What is the Value of Silver? Part II

[HawkHybrid]

6 hours ago, Junior said:

If you believe silver is not manipulated, then why do you invest in it?

the question should be if you believe silver is manipulated then why do you invest in it?

do you purposely go and gamble at a casino that is known to have rigged outcomes?

purposely play against cheats and get cheated of what should be your winnings?

or do you think you are so important that you will make everything right and get rich in the process?

 

who was buying silver when the wall street silver pumpers were shouting from every roof top of

how silver would go to the moon? not me.

there are plenty of real world practical reasons why people would still buy silver knowing that it

only tracks inflation long term.

these include

1. using it as a cheap entry inflation hedge.(as savings is especially useful for those inclined to spend every

penny that they currently hold, but they should convert it to gold once in a while for long term savings.)

2. buying it as the speculative part of a larger metals portfolio.

3. only buying it when it goes below it's long term average. (long term inflation tracker doesn't mean that it

accurately tracks inflation every second of every day. short term swings lasting over a decade is possible.)

 

all the people who are buying silver because they believe the world 'must' reset and make them filthy rich,

are conspiracy theorists who haven't thought it through. there are real life reasons to buy silver, but most

of the scenarios don't include 'silver as a get rich quick' scheme.

silver as an investment is not a get rich quick scheme.

 

HH 

[HawkHybrid]

6 hours ago, Junior said:

Just to argue this point: silver averaged $4.03 USD in December 1991. According to US data stats, based on the CPI (Consumer Price Index) i.e. the inflation benchmark, silver should only be $8.13 USD present day (December 2021). Arguing of course that if silver is above this price, it is ahead of inflation. Which would suggest @HawkHybrid is perhaps correct in the assumption that silver’s rise is with inflation (approximately).

However, using shadow stats by John Williams (who used to work with US inflation numbers back before the CPI had been changed by dropping or substituting certain commodities), he comes up with a different number. John uses the original CPI which had a more diverse basket of goods and commodities that would give a more accurate reflection on the inflation numbers. His original formula shows that silver priced at $4.03 USD in December of 1991 should be valued closer to $71.77 USD December 2021. Which would now suggest that @HawkHybrid is incorrect in the assumption that silver’s rise is in-line with inflation. 
 

Silver’s price currently as I write this is $22.37 USD. By the new CPI benchmark, it is ahead of inflation. But by the old benchmark, it is not. Which one is correct? Or more importantly, why did they have to shrink/change/substitute the old CPI basket of goods and commodities?

people always like to bring up the way inflation is/should be calculated and it is a moot point for

practical purposes.

I can effectively use a computer whilst not knowing how all of it's internals are calculated or works.

I just need to know enough about it to be able to use it.

same with investing in silver. I just need to know when the silver price is below it's long term average

in order to buy and above it for selling. charting programmes will offer you ema , sma, whatever moving

average for whatever time frame that you want. choose one that works for you and read off the number.

government inflation tracking indices are there for governments to 'prove to voters' how good they are

with inflation. these have nothing to do with the real world application of investing in silver. inflation is

notoriously difficult to track in our ever changing world. enabling a moving average on the silver chart is

a few clicks away, accurate to the data set and to the point. alternative you could waste all of your time

arguing why a government made up inflation measuring index is not actually measuring inflation accurately

and only serves to make the government look good(well duh, because making the government look good

is the sole purpose of it's existence?)

 

you just need to understand that long term inflation tracking means that short term(over a decade is possible)

inaccuracies is probable.

 

HH

[Junior]

31 minutes ago, HawkHybrid said:

I can effectively use a computer whilst not knowing how all of it's internals are calculated or works.

This is true. But can you invest in silver without knowing the connection points between it and the things it does?

Let’s take a computer as a good example. Contains a mere 1/10 of an ounce of silver. Hardly worth much more than a cup of coffee really. A computer can be priced vastly depending on the make, model, etc…. But let’s assume that a good computer can be worth $2000 USD. Now let’s assume silver rises from $22.50 USD per ounce to something absurd like $2250 USD per ounce. Well with only 1/10 of an ounce in a computer used to run it, then the price of that 1/10 of an ounce just jumped from costing $2.25 USD to costing $225 USD.

