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View Full Version : Silver as temporary $ storage?



clr8ter
17th June 2008, 18:19
Let's say I have 10K sitting around in a savings account making crap for intrest. Loosing money, actually, with inflation......Let's also say I would be in the market for a house in the next 12 to 18 months and would need that 10K as a down payment. Would any of you guys use silver,(or gold) as a temporary storage device in the meantime (and hope the price would rise)?

My Pants Are Cold
17th June 2008, 18:27
No .

LETMYSILVERGO
17th June 2008, 18:54
this is a big yes form me, it may explode in price some day , maybe soon. Just ask Ted.

LETMYSILVERGO
17th June 2008, 18:55
excuse my spelling has a case of dyslexia or something?

Phaeton
17th June 2008, 20:56
I wouldn't even think twice about it!

Your protecting your 10k the best way you can.
You are ensuring that you will have this money next year. If you look at the history of silver, is has always raised in price each year for the pass few years so I HIGHLY doubt you would have less than that 10k you started with, when you cash it in. The economy is so unstable that I don't and wouldn't recommend having much money in the bank. Your 10k could be worth crap come next year if you leave it in the bank.

Argentum
17th June 2008, 21:29
Short term silver might be a tad of a gamble. Shorts are going to try and force down silver and the Feds are going to slam gold here soon to prop up the dollar what with the coming election and all. If you pop into silver now at say an average of @17, or @880 or gold, you might have some sleepless nights. Another more stable option might be with Platinum or even Palladium ((I hold all four)). Plat and/or Pall might be a solid option with your sitch. ((And might go a long way in keeping your sanity))

It would help your $$ from getting creamed by inflation, be much more stable and might even get you a tad bit of an increase.... anyway, something to think on.

hiyosilver
17th June 2008, 22:31
I would wait a little while, as I think the fed will make another desperate attempt at saving face. (Also it seems to me the fed and the shorts are basically the same, backing the shorts positions with newly generated dollars...Now isn't that a helluva FRN!)... So a good buying opportunity may come this summer, then I think back up to 21 and probably closer to 26 or so by year end. It's your call though, remember. Nonetheless, money in the bank is a sure loser...and that, versus a shot at getting a 30% increase....hmmm. And besides that, home prices will be down even more, which would mean alot more bang for alot more bucks if it works out this way. Again though, it's your call.

TTAZZMAN
18th June 2008, 01:20
you might take a look at a long term chart for SLV.......we normally get a fall/winter runup in silver. of somewhere around 50%

keep in mind everything is a risk ...even holding $s....

i think its safe to say your $ will lose approx 10-15% of their buying power over the next year

stockmarket is not doing well at all (maybe dividend paying commodity stocks)

bonds suk

you can shop around and get special deals at banks and get up to 5% on those funds

just some thoughts

balou2
18th June 2008, 01:40
Short term silver might be a tad of a gamble. Shorts are going to try and force down silver and the Feds are going to slam gold here soon to prop up the dollar what with the coming election and all. If you pop into silver now at say an average of @17, or @880 or gold, you might have some sleepless nights. Another more stable option might be with Platinum or even Palladium ((I hold all four)). Plat and/or Pall might be a solid option with your sitch. ((And might go a long way in keeping your sanity))

It would help your $$ from getting creamed by inflation, be much more stable and might even get you a tad bit of an increase.... anyway, something to think on.

While my initial thought would be to say GO FOR IT, the above quote is a good explanation. While it is almost inevitable (knock on wood) that Silver will skyrocket in the coming years, the next 12-18 months could actually see a decrease before the stampeded happens. Then again, it could be $25 before the end of the year. It just depends on who you talk to, which means the short term sliver market is volatile. If you were looking to buy the house in 5 years, I'd say without a doubt, DO IT!

balou2
18th June 2008, 01:41
Also, while some may disagree with me on this one, consider a CD. Just make sure it's with a good bank.

