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Silver Price Update From James Turk And Eric Sprott

Tyler Durden's picture


Eric Sprott, Chairman of Sprott Asset Management, and James Turk, Director of the GoldMoney Foundation, talk about how there isn't enough silver in the silver market to back existing "paper silver" commitments. While there is much in the attached interview, the bottom line is that Sprott thinks that "silver will be the investment of this decade". And with 3 out of 5 central banks having just embarked on monetization, and two more imminents, he will almost certainly be right.

Silver price update from James Turk and Eric Sprott


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Fri, 08/05/2011 - 16:18 | 1528128 LoneStarHog
LoneStarHog's picture

But...but...insufficient physical silver to back the contracts would be ILLEGAL

Fri, 08/05/2011 - 16:23 | 1528144 Xibalba
Xibalba's picture

"Illegal" can be fixed....

Fri, 08/05/2011 - 16:37 | 1528186 Mesquite
Mesquite's picture

Seems to be a lot of that 'fixin' going on around the planet...

Fri, 08/05/2011 - 17:03 | 1528251 66Sexy
66Sexy's picture

short silver to protect a long physical silver position.

Fri, 08/05/2011 - 22:34 | 1529203 SumSUN
SumSUN's picture

-11 ?snake eyes.  

SHORT 66 sexy TO HEDGE YOUR..... what?



Fri, 08/05/2011 - 16:43 | 1528199 WiretapWilly
WiretapWilly's picture

Miners can't agree to sell future production? 

Fri, 08/05/2011 - 17:23 | 1528311 Popo
Popo's picture

Shh.  The entire argument rests on a fixed supply of silver.  

Fri, 08/05/2011 - 20:41 | 1528721 Buckaroo Banzai
Buckaroo Banzai's picture

You dont understand the silver market. Most silver is produced as by-product of base metal mining. By-products dont get sold forward.

Fri, 08/05/2011 - 17:05 | 1528252 Libertarians fo...
Libertarians for Prosperity's picture

But...but...insufficient physical silver to back the contracts would be ILLEGAL.....

In an interview last week, when asked why some billion dollar hedge fund doesn't try to bust the COMEX, Sprott admitted that COMEX contracts can be settled with SLV paper, which is the reason why you don't see the raid.

Also, quite pecularily, he said that stock in pm miners would out-perform the metal, which makes no sense to me - at all.  


Fri, 08/05/2011 - 17:16 | 1528292 narapoiddyslexia
narapoiddyslexia's picture

Maybe its the mathematices arising from the fact that miners are depressed below where they should be and they will outperform while they catch up? Just a theory.

Sat, 08/06/2011 - 10:34 | 1530264 dehdhed
dehdhed's picture

the problem i have with miners is they are largely valued for their reserves

as they dig it up and exchange it for fiat, their value doesn't necessarily go up

if they double production in a year, the life expectancy of their reserves would be halved.  how does this add value to the company?

if a major were thinking of purchasing a junior, the value would be based on reserves.  and if before the deal went through, the junior miraculously harvest 30% of their reserves, how would it become more valuable to the major? ... or china ... or saudi arabia

miners might be better to just leave the metal in the ground.  it can't be stolen that way.  it would encourage price increases on the metal and thus on their reserves.

instead of issuing dividends, a miner might be better to continue production but use cash reserves to fund themselves and put production in a vault.  reserves would remain unchanged as both in-ground and above-ground reserves would be included.

for me, i'll just stick with the metal.  it's the only thing i'm dead certain will never lose it's AAA rating


Sat, 08/06/2011 - 10:59 | 1530306 dehdhed
dehdhed's picture

i'm not too into the conspiracy of things, but it would seem the case being made for the 'undervalued' miners might be part of the manipulation argument.

please don't buy the metal, we need that in the future ... let us have it.  don't you see how undervalued we have made the miners for you.  please go buy shares in diminishing reserves and leave the precious production for us to buy.

i'm surprised sprott and others don't question this more

Fri, 08/05/2011 - 17:23 | 1528310 fuu
fuu's picture

Hi JohnnyWangerTexasBravoSlinger!

Fri, 08/05/2011 - 19:23 | 1528487 Whatta
Whatta's picture

Also, quite pecularily, he said that stock in pm miners would out-perform the metal, which makes no sense to me - at all.

If you will recall, last year (or maybe it was earlier this year) he sold a bunch of PSLV shares and people freaked for a day or so about silver topping. But, he revealed that he thought that the miners were underperforming in the market in comparison to physical and was merely reallocating to the miners...not getting out of the silver trade.

Here is a chart that illustrates that the miners are still underperforming physical...its Yahoo, but it works

Fri, 08/05/2011 - 16:16 | 1528130 drivenZ
drivenZ's picture

of course Sprott thinks that "silver will be the investment of this decade". He is talking up his own book. 


not that i think he's completely wrong but he does have a huge vested interest in people buying silver. 

Fri, 08/05/2011 - 16:23 | 1528149 Whalley World
Whalley World's picture

You are right, much better when fund managers promote toxic investments to the sheeple.  That's the ticket.  If a Billionaire sees the potential of silver, why would he not promote his investment of choice?

Fri, 08/05/2011 - 16:29 | 1528168 caerus
Fri, 08/05/2011 - 16:26 | 1528158 CH1
CH1's picture

Having a vested interest does NOT make someone an automatic liar.

Slogans substitute poorly for thoght.

