Ten Reasons to Buy Gold and Silver

[Freeman_KParticipant 3524]

Beer wrote:

Or maybe they are both grossly over valued right now. I found these charts that adjust the value of an ounce of gold/silver for inflation for the last 100 years…

http://www.macrotrends.net/1470/historical-silver-prices-100-year-chart

http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

The only time gold has ever really been more expensive in recent history here than it has over the last decade was in the late 70s into the early 80s when we had a few years with double digit inflation

Well that question is easy. There is just no way if i start with silver that it is grossly over valued at current price of 17 € when median production cost per oz of silver is + 10 €. My source for this info is the credible World silver annual report and here is the link – pdf: http://www.silverinstitute.org/WorldSilverSurvey2016.pdf

In fact, silver and gold were traded at production costs or even below production costs many times in the past 50 years. How is this possible ? Well mines produce silver mainly as a byproduct of other more abundant metals and can somehow scrap by. But it is obviously clear, that current prices of silver and gold are not consequence of the actual physical trade but rather EFT trade with agenda from the big guns – central banks, big private banks, etc. Since silver market is relatively small thay can easily keep it at depressed prices where silver acts just like any other commodity – cow, copper or wheat. But, it is anything but cow. To have silver here is crucial to keep the fiat printing fiesta going on but what happens when, not if, but when SHFT and those 99,96% of virtual trade wants physical delivery ? How much is paper silver worth ? Is silver still a cow just like commodity or does it become what was for thousands of years – a store of wealth, just like gold.

Now with gold this spread to production price is wider, my guess it that gold market is much bigger and thus more expansive, or better said not subject of such manipulations, thus the 1:72 and not 1:15 ratio. Still, just think about that for a moment, you can get gold and silver at low premiums over production cost.

As per your charts, I have a better chart for you from the same page:
http://www.macrotrends.net/1444/gold-to-monetary-base-ratio

Now at world debt at 325% of world GPD, USA debt doubling in less than 10 years now and standing just government debt at 20 trillion usd, with Europe printing as crazy and so on, i really “believe” that this fiat orgy which lasted for 100+ years is ending. And when that happens, i want to be prepared.

The choices we make, not the chances we take, determine our destiny

[BeerParticipant 11832]

Freeman_K wrote:

Now with gold this spread to production price is wider, my guess it that gold market is much bigger and thus more expansive, or better said not subject of such manipulations, thus the 1:72 and not 1:15 ratio. Still, just think about that for a moment, you can get gold and silver at low premiums over production cost.

The inflation adjusted charts show both gold and silver towards the high end of their values of what they were worth over the last 100 years…to me its indicating gold is in for some downward movement far more than they are both going to rocket up.

Freeman_K wrote:

As per your charts, I have a better chart for you from the same page:
http://www.macrotrends.net/1444/gold-to-monetary-base-ratio

Why do I care about this? Its just showing that our money supply has expanded faster than our gold supply. I’m fully aware this has happened. I’m fully aware we had inflation. This chart simply ignores said inflation. Its like complaining a dollar for a can of coke is ridiculously over priced because it cost 10 cents in 1950 even though I’m not working for 1950s wages anymore.

Freeman_K wrote:

Now at world debt at 325% of world GPD, USA debt doubling in less than 10 years now and standing just government debt at 20 trillion usd, with Europe printing as crazy and so on, i really “believe” that this fiat orgy which lasted for 100+ years is ending. And when that happens, i want to be prepared.

The only time gold is really a good “investment” is if the only other alternative in your playbook is burying cash in your back yard or stuffing it in a .02% interest savings account, and only because the only guarantee with these methods are that you will lose relative wealth to inflation.

Even if we have a period of 10-15% inflation, historically it just means bigger returns in the market and on rental properties. Why throw money at something that if you average in over time and hold long term historically will just pace inflation where as doing the same thing with stocks and rental properties will beat inflation?

