Price of Silver

SilverStandard

I would like to start a thread to debate the situation about why the price of silver is still so low.

I am a self confessed Silver bug. Been buying it for years.

If its true that all the mines will run out of silver by 2020 how much is there really left above ground.
The rate its being used up in computers and cell phones and medical uses, why is the prices still so low compared to Gold?

cloud_dog

SilverStandard wrote: »

If its true that all the mines will run out of silver by 2020 how much is there really left above ground.

Well, the USGS is talking in terms of 13 years supply of 'easy' silver and 28 years of 'difficult' silver.

Having said that there are some 'weird' information comming from USGS, for example the reserves listed by countery don't appear to have reduced by much (if at all) for a number of countries between about 2000 and 2008. Have a review of their web site but a couple of links below (found on another discussion on Kitco):

http://minerals.usgs.gov/minerals/pubs/commodity/silver/silvemcs07.pdf

http://minerals.usgs.gov/minerals/pubs/mcs/2007/mcsapp07.pdf

SilverStandard wrote: »

The rate its being used up in computers and cell phones and medical uses, why is the prices still so low compared to Gold?

The reduction of use in photography may have a bearing. In 1997 31% of silver production was used in photography, in 2007 that had been reduced to just over 14%. That is a huge amount of production to consume elsewhere, although I believe it is.

Also, I don't like the whole Gold/Silver ratio thing. A ratio is a measurement at a point in time, and over a period of time it fluctuates; but, is there really any valid correlation betwen the two? I'm sure there is a ratio between banaas and gold somewhere but is there any real validity to the ratio.

The other problem with a ratio is that it doesn't tell you if one is cheap or the other expensive.

Having said all this I am a trader on the back PM, although not really an 'end of the world type believer'. :rotfl:

SilverStandard

So whats your thoughts on the future of the silver price?

Where is the best place to buy, would you say?

agsnu

Don't forget that you have to pay VAT on silver, so you'll have to make 15% gain (+ inflation) before you break even if holding physical stuff.

cloud_dog

SilverStandard wrote: »

So whats your thoughts on the future of the silver price?

I am generally bullish on commodities and would believe silver will outperform gold.

SilverStandard wrote: »

Where is the best place to buy, would you say?

I don't have physical Ag / Au in my posession. Long term (safe Au/Ag) holdings are in Central Fund of Canada CEF (http://www.centralfund.com/), the fund holds approx 53% Au and 43 Ag and it has pluses and minuses. I tend to trade PM's using ETC's.

The reason I like CEF is that it hold physical bullion, does not lend, and I can hold it in an ISA / SIPP. I know some other physical ETC's can also be held in and ISA but this is my preferred choice.

colmil

This sounds very complicated to me.

I have about £15000 available at the moment and I,too, have been thinking of putting it into gold or silver, is this something that you would suggest?

If do, which is the easiest way to do it?

sabretoothtigger

5% of wealth is the cap normally, commoditys arent normal investments

cloud_dog

colmil wrote: »

This sounds very complicated to me.

I have about £15000 available at the moment and I,too, have been thinking of putting it into gold or silver, is this something that you would suggest?

If do, which is the easiest way to do it?

I would echo Sabre's comments but there is also a train of thought that indicates a higher percentage in times such as those we are experiencing, possibly up to 20%.

I really do not know enough about your circumstances and risk profile so cannot comment, other than commodities are high risk and have demonstrated much higher volatility over the last 12 months compared to the 'norm' (previous x number of years).

SilverStandard

As my sig says, we are running out of silver, and its being used more and more.

I think silver is much better investment than gold or oil, for reasons givien in my sig.


I think the best way is to hold physical, because over the next decade there will be no new silver and shortages will mean that anything that is not physical is just paper promises.

It is dificult in the UK, but you can buy 2nd hand VAT free.

Also if you are VAT registered and you can use the silver for something the you can get the VAT back.

sabretoothtigger

I reckon oil and agriculture might make more sense in the long term, shares related to that even.
Also the dollar came back a bit just recently.

Like feb saw a rise, fall, etc I think their could be at least one more cycle if only because it involves going past 1000 for gold

Silver is at a discount to gold in comparison to last year but thats for the good reason of still weak gdp in many countries so that alone is not a reason to buy silver at this point though it might be better value then gold long term

http://wiki.answers.com/Q/What_is_the_percentage_of_silver_in_the_earth%27s_crust

Silver is estimated as approximately 0.075ppm of the Earth's crust.

Gold is found in abundance in the lithosphere
upto about 0.005 ppm, with an Au/Ag ratio is about 0.07. The content of gold in igneous type rocks in parts per million is, on an average, ultramafic, 0.004.

http://www.blurtit.com/q420414.html


http://en.wikipedia.org/wiki/Abundance_of_elements_in_Earth%27s_crust


More silver was produced last year then ever before afaik , ten times as much as gold on that page
Ratios of gold and silver in the earths crust vary on that page from 18, 25 & 63 to 1

not physical is just paper promises.

Perth certificates are backed by australia government, if they mine gold there its not really an empty promise so much

http://www.perthmint.com.au/investment_invest_in_gold_government_guarantee.aspx

Australia has been one of the world's top three gold producing countries for some time. Australia's only refinery, AGR Matthey, of which the Mint has a substantial interest, refines over 400 tonnes of gold a year.

http://seekingalpha.com/article/141811-the-importance-of-the-dow-gold-ratio

Aegis

SilverStandard wrote: »

As my sig says, we are running out of silver, and its being used more and more.

I think silver is much better investment than gold or oil, for reasons givien in my sig.


I think the best way is to hold physical, because over the next decade there will be no new silver and shortages will mean that anything that is not physical is just paper promises.

What about when countries discover new silver mines? It could easily happen, and could on its own ruin your entire reason for investing in silver. Best not to assume that we're imminently running out of anything, as a general rule it just leads to sheepish looks when we find a new source. As an example, look at oil. Based on the predictions from 3 or 4 decades ago we were supposed to have run out of it by now. Instead it's still being produced and discovered year on year.

It is dificult in the UK, but you can buy 2nd hand VAT free.

That sounds either illegal if buying from a (supposedly) reputable company or very dangerous given the lack of guarantees if buying from an individual. I bought dodgy memory second hand recently, how much more of an impact would this have if it was dodgy precious metal?

Also if you are VAT registered and you can use the silver for something the you can get the VAT back.

Of course, this then precludes you from holding it as an investment, surely?