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Will Silver Be Worth More Than Gold? Perspectives On A Coming Silver Shortage

Tyler Durden's picture




 

While hardly news to regular readers, most of whom have ridden the 80%+ wave in silver in 2010, the following video from Future Money Trends explains some of the key basics about why silver, which is unique in the precious metals basket in that it is also an industrial metal (and has thus sparked much debate over whether or not it, like gold, is "money"), and provides some perspectives on why silver just may one day be more valuable than gold. Some facts: while there are 10 ounces of silver, for every ounce of gold mined, the most of it is not "free flowing" and is locked up in industrial uses; for every $1 in SLV investors still pile $7 in GLD; above ground silver has declined from 10 billion ounces in 1950 to 5-700 million ounces in 2010 (compared to an increase in above ground gold from 1 billion to 7 billion ounces); the gold to silver ratio is at 50x while the average long-term is 15x, industrial demand for silver is up 18% in 2010; and much more. Of course, there is no reason why one has to pick one or the other. Historically both have been tiered stores of value, with the Roman empire going so far as to succumb its silver currency when the going got tough. The simple fact is since global deleveraging will likely continue and since the US government will need to print trillions, most of it monetized by the Fed, the ongoing currency dilution will continue to result in increasing P prices: pretty simple. The only downside case to gold and silver holdings would involve massive asset liquidations a la September 2008, which also would mean that the Fed has lost control, that the US dollar is no longer the reserve currency, and that after the smoke settles, non-fiat currencies will rise again. And that includes both gold and silver.

 

h/t Daniel

 

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Fri, 12/31/2010 - 11:43 | 839457 joemayo
joemayo's picture

Silver aquired at a 65:1 (or greater) ratio buys a lot more gold today at 46:1, and for that I am very happy.

Fri, 12/31/2010 - 14:45 | 839974 midtowng
midtowng's picture

The video was a bit on the hyperbole, but the major facts were correct. Silver should outperform gold for the rest of the precious metals bull market.

 Eventually we should see a 15:1 ratio again.

Fri, 12/31/2010 - 23:39 | 841042 dlmaniac
dlmaniac's picture

I'd like to wait til silver's investment demand overshoots the industrial demand and then make a call on where gold VS silver ratio is heading.

 

Here's one stat I've noticed based on my rough reading of this year's sales # @ US Mint: For every 2000 US$ going into gold coins, 1000 went into silver coins. Since no one buys them as commodities @ US Mint, it should be a useful indicator of general public's investment interest in gold and silver for now.

Fri, 12/31/2010 - 11:44 | 839459 Azannoth
Azannoth's picture

Silver could soon be a new Rare Earth element ?

Fri, 12/31/2010 - 11:50 | 839468 Lets Hang Parliament
Lets Hang Parliament's picture

And the Chinese mine more of it than anyone else....

Fri, 12/31/2010 - 12:15 | 839542 Sean7k
Sean7k's picture

A lot of their production is recycled silver as an import as they do not care about polluting their land in the reprocessing. As silver gains in value, this will probably change.

Fri, 12/31/2010 - 12:43 | 839616 trav7777
trav7777's picture

silver???  No, peru and mexico

Fri, 12/31/2010 - 15:18 | 840096 DoChenRollingBearing
DoChenRollingBearing's picture

Peru is the number one producer of silver, correct.

Fri, 12/31/2010 - 14:47 | 839983 Rudeger
Rudeger's picture

Peru,then Mexico and China.

Fri, 12/31/2010 - 14:54 | 839994 Temporalist
Temporalist's picture

Completely wrong.  Gold yes, silver no.  Trav and Rud correct.

Fri, 12/31/2010 - 11:53 | 839460 66Sexy
66Sexy's picture

Siver has never been hoarded by investors like we're seeing today; which means silver could easily be used as money as it filters down among the population.

If the FED wants the psychological benefits of a domestic wealth effect, they just need declare a silver backed currency -- and revalue silver @ 500 an oz.

Fri, 12/31/2010 - 12:03 | 839506 Azannoth
Azannoth's picture

If we have 7B oz. of gold and ONLY 1B oz. of silver, I guess it would be easier to back a currency with gold

Fri, 12/31/2010 - 13:18 | 839738 66Sexy
66Sexy's picture

for the record: It wasn't me

Fri, 12/31/2010 - 13:40 | 839806 SilverRhino
SilverRhino's picture

William Munny is that you?

Fri, 12/31/2010 - 14:14 | 839891 RafterManFMJ
RafterManFMJ's picture

Well, I don't have any pets and I don't like my neighbors.  And I've been known to eat tripe, so please pressure cook the guts if you can.  The ball talk I believe we all can do without.

Fri, 12/31/2010 - 18:47 | 840607 perchprism
perchprism's picture

 

After reading your silly threats, I junked you.

Fri, 12/31/2010 - 18:53 | 840621 akak
akak's picture

Damn, 36 junks and it wasn't even Leo or Harry!

Fri, 12/31/2010 - 20:04 | 840747 StychoKiller
StychoKiller's picture

Non rompa prego le mie gonadi, grazie!

Fri, 12/31/2010 - 21:47 | 840883 Savyindallas
Savyindallas's picture

Please be assured it wasn't me either. and for the record, I don't even have a dog.

Fri, 12/31/2010 - 12:11 | 839534 Bearster
Bearster's picture

You must be very young, and haven't read much yet.

Fri, 12/31/2010 - 13:23 | 839752 h3m1ngw4y
h3m1ngw4y's picture

+1

totally off limits thinking :-)

it is hoarded - it filters through the population - the former or the later? *g*

500$ per ounce would never do the trick. the revaluation will be done by the physical holders

the currency backed by gold? another fail in due time google "freegold" to gain perspective

 

 

Fri, 12/31/2010 - 11:46 | 839463 jbeyer
jbeyer's picture

Are we really supposed to take this BS seriously when this idiot calls it a "Cadillac converter" (catalytic converter) and pronounces soldering "SOLDering"?

