The great silver crash-sell sell sell

[pieman]

hmmm

Frankston Median House Price
2001: $155,000
2011: $360,000
2.32x

AUD Gold Price
2001: $600
2011: $1400
2.33x

sorry 1 more sunfish, I've got spot gold price in 2001: $275 so thats

US Spot Gold Price
2001: $275
2011: $1542
5.6x
WOW THATS A BUBBLE WAITING TO POP!!!!

 

[hobo-jo]

Is Auspm still there abusing anyone who owns property?

He's on a temporary hiatus from the forum (self imposed ).

sorry 1 more sunfish, I've got spot gold price in 2001: $275 so thats

US Spot Gold Price
2001: $275
2011: $1542
5.6x
WOW THATS A BUBBLE WAITING TO POP!!!!

Maybe it will just plateau like Australian property?!?!

 

[pieman]

He's on a temporary hiatus from the forum (self imposed ).


Maybe it will just plateau like Australian property?!?!

No it wont.
Any tulip like increase of that magnitude is surely built on a ponzi scheme. Its behond the "fair" value of gold and its too much for people to afford -all obvious reasons for gold and silvers 150% in 6 month ponzi scheme increase to POP.

 

[Sunfish]

sorry 1 more sunfish, I've got spot gold price in 2001: $275 so thats

US Spot Gold Price
2001: $275
2011: $1542
5.6x
WOW THATS A BUBBLE WAITING TO POP!!!!

But it's different this time!

But seriously, if you've read as extensively as I have, that IS a reasonable statement. Gold has never been a freely traded commodity (I call it money but chartists call it a commodity) so a decades long bear market could reasonably be the precursor of a decades (plural) long reversion to the mean.

I started speaking of a "commodities supercycle" in '04, I think. At that time I thought 25 yrs and nothing has happened since to change my mind.

Your choice. Still not too late to join the party.

 

[Sunfish]

No it wont.
Any tulip like increase of that magnitude is surely built on a ponzi scheme. Its behond the "fair" value of gold and its too much for people to afford -all obvious reasons for gold and silvers 150% in 6 month ponzi scheme increase to POP.

Pieman, Have you any idea how absurd that sounds? its too much for people to afford Property can become too much for people to afford. But gold is money. How can "money" be too much for people to afford?

Gold is money and everything else must be valued in "ozs of gold". Not the reverse. You will not achieve financial freedom until you understand this, the most basic, of financial truths.

 

[Ridin-High]

Gold is money

*the KFC i ate tonight they wouldn't except American express card and gold
*petrol from woolies would accept amex but not gold

These corporations don't seem to consider my gold chain money (in the sense that it is readily acceptable as payment for goods/services)

 

[Indifference]

*the KFC i ate tonight they wouldn't except American express card and gold
*petrol from woolies would accept amex but not gold

These corporations don't seem to consider my gold chain money (in the sense that it is readily acceptable as payment for goods/services)

Life lesson 101: Learn the difference between money and currency...

No, they are not the same thing although the differences are subtle.

Currency is a medium of exchange, a unit of account, portable, divisible and fungible.

Money has all the attributes of currency BUT is also a store of value of long periods of time.

This is why you buy KFC with currency and is also why your currency buys less KFC this week than it did 10 yrs ago.... Real "money" on the other hand, maintains its purchasing power...

Inflation erodes the purchasing power of currency and if you use currency to value money, then it appears to rise in value BUT it isn't really because you are using a variable yardstick... Ie. Fiat currency, which diminishes in value over time.

 

[Intrinsic_Value]

Life lesson 101: Learn the difference between money and currency...

No, they are not the same thing although the differences are subtle.

Currency is a medium of exchange, a unit of account, portable, divisible and fungible.

Money has all the attributes of currency BUT is also a store of value of long periods of time.

This is why you buy KFC with currency and is also why your currency buys less KFC this week than it did 10 yrs ago.... Real "money" on the other hand, maintains its purchasing power...

