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Hinde Capital On Why Silver Velocity Will Be The Bullet That Sends The Metal Much Higher

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Thu, 08/19/2010 - 19:58 | 531727 Bolweevil
Bolweevil's picture

He had me at "Copernicus".

Thu, 08/19/2010 - 20:13 | 531744 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

you had me @ "Copernicus". 2

good long article.

Thu, 08/19/2010 - 20:37 | 531780 AUD
AUD's picture

"For in this way the coinage’s estimation vanishes when it cannot buy as much silver as the money itself contains". This statement is stupid.

Had me before "Copernicus". I didn't read his last piece on ZH either.

Thu, 08/19/2010 - 22:14 | 531951 jeff montanye
jeff montanye's picture

the thrust of the article seems sound.  i own some silver stocks for, basically, his reasons. and if i'd investigate more before opening my yap i'd find that 'jewellery' is brit for jewelry.  i only noticed the tip-off "whilst" on second reading.

Fri, 08/20/2010 - 06:23 | 532322 Johnny Dangereaux
Johnny Dangereaux's picture

Stupid is as stupid does. Go to www.coinflation.com and you'll see what he is talking about. A 1964 Kennedy Half dollar is worth 6.66 "dollars"...get it?

Fri, 08/20/2010 - 08:54 | 532454 ATM
ATM's picture

Probably closer to $7.25 now or about 3 gallons of gas in my neighborhood.

Fri, 08/20/2010 - 09:53 | 532610 DosZap
DosZap's picture

8

Thu, 08/19/2010 - 22:39 | 532029 septicshock
septicshock's picture

Sorry to steal a spot up so high, but I want to make sure people aren't suckered into over purchasing silver. Silver production yearly is over 20,000 tons a year. Production has been rising astronomically every year. Gold production has been declining every year as it is getting harder to find.
I own both silver and gold.... Gold is like my hundred dollars bills and silver is like change.

Thu, 08/19/2010 - 23:04 | 532059 Ultranaut
Ultranaut's picture

But has production been growing enough to meet demand? Will production continue to grow? I'm new to this whole game, and hence ignorant in a possibly obvious way, but it seems as if silver demand is likely to significantly increase.

Sat, 08/21/2010 - 01:23 | 534420 septicshock
septicshock's picture

I don't know whether it will continue to grow at it's current rate and I doubt anyone can know. What I do know is that silver is a byproduct of copper, zinc, and even gold production... and therefore silver has significant yearly growth in production. These are facts from wikipedia, not manipulated data and charts to serve any sinister purpose.

Put it this way, it costs five hundred dollars to mine a single ounce of gold. Silver being a byproduct of mines producing copper, zinc and other metals makes it significantly cheaper to obtain. These are simple facts. I recommend you research these points for yourself.

I own silver and gold. I would prefer a bull market for both of these PMs.

Thu, 08/19/2010 - 23:06 | 532065 DarkMath
DarkMath's picture

I'd have to agree with you septicshock. The more I read about Silver ratios being as high as 100 to one the more Bed Davies lost me.

I know that when the Hunt brothers tried to corner the market people started selling their Silver Silverware. The same thing could happen. If Gold and Silver spiked in price I think people would sell their Silver first.

There's just too much uncertainty with BiMetalism which is really what Ben Davies is arguing would drive the price of Silver higher.

Did you all know that BiMetalism was was motived the story of the Wizard of Oz? In 1873 the US left the BiMetalic standard and in doing so favored Northeastern banks over Agrarian MidWestern interest. Dorothy's shoes weren't made of Ruby's but of Silver. Silver  gave the poor man a financial say so when the ability to use it for money was taken away MidWesterners felt the moneyed East had taken over the government. The Wizard of Oz was more that just a kids story.

Fri, 08/20/2010 - 00:13 | 532129 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

Bed Davies

it's Ben Davies,  silly.

Fri, 08/20/2010 - 01:39 | 532202 JLee2027
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All the above-ground silver in the world won't make enough money to handle the world's current needs.

Fri, 08/20/2010 - 08:04 | 532369 Anton LaVey
Anton LaVey's picture

... Unless the price of {silver/gold} is allowed to rise to reflect a correct value vs paper money.

Dollar devaluation is the way to go. FDR did this during the Great Depression, lowering the value of the US Dollar from US$20.67 per ounce to US$35 per ounce (if I remember correctly).

Of course, the United States were, at the time, in a much better position than the one they are in now. To handle the current needs of the United States, the price of one ounce of gold or silver would have to be in the... tens of thousands of US dollars? Some people have mentioned, even advocated, targets of US$30,000 per ounce of Gold. Which is not as crazy as it sounds, provided the vaunted reserves of Fort Knox are still intact (a big IF).