 

Fri, 12/31/2010 - 11:53 | 839477 Mad Max
Mad Max's picture

No.

But remember that a blind squirrel sometimes finds a nut, and enough monkeys on typewriters will eventually pound out a GAO report.

Sat, 01/01/2011 - 01:35 | 841176 Dr. Sandi
Dr. Sandi's picture

enough monkeys on typewriters will eventually pound out a GAO report.

Damn, I think that's where they ALL come from. No wonder they're a little delayed sometimes.

Fri, 12/31/2010 - 11:54 | 839478 JonNadler
JonNadler's picture

that's right if you're going to listen to an idiot about silver, listen to me, at leat am a senior ANALyst for a major PM dealer who doesn't really sell any PM's although we have them, but people don't buy them from us because they're smart and see silver going back to $3. Then you may ask why are we in business? Well, if I answered that I'd have to kill you, or a JP Morgan thug would, I mean I don't get involved with the messy side of the business, that's why I went to college for

Fri, 12/31/2010 - 13:51 | 839834 akak
akak's picture

My my Jonny, don't you sound perky today!  You must have just taken a refeshing dip in one of the ol' Kitco precious metals pools.  Oh no, wait, my mistake ---- we all know that those pools are empty.

Fri, 12/31/2010 - 15:33 | 840143 A Nanny Moose
A Nanny Moose's picture

..or he slept at a Holiday Inn Express last night.

Fri, 12/31/2010 - 15:17 | 840094 barkster
barkster's picture

thank you, miss south carolina...

Fri, 12/31/2010 - 15:34 | 840147 VegasBD
VegasBD's picture

+15:1

Made me laugh...even with this hangover. thx

Fri, 12/31/2010 - 15:21 | 840104 DoChenRollingBearing
DoChenRollingBearing's picture

I hear you about why you went to college...

That's why JP Morgan HIRES thugs.

Fri, 12/31/2010 - 17:53 | 840481 strannick
strannick's picture

Mr. Nadler.

The inaccuracies of your gold price predictions for the last decade, along with commentaries penned for the gremlin denizens of fantasia, definately are indicative of college credentials.

I anxiously await your 2011 price forecast.

Would I be presumtuous to assume it calls for sub-1000$ gold when the bubble bursts, based on decreasing Indian jewellry demand, and a resurgent US$ and Treasuries market, despite the fear-mongering of conspiracy theorists?

Please post your 2011 portfolio for us, so we can short it and all get rich.

 

Fri, 12/31/2010 - 17:59 | 840500 akak
akak's picture

Would I be presumtuous to assume it calls for sub-1000$ gold when the bubble bursts, based on decreasing Indian jewellry demand, and a resurgent US$ and Treasuries market, despite the fear-mongering of conspiracy theorists?

Strannick, you forgot about all those unsightly piles --- nay, MOUNTAINS --- of scrap gold just littering the landscape!  Why, I just tripped over several of them today already!  Damn barbaric relic!  WHEN will these superstitious peasants realize that the future is going to be made of PAPER?!

Fri, 12/31/2010 - 11:56 | 839487 AnarchoCapitalist
AnarchoCapitalist's picture

Thank you. I thought I was hearing it wrong, I had to rewind it twice. I don't understand why people can't just let the facts speak for themselves. Why do they have to overemphasize every single sentence? He has good points, but he completely undermines them with his presentation.

Sat, 01/01/2011 - 12:13 | 841494 Matt
Matt's picture

I think you missed the point of the video. In my opinion, it isn't an informational video; it is an advertisement for a product (his website, not silver).

Fri, 12/31/2010 - 12:49 | 839634 Byte Me
Byte Me's picture

NO.

And the retard also quotes 1950 population as the 1980 figure and proceeds to extrapolate growth % from this erroneous value (1980 pop was around 4.2 Billion).

What other asserted figures are being misrepresented? We do not know. A full audit of his sources would be nice. None is provided.

I'd also question what validity Ag use in solar power especially by 2030, by which time we'll probably be using printed polymers incorporating organic substitutes.

Yes, Ag has many more industrial uses than Au. Big surprise, but it ain't used in cat converters - that's Pd and Ni (and others) - besides cc's are recycled.

Although I would support the 'higher price hypothesis' , this vid has factual errors and the asserted data needs corroboration.

Fri, 12/31/2010 - 13:32 | 839754 Red Neck Repugnicant
Red Neck Repugnicant's picture

The video also claims that above ground stock of gold is up 600% since 1980.

Meanwhile, the Gold Fields Mineral Services Ltd (an independent, London-based consultancy and research company     http://www.gfms.co.uk/index.htm ) asserts that above ground gold stock rises by about 1.7%/year over the past 50 years.  

Disinformation is funny. 

Fri, 12/31/2010 - 18:59 | 840632 perchprism
perchprism's picture

 

I have a plan for your 2011 economic activity:  Blow me.  You'll earn $0.25.

Fri, 12/31/2010 - 13:04 | 839693 Red Neck Repugnicant
Red Neck Repugnicant's picture

Isn't this the same guy who wears goofy American flag shirts and makes the videos for the National Inflation Association?

Or is it someone trying to copy his exact style?

Those videos at NIA are a bit like a Glenn Beck episode.  They start with indisputable truths, then quickly unravel into lunacy and nonsense. 

If you watch those videos, you won't buy precious metals.  You'll buy razor blades and cut your wrists. 

