Yeah, I don't pick on MR kids. I assume they were the same poster also.

This. No reason to pile on.

See Upper Egypt hieroglyphs of grain trading on par with gold.

ermmmmm.... for mirrors? Important for TEOTWAWKI

"Has anyone ever explained why I would trade food for your silver if our economic system melted down? I've never seen it. You eat your silver, I'll eat my wheat."



If you only have enough wheat for a week of course it's more valuable than Silver. But what if you have enough food for years and some of it will spoil before you get to it? Instead of wasting the value of that spoiled food you can trade it for Silver that never spoils. Silver's not done yet, expect QE forever and NIRP. We might even see bail ins. The elite don't care about us, they look upon us as nothing but resource hogs.

If you start buying silver in 2009, you're up $0 and 0 cents. If you started buying in 2011 in a best case you're down 50%, in a worst case like 75%. We could easily hit 2005 prices soon. It may not be done yet, but it's proving to be one of the worst places you could put your money as an investor right now.

Hahah, good point Slater.

Yeah, I mean I guess if I have food that I need to move, but I'd still rather trade it for like valuable labor, other foods, etc. No point in getting silver [why silver again?] and then not being able to trade it back for immediate food in a week or month.

Of course, I don't believe in any of that absurd bull **** ever happening in the next 85 years or even coming close. If the system didn't fall apart in 2008-09 it's not going to. Banks are so much more de-levered today.

Of course silver beat the market by a whole 2% in the past 2 day market meltdown, maybe I should put like 15-20% of my portfolio in there.

I think my favorite part of the thread was when actionzip said silver was still in a bull market after a 60% drop. Poor guy got banned or else he could tell us that this is still just a healthy pullback.

In truth, my favorite part of this thread is that ~ all the sane people are still here talking and the nutjobs are all banned, broke, or off the grid.

Why do we have money that serves as any significance? It's just paper, our belief in it gives it value... Some form of money seems to be in existence throughout human history in one form or another... At least Gold and Silver can't be inflated away into nothing.

Commercials are almost long Gold/Silver now.. The last time they were long Gold was back in 2001.. They have never been long Silver before...

We are probably very close to a bottom here.. and it's funny how all the bears are patting themselves on the back at a time like this. Any bears actually short right now?

They've been "almost long" numerous times in the past year. As for "we are probably very close to a bottom", why? Why do you feel the bottom is in? Surely if we were close their would be mass commercial accumulation (which there isn't).

Small speculators are now short more contracts than commercials.. that hasn't happened for about 15 years. Sure, we could see a final drop to $900 or so.. but the upside potential seems to be way higher than any downside at the moment.

We've heard this every few months at every level in the drop. "Sure, we could see 1200". "Sure, we could see 1000". Now "sure, we could see 900".

And even if it hits 900 and pops to 1200, it could be range-bound for a decade while other areas of the market are so much better. I don't mind it as a trade, but I do laugh at people accumulating it because the apocalypse is coming and the dollar will be extinct soon...

Yea.. if picking bottoms were easy then we would all be rich lol

A good chart of previous gold bears:
http://www.businessinsider.com/histo...markets-2015-7

It has been the second longest bear market in 40 years at this point.. If gold were to head towards $900 it would drop below that 50% line.

Where are all the bulls now though? All I see are bears.. The sentiment within this thread has completely changed..

There seems to be several signs pointing towards a trend reversal here.. I'm cautiously long.. if it goes towards $900 I'll definitely get more aggressive.. Probably another sign that it has bottomed already and I won't get that chance haha

Not precisely.

See, for the USD, the taxing ability of the Federal Gov't [states/local/city] gives it power. You can't pay with cucumbers or pigs or other commodities. That's not a 'belief' that's reality. Ignoring it means you're an irrational goldbug.

Gold is valuable, is not money, costs money to store and insure, is significantly more common and slightly overpriced compared to platinum which has more usefulness both industrial and jewelry, and has *not* been a store of value the past 35 years.

Gold bugs merely assert it is a store of value. Over the past 3+ decades you'd have been better off in stocks, long Treasuries, or corporates, or high-yield, or even money markets. Gold lost 85% in real terms from top to bottom.

Not long enough? Ok, I take your criticism and raise you 80 years of data. The S+P 500 is up 796% in real terms. Gold is up about 130% [As of 27 months ago, since then S+P has kicked even more ass.

