Gold or silver

Started by Whitlock, January 22, 2010, 04:19:28 PM

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Whitlock

Being a gold miner people are all ways asking me witch is a better investment gold or silver.
My answer to this is witch do you think has a better chance to go up?
For a exsample with gold at 1100.00 and silver at 18.00 do you think it is more likely that gold will go to 2200.00 or silver to 36.00 ???

I know Muldoon and others can shed some light on this for us

What do the following items tell you? Price of silver falls by nearly 5% in one day. In less than 11 days the available stock of silver to cover paper shorts falls by nearly 15%. In the first few minutes of oveseas trade, silver begins to recover it's losses.
The answer is that the race to own silver is on. From the US Government saying that it can't get enough blanks to make the silver eagle to the fact that silver stocks are continuing to decline rapidly since the first of the year, the signs are all pointing to an increase in the future. Allow me to point out what I am seeing and you can make up your own mind.
On Wednesday, January 20th, prices in New York for silver plummeted 4.7%, down 89 cents on the day. Yet the World Spot price not only stops the crash, but turns slightly positive in the first few minutes of trade. It would appear that traders outside the US have a different view of the value of the silver metal.
Tuesday, January 19th. the COMEX totals of silver on deposit shows 113 Moz of silver combined on deposit. While that is up slightly from the 112.6Moz in December, the numbers are seriously misleading. On the 8th of January, total stocks were at 111.5 Moz of which 54 Moz were registered to cover contract positions, 57 Moz was eligible to cover contracts, but were actually owned by someone who had them on deposit at a COMEX depository.
Just 11 days later, the stocks of registered silver have fallen to 47.4 Moz while the eligible stocks rose to 65 Moz. As of the 15th, over 128,000 silver contracts were open, amounting to a trade of more than 640 Moz with just 47 Moz available to cover demands for delivery. That's right, there is only physical silver to cover slightly more than 7% of the open silver contracts on the COMEX. Do the math -- 93% of the COMEX contracts can only be covered if the short side can find someone to sell them silver or the long is willing to settle in paper money for a paper silver contract.
Basically, nearly 15% of what was the available COMEX silver is now owned by someone. It only took 11 days for that much silver to disappear into personal hands. Only 47 Moz remains, at which point the shorts develope a new term for "naked short selling", because the only way they can then satisfiy the counterparties is to settle 1) Buy Silver on the open market to settle the demand for delivery or 2) force a settlement in cash, which is the same thing as a default.
I would expect the registered stocks to rise slightly in the near term, as the drop in prices allows some recovery, IF there is silver to be purchased on the open market at levels needed by COMEX. Otherwise, the race to own silver is heating up. Joe Sixpack may not yet be waking up to the facts of silver, but it would appear that savvy traders have laid definative claim on 7 million ounces in just 11 days, you might want to consider your position before the checkered flag waves.

Make Peace With Your Past So It Won't Screw Up The Present

bayview

#1


  I know the dealers here in the Dallas area are getting a considerable premium for physical gold sales. . .   If you can find it.  Most dealers and pawn shops are buying, not selling.

  To answer your question whitlock . . .   If things fall apart and the dollar bottoms, it would be easier for the general public to trade in silver than gold.  I would imagine a lot of bartering.  (My opinion)

   That is if your gold is gold . . . Seems that China just received some gold bars that were gold plated tungsten.



/
    . . . said the focus was safety, not filling town coffers with permit money . . .


peternap

Silver is a lot easier for the average person to accumulate.
Gold is just expensive. A normal working man can afford 30 bucks for a couple ounces of silver but probably can't scrape up a grand for an ounce of gold.

Silver is also easier to use as currency.
I like to base my opinions on what will really happen rather than what might based on some imagined scenario.

First, look at Nazi Germany. Jews escaping the country braided gold into the kids hair. In that respect, gold is smaller and better.

More likely in the event of a financial collapse, we're staying put. Then I look at Cambodia under the Khmer Rouge regime. The black market ruled and they didn't take plastic. They took gold and silver. The local equivalent of Walmart, who only bartered, was easier to get change from if you have small amounts of precious metal like silver.

As far as a growth investment in the market, I think we're past that point. They need to drop back to pre hysteria levels before stock in mining companies are worthwhile.

Just my opinion.

Honestly, I still think that as a casual investment, lead is better. You can still get it for free. You can sell it for .43 a pound if you need to. You can make bullets out of it.

If a FINANCIAL COLLAPSE DID HAPPEN, BULLETS ARE PRIME BARTERING ITEMS AND COME IN REAL HANDY TOO.
These here is God's finest scupturings! And there ain't no laws for the brave ones! And there ain't no asylums for the crazy ones! And there ain't no churches, except for this right here!