Fri, 12/31/2010 - 13:55 | 839837 akak
akak's picture

If you watch those videos, you won't buy precious metals.  You'll buy razor blades and cut your wrists. 

Please, RNR --- BUY BUY BUY!!

Fri, 12/31/2010 - 14:58 | 840013 Temporalist
Temporalist's picture

Yes he is the very NIA video guy, does most of his videos, and is clearly dead set on trying to get people to follow his investment advice, probably trying to start a financial newsletter and have people pay to subscribe to him.

That being said, I still buy silver without the hyperbole, although there may be a hyperinflationary event.

Fri, 12/31/2010 - 16:04 | 840222 enobittep
enobittep's picture

Yes it is.

These NIA guys are bankster wannabes! Opportunists that are claiming they are on a crusade to inform the public of the coming inflation - yea like anyone with 1/2 a brain couldn't figure out by reading various financial blogs on the web (I.e ZH).

They begin all the reporting with facts and then go into full hyperbol mode.

There gig is getting people panicked and then recommend some pitiful penny silver stock (which they invested in 2 months earlier). The stock jumps over the next few months - at which time they are probably dumping there shares and buying legitimate silver stocks (I.e. Hecla or CDE).

Go to the NIA website and go to stocks. They just did this with Girabaldi Resources Corp. - note the disclaimer regarding the NIA president's investment in this company.

Sat, 01/01/2011 - 01:38 | 841181 Dr. Sandi
Dr. Sandi's picture

If you watch those videos, you won't buy precious metals.  You'll buy razor blades and cut your wrists.

Not me. I'll cut somebody else's wrists who needs it more. But I like your sharp thinking on the subject.

Fri, 12/31/2010 - 11:48 | 839465 dwdollar
dwdollar's picture

I'm very skeptical.  If it gets close to the price of gold, a lot of that "consumed" silver will be found, melted down, and coined.

Fri, 12/31/2010 - 12:30 | 839589 tmosley
tmosley's picture

Mining landfills is much more difficult than you seem to think.

Platinum is much more expensive than gold, but only about 18% of the platinum consumed industrially is recovered.  This is because each use is so small it isn't worth it.  Once mines RUN OUT or cost of recovery explodes it might become profitable to do that.  It's going to have to get a LOT higher, though.  Many applications use so little, but do it on a huge scale (think silver sulfadiazene used in babies' eyes, or silver impregnated socks, or catheters.  That silver is absorbed into the body.  What are you going to do, mine sewage for silver?  You'll only get a few ppb if you are lucky.

Fri, 12/31/2010 - 13:29 | 839781 Bananamerican
Bananamerican's picture

i don't mind mining sewage if i can find the muthafucka who impregnated my socks!

Fri, 12/31/2010 - 15:39 | 840162 Calmyourself
Calmyourself's picture

.

Ha,  Happy New Year

Fri, 12/31/2010 - 11:52 | 839469 Cognitive Dissonance
Cognitive Dissonance's picture

For the past 6 or 7 years, I've assumed that when the herd finally recognizes the stealth destruction of their fiat paper currency by the powers that be and begin to search for alternatives, Silver will be viewed as more accessible and "affordable" than Gold, at least for the masses. This is why I have concentrated about half of my PM buying in Silver.

It stands to reason that when the panic begins, the average Joe will try to "buy" the "cheapest" hedge. Shaking their belief in the static value of the dollar will be very hard. Thus even as they try to off load their dying dollars, they will still think about them as static and how they can get the most "value" for their FRNs. They have been conditioned to believe "cheaper" is better for them in many things.

Silver will shine for this reason. How long is the real question. If you live by the sword of public opinion and herd mentality, you eventually die by that same sword.

Fri, 12/31/2010 - 12:19 | 839549 living on the edge
living on the edge's picture

CD,

I agree with your assessment that the common man will buy silver once the fallacy of an economic recovery is exposed as a fraud. When the masses realize the financial world is crumbling gold and silver will explode with silver leading the way. I don't expect silver to ever have a valuation approaching that of gold and I duly intend to sell my silver in favor of gold at some future point.

Fri, 12/31/2010 - 13:04 | 839691 Manipulism
Manipulism's picture

Selling for what????

$ ????

 

Fri, 12/31/2010 - 13:21 | 839748 Cognitive Dissonance
Cognitive Dissonance's picture

Selling (or bartering) either directly to Gold or whatever can be used as an intermediary that can then be sold for Gold. In this case it doesn't matter what the journey is, just that the destination is eventually Gold.

Fri, 12/31/2010 - 19:13 | 840660 RoRoTrader
RoRoTrader's picture

So what does the 'new social order' do with all of its gold and silver once the day of reckoning arrives for fiat currency?

In other words, what then?

And, if you and others writing comments at ZH are smart enough to figure out how to build a house of bricks then don't you think the JPM's of this world are too?

Best wishes for 2011 and beyond, CD.

 

Sat, 01/01/2011 - 01:41 | 841184 Dr. Sandi
Dr. Sandi's picture

And, if you and others writing comments at ZH are smart enough to figure out how to build a house of bricks then don't you think the JPM's of this world are too?

That IS the silver question Ro. As for me, the goal isn't to outsmart JPM, but to emulate them best I can on my diddly micro scale with my diddly silver holdings.

Sat, 01/01/2011 - 02:59 | 841233 RoRoTrader
RoRoTrader's picture

Dr ,

you know how some things/experiences in life always seem to come to back to us.

early every morning i used to drive through Cambridge off of Brattle into Boston.......there was a BiLLbOARD prominently displayed in McArthur Sq with a quote by THE gENeRAL McARThur which read, "there's no security on this earth, only opportunity.

what you are saying sounds a lot like trading to me........silver, gold, fiat, or whatever.

what do you think? i'd like to know. 2011........blowback year or morphing into something else?

