Future silver and gold prices

[gxseries]

Before you think about $50 silver and the sky falling for collectors, please remember that $50 in 2006 is a whole lot different than $50 in 1979!  Back then, $50 was nearly 15 hours work at minimum wage, today it's 9.5 hours (even less in states with higher minumum wages).  In 1979, the average price of a new home was $71,800 (or 1,436 oz. of $50 silver) but last year the average new home price was $295,100 (or 5,902 oz. of $50 silver!!!).  To be a comparable price in terms of new homes, silver would need to reach $205.50/oz. which I could see putting a damper on collectors, but $50 in today's paper currency would not be such a big deal in my opinion.  In fact, it might be a positive for collectors as more press on silver might create more demand (one of those conundrums of economics where higher prices increases demand, rather than reduces it).

 

Perhaps, I would be much happier if it was explained in terms of Current Consumer Price Index. A quick check on an inflation calculator is here: http://inflationdata.com/Inflation/Inflati...nCalculator.asp

 

If I substitued Jan 1980 to Dec 2005, the inflation rate is 152.96%, which means silver at that time would mean it would be 126.48 dollars. But don't forget, that was just a SHORT period of time, which was less than a month. Prices fell to 16 dollars later that year, which is still a hefty 40 dollars per ounce in today's dollar.

 

A historical graph could be viewed at kitco.com. Strangely the 50 dollar mark doesn't appear in the large graph but I am pretty sure it did occur when I did some research about it some time ago.

[Burks]

Why aren't people talking about platinum and palladium? Afterall there are coins minted in those metals too

 

 

How many people can collect platinum and palladium coins like they can silver coins? Not very many. I can go out with $100 and come back with pockets filled with really nice silver. Try that with those metals.

 

Although if I did have a lot of money (ie winning lotto) I'd invest in platinum in a heartbeat. If gold and silver go up, platinum will also with a greater return. Problem is if the bottom drops out......

 

Jtryka - Your points are valid and taken. But when people are so used to silver be affordable at $5-$9 an ounce, $50 is a huge hit. Imagine gold hitting $2500. Lots and lots of people who collect gold coins would be complaining like us silver collectors. One day silver just may hit that mark of $250, hopefully by then my bones are dust

[jtryka]

Jtryka - Your points are valid and taken. But when people are so used to silver be affordable at $5-$9 an ounce, $50 is a huge hit. Imagine gold hitting $2500. Lots and lots of people who collect gold coins would be complaining like us silver collectors. One day silver just may hit that mark of $250, hopefully by then my bones are dust 

 

Burks, you don't need to wait for $2500, I am whining pretty good today at $570!!! I was just looking the other day at the old threads on the NGC forum when gold hit $360, and then $400, those were the days! Hopefully by the time gold hits that level my Saint set will be complete (though it might put a crimp in my future Type 2 Liberty set!

 

Perhaps, I would be much happier if it was explained in terms of Current Consumer Price Index.

 

gxseries, you are absolutely correct, however I thought it might be more easy to relate to prices we see each day and understand since the CPI is such an abstract concept that has been changed since 1980.

[ageka]

I keep in mind that every country manipulates its inflation index and so using that to calculate anything is probably a loss of time

 

They say historically a gold coin bought you a first quality handmade three piece suit

Try today to buy a handmade suit for one ounce of gold

 

In 1960 a portion of take out french fries was 5 franks now it is the equivelent

of 68 franks which no index will show

[Guest Stujoe]

I am just thinking of silver being about 5 times more expensive than today with0out my disposable income increasing 5 fold.

 

I think in things in relation to food. I can justify spending $12 on a circ Morgan or Peace dollar. That won't even buy me a pizza and a couple of beers.

 

If it is at $40 or $50 for that same coin. Well, I have to start thinking I can pretty much take my whole family out to dinner on that.

 

With the sheer number of coins I collect, that would slow buying down to a pace that would require a major change in my collection.

