bear. In other words, equipment costs money and manpower costs money -- even if you own a source of money.


(*) So, when the "price" of silver (or North Sea Crude) goes "up" it might be because there is more demand or a lowered available supply -- or it might be because the dollar has lost value.


The only way that could happen is if the government is issuing more dollars than it is taking in in taxes. In fact, that is exactly what is happening. During World War II, the government changed the income tax into an income withholding tax. That helped pay for the war, but it was a drop in the bucket. Even so, we are not paying more taxes to fight the current war. Therefore, the price of everything must go up.


Silver (and gold, etc.) allow you protect your savings against losses due to inflation, but you do not gain because everything else now costs more as well.

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I am happy that silver is going up, but I am also unhappy since I have not yet locked in a price on my roll of 2006 silver eagles. I remember the good old days like 1996 when a new roll of silver eagles was less than $125, and now it will cost me more than $200!


As for Michael's statements, there is some truth to what he says, but there is an important missing link between the increase in the price of silver and wage inflation. Silver has nearly tripled from it's low in the early 90s, yet my salary has not tripled in that same time period. In 2005, silver rose 38.2% from $6.39/oz to $8.83/oz though I seriously doubt many or any of us experienced a 38% raise in wages last year. The prices of many goods rose sharply last year, but even more conservative estimates of "true inflation" (i.e. not the published CPI) put it around 7-9%, so silver in 2005 did way better than protecting your investment, or making you feel good about being "taller." The fact is, the metals and many other commodities are in a bull market that has gone beyond weakness in the dollar, and that is something those of us who invest in these commodities should feel good about. No one was downplaying the performance of the Dow and Nasdaq in 1998-99 blaming the increase in stock prices on monetary inflation (though it may have been largely due to inflation), because the bull market in stocks went beyond the monetary phenomena that most commodity naysayers still like to pin as the sole reason for increasing silver and gold prices.

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Cannot say that I am very happy or disappointed. One of my main collecting areas is silver; and to complete those areas, I am still more on the acquiring end rather than acquired end. It will not stop my from my collecting goals, but it will make it a bit more pricey.

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For you collectors, I wouldn't be too upset since most coins trade at such a premium to silver value that the rise in silver will have a more subdued effect. On some series, like circulated silver Roosevelt dimes or Kennedy halves, the silver will affect prices since these trade for around melt value, but for silver dollars or bust halves or seated liberty coins, the effect will be less.


Certainly it will not be like what I've gone through with Saints in the last 5 years. Back in 1999-2001, most common date issues (1920s Philly coins, S-mints from the teens, 08 NM, etc) were selling for about $125 over melt, which with gold at $275 meant these coins were available all over for under $400! Now, the melt value is over $500, plus the premium has expanded to about $250! So a common date in MS-63 that used to sell for $400 now costs $750 or $800, mostly because of the rise in gold! You won't experience that sort of pain on silver coins until spot prices reach $20 or more!

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... most of my collection was obtained in the 70s', when silver was well below 4 bucks!


Those were much bigger dollars. Minimum wage was about $1.75 in 1975. Regular gasoline was still $024.9 (25 cents/gallon) in 1972. However you measure it, $4 back then is like $20 to $40 now. (I still have a few things I bought back then -- an Indianhead Cent, a 1-oz. silver Engelhard bar, a Tibetan tangka.)

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I have ... silver halves that I found while searching rolls in Dec 03. To hold or sell is a tough decision.


Outside of what you need to complete your sets, sell. Sell the 40% first, the 90% Kennedys next, then the Franklins, then the Walkers. Sell them all right now, if you want. You got them for face and will sell them for about 6x face. You have to admit that 500% is a heck of a sales commission.


Check them to be sure, but outside of completing a Circ Set, they cannot be rare -- no rare dates, certainly -- and with the Kennedys that is true by definition.


I am holding because to me, silver is savings. It does not matter what the price is, I buy when I buy in order to sell much later.