Inflation erodes the purchasing power of currency and if you use currency to value money, then it appears to rise in value BUT it isn't really because you are using a variable yardstick... Ie. Fiat currency, which diminishes in value over time.

i really cant understand this argument at least not as how its presented here.
If 'real' money maintains its purchasing power (and i assume you are refering to gold here), then lets go back a bit:

In the early 1980's gold was exchangeable for US currency at around $800. Fast forward 20 years and gold was exchangeable for around US$300.

So was gold your definition of 'real money' during this period in that it maintained purchasing power? the answer is no.


Therefore gold does not meet the definition of money as you referred to it.

Over very very long periods of time (ie 100's of years) there does seem to be a good correlation of gold maintaining 'some form' of purchasing power.

But in the long run we are all dead.

I have no idea about the currency exchangeable rate of gold in the future.

But i am quite certain that at different points in time in the future gold (just like any asset) will be exchangable for differing amounts of currency at different points in future time, and thus will represent varing amounts of 'real money'.

 

[Ridin-High]

Life lesson 101: Learn the difference between money and currency...

No, they are not the same thing although the differences are subtle.

Currency is a medium of exchange, a unit of account, portable, divisible and fungible.

Money has all the attributes of currency BUT is also a store of value of long periods of time.

This is why you buy KFC with currency and is also why your currency buys less KFC this week than it did 10 yrs ago.... Real "money" on the other hand, maintains its purchasing power...

Inflation erodes the purchasing power of currency and if you use currency to value money, then it appears to rise in value BUT it isn't really because you are using a variable yardstick... Ie. Fiat currency, which diminishes in value over time.

My apologies, i have no understanding of that stuff. For some reason i thought i paid @ KFC and woolies with money tonight.

My currency/money seemed to have more purchasing power when i purchased some stuff from over seas then it did 10yrs ago

 

[BayView]

Why is that "believers" in one asset class feel so qualified to point out bubbles in any others doing well?

Probably directed at me?

It's a D&G thread about silver SF, and all I was doing was stating a reported position on a metal which is relevent to this topic.

Whether I am a believer in another asset class or not, it's still a fact...gold went up.

Did I infer it was a bubble, or anything else for that matter? No.

But, seeing as you brought it up; I haven't got a clue about gold - all I know is that it is going up presently.

You and JC aren't the same bloke are you?

 

[Sunfish]

Originally Posted by Sunfish
Why is that "believers" in one asset class feel so qualified to point out bubbles in any others doing well?

That statement is correct. A truth I have been aware of for some time.

all I was doing was stating a reported position on a metal which is relevent to this topic.

You felt entitled to to point out a truth, so did I. Why the double standard?

 

[Indifference]

i really cant understand this argument at least not as how its presented here.
If 'real' money maintains its purchasing power (and i assume you are refering to gold here), then lets go back a bit:

In the early 1980's gold was exchangeable for US currency at around $800. Fast forward 20 years and gold was exchangeable for around US$300.

So was gold your definition of 'real money' during this period in that it maintained purchasing power? the answer is no.


Therefore gold does not meet the definition of money as you referred to it.

Over very very long periods of time (ie 100's of years) there does seem to be a good correlation of gold maintaining 'some form' of purchasing power.

But in the long run we are all dead.

I have no idea about the currency exchangeable rate of gold in the future.

But i am quite certain that at different points in time in the future gold (just like any asset) will be exchangable for differing amounts of currency at different points in future time, and thus will represent varing amounts of 'real money'.

We all have our own points of view however, if you wish to continue valuing money in terms of fiat currency, then there will inevitably be wild variations at specific points in time.

I look at the store of value not in terms of the $ value because the $ value is largely irrelevant. I can't eat $'s, I can't sleep in $'s, I can't drive $'s..... sure I can use $'s as an exchange medium for these items, but that is simply missing the point and not accounting for the absence of "store of value" in fiat currencies.

Example. 300 oz of gold bought a median priced home in the US in 1973 (when I was born) and it still buys a median priced home in the US today (actually it buys 2 right now due to poor housing situation)

Now, let's consider the $ value in 1973 ($33400) and today ($213800) both taken in March from government census data. So what do we have?