Fri, 08/05/2011 - 16:45 | 1528206 drivenZ
drivenZ's picture

certainly did not call him a liar. I think he's a smart guy and he's been spot on and I beleive what he's saying. But if the building starts burning down and Sprott smells'll be the last to know. 


this is the same for most professional commentary but Sprott has a pretty narrow investment focus. 

Fri, 08/05/2011 - 17:10 | 1528265 smlbizman
smlbizman's picture

your understanding of the metals appears to be somewhat physical holders do not worry about price, just how much more we can get. to infer that eric has the same charactor as saint warren buffet i feel is a mistake. so if eric decides that after 6,000 years the metals or no longer relevant i will still have mine...and politley disagree with him...

Fri, 08/05/2011 - 17:17 | 1528297 Financial Newbie
Financial Newbie's picture

I hold physical and if I was broke, jobless, destitute with no way of feeding myself I think I can admit I'd worry about the price.

Deflation is a bitch, yo.



Fri, 08/05/2011 - 17:19 | 1528300 drivenZ
drivenZ's picture

"us physical holders do not worry about price, just how much more we can get." 

...of course you worry about price. for anyone on this board i doubt there's a shortage of silver. you can go out and buy basically as much as you want,unless some of you are closeted billionaires. 

Fri, 08/05/2011 - 17:25 | 1528320 caerus
caerus's picture

right...but priced in what terms?  any asset must necessarily be valued in terms of at least one other asset...many hold physical silver because they do not have faith in the present or future value of the USD...or any other fiat currency for that matter

Fri, 08/05/2011 - 16:29 | 1528165 Goofy Bastard
Goofy Bastard's picture

Don't really see the problem in a guy committing himself to a partuclar plan and then selling that same plan to others.  Sounds like a guy who believes in what he's doing.

Fri, 08/05/2011 - 16:30 | 1528170 mayhem_korner
mayhem_korner's picture

A starfish uses suction to overpower the tiring muscles of a clam.  It just takes time.

The vested interest that has kept silver from already clearing at $65+ is the Morgue's/Crimex's huge short, which I believe is the true driver of some of these misdirection raids.  Anyway, the Morgue is the clam, physical is the starfish.  It just takes time.

Fri, 08/05/2011 - 16:59 | 1528244 Snidley Whipsnae
Snidley Whipsnae's picture

excellent analogy mayhem

Fri, 08/05/2011 - 17:16 | 1528291 bigdumbnugly
bigdumbnugly's picture

at one point or another in our lives all us guys have been that starfish trying to wear down and finally open the clam, no?

Fri, 08/05/2011 - 17:28 | 1528325 Critical Path
Critical Path's picture

What ya getting at there? Oh...

Fri, 08/05/2011 - 17:32 | 1528336 bigdumbnugly
bigdumbnugly's picture


you know, even the use of suction part fits...

great analogy is right.

Fri, 08/05/2011 - 21:07 | 1528868 Rottenclam
Rottenclam's picture

Oh yes.  And when that clam is opened, the payoff is always in Silver Dollars.

Fri, 08/05/2011 - 17:10 | 1528268 fuu
fuu's picture

JPM:AG was under 1 all week.

Fri, 08/05/2011 - 21:44 | 1529073 Stares straight...
Stares straight ahead's picture

need better analogy: you can't eat a starfish...


Fri, 08/05/2011 - 23:57 | 1529511 Hulk
Hulk's picture

The tides out Bitchez, time to start picking up the starfish...

Fri, 08/05/2011 - 16:36 | 1528179 malek
malek's picture

Yes, I only buy things of which all advisors I trust have short positions on! /sarc

Being a contrarian just for the sake of it isn't really that convincing...

Fri, 08/05/2011 - 16:37 | 1528182 MsCreant
MsCreant's picture

Yes, he should be like Goldman:

  • Tell clients to sell, when you want to buy something low.
  • Tell clients to buy, when you want to sell it off because you know insider information that says it is going to lose value shortly.
Fri, 08/05/2011 - 16:49 | 1528220 Troll Magnet
Troll Magnet's picture

i don't know why so many junked you because you're essentially right.  

personally i am deeply invested in PMs and hope that Sprott is right but when you look closely, everyone who touts anything has something to sell or is invested in the said product.  i mean, everyone from mike maloney to peter schiff touts PMs while selling PMs.  

Fri, 08/05/2011 - 17:07 | 1528259 kito
kito's picture

funny how you can't win with your logic. if hes invested, hes got an angle, if hes not invested, hes a hypocrite for not backing his statement. 

Fri, 08/05/2011 - 19:48 | 1528555 Rynak
Rynak's picture

The whole argument is totally pointless anyways: That someone is invested in what he is talking about, just means that he is affected by what he is talking about.

That could result in:

1. He being biased AND yet being right.

2. He being biased yet NOT being right.

3. Him pushing something because of a personal agenda.

4. Him pushing something because of being convinced of it.

Him being invested in it could mean all kinds of different things - good, bad and irrelevant ones - and it isn't possible to know which of those is the case, without looking at the details and history of this relationship.

It's like: Let's say two people are married - does that imply that the guy is a wifebeater? Does it imply that the wife is a manipulative bitch? Does it mean that they fit together greatly? Does it mean that there will be lots of crisis because they don't match? Does it mean that they will be bored with each other quickly? Does it mean that they will find each other fascinating for a longterm, because else they wouldn't have married? WHAT does the mere fact of them being married imply? Uh, nothing... just that they're married... the rest depends on the details of the "how".