Sat, 01/01/2011 - 22:25 | 842113 Dr. Sandi
Dr. Sandi's picture

Honest to dog, I don't know. It's pretty obvious that paper money is going back to the hell that spawned it. But how fast?

I have silver because it's something I can keep close, and that is going up in value faster than anything else I can reasonably keep close.

Will I trade silver for gold? Sure, in a heartbeat, when and if silver stops appreciating faster than gold. I have little fear that somebody out there will trade me some of their gold for some of my silver.

And I have many pounds of old U.S. silver coins too, just in case we end up bartering instead of throwing cash and plastic at one another for some number of months.

I'm sure JPM and GS and those other elder demons will find ways to stay ahead of us mere mortals in 2011. And I'll watch and see if they're doing something that the authorities will tell us "kids, don't try this at home." Of COURSE I'm gonna try this at home. With or without Johnny Knoxville.

I have no visions of the future, but I'm really good at adapting to the bleeding edge. And I think those with "fluid intelligence" are going to have a very successful two years coming up.

While 2010 was the year of sitting tight, 2011-2012 looks to me to be the period of doing deals within a partially disrupted supply chain.

Will petroleum prices break us before the unsupported debts implode? I dunno. Too many cracks in the ice to know who's going to fall into the river first. So I'm just staying warm, keeping my swimming skills up to snuff and watching everywhere for signs of snapping ice.

Sun, 01/02/2011 - 04:06 | 842358 Red Neck Repugnicant
Red Neck Repugnicant's picture

your posts are wonderful

Fri, 12/31/2010 - 13:26 | 839768 h3m1ngw4y
h3m1ngw4y's picture

did you read this short comment?

"in favor of gold"

Fri, 12/31/2010 - 15:12 | 840082 living on the edge
living on the edge's picture

Hopefully trading my silver for gold. I believe one of the biggest trends of the future will be keeping most of ones assets outside the corrupt financial system.  

Fri, 12/31/2010 - 15:03 | 840030 Temporalist
Temporalist's picture

By your reasoning copper and nickel are going to do better.  As it is people are already stealing copper pipes from their foreclosed/abandoned homes.

Fri, 12/31/2010 - 20:10 | 840762 StychoKiller
StychoKiller's picture

There's more copper in the wiring, actually!

Sat, 01/01/2011 - 03:16 | 841254 trav7777
trav7777's picture

they use a lot of aluminum wires now...cheaper, conductivity close to as good

Fri, 12/31/2010 - 11:51 | 839471 AnarchoCapitalist
AnarchoCapitalist's picture

I agree 100% with the video. It has good points, but is very hokey. Why do these producers feel like they have to overemphasize every single sentence? PacMan eating silver coins? Calling a "catalytic converter" a "cadillac converter"??? Despite the great points within, I can't pass this video on to others because the production value just does not make it seem serious.

Fri, 12/31/2010 - 11:55 | 839481 TheGreatPonzi
TheGreatPonzi's picture

It's a side effect of mass television. In France, every journalist speaks with the same irritating tone.

Fri, 12/31/2010 - 12:30 | 839585 tpberg7
tpberg7's picture

In America, we love hokey!  The more hokey it is the more we listen.  The video has many valid points and is made to be persuasive to newcomers in the realm of silver.

Fri, 12/31/2010 - 12:52 | 839640 glenlloyd
glenlloyd's picture

Hokey as in privately colorized two dollar bills?

Fri, 12/31/2010 - 13:58 | 839841 akak
akak's picture

As in Sarah Palin, the (Yellow) Snow Queen.

Fri, 12/31/2010 - 11:51 | 839472 TheGreatPonzi
TheGreatPonzi's picture

Very interesting vid.

Silver is currently reaching new highs (30.827 on futures right now).

Fri, 12/31/2010 - 11:55 | 839482 Cognitive Dissonance
Cognitive Dissonance's picture

And Gold has broken through the $1,415 resistance on it's way to the old cosing high of $1,427. Interesting for this to be happening on the last trading day of 2010.

All hail the dead Blythe Masters.

Fri, 12/31/2010 - 15:03 | 840039 Temporalist
Temporalist's picture

Comeon CD everyone knows Blythe is the Undead...

Fri, 12/31/2010 - 15:19 | 840098 Dantzler
Dantzler's picture

crude @ $91.46

Fri, 12/31/2010 - 11:55 | 839480 yabyum
yabyum's picture

The typical American strip mall has a nail place, porn shop, tatoo parlor pawn shop, liquor store and a check cashing we buy gold shop. I guess we can add silver to the mix as folks go down to sell mom and dads silver service.

Fri, 12/31/2010 - 11:55 | 839484 psyclopz
psyclopz's picture

100 billion printed this week.
Tick, tick, tick.. That's the sound of time running out.

Fri, 12/31/2010 - 12:02 | 839504 DaBernank
DaBernank's picture

"Tick, Tick, Tick..."

Jordan Chase from Dexter!

Fri, 12/31/2010 - 14:56 | 840005 Millivanilli
Millivanilli's picture

This season sucked, bad.

Fri, 12/31/2010 - 11:56 | 839486 johnnymustardseed
johnnymustardseed's picture

If it does become more valuable than gold, the world is seriously messed up. I will be looking to buy a castle with a moat around it.

Fri, 12/31/2010 - 12:44 | 839619 tmosley
tmosley's picture

Why?  This is not a sign of disaster, but simply a reflection of the reality that prices have been suppressed for a long time, draining stockpiles.  Silver was worth more than gold for several thousand years of the Egyptian empire, as well as for several decades in the 1400's (until the Potosi mines opened in the New World).