[Sir Sisu]

I keep in mind that every country manipulates its inflation index and so using that to calculate anything is probably a loss of time

 

 

I agree. No amount of algorithmic alchemy on inflation indexes can ever account for all the changes in the basket of goods involved. While probably a good indicator, I would shy away from looking at those numbers as absolute.

 

Not only that, but other skewing factors are often at play. For example our inflation index actually decreased substantially the other year when the government reduced the tax on certain alcohol products.

[Brett]

It doesn't really matter to me whether gold & silver prices rise or fall. I am not into collecting to make money.

 

If silver was to hit $50 again, it wouldn't change anything I am currently doing. If I see a coin I like, I save up the money to buy it. Granted it would be better to buy the coin for $10 instead of $50. But either way i will eventually purchase it.

[Guest Stujoe]

I am not in it to make money. Heck, I rarely sell coins except under duress.

 

But I only have so much money to spend on my collections. For me, I have to look at the total collection and what is left in my collection is Silver. No way could I afford a sudden 5 times cost in my current collection for the bullion value stuff and the corresponding rise that would almost certainly occur in the other stuff. I would be dead for many years before I had a hope of completing my collection.

 

It would not stop me from collecting but it would change what I collect.

[stu62]

At $50 oz. for silver I will sell every common silver coin I have and score my 2 dream coins : an 1873-Cc Trade dollar and a Japanese Trade dollar.I held on to everything in 1980.Not this time! My mother sold a hideous gold bracelet she had in 1980 for$900 and took a cruise with my father.Sell! Sell! Sell!

[Guest Stujoe]

For those of you collecting in that silver bubble, did the price of other silver coins not linked to bullion valuie rise also? FOr example, at $50 an ounce, what would happen to a Mercury Dime that costs $40 now. Would it stay at $40 or rise to a higher level? Much higher level? What effect does a jump in silver have on the overall coin market.

[stu62]

A rising tide raises all boats. A 1921 Morgan rose and receded like the tide. I traded some 64 Kennedies to Millers Mint for a 1906-S and 1908-S Barber Halves in Fine. I think it was like 11 for both coins. I was 18 years old and still have those 2 while worn 64 Kennedies are worthless except for bullion. Collector coins won't rise as much compared to common garbage. Trade all your garbage for true collector coins!

[Guest Stujoe]

But I quite like my garbage. I am a simple, hole filler, collector. A rising coin market is exactly the opposite of what I desire. My most pleasant dreams at night are of the bottom totally falling out of the coin market.

[stu62]

Ahhhhh!! Sell your $2 coins now worth $5-6 and get your dream coins! The same bag of 64 Kennrdies is still sitting in my safe deposit draw.About 2 years ago I thought what good stuff I could have gotten for these.There was an add in the Sunday newspaper in 1980 where a dealer was willing to trade stuff like $3 gold pieces foe pre 65 garbage.The price of a $3 gold piece is way beyond my price range.To trade 100 common easily replacable coins for true treasures is the way to go in my book. I have a XF common date Sovereign, a restrike Austrian Ducat and a2 Peso Mexican If gold hits $1000 I will turn this rabble into a Seated Dollar! A Bust Half! (pre 1807).Think of the possibilites! I'm giddy with excitement!

[Guest Stujoe]

I am definitely not a 'Box of 20' kind of collector.

 

Right now at today's prices, I could trade in many of my coins for 20 or so fancier ones or I could change my buying habits to buy just a few, higher priced coins a year instead of many lower priced ones. But most of the fun would be gone for me. A coin market crash would be much, much more fun.

[Mark Stilson]

For those of you collecting in that silver bubble, did the price of other silver coins not linked to bullion valuie rise also? FOr example, at $50 an ounce, what would happen to a Mercury Dime that costs $40 now. Would it stay at $40 or rise to a higher level? Much higher level? What effect does a jump in silver have on the overall coin market.