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No one was downplaying the performance of the Dow and Nasdaq in 1998-99 blaming the increase in stock prices on monetary inflation (though it may have been largely due to inflation), because the bull market in stocks went beyond the monetary phenomena that most commodity naysayers still like to pin as the sole reason for increasing silver and gold prices.


First of all, I am not a "commodities naysayer." I like commodities (versus equities) for many reasons, including the opportunities for speculation.


Second, the stock market run-up of 1998-1999 was the last stage of a periodic rising curve, right on time according to the Kondratieff Cycle. ** The Reagan Revolution, the Graham-Rudman Act, etc., saved the economy. They even shut off the running billboard that tallied the National Debt on the theory that it was going to be paid off by now. Already by the later 80's pop phrases appeared like "the Me Generation" and the "Greed Decade." Fictional expressions included Wall Street and Bonfire of the Vanities. The home-worker daytrader of 1998-1999 was only the last blast before the bubble burst -- as it always must.


Third, the historical facts show that the price of silver -- like the price of coffee or sow bellies or mercury -- is a matter of supply and demand. Apart from inflation, the prices will rise and fall as more or less is consumed and more or less is brought to market.


Silver has its own rules, as do soybeans, etc., etc. Silver is not primarily mined, but mostly the result of secondary recovery from copper. Unlike other metals, a rising price for silver will not open up new mines, but will only consume existing stockpiles (coins, for instance). World production has been running being consumption for several years. So, a price rise is expected until the demand is satisfied.


However... that said... I remember about 1991 when you could buy silver for about 2 or 2.5 times face. (See here: http://www.silverinstitute.org/price/hist_priceny.php) On the other hand, even after the crash of 1980, silver still hit $14 in 1983, and those were bigger dollars than today -- about three times as big, perhaps more.


When it comes to the Metal of the Moon, I am a silver baron. But the fact remains that the US government is engaged in an expensive war and is not raising taxes to pay for it. Ergo...


** (I believe now that the Cycle has less usefulness now that everyone knows about it. I learned of it over 30 years ago. I thought it was pretty arcane and then about 1998, a stock broker used the term in a conversation and started to explain it, as if it were a new idea. I knew then that the cat was out of the bag. One thing about these objective events is that human reason overpowers them. You can condition a person to do anything -- until he figures out that he has been conditioned. So, the Long Wave Cycle may no longer apply -- if it ever did. Kondratieff was a Soviet communist. Libertarians deny the validity of mathematical psychohistory. For an argument against the Long Wave Cycle, see here:


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Michael, I think we agree more than we disagree. I certainly agree that gold and silver will provide a hedge against currency debasement over the long run, however being that they are commodities, they are also subject to the normal swings in market forces that affect the equity and other markets. For example, in 1980 when gold reached $850 (in 1980 dollars, I know all about the time value of money) it was largely due to a swing in the market psychology pendulum such that many investors thought the end of the world was upon us, and only gold would be worth anything. Clearly that did not turn out to be the case, and the price of gold went a lot higher than was justified. Similarly, silver rose to $50 not due to basic market fundamentals but due to manipulation by the Hunt Brothers. Over the next two decades, the pendulum of market psychology swung to far the other way, with gold the barbarous relic (though that is a misquote of Keynes) and silver soon to be doomed by digital cameras. During those many years, gold and silver both performed below where the market fundamentals should have lead them (personally, I am in line with the folks at GATA and believe there was market manipulation on the other side for gold from 1988 through the present). Now the pendulum is swinging back and you see outsized gains on both in recent years.


Over the long run, gold and silver should perform as a hedge, increasing in dollar price in inverse proportion to the loss in value of the dollar due to inflation. But, as they say, in the long run we are all dead! In the shorter run I tend to envision market performance looking like a sine wave centered around the expected return (for metals that being the rate of inflation +/- some value for depletion). Right now we are in the point of the cycle where returns are beginning to exceed expected returns, so a good time for being long metals. Keep in mind also that my thinking on market returns can also be applied to other markets, such as equities, bonds etc.