And this, ladies and gentlemen, is why I invest my dough in Gold and Silver.

Of course, I don't know anything, so feel free to ignore me.

Fri, 08/20/2010 - 05:27 | 532311 cossack55
cossack55's picture

Which also led to the creation of the Bank of North Dakota in 1919.  The only state with its own bank.  The only state (maybe Wyoming) that is still solvent.  Hard to believe 49 other states prefer to send their money to the evil 13 banks.

Fri, 08/20/2010 - 08:44 | 532435 tmosley
tmosley's picture

All the real silver silverware was sold back in 1980.  There is none to be found these days.  Even Harrods doesn't sell real silverware--only plated.  Hell, I was going through the estate of my grandmother, who was worth well north of a million dollars before she got age-related dementia and gave all of her money away (to scammers and charities).  She had a number of tea sets and what appeared to be silver platters, but all turned out to be plated.

You can't really count on new hoards of silver coming onto the market, since most were already washed out way back then.

Fri, 08/20/2010 - 10:12 | 532678 Raymond K Hessel
Raymond K Hessel's picture

I know silversmiths in NYC.  Your assertion about silverware is completely false.

Thu, 08/19/2010 - 23:26 | 532089 Hephasteus
Hephasteus's picture

It's a tough analaysis. Silver is about 15 times more common than gold. And it's going to lag behind gold in where it is on the oh shit meter. Silver hasn't even entered phase 2 of the process. Gold is square in it. Once gold crumbles silver will get put in it's position though. So it's probably going to act differently. Enjoying a run up, but with lots more defectors chasing bad money for good. As the bad money will try to actually be enticing beyond a bullshit facade.

I knew consumers were going to retrench in June. It still a long way to get a picture of it. What you are seeing right now is the beginning phase of some really horrible shit the governments are staring out. They'll distort and minimize it at a much greater quantity than they did the first one.

So you're warning is not invalid in my eyes. It's just not very clear. My belief is that if you are going to go with silver as your main horse. You are going to have to be much more patient than goldbugs.

Thu, 08/19/2010 - 23:34 | 532093 trav7777
trav7777's picture

Silver is not a buy and will not run like gold until production peaks.  Spot on with your comment.

Soon as silver production peaks and begins to decline, the price rise will be as relentless as gold's.  The latest production data I've seen suggests we might be on a plateau, but until there's a YoY decline, it's premature to call such a peak.

Fri, 08/20/2010 - 01:44 | 532207 JLee2027
JLee2027's picture

I would tend to agree with that, but the wild card is COMEX. Leasing of Central Bank silver stopped years ago because they ran out. Now they lease and sell customer silver. Basically, the market is tapped out of new large supplies while in Gold you can in theory run to a Central Bank and get some. You cannot do with silver.

The point I am making is that a COMEX default, when it happens, will happen in silver first. 

Fri, 08/20/2010 - 03:48 | 532282 The Alarmist
The Alarmist's picture

That is a good point ... if meltdown were to occur, buying your wheat (I am assuming you will bake your own bread) in retail quantities, or anything else in retail quantities for that matter, will most likely be easier using a given quantity of silver rather than gold. I suspect it would be more on the money to say that silver would be your "walking around money" rather than your pocket change.

 

Sat, 08/21/2010 - 01:11 | 534409 septicshock
septicshock's picture

Nice point. Silver as walking around currency...

Sat, 08/21/2010 - 01:08 | 534406 septicshock
septicshock's picture

It's nice to see people flagging comments as junk inappropriately just because they don't want to hear a viewpoint that doesn't support their investment. I own ten times more silver in weight than I own in gold. I would benefit greatly from a price move in silver that closed in on gold. I can dream, but neither my bearish comment nor my wildest dream will have any impact on the price of silver. Gold rarity will be a better store of wealth than silver for the foreseeable future.
I own silver also because it will definitely store value better than dollars will. I have no doubt that silver will be worth more dollars in the near future. I simply state not to OVER invest in silver alone for your benefit. Junk my comment, it has no real significance except prove ignorance and anger over a view point that contradicts your blind hope.

Thu, 08/19/2010 - 20:00 | 531729 uno
uno's picture

I'm still watching the ratios at the bottom of the weekly chart, winding up for a move.  Next week is expiration for the metals.  I still think there will be a drop and cover of shorts before the real move up.

http://stockcharts.com/c-sc/sc?s=$GOLD&p=W&b=5&g=0&i=p24219082951&a=157399896&r=8664

 

Thu, 08/19/2010 - 20:08 | 531732 truont
truont's picture

His name is Ben Davies.

I like this Davies guy. 