Let’s also assume that the raw price increase is fully transferred to the buyer of the computer (the exact $225 per 1/10 ounce). No one says, “Well at $2000 I would buy the computer, but at $2225 I can’t afford it!” Point being, because it’s such a small amount that goes into these electronics, it doesn’t matter if the price is low or high. The commodity is needed and the price can be passed on to the consumer.

So while you can use a computer without knowing how it works, I wouldn’t recommend investing in a key component of that computer without knowing how it is used and in what quantities.

Edited December 20, 2021 by Junior

[HawkHybrid]

28 minutes ago, Junior said:

This is true. But can you invest in silver without knowing the connection points between it and the things it does?

yes 

 

59 minutes ago, HawkHybrid said:

same with investing in silver. I just need to know when the silver price is below it's long term average

in order to buy and above it for selling.

did you not read this?

 

HH

[Centauri167]

9 hours ago, Junior said:

Open thought to ponder for all on this thread:

If you believe silver is not manipulated, then why do you invest in it?

An investment is suppose to be something you hope will grow in time and gain more momentum faster than inflation can take it away. If you believe silver is useful and that it is currently priced fairly i.e. there is no shortage, the paper markets are not over leveraged, and the price is not suppressed, then why are you in it?

Would it not be a losing investment if you put 10% of your portfolio in silver only to see it go sideways for a decade, two decades, or three, while inflation robs the investment of the original purchase price.

Who here is on “the silver forum” because they think silver will lose in the end?

Your response does not need to be directed to me, I will/do read all responses anyway. And I’m not trying to be malicious. I’m legitimately asking why are you in silver? 

So if you believe something is not manipulated it is stupid to invest in ???? I invest in silver because I hope there will be a larger industrial demand in the future what will make the prices go much higher.

[HawkHybrid]

42 minutes ago, Junior said:

Let’s take a computer as a good example. Contains a mere 1/10 of an ounce of silver. Hardly worth much more than a cup of coffee really. A computer can be priced vastly depending on the make, model, etc…. But let’s assume that a good computer can be worth $2000 USD. Now let’s assume silver rises from $22.50 USD per ounce to something absurd like $2250 USD per ounce. Well with only 1/10 of an ounce in a computer used to run it, then the price of that 1/10 of an ounce just jumped from costing $2.25 USD to costing $225 USD.

Let’s also assume that the raw price increase is fully transferred to the buyer of the computer (the exact $225 per 1/10 ounce). No one says, “Well at $2000 I would buy the computer, but at $2225 I can’t afford it!” Point being, because it’s such a small amount that goes into these electronics, it doesn’t matter if the price is low or high. The commodity is needed and the price can be passed on to the consumer.

So while you can use a computer without knowing how it works, I wouldn’t recommend investing in a key component of that computer without knowing how it is used and in what quantities.

a poor example that highlights nothing.

no one cares about the tiny pittance of silver that your computer has in it. they care about the big things like

industrial applications which account for ~50% of each years total demand.

https://www.silverinstitute.org/silver-supply-demand/

of which solar panels(photovoltaic) currently accounts for a 5th of that or ~10% of silver demand in recent years.

since 2012 traditional photography has reduced by about 25 million toz but jewellery has increased about 25

million toz.

since 2012 the total demand for silver has been flat overall but certain applications have shown to have

dwindled significantly.

 

HH

[Junior]

2 hours ago, Centauri167 said:

So if you believe something is not manipulated it is stupid to invest in ???? I invest in silver because I hope there will be a larger industrial demand in the future what will make the prices go much higher.

Who said stupid? Are you putting words in my mouth?

In all seriousness, this is my personal stance; I do believe silver is being manipulated to keep the price low. Why? I’m not in the know with this. But what I do know is the price is undervalued when looking at the many uses of this commodity. So while the price is held low, I will buy. When the price is high, I will sell some.

But if silver does go higher and inflation out paces it, then is the commodity still not undervalued?

Just some food for thought.