Fri, 08/05/2011 - 19:21 | 1528481 SamuelMaverick
SamuelMaverick's picture

Yeah, he has only been talking about the bull market in PM's for years and years, and backs everything he says with facts and numbers.    Wake up ding dong. 

Fri, 08/05/2011 - 19:42 | 1528545 smlbizman
smlbizman's picture

and one more thing driven, it seems kinda easy in this day to seperate the agenda driven pundits and the few that are just honest....and being honest does not mean those few are right all the not believe in eric sprott would be similar to not believing in the tylers.  

and why is it that people  have to go to such an extreme to discredit a point...of course price  matters to a degree, but i would guess that most physical holders are hoping they never HAVE to sell..but the worse of all are the grammer nazis....and you know who you are, were a point can't possibly be correct because of a missed spelled word or the improper use of a word....or did i just define what it is to be a troll....

Fri, 08/05/2011 - 20:12 | 1528616 spdrdr
spdrdr's picture

It's "grammar", not "grammer", you dolt!

Fri, 08/05/2011 - 21:26 | 1528984 smlbizman
smlbizman's picture

with it being the one and only draft, not giving a shit if i miss a key and not proofed, not bad by todays standards, ya tink?

Fri, 08/05/2011 - 21:30 | 1528998 spdrdr
spdrdr's picture

Ha! Only stirring the possum!

Peace - and keep your powder dry!


Fri, 08/05/2011 - 23:02 | 1529329 smlbizman
smlbizman's picture

i get jokes!..

Sat, 08/06/2011 - 00:52 | 1529656 caerus
caerus's picture

jokes are funny...

Sat, 08/06/2011 - 10:37 | 1530259 Nostradumbass
Nostradumbass's picture

"..but the worse of all are the grammer nazis....and you know who you are, were a point can't possibly be correct because of a missed spelled word or the improper use of a word...."

and then this:

"with it being the one and only draft, not giving a shit if i miss a key and not proofed, not bad by todays standards, ya tink?"


A bit more than a missed key there amigo...

Fri, 08/05/2011 - 16:26 | 1528157 caerus
caerus's picture

silver is the new...uh...silver...

Fri, 08/05/2011 - 16:27 | 1528160 Jonathan Toews
Jonathan Toews's picture

"And with 3 out of 5 central banks having just embarked on monetization, and two more imminents"

Am I missing something? What does that mean?  Which CBs are emarking on monetization?

Fri, 08/05/2011 - 16:28 | 1528161 Jasper M
Jasper M's picture

I'll take the under on that trade.
Default can wipe out monetized credits every bit as fast as the central banks can generate them.
And the more liquid PMs appear during a credit crisis, the more certain they are to be selected for liquidation to meet margin calls.

Fri, 08/05/2011 - 16:29 | 1528169 ReallySparky
ReallySparky's picture

And that is exactly what we "stackers" are praying for...more on sale.

Fri, 08/05/2011 - 17:47 | 1528367 Idiot Savant
Idiot Savant's picture

You gotta love stacker logic. Price down: I haven't lost money because I haven't sold AND it's an opportunity to buy more!! Price up: stackers count their gains, even though they haven't sold.

I hold PMs, but I don't hold to this logic. When it's up, it's up. When it's down, it's down. FWIW - I don't know WTF you guys are doing with all your silver. I'm limit up cause the shit is too bulky and heavy. Gold from here on out for me.

Fri, 08/05/2011 - 20:31 | 1528665 DoChenRollingBearing
DoChenRollingBearing's picture

An anecdote for my friends here at ZH.

Today I went and bought a little bit of gold.  At the coin shop, there was a lady behind me, middle aged.  She had a gold coin in a pendant on a gold chain.  She told me that she was there to sell it.  She asked me what it might be worth (a gold 1971 Rand, a coin I am not familiar with).  I asked here if could examine it, it seemed to weigh about 1/5th of an oz. So, I told her maybe she could get $300, but that the coin shop guy was the expert, not me.

She then dropped the bomb: margin call...

I wished her good luck.

Fri, 08/05/2011 - 16:41 | 1528194 mayhem_korner
mayhem_korner's picture

All that does is reload the spring even more tightly...

Fri, 08/05/2011 - 17:08 | 1528264 Snidley Whipsnae
Snidley Whipsnae's picture

"And the more liquid PMs appear during a credit crisis, the more certain they are to be selected for liquidation to meet margin calls. "

Ah yes grasshopper... and once liquidated the PMs fall into stronger hands... and the ships are loaded with PMs for the trip to SE Asia, India, Mid East, et al...

You are taking the 'short' view... pun intended...

When much of the physical PMs are sucked out of the West the paper traders will be irrelevent... They can trade pretend silver/gold or they can spend their time playing monopoly; ie, the board game.

The longer that the bullion banks play the paper game to suppress PM prices in order to make fiats look stronger, the longer the East can purchase paper PMs, and take delivery at bargain prices.

So, who is winning...

Fri, 08/05/2011 - 16:27 | 1528167 Flore
Flore's picture

what a piece of BS.. i am still eating with silver spoons forks and knives


Fri, 08/05/2011 - 16:41 | 1528191 dogbreath
dogbreath's picture

dollar down today,  gold up near the highs, silver down.   ????????

Fri, 08/05/2011 - 17:13 | 1528281 mayhem_korner
mayhem_korner's picture

CBs not hoarding silver - easier for the Morgue to beat down.