Blasting GLD/SLV as "not for serious investors", dynamite CNBC interviews, providing this research on silver for free...

I give Davies 5 gold stars.

 

Thu, 08/19/2010 - 22:52 | 532045 ArrestBobRubin
ArrestBobRubin's picture

Yeah, he's the real deal. His CNBC and King World News interviews show his deep command of the PM investment sector and all that's going on behind the scenes. I just wish I had 100K to open an account with him.

Mr. Davies has to be scaring the living daylights out of the cartel creeps. He's the whole package: highly intelligent and credible, articulate, tough, persuasive, and especially telegenic. JPM and HSBC must crap themselves each time he gets on the air or net. Davies is helping insure that the existing racket has as short a shelf life as possible. Thieves get most desperate at the end, and to see what was done to silver today only confirms that we must indeed be in the end game.

The paper silver market currently is a plaything and piggy bank for JPM and HSBC. Gary Goldman Gensler and the CFTC continue to make like Hellen Kellers. Oh yeah, gimme that FinReg. Laughable... Well let me tell ya boys: we're not relying on any miracle transformations from serial financial terrorists. Expanding global demand for physical PM (I'll take even just 300 million new Chinese buyers thank you), and the big money's move out of Comex and the LBMA and into fully allocated PM investments are just 2 of many big reasons that mean the end of this legalized theft in the near future. Of course, if butt boy Gensler actually does something about naked shorting and position limits, it'll just be gravy on our returns.

Fri, 08/20/2010 - 08:07 | 532372 Treeplanter
Treeplanter's picture

The cartel's paper scams just put more energy into the coiled spring of real metal.  It's helpful to see such thorough research. This article refreshes my satisfaction from Feb. when I bought 500 silver maple leafs as silver dipped below 15.   Funny thing, delivery took three times as long as in '09.

Thu, 08/19/2010 - 20:11 | 531743 Dismal Scientist
Dismal Scientist's picture

'Here silver is unique, industry will consume it, and others will buy for financial gain and protection.'

Whats not to like ?

Thu, 08/19/2010 - 20:27 | 531758 NoVolumeMeltup
NoVolumeMeltup's picture

Well you can't eat it which is why I only invest in baked goods and bonds printed on the tastier paper.

/sarcasm

Thu, 08/19/2010 - 20:37 | 531775 DosZap
DosZap's picture

"Whats not to like ?"

 

The only thing now, is Industry wil consume it...we have NO Industry consuming it.

What's it has going for it, is scarcity, above ground(unlike Gold, it is a by product of mining other metals).

SLW owns no mines, and pays barely over $4.00 an oz for it at present.......

Funny, since it's sitting at $18.30 spot.

The real catalyst for the ratios coming closer together, will be the lack of Gold availablility(when & if the melt down comes).

The price of Gold will be so expensive, that Silver will be the only thing left most folks can afford, and the lack of supply, will eat it up FAST.

In '08, it took over 6 mos to get 500ozs. of Mapes/Eagles, Gold & Slvr deliveries were WAY out.

Thu, 08/19/2010 - 22:09 | 531962 Thomas
Thomas's picture

Industry consumes it big time. There is silver in almost every electronic device made these days.

Thu, 08/19/2010 - 22:59 | 532052 TGR
TGR's picture

And every single mirror in everyone's bathroom around the world.

Hell, just imagine the ground-to-ceiling mirrors in every bathroom, bedroom, living room and kitchen of all the wall street poseurs who feel a constant need to admire themselves and you'd have a demand knocking on the door of the electronics industry.

 

Fri, 08/20/2010 - 10:02 | 532637 DosZap
DosZap's picture

Yeah, you missed my point, the economy( Industry) is dead as shit..............especially in Hamerika.The only Corporations doing well are short staffed, and exporting.

Fri, 08/20/2010 - 10:05 | 532640 DosZap
DosZap's picture

8

Fri, 08/20/2010 - 01:23 | 532189 Nonconformist
Nonconformist's picture

Actually, SLW is paying the equivalent of about $12 an oz and seems to be getting plenty of takers in the mining industry.  So, who to believe, the miners or the analyst?

Fri, 08/20/2010 - 08:47 | 532440 tmosley
tmosley's picture

You mean the miners that opened massive hedges at less than $5 and then closed them near $20 for huge losses over the course of a decade?

Yeah, miners are actually pretty stupid.

Fri, 08/20/2010 - 10:06 | 532646 DosZap
DosZap's picture

Non, not what I read last week...................just over $4.00oz.

Get a link please, as I would love to agree w/your contention $12.00.

They have NO exposure,no mines, and back dated contracts at these prices with miners.