1973 median house
300 oz gold
$33400

2011 median house
300 oz gold <--- currently only need 150 oz
$213800 <--- that is a lot more than $33400

This is what people mean when they say a store of value

The $ purchasing power has significantly eroded over a long period of time and WILL continue to do so..... money fluctuates, but tends to average out to be a store of value from generation to generation....

If we measure the value of real money in fiat currency, then we truly miss the entire point regarding store of value...

 

[Indifference]

My apologies, i have no understanding of that stuff. For some reason i thought i paid @ KFC and woolies with money tonight.

My currency/money seemed to have more purchasing power when i purchased some stuff from over seas then it did 10yrs ago

LOL.... temporary exchange rate fluctuations do not equate to long term increases in purchasing power. The Aussie dollar is not immune to debasement.... it is called inflation... inflation erodes fiat currency value. So unless we all live in a utopian world of 0% inflation, we are all having our $ devalued, year in, year out. Fiat currency has no long term store of value.

But enjoy the high exchange rate while it lasts.... because we all know what it will do to the economy in the long run. The party is always great, but the hangover never seems to get any less painful...

 

[Intrinsic_Value]

We all have our own points of view however, if you wish to continue valuing money in terms of fiat currency, then there will inevitably be wild variations at specific points in time.

I look at the store of value not in terms of the $ value because the $ value is largely irrelevant. I can't eat $'s, I can't sleep in $'s, I can't drive $'s..... sure I can use $'s as an exchange medium for these items, but that is simply missing the point and not accounting for the absence of "store of value" in fiat currencies.

Example. 300 oz of gold bought a median priced home in the US in 1973 (when I was born) and it still buys a median priced home in the US today (actually it buys 2 right now due to poor housing situation)

Now, let's consider the $ value in 1973 ($33400) and today ($213800) both taken in March from government census data. So what do we have?

1973 median house
300 oz gold
$33400

2011 median house
300 oz gold <--- currently only need 150 oz
$213800 <--- that is a lot more than $33400

This is what people mean when they say a store of value

The $ purchasing power has significantly eroded over a long period of time and WILL continue to do so..... money fluctuates, but tends to average out to be a store of value from generation to generation....

If we measure the value of real money in fiat currency, then we truly miss the entire point regarding store of value...

Yes i would totally agree that the longer the time frame, the poorer the store of value of a single unit of currency.
But who just keeps a stack of currency notes for the long term?

Other stores of value:
Houses, duration of future employment, education, bonds, shares, forest plantations etc etc

People accept that the store of value of currency notes will be debased over time, and in fact, people are actually happy with this (so long as its done in a controlled manner). Everytime we get a 'pay rise' we feel happy right?, but since everyone else gets a pay rise, we are effectively debasing the currency.

 

[BayView]

That statement is correct. A truth I have been aware of for some time.


You felt entitled to to point out a truth, so did I. Why the double standard?

Let me point out that the difference is you were pointing out that I was pointing out that there was a bubble.

So, I'll point out to you again - I wasn't saying that there was a bubble. You simply thought that and went off half-cocked.

Let me also point out that you were correct when you pointed out that I am a believer.

 

[Aaron Sice]

No it wont.
Any tulip like increase of that magnitude is surely built on a ponzi scheme. Its behond the "fair" value of gold and its too much for people to afford -all obvious reasons for gold and silvers 150% in 6 month ponzi scheme increase to POP.

riiiiight.

define "fair" value.

if the amero is gold backed like many tout, then you'll see gold at $8-10k an oz, comparitively.

 

[pieman]

riiiiight.

define "fair" value.

if the amero is gold backed like many tout, then you'll see gold at $8-10k an oz, comparitively.