JesterJay
18th June 2008, 16:33
Banks are evil. I'd rather hold silver than cash, cash than a bank deposit, and nothing much else interests me at this time.
Silver IS MONEY!
Consider yourself informed,
JesterJay



Also, while some may disagree with me on this one, consider a CD. Just make sure it's with a good bank.

clr8ter
18th June 2008, 18:04
Most everybody here has the same idea as me. I agree, banks are evil......or at least inept. Currently, I have money in a CD @ 5%, coming due next month. I will not be able to get that rate again, and even the 5% returned almost nothing compared to the principal. Interesting thought on Plat. & pallad. Never really thought about that. As for the timeframe for the house, it will hopefully be as the market hits bottom, (12 to 18 months IMO). Thanks for all the opinions.

Scrap Metal
19th June 2008, 07:21
Also, while some may disagree with me on this one, consider a CD. Just make sure it's with a good bank.


In fact, I do agree with you. Get a short-term CD at the best rate that you can. Silver has its place, but so does paper. For better or worse we are not at the place where paper is obsolete and people are dying to get their hands on silver.

pkrebaum
19th June 2008, 12:47
Between now and 2010 will be some of the best years Silver ever had.
All of our economic excesses will be coming home to roost, slowly over the next couple of months, much more rapidly after the elections.

By March of next year I fully expect $30 - $40 Silver. Sell then.
In 2010 a lot of new mine supply (stimulated by the higher prices we're seeing now) will be coming online, outstripping fabrication demand. After that it's all investment demand behind the price support, a situation I consider inherently unstable (a Silver commodities bubble).

You might feel like shooting yourself for missing the peak, which could be $125 - $400....but virtually all people will overshoot the peak and wind up in the crash. For those that do overshoot, they'll be a second, smaller peak 1 - 3 weeks later. Don't miss it....it will be all downhill from there, unless the Uber-economic-implosion happens and we're all hunkered down in our bunkers trading silver for whatever scraps of sustenance may be left.

Drumblebum
19th June 2008, 13:03
Also, while some may disagree with me on this one, consider a CD. Just make sure it's with a good bank.

Yeah...that's the trick now, ain't it? I have a relative boatload of cash in a fairly high-yield money market savings at Wamu, but I am considering whether to leave it there because of Wamu's financial situation. What am I supposed to do with it if I yank it from the bank?

I noticed a lot of banks being constructed in my area, but all of them are small indy banks, it seems. Anyone have an opinion on the outlook for these smaller institutions?

Sorry, I know it's a bit off topic - I just don't have anything to add to the responses to the OP ... :D

pkrebaum
19th June 2008, 13:42
you can find information on a bank's financial status at the FDIC website.

this site is good too:

http://ml-implode.com/

hiyosilver
20th June 2008, 00:42
Interesting thought on Plat. & pallad. .



Silver was down 1 cent on the NYMEX for the day....Platinum was down $42, over 2%....FYI


Silver is money, platinum is not.

balou2
20th June 2008, 01:48
Between now and 2010 will be some of the best years Silver ever had.
All of our economic excesses will be coming home to roost, slowly over the next couple of months, much more rapidly after the elections.

By March of next year I fully expect $30 - $40 Silver. Sell then.
In 2010 a lot of new mine supply (stimulated by the higher prices we're seeing now) will be coming online, outstripping fabrication demand. After that it's all investment demand behind the price support, a situation I consider inherently unstable (a Silver commodities bubble).

You might feel like shooting yourself for missing the peak, which could be $125 - $400....but virtually all people will overshoot the peak and wind up in the crash. For those that do overshoot, they'll be a second, smaller peak 1 - 3 weeks later. Don't miss it....it will be all downhill from there, unless the Uber-economic-implosion happens and we're all hunkered down in our bunkers trading silver for whatever scraps of sustenance may be left.

