Prices precious metals out of whack?

JohnRo

AG47 wrote: »

...silver is about a quarter the price it was in the 1970s

Silver bullion is a much better investment now than gold.

This doesn't make any sense from an investment POV. You could logically conclude the exact opposite is the case and that silver is a lousy investment vs. gold.

The price of precious metals is simply a result of the environment in which they are produced and traded, current supply and demand as already mentioned. It always will be and it always was.

There will be short term fluctuations based on other factors but longer term that's what will drive price discovery.

From an investment perspective today, silver's relatively higher price versus other metals forty or fifty years ago is irrelevant.

The question you need to ask wrt to a hike in the price of silver in the future is what's going to change in the future that alters the current market dynamic and significantly increases demand for it?

One thing for certain is an increased demand won't come from people buying silver because it was relatively more expensive half a century ago.

Wasn't there something around that time about a chap trying to control the silver market who bankrupted himself?

ColdIron

back_to_reality wrote: »

Never mind "precious" metals, give me a 1,400-year-old chicken

Chickens, like gold, are fungible

Dippypud

The-Joker wrote: »

It costs around the same price in energy and labor to retrieve any precious metal from landfill. Just the same as it's the exact same process to mine gold or silver from the earth the first time. Sometimes you get gold and silver in the same ore, the costs are exactly the same then. Looking at the prices of each of the four primary precious metals per ounce at the time of writing. Gold is $1600 Platinum is $1000, Palladium is $1950, Silver is $18, not $1800, not even $180 but silver really is priced as just $18 per ounce!! Why such a difference from the other three PM's? You can see which is worth retrieving from waste and which is not. It is a lot of work and energy to retrieve an ounce of silver from waste, it costs a great deal more than $18. You could just go and buy an ounce from the market at the manipulated down $18 per ounce.

Silver is no longer recycled from camera film ...

This includes cinema and X-ray film recovery, so the market is now mainly digital ....

cloud_dog

The-Joker wrote: »

It’s not unsupported statement that gold and silver are found together naturally and this is called electrum. It’s also not an unsupported fact to to extract the silver or the gold from electrum is a very similar process which costs the same.

Again it’s not an unsupported fact that all the costs are put on getting the gold refined and the silver is just called a byproduct that they are not going to throw away because it’s a precious metal, but they can claim very cheap mining costs because all the costs get put on gold.

These are supported facts that do not take long to verify.

I think you will find that that type of terminology is used primarily where the miner consider themselves a gold producer. I doubt very much that Fresnilo reports its primary resource as a byproduct, in fact they woul consider any gold as the byproduct and will report reserves, production etc as silver equivalent ounces.

markj113

The-Joker wrote: »

It costs around the same price in energy and labor to retrieve any precious metal from landfill. Just the same as it's the exact same process to mine gold or silver from the earth the first time. Sometimes you get gold and silver in the same ore, the costs are exactly the same then. Looking at the prices of each of the four primary precious metals per ounce at the time of writing. Gold is $1600 Platinum is $1000, Palladium is $1950, Silver is $18, not $1800, not even $180 but silver really is priced as just $18 per ounce!! Why such a difference from the other three PM's? You can see which is worth retrieving from waste and which is not. It is a lot of work and energy to retrieve an ounce of silver from waste, it costs a great deal more than $18. You could just go and buy an ounce from the market at the manipulated down $18 per ounce.

The simple answer is that although it costs the same to dig a hole and start mining the amount of metal you get for your labour is significantly different with silver being 19X more abundant below ground than gold.

Gold mined annually = 2.5k to 3k tonnes
Silver mined annually = 27k tonnes.

Silver is also often mined alongside copper.


I do own both but mostly gold as its far more liquid and easier to sell in bulk in the UK as the buy/sell spread is tighter and no VAT to factor in like silver/platinum/palladium/rhodium.

The-Joker

Dippypud wrote: »

Silver is no longer recycled from camera film ...

This includes cinema and X-ray film recovery, so the market is now mainly digital ....

Yep nearly all silver from old photography was recycled

Now more silver is used up from digital devices that have replaced old photography and it’s not cost effective to retrieve

The-Joker

ColdIron wrote: »

Chickens, like gold, are fungible

No fungible means every gram is the same

This is why diamonds art and land are a good long term store of value but can not be money, because they are not fungible.

The-Joker

The difference between currency and money


Currency
medium of exchange
unit of account
portable
divisible
durable
fungible
slowly becomes worth less

Money
medium of exchange
unit of account
portable
divisible
durable
fungible
STORE OF VALUE over long periods.


Only gold and silver have been used as a medium of exchange and hold their value over thousands of years, nothing else is money by true definition.

The-Joker

Currency must be a medium of exchange so we have to be able to buy and sell things with it. It has to be a unit of account, so one gram or unit is equal to one gram or unit. It has to be portable so not to large or heavy. It has to be divisible which means you can make change. Durable which means it has to last and not dissolve in water or evaporate or degrade in near extreme temperatures. And then something called fungible. Fungible means that each unit is interchangeable so the unit in your pocket buys the same as the unit in my pocket.
Money has to be all these things plus it has to be a store of value over long periods of time. So if you only remember one thing today remember that lots of things have been currency but only two things have ever been money. Nothing else meets ALL of these requirements and is a long term store of value only gold and silver are money in and of themselves. Currency doesn't have to meet all these requirements, but to be money it has to meet all of them especially a long term store of value. There are many things that are a long term store of value (like land for instance) but they do not meet the other requirements land is not portable. Diamonds some say are a good long term store of value and very portable but not fungible because no two grams or units of diamonds are worth exactly the same. But diamonds are used as currency a lot mostly for the sale of arms. Another reason I do not like diamonds as a long term store of value because they are not nearly as rare as people have been led to believe. I go into rarity of different physical stores of value later in the book.
Salt and tobacco as we have said meet most of the requirements of currency but are not durable even if they arguably do hold their value over long periods of time like money does, gold and silver. Things like this do hold their value over long periods of time but what good is this if they are not durable. Just because the value of something lasts the thing itself may not. Even modern digital currencies like Bit coin may well meet all or many of the requirements of currency but can not be a long term store of value because it is dependent on many things like electricity and Internet being reliable and not being hacked or messed with. Bit coins can not have any intrinsic value in themselves because they do not exist, they are virtual currencies. They come and go. Bit coins may be limited in quantity but they are not limited in competing digital competitors so the number of bit coin lookalikes could be infinite. Bit coins and suchlike are only a medium of exchange they don't have any use in themselves other than a virtual currency, so can not be a long term store of value. They can not be money in and of themselves like for example gold and silver coins because Bit coins and other virtual currencies are digital and not tangible they are not backed by anything just like fiat currencies from governments.

GiddyInvestor

" Wasn't there something around that time about a chap trying to control the silver market who bankrupted himself?"


see Nelson Bunker Hunt