NM_Shooter

You can't buy certified gold and hold it without having to pay an exorbitant strike price.  I wanted to buy some coins, or small bullion at one point, but I was not going to pay 30% over the market rate for gold. 

Seems like junk silver coins are easier to come by, and the premium is not as bad.... or am I being fooled by the proportionate scale?
"Officium Vacuus Auctorita"

peternap

Quote from: NM_Shooter on January 23, 2010, 11:21:43 AM
You can't buy certified gold and hold it without having to pay an exorbitant strike price.  I wanted to buy some coins, or small bullion at one point, but I was not going to pay 30% over the market rate for gold. 

Seems like junk silver coins are easier to come by, and the premium is not as bad.... or am I being fooled by the proportionate scale?

You can buy it, you just have to look. Stay away from coin dealers and pawn shops (Bottom feeders)
I get my best buys from people trying to sell it at gunshows. They'll take it to a dealer and be so insulted by the offer they just walk around with a sign.

Look for junk coin from individuals that worked in a bank, etc. Again, the dealers are your best friend because they PO everyone.

If you're real sneaky, spend a couple of hours hanging around a coin shop on a Saturday. People will come in trying to sell. If they leave, grab them and up the dealers offer. If the dealer spots you, you'll get banned, big deal ;D

In case you hadn't noticed...I don't care much for dealers. They feed off of peoples misery.
These here is God's finest scupturings! And there ain't no laws for the brave ones! And there ain't no asylums for the crazy ones! And there ain't no churches, except for this right here!


muldoon

Whitlock,

Loved your post.  I read it over the weekend but couldn't respond because I was thinking more than I wanted to blackberry in.  The comex situation is indeed bizarre.  I have a few thoughts on it. 

Alot of people think of gold and silver being inflationary or hyperinflationary protection assets.  I tend to disagree based mostly on the 1980s and early 1990s behavior, inflation surged as metals stayed stagnant.  But where they do really really well is geo-political turmoil.  As currencies fluctuate wildly or governments dive, gold surges in demand as the fear card comes out. 

Something that has always bugged me about metals, I have heard for years and years about how the markets are fixed.  I have read comex reports about how many bars they actually have versus the outstanding contracts; read reports of failure to deliver, and of course about the huge numbers of short contracts held by just 3 or 4 financial companies.  My first thought is why play in a rigged casino?  The idea of buying gold contracts seems essentially flawed to me.  Even they are supposed to settle, they now have the option to force a settlement in cash - and they drive the pricing that determines what you get in the settlement. 

But as we all know, the market does not set rates.  Not financial companies, not banks, the market always sets the rates. 

For example - base 10 year interest (^TNX) at 4% is a sham, ask anyone trying to get a loan - there is no loan to be had becase the market sets the rates and the market will not sustain such a rate.  Those who say the federal reserve sets rates, please explain why credit is so down if they can indeed set rates. 

Same principle as with the metals I see.  The "spot price" may fluctuate up and down, but the premium over spot does not change as much.  If you cannot buy an ounce of gold for spot ~ then the value of gold is not spot.  It's as simple as that in my opinion.  Supply and demand trumps computers and derivatives.  If the supply is as low as you claimed, and demand is ramping - and all things else are the same - then the value of the item will increase. 

I have some silver, a few hundred dollars in face value of mercury dimes.  Love them, such a beautiful coin, I think they are a practical purchase.  I intend to pass them to my children one day.  I hope to not need them for anything else.  For silver coins -- coins made before 1964 are 90% silver.  Therefore they are theoretically worth 90% of spot per ounce (aside from numismatic value, some old coins are very valuable).  An ounce of silver dimes is roughly 11 coins.  1.10 in face value is worth about 90% of 18 dollars, or just under 17 bucks.  Add the premium back in and 11 dimes is really worth just over 20 dollars, or 2 roughly 2 bucks a dime.  Thats the value in metal, once 10 cents, now 2 dollars.  I do not argue that point. 

I have found quite a few just by using cash and getting change on a daily basis.  There is alot of this stuff floating aroun in currency.  Check your pockets and piggy banks, you might be very surprised. 

OlJarhead

Interesting read all these years later...we were looking at both back between 06 and 09sh...and kept an eye on since....

Gold was under $900/oz and I think silver was $11/oz.

It wasn't an investment, it was just a way to store wealth (even just a little) and today at around $1800/oz for gold (and it's been higher) and $22/oz for silver (ditto) I can say our dollars were well spent as we probably still have the same buying power as we did back then :D