Ten years ago, people probably said they wouldn't want to live in a world where gold passed $1000 an ounce, but it wasn't so terrible when that happened.  

Fri, 12/31/2010 - 14:00 | 839856 akak
akak's picture

To be honest, tmosley, I have never seen any evidence that the value of silver was ever MORE than that of gold at any time in human history, although it is true that silver's value relative to gold was much higher in ancient Egypt and Mesopotamia than it was even during the time of the Roman Empire --- with a gold:silver ratio of around 5 or 6:1, I believe (around 12:1 during the early Roman Empire).

Fri, 12/31/2010 - 14:47 | 839979 tmosley
tmosley's picture

Thanks for calling me out.  It looks like I was wrong about the 1400's.  It seems I had some bad info there.  The gold to silver ratio peaked at 1:4 at that time.  I'm currently tracking down the source that said silver was more precious than gold in Ancient Egypt.

Fri, 12/31/2010 - 14:50 | 839986 akak
akak's picture

You are welcome!

I was just glad that you did not take offense, as I was certainly NOT trying to discredit or attack you in any way.

Fri, 12/31/2010 - 14:57 | 840004 Red Neck Repugnicant
Red Neck Repugnicant's picture

Oh my GOD!

It's barely even daylight here in Sydney - not to mention the first day of an entirely New Year - and tmosely has already fallen on his face! 

It literally is a daily occurrence. 

*LOL*

 

Fri, 12/31/2010 - 14:58 | 840015 tmosley
tmosley's picture

Oh my GOD!  

It's the middle of the day here in Texas, and the Republicunt still hasn't contributed ANYTHING to ANY of the coversations he's butted his nose into!

This is literally a continuous occurrence.

*LOL*

Fri, 12/31/2010 - 15:06 | 840054 Red Neck Repugnicant
Red Neck Repugnicant's picture


I truly need to know the answer to this question before I start any of my activities for the day:

Tmosely -

When you post comments on the internet, which precaution do you take to absorb the continued crushing pressure on your face as you fall on it daily:

A. Wrap your head with sponges

B. Wear a prosthetic woodpecker beak

C. All your internet surfing is done under water 

Please advise. 

Fri, 12/31/2010 - 17:07 | 840357 trav7777
trav7777's picture

PWNED

Fri, 12/31/2010 - 15:44 | 840172 Calmyourself
Calmyourself's picture

Your still a smart ass socialist with very little other than bombast to contribute..

Fri, 12/31/2010 - 15:06 | 840052 tmosley
tmosley's picture

More on historical gold to silver ratios--I am finding a lot of writing, but not a lot of sources on the subject.  Ancient Egypt seems to have had a GSR somewhere between 1:1 and 1:2.5, while it was 1:9 in Mesopotamia.  It seems that after trade was opened between Egypt and the Hittites, the ratio normalized between the two empires.

Also interesting is that it seems that the ratio for 1:4 in China for a very long time, with mentions of this ratio both in ancient times and as late as the 1500's, when Spanish silver fleets made port in the Philippines, which then found their way to China.  No charts or anything like that yet...

It should be noted, however, that there is simply no historical precedent for what is going on in the silver markets.  Never has price been so low while supply is at or below 700 year lows.

Fri, 12/31/2010 - 11:57 | 839488 dryam
dryam's picture

Silver just hit 30.92

Fri, 12/31/2010 - 20:15 | 840770 StychoKiller
StychoKiller's picture

Silver finishes the year at $30.91!  We have a winna!

Fri, 12/31/2010 - 11:56 | 839490 Clapham Junction
Clapham Junction's picture

Remember what happened in the 1800's when they ran out of whale blubber.

(that's right, the price got cheaper as alternatives, duh, oil, was used instead.)

Expecting a massive "junking."  Go ahead, fuck you and HAPPY NEW YEAR!

Fri, 12/31/2010 - 12:00 | 839499 yabyum
yabyum's picture

Alternatives!?!? How 'bout .22 bullets cheap whiskey, and MRE's

Fri, 12/31/2010 - 12:06 | 839515 Clapham Junction
Clapham Junction's picture

Along that line (not quite what I meant ;) add cartons of Marlboro's.

Fri, 12/31/2010 - 12:53 | 839650 Hearst
Hearst's picture

'Japan creates new artificial metal.'  Maybe future technology will make this an easier alternative for substituting some metals.  Oh wait,, this 'new' metal is still made with that shinny old one - Silver.

http://www.yomiuri.co.jp/dy/features/science/T101230003933.htm

 

Fri, 12/31/2010 - 13:30 | 839779 h3m1ngw4y
h3m1ngw4y's picture

+1

thanks for the read

Fri, 12/31/2010 - 14:25 | 839924 JLee2027
JLee2027's picture

You still need the heart of a star.

Fri, 12/31/2010 - 17:24 | 840411 trav7777
trav7777's picture

didn't note the other metal?  Rhodium, LOL...astoundingly rarer than almost anything and already 3x the price of Pd

Fri, 12/31/2010 - 12:58 | 839665 Things that go bump
Things that go bump's picture

How do you keep them fresh?  

Fri, 12/31/2010 - 15:09 | 840071 Temporalist
Temporalist's picture

Yes and what if they get wet?  And what if they get smoked?  And what if you don't smoke them?  Oh alcohol applies the same way too.  People like to talk about cigarettes like they are in jail.  The reason why cigarettes are like curren c in jail is becase they are cheap and readily accessible but imagine if the jail was flooded with cigarettes like the Fed floods the world with FRNs; massive inflation.