 

 

One thing is the "hole fillers" or high mintage were over priced. There was a lag in the price of better coins. But they did rise just not as dramatic per centage wise. It hit hardest the people who wanted year sets or just collected on a "whim". Main effect, one day you go out and buy a nice ms silver dollar for $6-$10, the next its $20 to $40 to $50. I'm not sure if any kind of actual melt down numbers were ever figured out. I don't think any real massive melt down actually happened.

[Art]

As I recall when silver was lunging up, the prices of collector coins were advancing proportionately. So a tenfold increase in base silver would make that 40 merc a $400 merc, at least. There was a lot of big money investment buying. People were forming clubs to buy bags of silver -- basically anything they could get their hands on.

[jlueke]

As I recall when silver was lunging up, the prices of collector coins were advancing proportionately. So a tenfold increase in base silver would make that 40 merc a $400 merc, at least. There was a lot of big money investment buying. People were forming clubs to buy bags of silver -- basically anything they could get their hands on.

Good thing there's brass, copper, and bronze coins.

[Guest Stujoe]

One thing is the "hole fillers" or high mintage were over priced. There was a lag in the price of better coins. But they did rise just not as dramatic per centage wise.

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As I recall when silver was lunging up, the prices of collector coins were advancing proportionately. So a tenfold increase in base silver would make that 40 merc a $400 merc, at least. There was a lot of big money investment buying. People were forming clubs to buy bags of silver -- basically anything they could get their hands on.

<{POST_SNAPBACK}>

 

That is more or less what I would have expected. And it pretty much cements that I would be one collector in search of calmer waters. Possibly they would be found in the world or exonumia areas.

[Art]

That is more or less what I would have expected. And it pretty much cements that I would be one collector in search of calmer waters. Possibly they would be found in the world or exonumia areas.

 

 

Good time to work on your Lincolns or maybe start one of those aluminum collections.

[Dan769]

That is more or less what I would have expected. And it pretty much cements that I would be one collector in search of calmer waters. Possibly they would be found in the world or exonumia areas.

 

 

Start buying Liberty Nickels now!. Get in before a silver run-up forces many to seek calmer waters

[Mark Stilson]

Right now its not bad. Just watch if the prices jump too "fast". The last time like said earlier in the post people got stuck buying high and selling low. This is still a mild rise in prices.

 

Trying to remember back it made a real slow crawl from $2.xx to about then stabilized for a bit around $4-5. Went up to $10, then made a rush to about $20 then the hard spike to $52. After the Hunt deal was out dropped back down pretty fast to the $20 range for awhile. I may be off some, but it should be pretty close.

[stu62]

In 1980 old ladies cleaned out attics and cleaned up.Speculators got killed. The Hunt brothers missed a margin call and silver dropped drastically in like a week.

[Mark Stilson]

After all was said and done. I was glad I just dumped the silver bars. Did not make it on peak but sold at $48. I did still keep a few of the bullion, just because of design though. Main thing I got out of was don't freak and think long term. Burning my collection would have been a mistake. At least to me. I'm already thinking how they will split to my kids.

[ageka]

I agree. No amount of algorithmic alchemy on inflation indexes can ever account for all the changes in the basket of goods involved. While probably a good indicator, I would shy away from looking at those numbers as absolute.

 

Not only that, but other skewing factors are often at play. For example our inflation index actually decreased substantially the other year when the government reduced the tax on certain alcohol products.

 

In Belgium the wages go up by 2% everytime the manipulated key inflation index goes up by 2%

Now you can imagine how manipulated that is

I lost all intrest in the index because first it probably is half of what it should be for the past 10 years and second I pay like 65% taxes on that 2 % rise so that leaves me with 35% of the manipulated index or 18 % of real inflation index

[Art]

In 1980 old ladies cleaned out attics and cleaned up.Speculators got killed. The Hunt brothers missed a margin call and silver dropped drastically in like a week.

 

 

Some of us not so old and not so ladies did the same. I sold a bunch of silver and gold at the highs. Most of the silver was in bar form - nothing collectible just plain old 10 oz bars. Most of the gold was jewelry and some sovereigns that I had.

 

I would do it again without hesitation.