So I'm curious then...what's your outlook for the 25-30 year range? I have always considered silver as a long-term investment. Even though I've participated in silver for a few years, 2010 is not what I would ever consider as long term. I agree that once all these juniors bare fruits, we'll see the price go down significantly, but I also know that the earth does not provide a never-ending supply. Analysts have already speculated that by 2010 the price will be down to around $10/oz. While I'm sure technology can replace some of the uses of silver, monetarily, I can only see it improve. I am NOT one of those that believe it will crack $250, but I could see it in the $100-200 range in 20-30 years.

Just curious on your opinion.

pkrebaum
21st June 2008, 04:28
25 or 30 years out is too far out to say, the world will be a completely different place by then. So please accept this explanation of my logic behind my current near-term recommendations. It's a bit long, mostly 'cause it contains material from multiple posts....

See:

http://news.silverseek.com/SilverInvestor/1213979107.php

Silver—Two Sides of the Story

By: David Morgan, Silver Investor, Silver-Investor.com


What drives the price of silver? Certainly it is a function of buying and selling pressure, and primarily, this price setting mechanism takes place on the COMEX. However, so much has been written recently about short selling, price management, and naked sales, and on and on, that I wanted to take a more basic look at demand. Real demand and investment demand, regardless of how the price is set, fall into two main categories. We have investment demand (monetary demand), and we have industrial demand. In this year’s World Silver Survey 2008, sponsored by the Silver Institute, under the Investment Chapter it states, “Investor activity was the main driver of the high and volatile silver price in 2007.”

Ah ha! Just as always maintained by me (and others), the main driving force for silver prices will be investment demand! It seems even Gold Fields Minerals Services (GFMS), which compiles the study, agrees with us.

********************************************

I agree completely with David Morgan on this, and have done my own research into the supply and demand situation. All the data backs the assertion that investment demand is responsible for Silver being above $12/Oz. or so. I wrote the following in a previous post in these forums:
(Tracking the re-monetization of Silver)
***

Between now and 2010 will be the "golden age" (no pun intended) for us silver bugs. After 2010 supply will outstrip demand and the ONLY thing propping up the price of silver will be investment demand, unless there is a massive social meltdown and we all start using silver as money. I shouldn't have to add that investment demand is an unstable, unsustainable condition, a bubble if you will.

If anyone doubts the 2010 theory above I'd encourage you to review the production & demand data:

http://www.silverinstitute.org/supply/production.php

http://www.silverinstitute.org/supply/index.php

Total fabrication demand is only growing at 1% - 2% a year while mine production is growing at 4%. If it weren't for the current invesment demand of about 70 MOz. the price of silver would be about $10/Oz.

Most notable is the 11% growth in output of the primary silver mines.
These folks live just to mine silver and contribute 130 MOz. to annual mine output. Unlike the secondary mines their production rate can be ramped up rapidly....if you read the mining websites you'll see that many have made 25% increases over the last year alone, with more to come.

So unless the unthinkable worldwide financial / social meltdown occurs this would be my advice:
Wait for silver to get to $50 - $100 / Oz., then sell it all and get out before 2010. I hate to be such a bummer to 'yall here, but the silver at $4000/Oz. thing just ain't gonna happen.
Maybe a four-hundred dollar peak, but good luck catching it.... just make sure you get your money back from your bullion dealer in cash because 24 hours later, after the crash, he's going to be broke and his checks will be worthless.

************



To which Richard asked:

"Hmm... Why do you assign such a low probability that the fist system will collapse, bearing in mind that it always happens sooner or later and that what is historically seen at thier end is being seen now? Why is it so invincible? Why is this time, our time, going to be different and succeed where it has always failed before?

I ask that of all who think that the system will win again this time. It just seems ridiculous to me that a number of people hold this view, when history is not on their side. I mean, not that I don't my doubts at times but ultimately, given the way things are going, I can't help but sense that it's almost done because what's going on today is just...corrupt beyond belief! How can that keep on going?! "

And I replied:

"The "unless" in "So unless the unthinkable worldwide financial / social meltdown occurs" is actually more of a wait and see attitude...I hate to really assign a probability to this.