[Freeman_KParticipant 3524]

Beer wrote:

The inflation adjusted charts show both gold and silver towards the high end of their values of what they were worth over the last 100 years…to me its indicating gold is in for some downward movement far more than they are both going to rocket up.

To me those charts show that silver is more or less depressed at small premiums over production cost per last 70 years and that gold now looks overpriced. But overpriced to what, to production cost ? Did millions of men die chasing gold to sold it later at small premium over production cost ? Zoom out for few thousands of years and current prices are exceptionally low, not a rule. You can get silver coins from mine in Peru at 11.74 USD production cost delivered at your door for 17 USD. If this isn’t a steal i don’t know what is. And while gold has some place to bottom out, silver has zero room to go down. But what is important to understand here is that silver and gold are not commodities but traditional money which was abolished only after ww2 with fiat experiment of Bretton woods system which was abolished in few decades and now we have for the first time in history system where money is backed not by tangible asset but by intangible government promise to behave. LOL.

Beer wrote:

Why do I care about this? Its just showing that our money supply has expanded faster than our gold supply. I’m fully aware this has happened. I’m fully aware we had inflation. This chart simply ignores said inflation. Its like complaining a dollar for a can of coke is ridiculously over priced because it cost 10 cents in 1950 even though I’m not working for 1950s wages anymore.

You care about money supply because gold and silver are not cows and pigs to be traded like disposable commodity at production costs but are rather traditional stores of wealth. This chart is to me one of the most significant charts from that page and only shows the upwards possibility for gold&silver when, not if, when fiat fiesta of money printing money masters loses trust from population. And what will happen when suddenly demand for physical delivery of gold and silver will increase 100X ? Fiat is nothing but paper on which government says it has worth, but what governments ? The ones that increase money supply x2 now in few years. To me, this is history happening again, just like Weimar or Roman Empire.

Beer wrote:

Why throw money at something that if you average in over time and hold long term historically will just pace inflation where as doing the same thing with stocks and rental properties will beat inflation?

There were 6 oz of silver per person in the world mined in the whole history, so for small amount of fiat you can get enough silver to be protected against the system risks and while i agree to not go crazy and that there is good probability that fiat fiesta can go on a lot more time i also believe that both gold and silver will return to their historical role of main stores of wealth on which new global financial system will be built. Hope to see this, but for example it took 500 years for Roman Empire to collapse with gradual debasement of silver in denarius. So i could well die before that happens and you could bask in fiat from dividends.

The choices we make, not the chances we take, determine our destiny

[BeerParticipant 11832]

Freeman_K wrote:

Zoom out for few thousands of years and current prices are exceptionally low, not a rule.

Its not. I already looked at that earlier in the thread with the article that analyzed the Roman centurions pay. You keep making this claim but you haven’t backed it with anything.

Its also not exceptionally low if you look at the last 100 years adjusted for inflation.

Freeman_K wrote:

But what is important to understand here is that silver and gold are not commodities

Yes they are. Perhaps you should learn what a commodity is before making flat out false statements

http://www.investopedia.com/terms/c/commodity.asp

There is a reason why you buy gold/silver by weight even if you are buying them in coin form.

Freeman_K wrote:

You care about money supply because gold and silver are not cows and pigs to be traded like disposable commodity at production costs but are rather traditional stores of wealth. This chart is to me one of the most significant charts from that page and only shows the upwards possibility for gold&silver

This is precisely why I care about the inflation adjusted chart way more than the other one you think is important. If we had 1000% inflation over the last 100 years and only a 100% increase in gold/silver…I’d agree with you gold/silver is under valued and probably a good investment. When gold/silver is near is up near the high end of its 100 year range…I’m just not seeing where its undervalued with lots of room to move up.

Freeman_K wrote:

when fiat fiesta of money printing money masters loses trust from population. And what will happen when suddenly demand for physical delivery of gold and silver will increase 100X ? Fiat is nothing but paper on which government says it has worth, but what governments ? The ones that increase money supply x2 now in few years.