As for the wave theories and Kondratieff cycles, I view them with somewhat less credibility as mainstream technical analysis. Sometimes they are accurate due to self-fullfilling prophesy, other times I think they are more like the blind pig finding the acorn, in that some smart technician found a mathematical model that happens to accruately describe historical market behavior, but may be more limited in describing future market movements. I remember reading some commentary a couple years ago about the imminent Kondratieff winter, where the values of all assets including gold and silver plummet and the only things of value would be food, water and a club to protect your family. Certainly when fans of Kondratieff start predicting a move back to the stone age, they lose what little credibility they had with folks like me. If you want to talk fundamentals, like supply and demand, I am all for it. Even if you want to talk about metals and their appropriate monetary roles in the market, I am with you there. But these long wave cycles and predictions of doomsday don't really do much for me. I realize from your comments that you are not a total kool-aid drinker on Kondratieff and long-wave cycles, but it seems you put more weight on the theory than I do.

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I'm with Stu,,, as someone still in my earning years and a bit off retirement, I'd hope all prices (stocks, metals, etc.) fall through the floor and stay there (buy more for the same dollar, right). Then when we're ready to retire, let the prices fly....


Long wave theory = Marketing cycle by another name. Mindless masses forget about the last time they were screwed, then the next round of marketing can begin and a new scam can run...


Wealth is best accumulated by not spending what you make. Metals are pretty cruddy at increasing wealth or generating wealth, but are fair at maintaining it after you get it..


For those of us still trying to get to that point at which we feel we are adequately wealthy, I'd say don't waste your valuable money and time on metals. Play with them as a hobby, like coins...


If your after wealth, then observe the world around you closely and invest independently of the herd movements.

Long/short term investment opportunities are out there,,


Find your horse by yourself,, hope your in the right place at the right time (you'll know your close if the masses are not with you),,, ride that pony till she drops or until the masses join you,, then get the heck off while the masses are buying and let em' have her.... rinse and repeat.


Too many riders on Silver right now. I'm off, she's yours.

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Well, I've always bought silver and gold to have money to spend when the paper currency becomes bumwad, as our paper is about to become pretty soon.


That the spot prices are in a steady rise isn't surprising nor dismaying to me, but I don't like to see it happen either.

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I took the prices for silver from the Silver Institute cited above and put them into a spreadsheet. I then went to the US Bureau of Labor Statistics and got a table for the Consumer Price Index 1984=100. Then, I did the math, multiplying the annual average price of silver with the average annual CPI for the year, giving me an "adjusted average annual price for silver."

As you can see, the price of silver is up a bit.


Annual Actual Adjusted

Year Average Average

2004 6.67 12.51

2003 4.89 8.96

2002 4.6 8.22

2001 4.36 7.69

2000 4.97 8.48

1999 5.22 8.63

1998 5.53 8.97

1997 4.87 7.78

1996 5.17 8.06

1995 5.18 7.85

1994 5.28 7.77

1993 4.30 6.18

1992 3.93 5.47

1991 4.03 5.45

1990 4.81 6.20

1989 5.49 6.74

1988 6.53 7.63

1987 7.01 7.89

1986 5.46 5.96

1985 6.14 6.55

1984 8.15 8.39

1983 11.43 11.38

1982 7.93 7.65

1981 10.50 9.54

1980 20.65 17.02

1979 11.11 8.06

1978 5.40 3.52

1977 4.62 2.80

1976 4.35 2.47

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That is interesting, but I would suggest a comparison of the actual average silver price to the base price in 1984 multiplied but the index for each year (i.e. if 1984=100, then they are the same, if 1985=1.065, then the price would be 6.5% higher than 1984, etc.). This would show the difference between actual prices and what they "should be" if they merely tracked the devaluation of the dollar. This data would likely illustrate the sine wave concept I alluded to before.

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##  Silver and gold (and copper and petroleum) are fixed quantities.  We can grow more lumber. We can raise more cattle.  We cannot make more silver.



Actually through particle bombardment one element can be transmutated into another element. The costs however, are astronomical. So for the moment gold/silver will remain 'fixed' quantities but as science progresses it would be conceivable to believe that gold/silver could one day be produced through transmutation at a more reasonable cost than at present.

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