With ever-increasing power and market interventions by the Fed and Central banks I really don't know how long they can keep this thing going. Though unlikely, just because all other fiat currencies in the past have collapsed doesn't mean this one will. Perhaps a better question would be "what would a post-dollar superpower world look like".

Most people assume this thing will go down quickly, like the twin towers. But perhaps it will be a slow melt, like a bowl of ice cream left out on the counter. Perhaps the web will enable a significant proportion of our dollars to be replaced by barter....maybe we'll be living in small self-sufficient communal agrarian groups with little need for money at all. The worst thing of all that could happen is that we'll no longer need money because the aristocratic financial/corporate overlords will sieze all power and force the rest of us into a feudal slave existence whereby we are forced to work or be executed.

If man's continued ingenuity somehow allows us to escape this financial meltdown thing then there could be a surplus of silver available. We are done mining all the silver that exists at $ 3 /Oz., but what about at $15 or $30 /Oz.? It sure is stimulating a lot of prospecting which wasn't happening during the past 50 years due to silver's depressed price. Will capitalism step in and fill the "silver gap" ? Or have we reached "PEAK SILVER" ??? The concept of "peak silver" is probably something which could occupy a book or two.

At any rate, having physical silver is the best short-term strategy there is, at least until 2010. My gut feeling is that by mid 2009 we will have a MUCH clearer picture of what is going to happen with this fiat money thing ... and I will be making course corrections as the winds change ...as new data comes in, adaptability will be the key to survival."

************

OOOPPPS!!!!! I've exceeded the 10,000 character limit.... the rest in part 2

pkrebaum
21st June 2008, 04:29
In the above, as far as the demand/supply situation goes, the "We are done mining all the silver that exists at $ 3 /Oz., but what about at $15 or $30 /Oz.? It sure is stimulating a lot of prospecting which wasn't happening during the past 50 years due to silver's depressed price." is key. Actually I should have said "Siver's SUPRESSED price".

Current costs of Silver recovery from a pure Silver mine vary from $1.50 to $5.00 per Oz., let's say an average of $3.00 for calculation's sake. At $6.00 an ounce, prospecting for new sources will start. At $9.00/Oz. mining is profitable. At $12.00/Oz. you've got enough profit to expand your operations at a rapid rate. There is a time lag, measured from a couple of years on up to a decade, associated with each of these activities.

The recent interest in Silver has created a 1 to 2 year "supply gap" due to the increased investment demand. If investment demand fails to keep rising the mines will catch up in 2010 and the price will begin to decrease. Namby-pamby fund managers will begin to sell their Silver holdings, creating a supply glut of hundreds of millions of ounces and pushing Silver prices into the basement. Prices supported by investment demand create bubbles, and all bubbles pop.

Getting back to the story line.....
This next assumption may require a leap of faith, and I'm sure Butler and Hommel might disagree with me on this, but at $ 15 - $ 20 per Oz., I believe there is a HUGE amount of Silver to be mined. 10 to 50 BILLION ounces, in my honest estimation. Or 10 to 50 year's worth at current rates of usage. I can't see the Earth with X-Ray vision to tell how much Silver is where and at what cost it could be recovered for. I can say that the supply of many things has increased rapidly in response to a rapidly rising price. And Silver will be more responsive to price increases than almost any other commodity because decades of price supression have discouraged any investment in new production (heck, the supressed price is one of the main reasons we're buying Silver...it's a great deal !). Once the artificial price caps are gone new mine production will go popping up like a champaigne cork.

************************

O.K., now on to the demand side of the equation:

So if investment demand is responsible for the current high price, what causes this investment demand ? If we know a bit about the cause it will help us to predict the future under several different scenarios.