Fri, 08/05/2011 - 18:29 | 1528397 dogbreath
dogbreath's picture


Fri, 08/05/2011 - 16:41 | 1528192 Rhetoric
Rhetoric's picture

Thoughtcrime is death.

Fri, 08/05/2011 - 16:41 | 1528193 Goofy Bastard
Goofy Bastard's picture

The one beef I do have is Sprott using the 16:1 ratio and saying how "since the price of gold is $1600, that means silver has to hit about $100".  Couldn't this just as easily imply gold is overpriced in and of itself?  Maybe gold should be $600/ounce right now.  I agree with the big picture but this argument from silver-bugs always bothers me.

Fri, 08/05/2011 - 16:43 | 1528203 unky
unky's picture

fine, if you think $600 is a fair price of gold i will gladly take some from you for this price

Fri, 08/05/2011 - 16:45 | 1528209 caerus
caerus's picture

me too please...thanks

Fri, 08/05/2011 - 17:12 | 1528277 Goofy Bastard
Goofy Bastard's picture

No thanks, like I said, I agree with Sprott for the most part and invest in silver/gold as well.  But it's def a sales pitch to say that since the ratio should be 16:1, silver should be $100/ounce.  The ratio alone is only useful for a spread trade.

Fri, 08/05/2011 - 17:41 | 1528345 caerus
caerus's picture

you may be right...but the 16:1 ratio is not completely is based upon the historical value relationship between the two and otherwise...for example... Cross of Gold Speech

edit:  btw i don't mean to imply a gold vs bi metal standard by this example...there are several others...just saying that 16:1 is not an arbitrary ratio

Fri, 08/05/2011 - 17:00 | 1528248 Bastiat
Bastiat's picture

Do your homework: read Sprott's piece on supply/demand in silver from a month back or so. 

Fri, 08/05/2011 - 17:12 | 1528275 LawsofPhysics
LawsofPhysics's picture

There is a trade in there somewhere.

Fri, 08/05/2011 - 17:44 | 1528368 pain_and_soros
pain_and_soros's picture

Hey goofy


the 16:1 ratio is historical, based approximately on how much of gold vs silver has been pulled out of the ground, i.e.  16 oz of silver have been extracted for every ounce of gold, and he is simply saying that the current price ratio will at some point return to the historical norm.

He also said that he expects the gold price to go much higher (once the paper gold market blows up), and silver will tag along for that ride, though it will outperform since it has a longer way to go to bring it into the historical norm visa a viz gold



Fri, 08/05/2011 - 18:29 | 1528398 IQ 145
IQ 145's picture

You are mistaken. The specific ratio 16:1; is more or less arbitrary; this ratio has varied from around 10 to 25 during the millenia when silver and gold were money. But it is not stable at 40:1; and it will not remain there. A sense of time is important; an electron can be in two places at once; for a very, very short time. for the metals ratio; five or six years is getting on for a long time. The ratio will revert to the mean; one of the most dependable mathematical processes available. This will not occur by the Gold price getting cut in half. Mr. Sprott is right; and I am right, have been for eleven years; these things take time. Silver will outperform Gold very significantly. There are six reasons why this is so; supply and demand, supply and demand, and supply and demand. These are valid reasons.

Fri, 08/05/2011 - 19:31 | 1528514 problemfixr
problemfixr's picture

The Coinage Act of 1834 was passed by the United States Congress on June 27, 1834. It raised the silver-to-gold weight ratio from its 1792 level of 15:1 (established by the Coinage Act of 1792) to 16:1 thus setting the mint price for silver at a level below its international market price. After its passage, one ounce of gold was the equivalent of $20.67. 



Fri, 08/05/2011 - 16:42 | 1528198 jm
jm's picture

I usually don't say much on these gold/silver posts, but I think this fixation on metals looks really stupid right now.

The Fed doesn't need QE to fund the government budget--everybody's running into treasuries.  QE will only drive up commodities which is the last thing the Fed wants to see right now.     

I can buy a stock with a 10%+ dividend, trades 20% below book value, has a p/e of 4, a 25% total debt/equity ratio.  If that's not value, I don't know what is. 


Fri, 08/05/2011 - 16:44 | 1528207 Galen Slade
Galen Slade's picture

And when said stock goes to zero, I'll still have my PHYZZ....

Fri, 08/05/2011 - 16:50 | 1528222 jm
jm's picture

Yeah, every company in the world is going bankrupt.  Sigh.  

Fri, 08/05/2011 - 17:14 | 1528282 Galen Slade
Galen Slade's picture

Except the TBTF banks.  They'll make certain they're the last to go....

Fri, 08/05/2011 - 17:15 | 1528288 Snidley Whipsnae
Snidley Whipsnae's picture

Perhaps 'all the companies' will not go bankrupt... but there is a very good chance that some soverigns will... and the interconnectness of the world financial system guarantees that there will be some domino effect. Simply take a look at how much soverign paper CBs are holding. Meanwhile the currencies are being printed to oblivion. At some point this will collapse.

Play with your paper in front of the oncoming locomotive if you wish.

If you think paper is as safe as gold/silver...Why didn't gold sell off to the extent of stocks yesterday?

Fri, 08/05/2011 - 17:29 | 1528327 jm
jm's picture

Fine, there is all kinds of turmoil going on.  If the price of a stock goes down from here, I'm compensated at least in part by the dividend until it recovers.  I've even got some padding in a worst case because it is trading below book value.

A stock claim on real assets.  It is ownership.  "Paper" has nothing to do with it.

