Silver goes ballistic and shakes the financial system

[axj]

I do have one question for those that know more though. I've read an opinion that the price always returns to the mean, but what term is the mean calculated over?

Probably the mean gold-silver price ratio, since with the current levels of inflation the prices need to be higher for both over time just to keep the value.

And that is not accounting for factors that increase prices even more than just keeping up with inflation, such as increased industrial demand for silver or the increased stockpiling of gold by central banks.

On the other side of the equation, the prices of both seem to have been suppressed for a long time - probably to make fiat currencies and the financial system look more stable than they are. Especially a large rise in the price of gold has always been interpreted as signifying financial and currency instability.

 

[daddycat]

Q: (Odyssey) On the money issue, would it be a good idea to invest in silver or gold?

A: Partly, but what about "needful things"?

Q: (KJN) So we should spend it on things we need now, versus spending it on gold or putting in a bank or that kind of thing?

A: Mostly. Money will soon be worthless, ownership will survive awhile longer.

I think most of us are not past the point of needing to spend on needful things.

There's also this perspective of silver falling back to the $50s.

But I also like Jeffrey Christian, and he’s telling me, wait a minute, $50 is this area where silver can’t stay for more than an extended period of time.

...

So the longer that silver stays at prices where it makes sense to mine more, it makes sense to recycle more, it makes sense to use less in fabricated products, and it makes sense to take profits if you’re an investor, the longer it stays up there, the greater the probability that the price will come down.

And that’s why we say, look, the price of silver, the price of anything can spike to anything. But staying there is another story. So we saw in 1979, the price went from Silver run from $5 to $50. And Two days later or a month later, it was $35. That month that it hit $50 for five minutes, the average price was like $35.

And for the full year, 1980, it was $20. 2011, Given the price spiked to $50, and it stayed up there for about 20 minutes. And within five days, it was $32 an ounce. And then it fell to $15 within five years. So that’s the economics. It’s not theories, it’s economic realities. What does it cost to produce an ounce of silver from mines or from scrap? And what does it cost to use it? And what does that do to the price of my the price of my products. At what point do people stop buying mirrors?

Gold And Silver Hit New Highs—Here’s What Eventually Stops The Rally | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

 

[Aeneas]

The 'experts' are doing their best to tell people to cash in and that silver is just about to go down. They don't explain the massive silver shortage which has been going on for 6 years, nor the big discrepency between prices on the papir silver contracts (eg. ponzi scheme) and the physical silver market. I have a tab with kitco.com open and the headlines are laughable (and has mostly always been as it was part of the gate keepers). Such as this one from 3 hours ago:

After silver’s massive price rally, it may be time to take profits while momentum lasts – HSBC​

The truth is that they are very likely heavily invested in paper silver contracts which they wish to offload.

Here is another beauty:

Slight gains in gold, silver sells off on profit taking​

This has been a common headline over the years, but the truth is that people with physical gold or silver don't do profit taking and then buy back when it is more expensive. So again ponzi schemers wanting to scare people into that now is a good time to sell some physical silver. The funny part is that it was published 4 hours ago, yet silver hasn't gone down today. As a matter of fact, it is up $8+ per ounce with gold currently up $165+! Looks like something has spooked the market and crypto is also up.

And another

Silver’s rally may be topping as prices impact industrial demand, gold shrugs off Greenland deal to move above $5,000/oz – Heraeus​

It does impact the industry, but industrial demand is not something which changes day to day. The contracts which the industry fills are made years in advance. Massive solar panel projects which have been years in the making and where the contracts are signed, don't just get shelved overnight. That is a longer term policy reevaluation which takes time.

It should also be said as it already has, that new mines don't just spring up nor does recycling just happen. Investment in a recycling plant which takes 5 years to bring on board or a new mine which takes 10 years to bring on board, is only going to happen if the investors think that the prices will stay up. If spending billions in making it happen, they want to be sure that there also is a good demand for the silver when it comes online.

It is hard to tell where this will go other than it is interesting to observe (regardless of whether one has any precious metal or not), as it is a financial war taking place and where some of the big players are showing signs of desperation. It is just another perspective to be observed of the geopolitical and cosmic play taking place. The way I look at it, then the latest massive solar storm could well play into this, just in ways we don't quite understand.

 

[nicklebleu]

Another thought on silver …

If you buy silver now, one thing I would consider if living in the US is junk silver (pre-65 dimes, quarter and half-dollars with 90% silver content).