One source of demand is speculation from those who want to make a quick buck. Since these people are only holding Silver short-term they really don't affect the fundamental, long term demand picture. The volatility that their trading introduces into the system does really mess with the sanity and blood pressure of those of us who are longer-term investors, though.

I think most long-term investors buy Silver and Gold for one main reason:

Security. And the emotion behind the need for security is fear, a very powerful emotion indeed.

I think there's three types of security buyers are looking for:
1) Security from monetary decline (inflation or hyperinflation)
2) Security during economic declines (depressions, stock & bond crashes)
3) Security during social declines (riots, strikes, political upheavals)

****************

Now then.... 1, 2, & 3, above are going to drive the investment demand for Silver, which will drive the price, based on people's fears about the likelihood of any combination of 1, 2, or 3 happening.

The future will bring varying amounts of 1, 2, and 3. We must consider how probable certain aspects of the future will be (create some likely scenarios) and try to guesstimate the timing and quantity of investment demand that each situation will require. All against a backdrop of rapidly rising mine production. This is where things get hairy, it's also where my choices of how, when, and what price I might sell my Silver diverge into different conclusions.

************************
The most likely scenario (IMHO), is that things will continue as they are going now, with 15% inflation and deteriorating economic conditions. If nothing much changes (no big "upsets" to the system) and Silver continues to remain in the dark as far as investment goes, then get out by 2010. If the "word" of Silver gets out and it becomes a popular PHYSICAL (not paper) investment, then it might make sense to hold on a year longer.

If things get really severe and the dollar collapses (hyperinflation sets in) AND Silver begins to be used as MONEY in clear preference to dollars, then don't sell at all. You'll need that Silver to survive.

If great social upheavals and riots happen.... well, pray that they don't because you may not escape with your life. And note that not a single insurance policy in the world will pay for damages caused by "social unrest". So if they burn your house down you're S.O.L......and BTW during riots the greatest destroyer is fire. If you can head for the caves then do so.

******************

One factor in determining when to sell is the rate of price increase. Rapid spikes upwards will usually have rapid spikes downwards. The $50 Silver peak in Bunker Hunt's time lasted less than 24 hours. It's better to sell early on the upside than to overshoot and get caught in the downside. A quick spike then is an indicator of demand with unsound fundamentals.

MUCH better is a steadily advancing rise in price, this indicates a stronger fundamental to the demand. At the end of a steady run things will start to get spikey, beginning with a parabolic increase. Get out then, a crash will occur shortly and the price will have dropped back to where it was at the beginning of the run within a few weeks. DON'T get euphoric when that parabolic top begins... get out and get your money in CASH. Your local coin dealer will be happy to give you cash on the upside because he's got cash coming in from new buyers. Dealers might not even want to buy on the downside because they don't want to go bankrupt by being stuck with a declining asset..... like someone just told me here at work today that some car dealers are REFUSING to take SUV's as trade-ins. Two year old SUVs are going for HALF the price of a new one.

************************

I regard my "sell by 2010" recommendation as a "low risk" recommendation for the following reasons:

a) if things go on as they are and demand doesn't pick up substantially, you'll be getting out near the peak.

b) if things DON'T go on as they are (a situation where you would want to hold on to your silver past 2010) then I think which way to go will be VERY obvious by early 2009. So the warning to hold on will precede the recommended time to sell....that's low risk.

Now.... what to do if selling in 2010 IS warranted: Sell and hold onto that cash. When the price begins to decline ....suddenly all those fund managers are going to sell, creating a super-glut of Silver on the market. The price may hit $4 an Oz. >>>>Now Buy All The Silver And Gold (50/50) You Can with that cash.<<<<

Mines will shut down and won't re-open until Silver goes above $10/Oz. Inflation will still be going at 15%. Your PM values will track that inflation and protect you from it. Except that you'll have a much greater quantity of PM in your vault because you sold high and bought low.