It was of course a p1ss take on the typical responses in the fairfax media when ever there is a property article online although 150% increase in 6 months reeks of a ponzi scheme

 

[Ridin-High]

riiiiight.

define "fair" value.

if the amero is gold backed like many tout, then you'll see gold at $8-10k an oz, comparitively.

you listen to alex jones? I use to listen to him and max keiser... sorta tuned out after awhile

 

[Intrinsic_Value]

There are no guarantees at all in life. However, there are probably outcomes based on a mechanism of action. What is certain is that most countries in the world are printing dollars/yen/pounds like mad. What is certain is that there are finite resources/goods in the world. If you have a finite amount of resources that are denominated in an increasing number of dollars, then the logical conclusion is that the nominal price of those resources will go up as the number of dollars go up, with the purchasing power of all dollars in existance in inverse proportion to the number of dollars out there.

It's hardly rocket science. The more dollars you print, the more of them you need to buy something, hence lower purchasing power.

The thing about silver is that, unlike gold, it has numerous industrial applications and is consumed over time, and so whilst I can't give you certainty (I'm not certain I'll be alive to press the 'post reply' button) I can say that the fundamentals are there for silver to increase in nominal value when represented across a basket of currencies.

The problem with this is the question?
To what degree is that printed money being used to create speculative positions in silver (and other commodities)?

To me the biggest risk is to look at the commodity in isolation and say its going up just because its a hedge against money printing.

ie it ignores the risk that because its going up, its easy to use 'cheap printed money' to borrow at low interest rates and ride the momentum trade.

So in other words if one looks at the price of silver, what proportion of the price represents the speculative component and what proportion represents the underlying 'store of value'.

Or to look at it another way, credit has to be given where credit is due.

Sunfish has been talking about silver for many years. So Sunfish's purchases would have been at prices with a minimal speculative component built in.



So there is a very good chance that Sunfish's purchases will maintain a good purchasing power on his purchase prices.

Those comming late to the party and buying on the very recent price spike, may well find that they will suffer a serious loss in purchasing power against those recent positions because they have failed to take into account the pricing impact from speculative positions. ie they have failed to understand the purpose of the pricing mechanism.

 

[Ocean Architect]

The problem with this is the question?
To what degree is that printed money being used to create speculative positions in silver (and other commodities)?

I don't think that that is the question at all. I think that it is precisely the other way around - To what degree has the confidence in fiat money, originally backed in and redeemable for precious metals, been used to create speculative positions in fiat currency?

To me the biggest risk is to look at the commodity in isolation and say its going up just because its a hedge against money printing.

ie it ignores the risk that because its going up, its easy to use 'cheap printed money' to borrow at low interest rates and ride the momentum trade.

You should't look at anything at all in isolation. You should understand pan-fundamentals across many different disciplines before you make a decision. I personally believe that the recent upswing in precious metal nominal values is the beginning of a much larger upswing as the population realises the folly of putting their faith in fiat, mostly digital, money. Imo this contraction is a return to the true value of precious metals, and wouldnt be surprised (in fact, expecting) a return to currency redeemable in precious metals.

So in other words if one looks at the price of silver, what proportion of the price represents the speculative component and what proportion represents the underlying 'store of value'.

Or to look at it another way, credit has to be given where credit is due.

Correct. What must be taken into consideration however (because I believe that you have the cart before the horse - very respectfully of course) is that physical metals have some sort of value, whereas fiat currencies have no value whatsoever except our faith in them. Fiat currencies are a promise to pay. That's it.

Sunfish has been talking about silver for many years. So Sunfish's purchases would have been at prices with a minimal speculative component built in.

So there is a very good chance that Sunfish's purchases will maintain a good purchasing power on his purchase prices.

I agree, sunfish will certainly enjoy massive purchasing power, moreso because he got in early. Understanding fundamentals is easy - it's the timing that is difficult, particularly since timing factors are influenced by human decision, which is of course, difficult to predict.

Those comming late to the party and buying on the very recent price spike, may well find that they will suffer a serious loss in purchasing power against those recent positions because they have failed to take into account the pricing impact from speculative positions. ie they have failed to understand the purpose of the pricing mechanism.

Normally I would agree, were it any other commodity, in almost any other circumstance - except that I do not think that this is a speculative trade, nor do I think that this is a spike - imo it is a blip in a long term upward trend for precious metals (or downward trend in fiat currencies. same same)