It has two advantages:
a) It has the lowest premium of any silver, as the bottleneck at the moment is not so much on silver supply per se, but on refining. Refineries have stopped buying junk silver to focus their production of bullion (faster and cheaper), as they are already working 24/7.
b) In a severe economic downturn, it may be one of the better “tradable” PM formats - small and recognizable (as long as the coins are used, aka not new). You couldn’t well use a one ounce coin of silver to go to a farmer and buy some food, even less with gold (which would probably buy his whole flock).

Same applies to Australia, although the case is a little more complicated, as there are two types of coin: called pre-silver (92.5% silver content; threepences, sixpences and florins, minted 1919-1945) and post-silver (same format, but silver content reduced to 50%, minted 1946-1964). And because they used the “imperial” system, they are much less recognizable, but still.

Just a thought.

 

[dennis]

Here is a melt value calculator for US and other world coins with real time price updates. For instance, a US dime had 0.0723 ounces of silver and at $113 per ounce one of these old coins is worth $8.19

U.S. Silver Coin Melt Values | Silver Dollar Melt Value | NGC

See melt values for U.S. silver coins, including morgan silver dollars and silver quarters. NGC provides historical coin melt values, coin price information and a melt value calculator.

www.ngccoin.com

 

[Jones]

Same applies to Australia, although the case is a little more complicated, as there are two types of coin: called pre-silver (92.5% silver content; threepences, sixpences and florins, minted 1919-1945) and post-silver (same format, but silver content reduced to 50%, minted 1946-1964). And because they used the “imperial” system, they are much less recognizable, but still.

There's the 1966 round 50 cent piece to consider. It's 80% silver and 20% copper. You can find plenty of them on ebay because it looks like a lot of coin collectors are taking their profits at the moment.

They weigh 13.28g in total, 10.624g of that is silver. Today's closing silver price in Australia was $165.72 per ounce, there's 31.103 grams in a troy ounce. So each gram of silver is worth $5.33 so if purchase price is a priority, aiming for around $56 - $60 for them seems fair - unless you're happy taking a risk that the price will continue to rise. I've bought them before off ebay for a coin collector relative.

The other option for junk silver is buying silver jewellery or other household items from second hand places or pawn shops, could take a set of scales with to negotiate price.

Fine silver (.999) is 99.9% silver
Sterling silver (.925) is 92.5% silver and 7.5% copper.
Argentium silver (.933) is 93.3% silver and 6.7% copper.

 

[Matty F]

Here in the uk i buy my silver from a company called bullion by post. In the past if you wanted to sell back to them everything had to be done via a phone call. Today I received a email to say you can sell back to them online not need to call. They’ve made it super easy and convenient and to consider cashing in before it drops. Think I’ll hold on to mine for a little longer

 

[Aeneas]

Here is an article on SOTT, which gives a broader context for the happenings on the precious metals front. It is well worth the read even if long. At the end of it, one gets the picture that how Trump or anybody braggs about 'Murika', it is not going to change the fundamentals and that the US don't have such good cards in their hand. That might just result in more desperate and unpredictable lashing out, but it will be unlikely to change where this is heading for the empire.

Geopolitics and the Weaponizing of the periodic table

I've been sitting on this one for a while now. Collecting data points that most people missed because they were too busy arguing about tariffs and TikTok bans. But the trade war is heating up again I think. Inevitably I have to add. And when it...

www.sott.net

 

[Chu]

Here is an article on SOTT, which gives a broader context for the happenings on the precious metals front. It is well worth the read even if long. At the end of it, one gets the picture that how Trump or anybody braggs about 'Murika', it is not going to change the fundamentals and that the US don't have such good cards in their hand. That might just result in more desperate and unpredictable lashing out, but it will be unlikely to change where this is heading for the empire.

Geopolitics and the Weaponizing of the periodic table

I've been sitting on this one for a while now. Collecting data points that most people missed because they were too busy arguing about tariffs and TikTok bans. But the trade war is heating up again I think. Inevitably I have to add. And when it...

www.sott.net

That was very interesting, thank you! So, without Chinese cooperation, they can talk and talk about producing weapons and developing this and that, but they won't even have bullets. Much less AI data centers. Hmmm...

 

[Aeneas]

Much less AI data centers. Hmmm...

That was what I was thinking apart from 5G (also mentioned in the article) + a whole lot of other things, which the WEF wishes to push. Fancy weapons, Net zero, 'renewable' energy, high tech society and control systems etc. all just remains on the drawing board without Chinese cooperation.
Perhaps China will cooperate but they determine the pace.