I don't know what gold or anything will do in the furture, nor does anybody else.  All the jackasses saying I told you so never put a date on anything, so they are worthless or got super-lucky.  But gold is not cheap.  Hell, it's almost the saem price as platinum right now.

Fri, 08/05/2011 - 17:46 | 1528365 Snidley Whipsnae
Snidley Whipsnae's picture

"A stock claim on real assets. It is ownership. "Paper" has nothing to do with it."

Wrong... The world is littered with paper stock certificates of now defunct companies. If you don't believe it check out how many of the current DJ listed companies were listed in 1920, or 1930, or etc... A stock certificate is paper and it can go to ZERO equivalent purchasing power. Gold, on the other hand, has never gone to zero... Even after being declared a 'barbarous relic' by central bankers and the price beaten down by them since 1913.

"But gold is not cheap." You gotta do better than that! Compared to printed fiat who's intrinsic value has always gone to zero? Compared to bananas? lol

Gold is now returning to it's rightful place as the supreme store of value. Fiat, with an inflation target of 2% by central banks, was never a good store of value. We were forced to use fiat at gunpoint. We are witness to history in the making here. Because you don't recognize what you are seeing, or are in denial, does not make your conclusions right.

Watch what SE Asia is doing and you will find out where the PMs are going. They are buying every dip...


Fri, 08/05/2011 - 17:52 | 1528375 jm
jm's picture

The certificate is worthless because the real aseets didn't perform and the company went bankrupt, not becaue the claim is paper.  If you actually think that every company is going bankrupt in the near term, whatever.  I think you are stupid for thinking it, but whatever.  Don't diversify.   

"Gold is now returning to its rightful blah, blah, blah."  Is zero hedge now kindergarten!?!


Fri, 08/05/2011 - 19:18 | 1528475 Snidley Whipsnae
Snidley Whipsnae's picture

"The certificate is worthless because the real aseets didn't perform and the company went bankrupt, not becaue the claim is paper. "

And if the certificate itself had been made of gold/silver it would never have become worthless. So, yes the certificate is worthless because it is just one more piece of paper.

"Is zero hedge now kindergarten!?!"

Well, you are here so I suppose you answered your own question...

Fri, 08/05/2011 - 19:18 | 1528483 Idiot Savant
Idiot Savant's picture

I can buy a stock with a 10%+ dividend, trades 20% below book value, has a p/e of 4, a 25% total debt/equity ratio.  If that's not value, I don't know what is. 

For those of us that are less adept at picking stocks, do you mind providing a few examples of said stocks?

Fri, 08/05/2011 - 19:28 | 1528515 jm
jm's picture

I have no incentive to tell you, as I want to continue buying on the bets terms.

So run some screens, do some homework, and stop being lazy!

Fri, 08/05/2011 - 21:23 | 1528963 BigJim
BigJim's picture

Translation: he can't name a stock with a 10%+ dividend, trades 20% below book value, has a p/e of 4, a 25% total debt/equity ratio.

Sat, 08/06/2011 - 01:29 | 1529725 jonjon831983
jonjon831983's picture

Aren't equities low on the totem pole if a company goes bankrupt?

"you can think of equity as ownership in any asset after all debts associated with that asset are paid off." - Investopedia

Fri, 08/05/2011 - 16:47 | 1528214 caerus
caerus's picture

hmmm...can't pay your debts or balance your budget eh?  quick...sell me some treasuries!

Fri, 08/05/2011 - 16:49 | 1528216 ReallySparky
ReallySparky's picture

Who hired you to come in here and try to persuade us to buy stocks in a fixed market that only allows the big banks and algo's to win.  Can you please provide us with inside information so that the playing field is level and fair?



Where the heck is the spell check button? So I don't have to edit all my posts?

Fri, 08/05/2011 - 16:55 | 1528236 jm
jm's picture

Who the fuck cares if the "playing field" is level or not? 

Nothing is fair in life.  Think price and yield instead.

Fri, 08/05/2011 - 17:12 | 1528279 mayhem_korner
mayhem_korner's picture

Think "assets held" and "purchasing power." 

Fri, 08/05/2011 - 17:19 | 1528301 Snidley Whipsnae
Snidley Whipsnae's picture

If you are thinking 'yield'... What has yielded a greater roi over the last 11 years than gold? Of course there are a few individual stocks that have done better... But are you good enough to pick them?

If you bought the Dow you would be behind gold, same with the other exchanges.

Fri, 08/05/2011 - 17:45 | 1528362 jm
jm's picture

Gold doesn't have a yield.  It is rock you have to sell to book profit. 

I bet I'll get a dozen "thumbs down" for this statement of the obvious.

Fri, 08/05/2011 - 17:51 | 1528372 Snidley Whipsnae
Snidley Whipsnae's picture

You got one from me. Yield is what one pockets or doesn't after a transaction is concluded. imo.

The move up in PMs has not stopped and when it does it will only be because CBs come with currencies that people can believe will be a reasonable store of value.

We are nowhere close to being there yet. Before we get there we will see massive economic contraction followed by hyperinflation. Good luck with your paper on this roller coaster.

Fri, 08/05/2011 - 18:52 | 1528418 IQ 145
IQ 145's picture

He got one from me too; he really deserved it.

Sat, 08/06/2011 - 05:59 | 1529941 DaBernank
DaBernank's picture

-1 from me too. This "yield" is denominated in which strong currency that will hold its purchasing power?

