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Monex Silver American Eagles Pass $50/Ounce
No commentary necessary.
But it could be worse. One could be trying to buy American Eagles in Latvia, where the dealer bid/ask is 45.91x....72.81!
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Nice. Lagavulin for two silver rounds as opposed to seven not long ago. Single malt Islay, salopes!
I have a question for zh'ers that I've wanted to ask for some time: I'm not getting why silver is less "valuable" than gold, given that it is irreplaceable for many industrial applications (especially electrical components), and due to it's industrial uses, has been depleted enormously. How is this possible? Admittedly, I've only had a few economic courses, and although I've been reading financial blogs for the last four years to try to better educate myself, I just don't get it.
I see how the relative industrial uselessness of gold makes it an ideal material for a currency, but based on the figures I've seen, there is something like 6x the amount of above-ground gold compared to silver. It seems to me that if scarcity was the determinant of price, then silver should be at least 6x gold, or roughly at $9034 per ounce at today's gold spot price.
Any thoughts?
In a word, demand.
Rightly or wrongly, gold is more in demand that silver, hence is valued more.
If supply were the sole determinant of price, then rhodium would be priced at something like $150,000 per ounce, and iridium at $1,500,000 per ounce, as they are 100 and 1000 times, respectively, less common than gold --- yet neither are priced at anything like such prices, as the demand for them is not identical or even anywhere close to that for gold. Likewise, if the price of iron were based solely on supply (relative to gold), it would cost well less than one cent per pound, which it obviously does not based on its usefulness.
"Rightly or wrongly, gold is more in demand that silver, hence is valued more."
OK, I can appreciate that perspective. Do you think this is based on supply/demand principles or on ideological beliefs?
Difficult question to answer, and probably impossible. Gold is such a unique asset that its demand is inextricably interwoven with a great deal of very strong political, economic and monetary beliefs and ideologies. What is the "unbiased" demand for gold? I would not even try to hazard a guess at that one.
With that said, however, I do not think that it is outside the realm of possibility that the demand for silver could rise orders of magnitude higher than it is today, and in fact we may already be seeing that revaluation beginning to take place. Could this eventually take the gold:silver price ratio (currently at around 32) down to 10 or even 2? I don't think that it is at all impossible. In fact, I strongly suspect that in the future, this so-called "silver bull market" is going to be known as "The Silver Price Revolution".
IMHO, supply and demand started the trend long ago, since there is 16 times more silver in the earth's crust than gold, implying there is more silver supply than gold...
Also - gold does not tarnish, does not oxidize, does not corrode. Silver does.
->Not losing part of your stash to corrosion every year makes holding gold for the long term a better value, especially in the past - before air tight coin tubes, air conditioning, etc.
Regarding the amounts of the metals in the crust, my understanding is that most of the relatively rich mines are played out, and that most silver production comes from other metal mines, where silver also is present in small quantities. But these mines require massive amounts of energy to crush the rock before the metals are separated from the ore through various processes, some of which also requires large amounts of energy. Given that energy prices are rising so dramatically, it raises the question in my mind if mining will be economically feasible in the near-distant future, even given silver's recent price increases. In other words, even though the silver is there, that doesn't necessarily mean that it will be mined after energy supplies are drastically reduced. All the low-hanging fruit has long been picked.
From http://www.gold-eagle.com/editorials_01/poitras022801.html, written in 2001:
"Because they are so scattered in the earth's crust and waters, much of the gold and silver that exists on the planet is economically unavailable. On average, it would take one billion pounds of igneous rock to recover ~70 pounds of silver (0.0023 troy oz Ag/metric ton), and the cost of recovering silver at such low concentrations would be astronomical. It is estimated that 8.5 million tons of gold are suspended in the world's oceans, yet several million gallons of ocean water would have to be processed to recover one troy ounce of gold, making gold recovery in the ocean economically unfeasible. In Canada, for every 1200 gold occurrences in rock (many of these do not contain enough gold to fill your teeth), only 1 "hard rock" economic deposit will result."
And from Eric Sprott: http://www.investingcontrarian.com/index.php/global/eric-sprotts-double-..., based on USGS data, of the 46 billion ounces of silver ever produced, only around 1 billion remain. That is contrasted with gold, 5 billion ounces ever mined, 2 billion ounces remaining. (although I have seen others claim the amount of gold remaining is essentially all of it, so perhaps the Rothchilds' have a secret vault with a few billion ounces Au?)
In any event, if you look at: http://www.silverinstitute.org/images/stories/silver/PDF/wss09sum.pdf, the estimates for annual silver production (2009) were 681 million ounces mined, and 833 million ounces consumed for industrial purposes. Given that gold has very few industrial uses, and given that at least 2/5ths of gold still remains, while only 1/46th of all silver remains, I don't think the argument that there is 16x more silver in the crust than gold makes any sense from a supply/demand standpoint. Were it not for the 177 million ounces recovered from scrap, and another 31 million ounces sold from government stocks, it would not be possible to meet even industrial demand, not to mention any increases in investor demand.
Here in northern Japan I'd been going into one coin dealer and cleaning him out of proof sets. He was selling way under melt value. I was flipping them on Ebay in lots with free shipping and then using the money to order bullion from bullionbourse.com
I went in today, after having snagged a roll of 1964 Kennedy halves on Monday for $200. No proof sets out. Nothing but old manky British bullion and $20+ over spot at that. I'll never go back.
Keep in mind that nobody but me had been buying the silver from him. I knew what the stock was, and it only changed when I bought it.
It never ceases to amaze me how completely out of touch with reality the average Japanese businessman really is.
But never fear, my beautiful and resourceful wife found me a new coinshop to pillage.
1976,'78 Panama 20 Balboas 4oz .925 coins, anyone?