 

[iamthatis]

Here is an article on SOTT, which gives a broader context for the happenings on the precious metals front. It is well worth the read even if long. At the end of it, one gets the picture that how Trump or anybody braggs about 'Murika', it is not going to change the fundamentals and that the US don't have such good cards in their hand. That might just result in more desperate and unpredictable lashing out, but it will be unlikely to change where this is heading for the empire.

Geopolitics and the Weaponizing of the periodic table

I've been sitting on this one for a while now. Collecting data points that most people missed because they were too busy arguing about tariffs and TikTok bans. But the trade war is heating up again I think. Inevitably I have to add. And when it...

www.sott.net

Yes, a great article. I had this info in mind when reading Krainer's latest substack article, which is bullish on Trump, who is described as trying to overhaul the American economy, moving away from a British financial parasite/free trade system to the American Hamiltonian system of using credit for domestic production. I find Krainer's post is a bit simplistic, though.

The way I see it is that Uncle Sam has been forced to change tactics in order to compete with China, or BRICS+ more generally. It's reducing its more overt imperial operating system (too costly), but keeping intact its covert imperial force projection capabilities (regime change, Secret Teams).

At the same time, Uncle Sam is changing the imperial program from woke and liberal to something more normal, realist and conservative. Many people who became sick of the deranged seem totally spellbound by the new American imperialism narrative. It's kept its imperial tactics, rebranded based on strength, and now apparently preferentially deploys them for its near-abroad sphere of influence. Though that said, my guess is that this breaks down when considering Iran, which may be subject to good ol' Team USA World Police idiocy sometime soon.

Domestically, the program is also changing from woke to something more normal, and Trump has been advertising a revival of American manufacturing, which gives rise to Krainer's post. I've also read that in order to re-shore industry, they need a weak dollar, which is one conspiratorial reason why silver and gold have been 'allowed' to skyrocket.

The article about critical minerals throws ALL of that into question. In today's economy, which became hyper-globalized since the fall of the USSR, one can't just overhaul supply chains with nations that one has alienated overnight. So the Hamiltonian hypothesis only works for resources America already has, but will not be enough to feed the imperial beast, nor take care of domestic needs.

I am probably missing something, but it seems to be quite a bind for Trump and America. Continue on the path of force projection in order to maintain itself as a world power, and run out of resources in a few years, which only strengthens competitors, who just have to sit it out and wait. Or, if it's not already too late, change tactics and become less 'great' and 'yuge', make a humbling deal with China, continue to receive critical minerals, make a start on rebuilding the industry base (also on a timeline of many years), all of which also strengthens your competitors.

 

[Aeneas]

To the question of whether to keep dollars in a sock or convert them to silver, one could ask, in which one has the most trust. For context for the following, the gold suddenly increased $170 per ounce yesterday. I wondered if a war had started but no. Today, I then read:

The DXY sits at 96.68, its lowest level since February 2022. Trump told reporters yesterday he thinks the dollar decline is “great”. He’s “not concerned”. The market heard this as permission to sell. The dollar had its worst day since April.

But this isn’t an accident. This isn’t some policy incompetence or Trump not understanding economics. This is the strategy.

If the US wants to bring back manufacturing, it needs to devalue the dollar. A weaker currency supports exports, eases financial conditions, and reduces the real burden of record government debt. Trump knows this. His administration knows this. Dollar weakness isn’t a problem to be solved - it’s a feature to be tolerated when it aligns with policy objectives.

On top of renewed QE expectations, rate cuts on the horizon, expanding fiscal deficits, and eroding confidence in dollar dominance, central banks are accelerating their shift toward gold as a neutral reserve asset. Record central bank gold purchases. Structurally negative real rates. Growing efforts to reduce USD dependency at the margins in global trade and reserves.

So, that is partly what caused the sharp increase yesterday and it showed that the current US administration actively wishes for a weaker dollar. It has nothing to do with Trump, but more like a forced choice.
Just noticed while I was writing that @iamthatis mentioned it too:

I've also read that in order to re-shore industry, they need a weak dollar, which is one conspiratorial reason why silver and gold have been 'allowed' to skyrocket.

So basically the dollars in the sock is being devalued fast at the moment. The question is what to convert it into (if at all). @daddycat mentioned needed things and that would be priority number one, but if that is covered, then what else apart from paying off loans if any? Think creatively about it. Precious metals is an option if they are still available for retail buyers. There is no guarantee that they will keep rising above the current price + the premium as there seldom are guarantees in life apart from taxes and death. At least, I wouldn't give advice what to do, other than research well and follow your gut feeling. In the end, it might just be to buy newer and warmer socks and clothes along with some skis and snow shoes for the times ahead.