And if "b" (the meltdown) occurs ........... we'll just have to hold on to our PMs and wing it, adapting to changing threats and conditions ASAP.

**********************

Hope I addressed all the major issues and didn't leave anything out.
There's an infinite number of scenarios, and probably a few more really likely
ones, but I just realized it's 4:00 AM and I'd better get some sleep.

JaySpizzy
21st June 2008, 07:09
If you buy a CD, you will get creamed by inflation for sure.

If you hold cash you will of course lose.

In both cases you'll lose everything in the event of a collapse.

If you hold silver you will retain buying power, and stand a chance to make a good return over the cost of living.

To establish this fact, just look at a five year silver chart, and use common sense to reason out why silver price has been increasing over the past year. Do those factors still exist?

Phaeton
21st June 2008, 09:18
If you buy a CD, you will get creamed by inflation for sure.

If you hold cash you will of course lose.

In both cases you'll lose everything in the event of a collapse.

If you hold silver you will retain buying power, and stand a chance to make a good return over the cost of living.

To establish this fact, just look at a five year silver chart, and use common sense to reason out why silver price has been increasing over the past year. Do those factors still exist?

yes! yes!... listen to JaySpizzy and JesterJay and any other Jay I might have missed!

If you needed the money in like six months, I would be wary, but a year? A year and a half? You, I'm sure, have seen the charts for the past few years and the price of Silver has gone up within any 12-16 month time span. I believe you will do better than you would with a CD.

As for a CD. Good rates at good banks are tough to come by! Besides, with inflation where it is, you will surely lose money. Don't forget about that 1099int form you will have to fill out either. With that, you will lose 1 - 1.5% with a CD. The only plus (if you consider it a plus) is that it's FDIC protected. CD’s simply do not keep up with the current costs of living.

If you think you will have trouble selling your silver when the time comes, just remember what happened in March when the price went up past $20. Everyone was scrambling for silver! In 12-16 months I strongly feel that we will be at that price-point again. Buy a monster box of SAE's and I'm sure you won't have trouble selling it or maximize your 10k and buy some 90% at or below spot. You might have a little more trouble selling that one though.

JaySpizzy
23rd June 2008, 09:57
In the above, as far as the demand/supply situation goes, the "We are done mining all the silver that exists at $ 3 /Oz., but what about at $15 or $30 /Oz.? It sure is stimulating a lot of prospecting which wasn't happening during the past 50 years due to silver's depressed price." is key. Actually I should have said "Siver's SUPRESSED price".



pkrebaum. I like your analysis, and careful dissection. One of the most convincing fundamentals argument I've heard for investing in precious metals is by Greg McCoach here:

http://www.youtube.com/watch?v=7zZxZiMJfLc .

His argument is about gold, and his basic point is that because of the current global political-economic situation, the demand factor is WAY, WAY underplayed. He is even more bullish on silver for the same reason.

So, what if the silver demand rises, not by something like fifty or even a hundred percent, but by a factor of 10, or even 30 or more? Production could never increase by that factor no matter how much cash you throw at it. Mining is a limited physical activity.

My point is that I do believe we are in the first leg of a major bull market in silver, and that that bull market will top off one day, but I think there are so many dynamic factors in the silver price, that its hard to predict years, prices, etc.

My approach is to buy- just stock up, hold on, and watch very, very closely.

pkrebaum
23rd June 2008, 23:19
"My approach is to buy- just stock up, hold on, and watch very, very closely." -JaySpizzy

Mine too.

What I always emphasize is to "follow the data". Don't hold on to dogma or theory too tightly, it's just there as a model to help us conveniently fit an infinite number of variables into our heads without going crazy with confusion. If you try to look at things dispassionately, without colored glasses, you will always be closer to the truth, and closer to reality. If what you see doesn't jive with what others say, dare to formulate your own hypothesis ..... just be sure to test it before acting on it. No one ever gets to be an expert without walking their own plank and getting their feet wet.