Fri, 08/05/2011 - 18:57 | 1528402 MsCreant
MsCreant's picture

Hi jm,

Two comments, I think there is a perspective thing going on here more than disagreement:

First, I do not depend on these investments to make my living, I am not a day trader. I think you are (if I am wrong, sorry). If I want to hold something that I think will do well over time and not think a lot about it, PMs right now, are where it is at for me. So I don't worry so much about the ups and downs (and my last buy ins were so long ago that it needs to drop a whole lot before I freak). So one dimension is short vs. long term view, up on each second vs. over the years.

Second, I think synchronic vs. diachronic analysis is at work here. You are trying to respond to diachronic movement. Yet there is one synchronic snapshot out there that many of us think is coming, and we want to brace for it. We don't know when, but we want to be ready. We think PMs will be where to be when this event happens. You see the whole thing as constantly in flux. It is not that we don't know that, but we want to be ready for the "EVENT."

There is a very decent probability that something is going to collapse. Mother nature, entropy, Chaos theory, the cycle of life and death, call it what you like, we are over due.

jm, I don't think one of us is right or wrong, it is just what we choose to prioritize. Each has it's dangers and benefits.

You are not typically so reactive. You came into fight club tonight swinging. Something is up. Just sayin'.

Fri, 08/05/2011 - 19:07 | 1528452 jm
jm's picture

I"m not a day trader, and I'm not a stockpicker either.  But I do know someithng about valuing securities.  And I think a disservice is being committed in the endless harping about gold. 

The ideal: buy what is cheap.

One may be right or wrong about cheap, but this is the holy grail.

There is nothing cheap about gold in my view.  And when I challenge this greatest of sacred cows, I expect to get reasons why I am wrong. Roast me: nothing worng with that at all.

All I've seen thus far is platitudes about fairness (you know as well as I this world isn't fair at all), that gold rightful place as the supreme store of value (WTF could that mean), and everyone is running from risk (so be a mo-mo monkey and join the crowd).  Oh yeah, and being called Barton Biggs.

I'm frustrated by the unquality of thinking going on here.


Fri, 08/05/2011 - 19:25 | 1528492 Snidley Whipsnae
Snidley Whipsnae's picture

Declaring that equities are a bargain when everyone but you are aware that the US economy is heading into a double dip recession is a reach, isn't it?

And if you are frustrated by some posters here being big PM fans you certainly are free to post somewhere else. After all, few sites provide a level field for PM fans but many provide a slanted playing field for those that hate PMs.

Fri, 08/05/2011 - 19:42 | 1528541 jm
jm's picture

I'm frustrated by how stupid many comments are about the issue.  Me leaving will only contribute to further dumbassification.  

You and many others here have settled into the unthinking sheeple that many here ridicule; you just have a different object of worship.

Fri, 08/05/2011 - 19:39 | 1528533 delacroix
delacroix's picture

the whole problem, is( dollars ), are used as the metric, to measure value

Fri, 08/05/2011 - 19:45 | 1528551 jm
jm's picture

And if you think of gold as money, so be it.  Everyone should hold cash of some sort.

But if you believe as I do that the future is unknown, then diversify your cash holdings and take some calculated risks out of cash for a return.

Fri, 08/05/2011 - 21:28 | 1528991 BigJim
BigJim's picture

There is nothing cheap about gold in my view

Then maybe it's time to look around a bit more, fuckwit:

Sat, 08/06/2011 - 08:25 | 1530062 slowimplosion
slowimplosion's picture

After watching the "stock market" being whipped into a frenzy then crashed in 2001, and then whipped into a frenzy and crashed in 2008 and whipped into at the very least a absurdly bogus valuation right now and about to be crashed again, I cannot for the life of me understand why ANY individual would put a red cent into the equity markets.  The idea that you are acutally buying a piece of a company and sharing it that company's success is demonstrably false in all but a handful of cases.


They are manipulated to fleece everyone that isn't in the IB cartel.  Now they are certainly trying to do that with PMs also, but they can only do it with paper PMs, never with physical.

Sat, 08/06/2011 - 09:52 | 1530186 jm
jm's picture

Only in bizzarro world is a 10% dividend called getting "fleeced".



Fri, 08/05/2011 - 20:25 | 1528644 plata pura
plata pura's picture

the saeculum be all powerful and it'd gyrations figur'd in.

Fri, 08/05/2011 - 21:54 | 1529115 dogbreath
dogbreath's picture

i agree but I helped you with your wish  

Fri, 08/05/2011 - 18:50 | 1528413 IQ 145
IQ 145's picture

And the answer is; Silver! and that's the point of the post we're commenting on. The out-performance will be even more dramatic in the next 3 years.

Fri, 08/05/2011 - 17:01 | 1528249 bernorange
bernorange's picture

The flight to treasuries isn't likely to last IMO.  Peeps are eventually going to see that the debt ceiling raise is just a blip on the debt radar and real spending cuts and fiscal sanity aren't going to happen.

Fri, 08/05/2011 - 17:36 | 1528344 jm
jm's picture

I'm not talking about whether treasureis are great or not.

I think a stock with a p/e of 4, little debt, trading below book value, and a 10% yield is cheap.

Fri, 08/05/2011 - 17:59 | 1528385 notRobot
notRobot's picture

And which stock would that be, Barton Biggs? ... em,  jm?

Fri, 08/05/2011 - 18:48 | 1528408 jm
jm's picture

Equating value investing with Barton Biggs shows just how low your IQ is.  Sad.