Fri, 12/31/2010 - 15:45 | 840174 Things that go bump
Things that go bump's picture

Personally, I have laid in a few cases of bar soap for trade goods.  Its cheap, easy to store, doesn't spoil, doesn't attract vermin, and it is really hard to make for yourself, much more difficult than brewing beer or distilling alcohol.  I imagine that in a collapse situation, it would be an attractive barter good.  It won't go to waste if I don't need it for that purpose.  

Sat, 01/01/2011 - 01:49 | 841189 Dr. Sandi
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I have laid in a few cases of bar soap for trade goods.  Its cheap, easy to store, doesn't spoil, doesn't attract vermin, and it is really hard to make for yourself

Hey, I think Tyler Durden would disagree with you on just how hard it is to make soap. Of course, if you don't live near a liposuction clinic, all bets are off.


Sat, 01/01/2011 - 02:13 | 841211 Things that go bump
Things that go bump's picture

Yes, I forgot about Tyler Durden making soap, but I doubt if you'd care to attempt it, even in close proximity to a liposuction clinic.  That would give you the fat, but you still need to make lye and what you get when you mix it together is likely to be something more suitable for laundry than for washing your face or your more delicate and sensitive parts.  

Sat, 01/01/2011 - 02:23 | 841219 Dr. Sandi
Dr. Sandi's picture

If you believe the Mad Max scenarios here, you have to wonder if any of the survivors will be people who use soap.

Just sayin....

But seriously, what kind of soap have you chosen, and what was the thinking behind it?

I'm thinking of adding to my soap holdings now that the ultrasonic rodent repellers seem to not be keeping the hungry winter hordes out of my oat and corn meal supplies. I love silver, but there's gotta be a better way to score a bag of potatoes from a stinky neighbor.

Sat, 01/01/2011 - 05:47 | 841311 Things that go bump
Things that go bump's picture

Hey, Doc, It doesn't even have to be mad max.  You know those little slivers of soap you have when a bar of soap is about done?  My mother remembers during World War II they would save all those little slivers of soap until they had enough that they could melt them down and make a whole bar out of it.  Use up, wear out, make do or do without.  A bar of soap might be worth a bag of potatoes.

 

Sat, 01/01/2011 - 22:33 | 842130 Dr. Sandi
Dr. Sandi's picture

Sounds pretty familiar. You mom might have known my mom.

My question is: Ivory, Irish Spring, Yardley, Dove? Any feelings about whether the expensive stuff will be worth the premium, or just load up for bulk because soap is soap?

I'm being serious for a change here because I think soap works for me as a hoarding item.

Sun, 01/02/2011 - 01:00 | 842247 Things that go bump
Things that go bump's picture

I'm going with soap is soap.  I buy it in bulk at Sam's Club.  If it gets to the point where we're using it as a barter item, I doubt if anyone will be too fussy.  

Sun, 01/02/2011 - 07:34 | 842413 Dr. Sandi
Dr. Sandi's picture

Makes sense. Thanx.

Fri, 12/31/2010 - 12:46 | 839625 trav7777
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unfortunately, elements have in many cases, UNIQUE properties which cannot easily be substituted.  Silver is one of them.

SURELY you'd believe that if titanium or some other element would work, that they'd already be using it because Silver is relatively quite expensive already.

Fri, 12/31/2010 - 13:07 | 839706 Byte Me
Byte Me's picture

Elemants have in all cases, unique properties - that's what the definition of an element is.

(Not meaning to knock you bub, just pointing out the obvious and not going to get isotopic about it either.)

 

You could get tech advances that obviate and obsolete process uses: eg silver nitrate was used extensively in film and photo but a ccd and a bit of RAM in a digital camera ...

Just sayin'..

Fri, 12/31/2010 - 12:59 | 839677 tmosley
tmosley's picture

Correct, though silver has many properties which simply can NOT be replicated.  I do expect radical advances in graphene production to allow that material to replace silver's role in electronics.  My own company is working on new technologies that can easily replace silver in most applications with much cheaper and infinitely longer lasting selenium (a catalytic antimicrobial, rather than a reagent/poison).  I think that is the great bulk of its applications.  The remaining uses are principally reagents, which may or may not be overcome soon.

I expect both graphene and selenium to be years from making it onto the market in a meaningful way.  When they do, I will be out of silver and into gold.

Also interesting is that JPM corner of the copper market.  They might be creating artificial demand for copper in the hopes of bringing more silver production online (as copper and silver are generally found together).

So clearly, there are many cons on the silver price, but their effect is years away.  For now, silver is the investment/trade of the millennium.

Fri, 12/31/2010 - 13:14 | 839722 DosZap
DosZap's picture

tm,

Not only did the bstds corner the copper mkt, they also went offshore, and started their silver business again.

Just like a flesh eating bacteria, just when you think you have it stopped, the SOB returns.

Fri, 12/31/2010 - 11:58 | 839492 JonNadler
JonNadler's picture

DAmn, those Crimex boys had to take the day off today? Did they, bunch of lazy cowards, I told them, you take off your eyes for one second and the thing can blow to DA MOoooooooooonnnnn!!!!!!

Jamie won't listen to my advice

Fri, 12/31/2010 - 14:28 | 839930 JLee2027
JLee2027's picture

I love your icon! An upside down robot trader, lol.

Fri, 12/31/2010 - 11:57 | 839493 johnnymustardseed
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Up 42 cents, maybe they are right. Should I put gators in the moat?

Fri, 12/31/2010 - 20:20 | 840775 StychoKiller
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Piranhas might be an adequate substitute. :>D

Fri, 12/31/2010 - 11:57 | 839494 High Plains Drifter
High Plains Drifter's picture

Ok, I guess I am now down with Chinese solar stocks. 