But gold sure is yellow and shiny!
However, inflation is better for stocks than commodities. [You can calculate your own returns for Coke, IBM, P&G, JPM, HSY, TR, CL, T, GE, Lorillard, DD, Cigna, MO, BUD which will crush the S+P].

If events occur such that your only hope is that people are requiring gold instead of currency, you will have most definitely have wished you instead invested in food, water, rifles, ammo, and farmland instead.
Not gold.

Sources: S+P, BLS, The Economist.

Just wanted to say that my gut on the part I bolded is that you are being results oriented a la the "my flush got there so it was a good ship" meme.

You may well be right based upon what actually happened (I am not going to check). But you are not making a risk adjusted assessment. Just an absolute one.

The point of owning gold to some of the more zealous is that there is no counter party risk. There is no market risk if you are not concerned about trading out of it, etc.

Gold has been the baseline for the vast majority of human history, blah blah blah.

All that being said, Warren Buffet's critique of gold is spot on. But he is mistaken not to hold it in his portfolio.

Risk preferences, blah blah blah... But basically you need some assets that generate return and some assets that you can depend on.

This is the basis of the equities + treasuries prescription of the "dumb" money managers = FAs. The huge flaw here is the assumption that US Ts are risk free. They are not, and they cannot replace gold.

I'm wandering, but I just wanted to point out that your analysis is not quite sound.

(But you are right about the taxes thingy. Taxes suck. Our tax system is screwed up. Founding fathers are rolling in their graves, etc.)

I cant tell if you are leveling or not. But I dont think that you are. If you are not leveling you have absolutely no idea what you are talking about.

We are on a knifes edge. In fact, that is one characteristic of complex systems (life, markets, economies, ecosystems, etc) they are constantly evolving on the edge of order and chaos.

this is going to get good again

My man. I am here for your education. Anything I can do to help, ask away.

1. If you understand modern portfolio theory you will realize that PMs (and other hard assets) adjust your risk profile in a way that paper cannot.

If you ask why Ag or Au instead of oil or food the answer is a practical one. Gold was the organic result of the evolution of a barter economy because of its scarcity, universal demand, divisibility, and portability.

If you have a $10M portfolio and want to allocate 10% of your wealth to hard assets, good luck storing all that in oil, or wheat, or w.e. This is why Au.

2. In response to one of your bullets, Au will not make you rich. It is money, it will preserve your wealth. Whether or not you realize it, you are already rich. If there was something like a currency collapse and all your wealth was in USD you would no longer be rich, but would be about as well off as a hunter and gather in the Amazon. But if there was a currency collapse and you had say 10% of your portfolio in Au, you would feel rich relative to everyone else who remained in paper as you were able to preserve some of your wealth throughout the collapse.

3. As to your point about buying food and shelter...in the case of a collapse, I cant say that it will. But if you want to hedge that event, history says that PMs are a safer bet than anything else.

4. IMO you should not be completely in stocks or PMs. Stocks would be better to own assuming a currency collapse is not also accompanied by a breakdown of society. But if a currency collapse comes with serious social unrest you may well find utility in your PMs that you would not find in plenty of other scenarious.

Look at it this way. The future is uncertain. If you consider several scenarios and several portfolios:

S1. Nothing happens
S2. Currency collapse but maintenance of the current social order
S3. Currency collapse and destruction of the social order
S4. Currency collapse, destruction of the social order, solar or Russian EMP

P1. All equites and currency
P2. All PMs
P3. equities, PMs, and currency

From a simple thought experiment it should be rather clear that P3 is never the best or worst performing portfolio. That P1 performs best in S1, Ill give ya S2. That P1 performs the worst in S3 and S4...hm I am just going to go with etc here, you can see where I am going.

Pascal's wager...The probabilities of the various scenarios matter and your estimation of them combined with your risk tolerance should inform your portfolio weighting.

But if you value what you have either built or been given Pascal's wager and MPT indicate that you should allocate at least some of your portfolio to PMs unless you assign a probability of 0 to certain of the above scenarios. Which I would argue is at best naive.

Also, for those hoping to get rich off of a buy and hold strategy of physical...it is mostly wishful thinking.

But my above post is as logically sound as it gets. The argument for getting rich off of physical is in being first to the party. Most people have not realized the above or much else of what lies beneath the smoke and mirrors. When they do it is theorized that the price will rise as people begin to adjust to the reality of possible black swans.