Fri, 08/05/2011 - 20:04 | 1528595 SamuelMaverick
SamuelMaverick's picture

Mr fundamental trader jm, wow, I do not want to take you to kindergarten investing 101 but here goes one little tidbit- a stock with a PE of 4, little debt, trading below book, and a 10% dividend yield can become a total worthless piece of shit overnight. It  depends on what they make or sell, if the price of their product or service is elastic or inelastic ( ie can they raise prices with any inflation and the customer has little choice, think oil co.s), if the managemant is competent, the state of the economy, change in competition, etc.  Oh yeah, common stock is not worth shit if the co. goes belly up, bond holders get paid first, preferred stock 2nd, and in every case of bankruptcy that I have seen the common shares get jack and shit zero zip zilch nada nothing.  Go look at the Dow from 2008 to spring of 2009, it was 1 year of good quality stocks and worthless shit stocks all going down together. First day of Kindergarden done.  Your grade is an F.

Fri, 08/05/2011 - 20:18 | 1528634 jm
jm's picture

You clearly don't even know what trading below book value means, so you really should just shut the fuck up. Try to learn instead of committing intellectual suicide.

Fri, 08/05/2011 - 20:40 | 1528714 SamuelMaverick
SamuelMaverick's picture

trading below book does not mean shit if you are holding common stock. you own nothing. again you get a grade of F  mr. kindergardener

Sat, 08/06/2011 - 09:58 | 1530205 jm
jm's picture

I'm going to spell out how utterly worthless your knowledge is.  Maybe, just maybe you will be a little less stupid and more receptive to learning.

Creditors get recovery on their invested capital.  If a stock trades below book value there this is something in excess of this investment remaining.  If total debt is 25% of equity, common stock isn't worthless in this case.

Fri, 08/05/2011 - 20:45 | 1528742 Boston
Boston's picture

To be fair, I think you make a valid point---finding ultra-cheap shares (eg. p/e of 4, 0.8 of book, yielding 10%, etc.) is the Holy Grail of investing.

But from my experience, when you find such companies (and yes I run my own screens), you---usually---tend to find some good reasons why the market values so cheaply.

Eg. Micro-caps, with concentrations in customers, or suppliers or key employees, hard-to-defend product/process technology, etc. etc.


So you're probably taking on huge risk, and for that, you're being compensated. But on a risk-adjusted basis, these "finds" are often not as cheap as they first appear.

Fri, 08/05/2011 - 20:52 | 1528788 jm
jm's picture

I agree.

Fri, 08/05/2011 - 23:28 | 1529432 bernorange
bernorange's picture

Thanks to S&P, the flight to treasuries may end Monday.  The Fed is going to get their justification and political capital for QE3.  PPT activate!

Fri, 08/05/2011 - 18:54 | 1528421 IQ 145
IQ 145's picture

No, it won't last. it's a "knee jerk" reaction.

Fri, 08/05/2011 - 17:10 | 1528269 mayhem_korner
mayhem_korner's picture

I think this fixation on metals looks really stupid right now.

Ummm...where to start here?  People aren't running into treauries, they are running AWAY from everything else.  This is a global currency war.  The fiat currencies are trying mercilessly to gain advantage on one another - meanwhile they are all dying and REAL money is emerging (PMs).

I'd suggest charting securities in terms of gold and you may see things differently.

BTW Gold is up 3.2% this week and 20% year to date. 

Fri, 08/05/2011 - 17:14 | 1528286 caerus
caerus's picture


Fri, 08/05/2011 - 17:41 | 1528353 jm
jm's picture

If everyone is bllindly running away from risk, then wouldn't it may sense that it is time to start look at buying?


Gold: "the only thing that will always go up and never go down."


Fri, 08/05/2011 - 18:50 | 1528411's picture

I had this other thing that went up and wouldn't go down so after four hours I had to call a physician.

Fri, 08/05/2011 - 19:09 | 1528460 jm
jm's picture

shut the beat down, gangsta!

Fri, 08/05/2011 - 18:34 | 1528403 IQ 145
IQ 145's picture

This is not "value"; this was value. it';s not then, it's now. What will be the "dividend" on silver held in a vault for the next twelve months?

Fri, 08/05/2011 - 19:18 | 1528474 gwar5
gwar5's picture



The market is back at March 2009 lows priced in gold.  QE pumps the market for the wealth "effect"

The market goes up priced in dollars, but the USD is going down in value in real terms --- net-net, you're not gaining anything.

But it sure looks good, that is, until you figure it out.

You're doing what Bernanke and the FED wants you to do, which is to keep your money in the game so they can garnish it through dilution/debasement. 

The banksters have been ripping everybody off this way for decades and people are wising up. Don't be the last to figure it out.


Fri, 08/05/2011 - 16:44 | 1528202 SwingForce
SwingForce's picture

Take a deep breath of the ether, here's the problem, Jerky! Just like there are not enuf Swiss Franks in the world, there are not unuf OZ of Gold or Silver to satisfy your hoarding craving. Figure it out. Its why the USD will never NOT be the world's currency- unlike gold, there is NO SHORTAGE.

Fri, 08/05/2011 - 16:48 | 1528218 MsCreant
MsCreant's picture

China is just begging us to print more.

Fri, 08/05/2011 - 17:08 | 1528262 hack3434
hack3434's picture

You got it all bass ackwards 

Fri, 08/05/2011 - 17:20 | 1528304 mayhem_korner
mayhem_korner's picture

Its why the USD will never NOT be the world's currency- unlike gold, there is NO SHORTAGE.

