Is Silver the Sleeper?

[webmaster]

Subject:Is Silver the Sleeper?
By: David Morgan, Silver Investor

Overview: Naturally, putting your neck out for a gold price leads to the next logical question and that is, “What price will silver reach at its high point?” This question is much more difficult to answer, because silver is not considered to be money in any government’s monetary base, either officially or unofficially.

Link: http://news.silverseek.com/SilverInv...1204906825.php

[FedFixNix]

Impossible to answer when lacking a time frame, or even to hazard a guess. Are you referring to a 1 year frame? 2 or 3 years? 5? 10? 20?

There was a similar question and some excellent commentary on the Kitco forum (which I am not allowed to post to because of a 7 days waiting period after signing up... which I totally don't understand).

The author says silver will reach $100 /oz and higher this year or next (2009). Had I been allowed to post there I would have pointed out that there are some jokers and wild cards in the deck that might discount his excellent reasoning. His reasoning, along with mine, must be based on a set of underlying assumptions, and I would question if he has accurately assessed all of those "wild-card" factors.

The big jokers, of course are: 1. what is going to be happening with the US, UK and world economy in its entirety; and 2. what the ptb (powers that be) are going to be doing about economic conditions?

Another way of putting the question is how long will current market forces be allowed to operate without caps, controls, and price fixing? Or.... How far will the dollar be allowed to fall before it's value is fixed to a parity with other commodities or to some fiat or legal specification?

There are many other socio-economic questions that arise from your basic speculative inquiry about the ultimate price of silver... or gold.... or any other commodity of value in a collapsing economy.

And, yes, our economy IS collapsing, and MUST collapse, until the basic unsoundness of our monetary system is resolved.

My screen name says it all. FedFixNix. The Federal Reserve System is at the root of the problem, or rather IS the root of of the problem, and must at some point be FIXED. I have been talking about that point for many years. For the good of the nation and the world it should have been fixed long ago. For the good of my net worth, the longer it takes the better. I will profit along with the gold and silver bugs, or Moneymasters, who started us down this path in 1913 and before.

Silver will go to over $100/oz before the end of 09 IF it is allowed to do so. In reality, by the time it gets that high, and the dollar gets that low, our entire economy will be in pandemonium or collapse, and price controls will be enforced, along with martial law.

No, I am not a gloom and doomer. I am an optimist, and a realist. I'm simply weighing all the evidence as I see it as objectively as possible.

Now, the better discussion for me would be: Assuming that silver will go to $50, $75 and $100 per oz and beyond, what is the most optimal way to profit from those moves?

What would be the best way to maximize the profit potential from, say, a $50,000 investment in silver or other PMs?

Any thoughts?

FedFixNix

[Jake182]

I believe, like most of these posts, that silver will hit the lofty areas of $50 or even $100--in the next year or two. What I dont believe is that this rise in Silver ( cant say for Gold) will not be soley a function of the shrinking US dollar. The industrial/commercial uses of silver are huge and the the average investor will put a little silver in their IRA or under the mattress. That "little bit" will be an enormous bump when saluted by the general investment community.Then the industrial users will stockpile even more. The point I am making is that the US economy/monetary system does not have to tank ( Depression) for Silver to hit the above highs.

Thats my bet and my hope: high silver and not a depression or severe recession.

What's the buzz on my view?

Thanks to all who reply--even those who think I'm nuts.

[mick silver]

i just read this , and it sound alot like what starting to happen

[Richard]

FedFix... Jake,

Absolutely. For silver to go up, a Great Depression is NOT required. I think gold is better for pacing with inflation, silver for out-pacing it. Naturally, people will figure that out and that's what they will go for.

I actually don't count the inflation rise potential as anything meaningful, sort of like turning up the volume on a dumb TV show (lets say mainstream news...) doesn't make it any better or smarter! But there the analogy ends. Silver is a smart investment, no question about it. But... how easy will it be to come by in future, however long that is, at such a point that either/or

a) the US economy tanks

b) industrial demand eats away it to the point that it's astronomical?

Or, the WORLD economy. Even if all these other nations de-peg they are still fiat currencies themselves, so growing consumption in silver may not take off all that much. Ditto for the US.

So what we would see would be

a) reduction in consumption
b) stagnation in production
c) far less availability at any price!

Ie, fundamentals would be "idling about", just begging to back currencies. Or at least back them by gold, with silver buying more gold. In either case, the ratio corrects and silver emerges as king. At least until mining it can be profitable again.

So, how would one increase their wealth?

Buy silver now and keep on doing so. And maybe...

Now, someone in another topic mentioned palladium and it's current relative price stability of ~450 or so. Here's the thing with that... Palladium has a ratio with silver of ~ 1:555 when supply numbers are looked at. Palladium, according to my reserach so far, is produced at about 7 million ounces a year since... iirc, the 2000's. And it is of course also an industrial metal, so it's fundamentals are probably similar to silver's (I apply "similar" losely here, because I'm not dead certain on anything yet.)

Given that high ratio, based on 2006 supply numbers, "silver" is on sale through palladium. Big time!

And it only costs half as much as gold for an ounce of palladium. It's current availability, I am not certain but ebay has very little of it for auction. Still, one doesn't a lot of it! Heck, a matter of grams would equall ounces of silver and gold in the future!

I don't know. This all just assembling in my had as I write, but I have looked some into it and... I can't find a reason to refute that. It does seem possible to get REALLY wealthy in this way! I mean, if 1 ounce of silver can buy 5 gold, and 1 palladium oince 555 silver ounces...

Just disregard the unbacked FRN cost and one's getting the bargain of perhaps all of human history here for the cost of about 25 ounces of silver in FRN terms today! That's a return of just over 2,200%!

NOW is the time to prosper immensly, not once all this starts to fall apart and look for a cure. By then, declining consumtion will stagnate supply and rocket price to produce little or no availability.

That's my input for now, for whatever that's worth. I would very much appreciate comments, criticism and disscussion here. Like I said, this is right off the top of my head, but it makes sense to me. And right now, I'm rebudgetting to get at least one ounce palladium.

[Richard]

I couldn't edit the errors in my above post in time...

The ratio should read 1:111. 1:555 is the palladium to gold.

[Richard]

I don't know that I agree with the old "fixed" ratio of 15 to 1. What was this fixed by? Actuall supply? Laws of man???

Still, the gist of the article is pretty much right.