Another argument is the rehypothecation and all the paper claims when viewed in light of actual physical supply.

Its fairly interesting to study the history of this stuff. The Medici's pioneered fractional reserve banking. The idea that the opportunity cost of Au sitting in their vaults was worth the risk of floating multiple paper claims on the same hard asset.

If things begin to unwind holding physical may become more valuable than a prima facie analysis would suggest...

LOL, really liked this post.

#who will have the last laugh?

Markets don't work (or, at least dont only work) according to first level thinking. Sometimes its baked into the cake but requires a catalyst to break. Once the rock cleaves, the phase shift happens, there may well be no going back.

What I am trying to say is that just because we had QE and silver is not trading above $50 does not mean that past QE will not contribute to a future rise in price.

Right. But all the silver bulls were wrong on all of their theses - whether they were using first, second, third, fourth, fifth level thinking. They failed to capture any of the reality of what was going on in silver (whereas the bears were correct, and what's more, far more rational).

This is just magical thinking. What drove the rise up to 2011 was a few things:
- Recovery in all asset classes as more liquidity became available and the economy recovered following the 2008 crash
- The opening of silver ETFs and other investment vehicles which opened silver to a new class of speculators
- The rise of the Internet from 2000, bringing in a new breed of idiot/speculator/metal bug (a similar thing happened in biotech and pink sheets).
- A supply shortage related to mining
- Normalizing (increasing) industrial usage as companies recovered from the worst recession in 60 years.
- Buzz around QE
- Zero interest rates, meaning that people put cash into finding speculative returns

All of these pointed in the same direction and brought in a lot of new, naive money - the perfect storm for a bubble. None of these things are driving prices up now - they've all played out, and in fact, several of these things are working against silver (for example, rising interest rates).

This is just grasping at straws.

Is silver a better buy at closer to the cost of production than 3-4x the cost of production? Obviously. Does that make it a good buy? No. The silver bulls have proven they have zero ability to predict the price movements of this metal, on any time frame, which means you don't have an edge and are just gambling. Add to this the fact that silver is going to heavily under perform the stock market in the long run, particularly something like the tech heavy Nasdaq, and it's an "investment" for gamblers and losers.

Tooth, I like silver and physical but I am not a tin foil hat kinda guy. I wasn't trying to defend permabulls, who are largely confused, so much as I was trying defend being long some PMs.

As for the rest, haha, I don't think its magical thinking but I probably didn't do a very good job of explaining.

Let's use the example of an equity with record OI and a really narrow trading range. Maybe the expected move is 25% of the asset as of t=0. It is now t=25 and the price is exactly where it was on t=0. But on t=28 there is an earnings announcement and they beat expectations by 10%.

That is an example of it being baked into the cake but the price not moving at the time everyone got positioned.

In the case of, say silver, previous QE could have contributed to record long physical positioning but the price could be right where it started at the beginning of QE. The difference is a lot of physical supply was removed from the market (with its owners intending to never contribute to future supply).

All of a sudden a catalyst, lets say the Chinese announce they have been lying about the gold accumulation and "actually" (lol @ this) have 5k more tons than the US. End of trading that week silver has more than tripled in price from $20/oz to $75.

There is an example, and that was not magic...

1. I don't think you can or should say all. And just because they have not been proven right yet does not mean they will not be. So it is unfair to conclude they were proven wrong. Unless you are looking at things form a certain time frame with the perspective of trading out of the metal and taking profits in USD.

Many (err, some?) silver bulls are just trying to hedge cash exposure and are net long physical without the intention of one day taking profits in cash.

Trading physical in the current environment is pretty ******ed (z spread is ginormous). About as ******ed as thinking you are hedged by being long some ETFs.


2. I am not arguing to buy at this price. Though I do personally prefer a steady accumulation that can be added to when you feel like you are getting a bargain.

Many hedgers are not so much concerned with price as they are with their risk. So for someone who has no PM expsoure and is too heavily invested in the status quo silver could be a better buy at $25 / oz for them than it could be at $10 / oz for the tin foil hat guy who has every penny American Eagles...

If you do not have any PM exposure I would suggest that it is a good buy at current prices. Get some experience in the physical market and then ask yourself what supply is actually like. There is a big difference between the paper games in the futures and ETF universe and actually trying to get your hands on the metal.

(FWIW, as I right this micro PM break out. Dec gold testing 1100 resistance, silver on the move.)