Fri, 08/20/2010 - 08:22 | 532395 Treeplanter
Treeplanter's picture

SLW is one of that handful of miners that will go up when the metal and the big markets take a hit.  The others are often in lock step with the machines following both spot prices, the Dow and S&P up and down.  So far it looks like the miners will go down with the broader markets when the ski jump come back to earth.   Feels like we are watching a race between the PM short squeeze and moonshot and the Crash of 2010.  Or will the new QE inflat the markets a while longer?  

Fri, 08/20/2010 - 10:09 | 532660 DosZap
DosZap's picture

Tree,

SLW is not a Miner, they own no mines.............

Thu, 08/19/2010 - 20:16 | 531749 nmewn
nmewn's picture

67.2 bitchez.

Thu, 08/19/2010 - 20:17 | 531752 Al Gorerhythm
Al Gorerhythm's picture

TICK, TICK, TICK ...........BOOM!

Thu, 08/19/2010 - 20:24 | 531759 sid farkas
sid farkas's picture

sweet jesus, why is this on zero hedge? You'd think with all the cheering for guys like Hugh Hendry around here that people understand the deflationary scenario that's about to play out.

Nevermind the elasticity of silver supply (as a byproduct of mining other metals) that this guy fails to mention. Silver is going to get obliterated if (when) this ponzi scheme falls apart. I'm not against holding some physical silver for a SHTF type event, but speculating on the long side while bond yields are plunging and M3 is down ~10% seems particularly dumb.

 

 

Thu, 08/19/2010 - 20:41 | 531784 RockyRacoon
RockyRacoon's picture

Those encumbered with too much debt and ailing commodity prices had to curtail their current mining operations, in some cases to bare minimums, whilst shelving large capital expenditure projects which would bring on new supply in years to come. As over two thirds of silver production occurs as a by-product from copper, zinc and lead mining, silver mine supply into the future has been stymied.

Got any other bright ideas that demonstrate that you didn't read the article?

Thu, 08/19/2010 - 21:11 | 531842 merehuman
merehuman's picture

Thanks RockyRacoon. Whatever price silver goes to is as meaningless as the value of the dollar. What price is a potato when hungry, how valuable is the dollar whithout the government to uphold it?

down with the dollar and the fed, up with real money, silver and gold

Fri, 08/20/2010 - 01:16 | 532186 sid farkas
sid farkas's picture

I've seen this same article in various forms everytime silver is near a high. The pertinent piece of information, if you're going to do supply/demand analysis, is what is the elasticity of silver supply. It is my understanding that not all possible silver is recovered from base metal mining and that for a constant amount of base metal mining variable amounts of silver can be economically extracted depending on the spot price.

 

 

Fri, 08/20/2010 - 05:34 | 532312 cossack55
cossack55's picture

When the approaching meltdown occurs, who do you think is going to be doing the mining?  Who do you think will own the mines (hint: involves # of guns)? How do you think they will get the ore to the plants, refined silver to mints that won't exist.  Man, you have got to start thinking outside the box.  When it goes, it all goes. Pull your face out of FT and walk the streets. You will learn much more that way.

Fri, 08/20/2010 - 09:03 | 532474 sid farkas
sid farkas's picture

I don't think we disagree about a SHTF scenario, having some physical silver in your possession would be a good thing. But you have to be insane to think long bets on paper silver are going to pay off. When it goes, nobody is going to be paying or delivering physical silver, like you said it all goes.

I was long silver and gold since 2003, but at this point it makes no sense. The right thing to own now is USD (heresy, I know).

Fri, 08/20/2010 - 10:17 | 532694 augmister
augmister's picture

+1  Dollars!  And kept fresh and safe in the Bank of Sealy and Bank of Amana.  Once the market tanks, all the shiny will be pulled down with it.  ON SALE!  The dollars will buy lots of shiny at that point.  Must be nimble and ready.

Thu, 08/19/2010 - 20:41 | 531788 Conrad Murray
Conrad Murray's picture

Most of the inflation/deflation debate stems from the issue of timing.  As the economy continues its downward trend, lots of wild stuff will happen.  Nobody really knows exactly what or precisely when, but I think the general list is: The markets will crater(even gold and silver), BS will print and fire up the Chinooks, the world finally says "No mas", the dollar loses reserve status and everything goes apeshit for some time, PMs emerge as a primary means of exchange then eventually back a new world currency(or the NWO thing doesn't work out and we all Mad Max around until civility, however nationalist, is once again appealing).  Then we do it all over again.

Thu, 08/19/2010 - 21:12 | 531846 Spitzer
Spitzer's picture

You are a moron.

So you suggest joining the biggest bubble ever in bonds ? talk about dumb.

What is the quality of those bonds if the economy that backs them is imploding ?

 

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