Sun, 01/09/2011 - 09:34 | 839505 Clapham Junction
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 (d)

Fri, 12/31/2010 - 11:59 | 839496 Silverhog
Silverhog's picture

So what would be the alternative to Silver? Flubber?

Sun, 01/09/2011 - 09:33 | 839510 Clapham Junction
Clapham Junction's picture

(d)

Fri, 12/31/2010 - 11:59 | 839497 apberusdisvet
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The FED manipulation is failing largely because it cannot control the Asian sovereigns who, along with their citizens, will prove to be principal drivers of price.  Big conundrum for Ben and Timmie.  They can control, to a certain extent, western investment, but not the Eastern tsunami.  Plus, rumors have it that LBMA is close to being out of physical.  Inventory shortages, especially for silver, at the major dealers and mints are a huge clue.

My allocation of PMs has always been one-third gold, two-thirds silver as I have always felt that the GSR was upside down, primarily due to the inability to recycle silver to any where near the extent that gold is reclaimed.  The big clue that I realized early on in my due diligence on junior miners, is that silver production is primarily as a result of mining other base metals since in the last 50 years anyway, it has never made economic sense to directly mine it. 

I wouldn't be surprised to see the GSR down to 1:1 in the next decade.

Fri, 12/31/2010 - 14:22 | 839913 Fred Hayek
Fred Hayek's picture

I suspect it'll go back to the 12:1 to 15:1 range of pre COMEX manipulation times.

The thing that really kills me about what Blythe Masters et al are doing is that the only thing they're accomplishing at this point is to let asian buyers get their silver more cheaply.  That's all they're achieving, in a big picture sense.  What the hell is the value in that? 

Fri, 12/31/2010 - 11:59 | 839498 High Plains Drifter
High Plains Drifter's picture

Keep your hands off of my junk.

Fri, 12/31/2010 - 12:08 | 839528 Clapham Junction
Clapham Junction's picture

  Hey, what happened to that dude? Was he prosecuted or what?

  CJ

Fri, 12/31/2010 - 12:22 | 839561 High Plains Drifter
High Plains Drifter's picture

I don't know. I think they just blew him off.

Fri, 12/31/2010 - 13:17 | 839734 DosZap
DosZap's picture

No, he was arrested, and banned from future flights, on the list now.

Fri, 12/31/2010 - 14:10 | 839803 Bananamerican
Bananamerican's picture

fa realz??

fuck this fascist pop stand.

"Tyner ...is now facing a possible lawsuit for entering a security line and then not allowing a government employee access to his crotch during a pat-down search."

Fri, 12/31/2010 - 12:11 | 839501 firstdivision
firstdivision's picture

Silver, the best investment this year!

<OT>Anyone seeing the action in AUDJPY the past few min?  WTF is going on with it?

Also, going sell some Euros.</OT>

Fri, 12/31/2010 - 12:28 | 839575 rosiescenario
rosiescenario's picture

........silver mining stocks did better than the metal.....

Fri, 12/31/2010 - 12:30 | 839580 gwar5
gwar5's picture

I like miners, they're great, but government can nationalize them in 'emergency'

Fri, 12/31/2010 - 13:04 | 839688 Things that go bump
Things that go bump's picture

I think they can nationalize our physical, too, though I imagine they'll nationalize the 401Ks and IRAs first.  

 

Fri, 12/31/2010 - 13:24 | 839743 DosZap
DosZap's picture

You are dead on, but they have to find it, and the 401k's, and IRA's are next on the list, it will rival the Xmas Eve 1913 theft.

The American people will possibly start a war if they do this.

I think thats the reason it has not already happened.

The bstds in Congress, think they can do want they want with no consequences to their actions.

They are dead wrong.

Fri, 12/31/2010 - 15:33 | 840144 Things that go bump
Things that go bump's picture

If I had to watch my life savings disappear into the hands of that crew of thieves, I don't know what I would do.  You're just helpless if you keep your money in a bank.  I cashed out my 401k a couple of years ago, invested in PMs and other tangibles.  

Fri, 12/31/2010 - 17:30 | 840428 trav7777
trav7777's picture

let's go down that road.  If it came to this "SHTF" moment where you had PMs and the cops or some agency came and seized them, they'd basically be condemning you and your family to starvation.  In such a scenario, I would suppose a lot of people would take the shorter route out, which is to essentially hunt the police.  I mean, you're gonna starve anyhow or die of a disease, why wait around for it?

Fri, 12/31/2010 - 19:14 | 840661 Things that go bump
Things that go bump's picture

You know, every now and then in England some farmer digs up someone's hoard of treasure - Roman coins, gold beads and cups, buried long ago in a time of danger and never returned for, so the feared danger probably materialized.  I'm too old for pig hunting, but if my family can't get the use of what little I've put by, I'll be content enough to keep it out of the hands of those pirates,  preferring to enrich some future farmer.  

Fri, 12/31/2010 - 15:53 | 840195 delacroix
delacroix's picture

silver could be declared a strategic metal

Fri, 12/31/2010 - 13:06 | 839692 Saxxon
Saxxon's picture

+1 not going to happen here in the U.S. but those vaunted deposits in South America could very well wind up nationalized.  In fact I would bet on it.  Does anyone remember Evo Morales in Ecuador around 2006?  CDE was digging a mine there and after Morales took over the Nat Gas pipelines CDE's stock took a swan dive.  Not to mention Africa.

Fri, 12/31/2010 - 13:08 | 839710 A_MacLaren
A_MacLaren's picture

Gubmint can nationalize anything and everything in an "emergency".

Property rights?  Rule of Law?  In an "emergency", its all out the window.

Fri, 12/31/2010 - 12:06 | 839512 steve from virginia
steve from virginia's picture

The only downside case to gold and silver holdings would involve massive asset liquidations a la September 2008, which also would mean that the Fed has lost control, that the US dollar is no longer the reserve currency, and that after the smoke settles, non-fiat currencies will rise again.