[Junior]

2 hours ago, HawkHybrid said:

a poor example that highlights nothing.

no one cares about the tiny pittance of silver that your computer has in it. they care about the big things like

industrial applications which account for ~50% of each years total demand.

https://www.silverinstitute.org/silver-supply-demand/

of which solar panels(photovoltaic) currently accounts for a 5th of that or ~10% of silver demand in recent years.

since 2012 traditional photography has reduced by about 25 million toz but jewellery has increased about 25

million toz.

since 2012 the total demand for silver has been flat overall but certain applications have shown to have

dwindled significantly.

 

HH

Well I believe it’s not a poor example at all. Silver is only used in minuscule amounts in many applications. Let’s take an automobile as another example. The Internal Combustion Engine (ICE for short) uses between 1-2 ounces of silver for the computers, circuitry, and sensors. An electric vehicle will use between 2-3 ounces. Add up all the cars sold the world over and those minuscule amounts add up a lot.

[HawkHybrid]

53 minutes ago, Junior said:

Well I believe it’s not a poor example at all. Silver is only used in minuscule amounts in many applications. Let’s take an automobile as another example. The Internal Combustion Engine (ICE for short) uses between 1-2 ounces of silver for the computers, circuitry, and sensors. An electric vehicle will use between 2-3 ounces. Add up all the cars sold the world over and those minuscule amounts add up a lot.

what the point of selected instances being able to afford a rise in the silver price when the

industries that account for 50% of demand would have trouble paying for it?

https://www.ev-volumes.com/country/total-world-plug-in-vehicle-volumes/

let's estimate world electric car sales at 2x3(6) million per year each using 3 toz.

that's a grand total of 18 million toz. that's still a bit under the amount that is used by the dwindling

traditional photography sector(~28 million toz). what about payment for the other 900+ million toz?

I gave solar panels as an example. it currently accounts for 10% of world silver demand.

https://werecyclesolar.com/how-much-silver-is-used-in-solar-panels/

silver can be up to 6% of the cost building each panel. if the silver price doubles like it has done recently,

solar panel would go up by maybe 6%. what a surprise that when silver accounts for a large % of costs is

also in sectors that make up more of the worlds demand for silver.

 

are you purposely counting peanuts whilst ignoring the elephant in the room just so that you can skew

the weighting in favour of less significant sectors?

 

HH

Edited December 20, 2021 by HawkHybrid

[Junior]

30 minutes ago, HawkHybrid said:

I gave solar panels as an example. it currently accounts for 10% of world silver demand.

A very good example. So if 2022 demand is projected to be 1 billion ounces, then just solar alone would account for 100 million ounces. A solar panel uses much more silver than say a car or a computer. 

In the electronics that use silver in minuscule amounts (say a computer or a car), the price is too low to extract the silver cost effectively because the chemicals used for extraction cost way more than the silver being extracted. So often times computers are not recycled for silver and neither are the cars. They are scrapped for other metals instead.

If the price of silver were to rise making it more cost effective to extract it from electronics and cars, then that could help assist with any future deficits. But for now, the price of silver is too low to extract and this helps perpetuate us further into silver deficits. That’s a big elephant in the room by itself.

[saynow]

in my opinion,

its (silver) value is the mining production cost plus the value of being precious metal 

like gold its production cost according some sources 1000$ and it is price now 1800$

so silver should be like gold but it is not 

we are waiting!

 

[Centauri167]

13 hours ago, saynow said:

in my opinion,

its (silver) value is the mining production cost plus the value of being precious metal 

like gold its production cost according some sources 1000$ and it is price now 1800$

so silver should be like gold but it is not 

we are waiting!

 

You forget one key aspect, the "demand" and what people are willing to pay for something.

If people want to pay 1800 USD/ounce for gold but only 23 USD/ounce for silver, that's just the price.

Miners often sell with losses because the market price is lower than yhe production cost.

[CANV]

if silver gets too expensive they will use less effective other metals to do the job..  

[Centauri167]

2 hours ago, CANV said:

if silver gets too expensive they will use less effective other metals to do the job..  

Indeed, or just chance the process completely.