Here's a little game for you.

Go out and buy 100 monopoly games.  Funnel all the "cash" into one "bank."  And when any player gets bankrupted for landing on Pennsylvania avenue with 3 houses, they can draw from the bank.  If you can stand it for a couple of days, eventually someone will figure out that the only way to win the game is to buy up all the deeds.  And then the price of the deeds goes to the moon.

See if you can figure all that out (I'll give you a hint: the deeds are like PMs). 

Fri, 08/05/2011 - 17:21 | 1528307 Snidley Whipsnae
Snidley Whipsnae's picture

SwingForce wins! ... dumbest post of the day, hands down ... congrats!

Fri, 08/05/2011 - 16:45 | 1528210 unky
unky's picture

silver with $41.66 as we speak, MUAHAHAHA this was yesterday, today the big dip buyers come in, well maybe monday  too

Fri, 08/05/2011 - 16:44 | 1528215 DarkStarDog
DarkStarDog's picture

silver is cool...  but I aint buying no paper BS eft of fund.  it must be the real deal hard asset in pocket.  promise to deliver or some paper contract aint gunna cut it.  Keep'n it REAL

Fri, 08/05/2011 - 16:50 | 1528223 caerus
caerus's picture


Sat, 08/06/2011 - 06:20 | 1529954 DaBernank
DaBernank's picture

I hold as much physical AG as the safe holds but I've also been playing the volatility by trading in and out of AGQ and ZSL and using those 'profits' to buy physical gold.

Fri, 08/05/2011 - 16:51 | 1528225 r101958
r101958's picture

I bought all my physical silver when it was between $12 to $18 and I haven't been upset about it as an investment. Don't have paper silver.

Fri, 08/05/2011 - 17:35 | 1528342 cossack55
cossack55's picture

Started buying at $1.12/oz and stopped at $16.00.  Then started buying brass/lead and food. I sleep very well and I also have no paper silver. However, I do have some silver paper I bought at Wal-mart clearance after xmas.

Fri, 08/05/2011 - 16:51 | 1528233 unky
unky's picture

where i can get the complete interview ? because in the end of the video they want to talk about gold... anyone has a link?

Fri, 08/05/2011 - 17:02 | 1528250 RobotTrader
RobotTrader's picture



GDX/GLD ratio closed at new lows for 2011.

Ratio Traders are making hay once again.  Riding the GLD up and up and profiting immensely on mining shorts.

It needs to reverse right now, otherwise we could be headed towards a 2008 style meltdown.

In other words, we need to see a 12% move in one week in names like NEM, GG, ABX, etc. with gold going up over $1,700 or so.

Fri, 08/05/2011 - 17:11 | 1528274 caerus
caerus's picture

not looking good in this tape...miners might go down w everyone else (temporarily)

Fri, 08/05/2011 - 17:15 | 1528289 LawsofPhysics
LawsofPhysics's picture

Don't start making sense now robo.

Fri, 08/05/2011 - 19:18 | 1528473 jomama
jomama's picture

he always does, people are just to gullible to understand.

Fri, 08/05/2011 - 17:28 | 1528324 Snidley Whipsnae
Snidley Whipsnae's picture

Lots of mining companies pay dividends of 1% or less and while reporting very good earnings... and then they wonder why they can't sell their stock... Then they issue WAAAAY too much stock with large blocks going to the execs as stock options, bonuses, etc.

Physical please...

...and ROBO... you can throw those charts out the window in these Fed/Gov directed/manipulated markets...

Fri, 08/05/2011 - 17:15 | 1528287 notadouche
notadouche's picture

Mr. Durden,

I would like to hear from the bears.  Yes I have stooped so low that I only like to hear my news from the talking bears.  They have had the most useful information.  I've made more money with those bears than with any other advisor.

Fri, 08/05/2011 - 17:18 | 1528298 william shatner
william shatner's picture

I prefer gold, silver is for poor men.

Fri, 08/05/2011 - 17:25 | 1528314 JW n FL
JW n FL's picture

With the world market price of silver having been in excess of $1.29 per troy ounce since 1960, Congress repealed the legal foundation for Silver Certificates on June 4, 1963; but President John F. Kennedy responded with Executive Order 11110 that the Treasury should continue to "issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury".

Fri, 08/05/2011 - 18:59 | 1528429 IQ 145
IQ 145's picture

And what happened to him a little later in 1963; just as soon as the planning could be completed and the contractors hired? hmm? what? you don't remember. 

Fri, 08/05/2011 - 19:02 | 1528437 JW n FL
JW n FL's picture

I am a romantic.. you know that! I want the good guys to rise up and defeat evil.. whether or not this happens? I doubt! but I can dream.. dont take my dreams from me.. I might snap and start hunting lobbyists for fun!

DID YOU HEAR THAT FBI??? maybe that will be worth a nice consulting job to some chicken hearted Lobbyist(s) for you!!

My best to you as always! keep in the fight! thats all we all can do! dreaming optional!

Fri, 08/05/2011 - 17:24 | 1528316 4realmoney
4realmoney's picture

Does the price of a Silver Eagle monster box seem like it's for poor men?

Fri, 08/05/2011 - 17:40 | 1528350 Bastiat
Bastiat's picture

Silver ytd 23.9%!  75% was it. last year?  And I'd be surprised to see less than 75+% thise year (wd be about $55).  Hard to stay poor that way!

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