  This sort of non- 'analysis' is what gives economists etc. a bad reputation. ZH pimps the PM home team, like a Green Bay Packers web site. Even when it doesn't make sense.

Asset liquidations in 2008 did not have the Fed or other central banks losing control, in fact they gained MORE control: the Fed now arguably makes US economic policy. Another shock will give the Fed even more control. This control is a big complaint among analysts. C'mon, get with it!

What also happened in 2008 was that interconnected counterparty risk and large amounts of leverage exposed assets to margin risk.

Since NO significant finance deleveraging has taken place since 2008 and the 'paper' derivative positions in PMs are much larger than they were two years ago the counterparty/margin risk has increased dramatically. This is the tradoff: larger leveraged paper gold and silver positions push the price higher, when the market declines the physical collateral gets dumped 'at the market' which at the time is filled with others trying to sell.

Sell for what? Dollars, cash dollars, paper bills the frantic speculators staring ruin in the face will demand. The brokers will sell their gold and silver positions right out from under them. This is what happens, it's happened before, it happened 2 years ago and in all times previous, is what happens when asset markets decline.

When another country with a large float decides to run a current account deficit as the US has run since the 1970s it will have the world's new reserve currency. Gold as the reserve currency: what would be traded for it? Settling gold accounts is all: this was the world's economy was ... in 1931 and 1932. Not a good track record ...

Fri, 12/31/2010 - 12:06 | 839518 rosiescenario
rosiescenario's picture

Having been a buyer of silver miners a few years ago, it is clear that you do best buying the producer rather than the product.

This article has some good points, but doesn't state the obvious: silver is more plentiful than gold, just as gold is more plentiful than platinum and platinum is far more plentiful than unobtainium. From a mining atndpoint the extraction cost (tons of rock moved to get an oz.) has a direct bearing on a metals ultimate cost. A great deal of the silver we see in the market comes as a bi-metal to primary copper production. Conversely, silver as a primary target metal throws off lead and zinc as by metals....some mines may actually have a negative cost for the silver they sell due to that.

 

....so...some useful statistics in that blurb, but only 1/2 the real picture.

Fri, 12/31/2010 - 12:28 | 839574 gwar5
gwar5's picture

I agree miners are great. But in a big run, or shortages, government can nationalize mines or impose confiscatory taxes on top of the taxes you already pay.

The government in Australia tried to impose a 40% tax on miners which would have made them a de facto partner.  Didn't help the stock prices. They got rid of the PM instead. Dodged a bullet. But disaster can happen out of nowhere. In hard times, government will do anything.

Fri, 12/31/2010 - 12:35 | 839595 rosiescenario
rosiescenario's picture

.....I understand your point, but I have been an investor in mining stocks for 40 years and I still believe that it is better to own the producer than the product. Of course you better be careful to choose your countries carefully as Hecla discovered a few years ago with that nut case in VZ.....of course, too, that was a good time to buy HL.....

 

Just started buying a highly speculative miner with an asset in Texas....I am hoping Texas is safer than VZ.....

 

 

Fri, 12/31/2010 - 13:01 | 839684 -Michelle-
-Michelle-'s picture

I can understand buying miners to trade, but I don't see how they would be better than owning physical when things continue to go south.  In the end, it's still just paper, isn't it?

Fri, 12/31/2010 - 13:16 | 839730 fiftybagger
Fri, 12/31/2010 - 15:39 | 840158 redrob25
redrob25's picture

The only problem with mining stocks is which to choose? You have to have a basket of them and hope you have a few solid winners. No such counterparty risk with the physical.

Fri, 12/31/2010 - 12:08 | 839521 Pringsh Peensh
Pringsh Peensh's picture

kitco....down, nice end to the year

Fri, 12/31/2010 - 12:12 | 839536 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Get monie!

Fri, 12/31/2010 - 12:13 | 839537 Clapham Junction
Clapham Junction's picture

OFF TOPIC!!!

HEY TYLER, CAN YOU POST SOME MORE OF THOSE UN-INTENTIONALLY HILARIOUS ASIAN NAMES????

PLEASE?????!!!!

Fri, 12/31/2010 - 14:29 | 839937 JLee2027
JLee2027's picture

Come on...Tyler has better things to do....and you have Google. Go find:

http://www.google.com/search?sourceid=chrome&ie=UTF-8&q=funny+asian+names

Fri, 12/31/2010 - 12:15 | 839540 johnnymustardseed
johnnymustardseed's picture

Having been a buyer of silver miners a few years ago, it is clear that you do best buying the producer rather than the product.

The problem with that is how do you (worthless) cash out of those stocks?

Fri, 12/31/2010 - 12:26 | 839568 High Plains Drifter
High Plains Drifter's picture

The miners are stocks.  Bullion is bullion. I see no correlation between the two even though there might appear to be one.

Fri, 12/31/2010 - 12:16 | 839543 Chartist
Chartist's picture

Palladium is the one to watch, imo....China's demand for cars could drive palladium demand much higher....it's more rare than gold too.

Fri, 12/31/2010 - 13:11 | 839714 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I have a question for you, what do you think about China cutting back on how many new drivers license to issue?  I ask because I do not know if that policy will make a difference.  Probably not. 

I think the main question is can the Chinese all afford new cars?  Will working wages rise enough to make a difference in car sales?

Fri, 12/31/2010 - 15:27 | 840120 Temporalist
Temporalist's picture

I believe that is locale specific not national.  They want to prevent too much traffic and pollution in major metro areas after they realized they could see and breath when they banned cars during the Olmypics.

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