I don’t know where you think this huge demand for physical gold and silver will come from. A lot of people literally have a negative net worth or so little money that even if they converted all their cash into gold its going to have no impact on the system at all. On the other end of the spectrum, the people with big bucks get better returns investing in stocks and real estate.

Basically you get one chunk of the country that doesn’t have the assets to have any impact and another chunk of the country that benefits from the current system so even if they could make an impact why would they want to?

Freeman_K wrote:

There were 6 oz of silver per person in the world mined in the whole history

Ultimately prices are going to be based on supply and demand. One half of that equation is rather irrelevant when trying to figure out what its worth. Its like you just read this random factoid somewhere and actually think its meaningful for some odd reason.

Freeman_K wrote:

so for small amount of fiat you can get enough silver to be protected against the system risks and while i agree to not go crazy and that there is good probability that fiat fiesta can go on a lot more time i also believe that both gold and silver will return to their historical role of main stores of wealth on which new global financial system will be built.

The thing is, if you are sitting on like 10k worth of gold/silver and the system collapses…you aren’t sitting on enough gold/silver to just say f~~~ it, hop on a boat, and go live out your life in comfort in some foreign country after the s~~~ hits the fan here. If you are sitting on hundreds of thousands of gold/silver you are just f~~~ing yourself out of better gains from stocks/rentals.

Realistically there are a hell of a lot more people who have made fortunes, or even just enough to fund an early/decent retirement through stocks and rentals. I’ve never heard of anyone doing it by turning their basement into a miniature Fort Knox by filling it up with gold bars and coins over the years. Seems pretty obvious where the smart money is going.

Freeman_K wrote:

So i could well die before that happens and you could bask in fiat from dividends.

More than likely. I mean realistically even if we have a collapse 20 years down the road from now and over that 20 years prior to the collapse gold averages 3% returns while stocks average 10% returns, then something really s~~~ty happened, the guy who sat in stocks for 20 years would have to lose 3/4 of his wealth for the guy in gold to have a higher net worth.

If you are investing in companies that are already doing business in many countries and in many currencies, its not like all our investments are going to go to zero. It might mean a decrease in currency conversion rates or a decrease in the American standard of living, but its not like its a doomsday scenario for anyone not holding on to physical metals.

[Freeman_KParticipant 3524]

Getting the historic price of the silver and gold is not that straightforward – one thing you have inflation, then you have technological advance and so on. I have found my chart from the previous page basically cited in the local academic sources so there is at least some credibility to it. Even if you heavily discount gold prices the fact remains that silver was locked at 1:15 for thousands of years and there is no fundamental reason to behave like it behaves other that masses are convinced that government paper is money and silver is something to make spoon off.

Beer wrote:

Its not. I already looked at that earlier in the thread with the article that analyzed the Roman centurions pay.

What is most common claim is that annual pay under Julius Ceasar was 225 denarius for centurion which was 800 grams of silver or 2 oz per month – very much supporting my claim that basic wage was 1 oz per silver. Take a look at http://www.the-colosseum.net/history/monete_en.htm, they should not have any agenda, there are some interesting claims there that are supporting my claims about 1 oz per month of silver and 1 oz per year of gold. It varies greatly depending on the period and state of the denarii debasement which went from pure silver to 5% silver in the dying stages of the empire – now we have 0% backing.

Beer wrote:

Yes they are. Perhaps you should learn what a commodity is before making flat out false statements

No, it is not commodity, in its function it is not. It has an unique function of money and store of value. Mainstream would like to convince you that your fiat has any worth because it is backed by 20 trillion government debt and guns to collect taxes but unlike passing currencies gold and silver will maintain its base value. Ultimately i agree that in short term you can probably place money better somewhere else, yet long term we there will be a huge correction to the historic stores of money once the trust in system collapses. And we could not be far from this.

Having 10-15% of investments in precious metals looks like reasonable strategy imo – but i am not trying to convince anyone since system relies on keeping the metals at base production price, at more and more increasing price to do that. To be honest, i am rooting every day that i see silver down another few %.

The choices we make, not the chances we take, determine our destiny

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