Submitted by SD Contributor AGXIIK:
If silver hits $75-100, or scoots well into triple digits then more than just hard core silver stackers will take notice. We will finally see a real stampede as the general public begins entering the market.
As silver moves through $75 an ounce and the general public finally takes notice, MOPE will be flowing like crap down a sewer to dissuade people from buying.
I don’t believe Joe 6-Pack will understand what is happening if silver takes out $49 any more than they did when it hit $49 in May 2011.
The only ones who noticed or seemed to understand were people like us and the Cartel and for very different reasons.
If silver hits $75-100, or scoots well into triple digits then more than just hard core silver stackers will take notice. We we finally see a real stampede as the general public begins entering the market.
Since the Great Smackdown of 2011, the price has consistently dropped for well over a year along with several spikes that got physical buyers on the wrong side of the trade and scared the average investor. MOPE will be flowing like crap down a sewer to dissuade people from buying, with the usual pundits saying that this is a bad time to invest in precious metals.
The public notice of silver has been nearly nonexistence in the last 2-3 years. Gold has gotten much more attention by the financial media during that time period. If people are fearful of silver due to its volatility it will take serious and consistent price rises to get the attention of the retail investor to rotate their cash into silver. This will force prices even higher in spite of the inevitable small retracements in the price.
The Rhino Horn of the coming parabolic silver run could and should then take silver to unprecedented heights as the scarcity and demand run in tandem during a monumental increase in price. The Casey chart of silver price increases and decreased would indicate a 300% increase over the last retracement of price to $26 an ounce.
I would not be surprised to see $75 as a resting point before even great price escalation. As Chris Duane notes in his 14 reasons to buy silver, the real inflation rate of 400% or so will be reflected in these prices. A feeding frenzy could take place as food and fuel inflation in 2013 shock the bejaebbers out of the US and Canadian citizenry. There will be many people who see their inflation eroded cash evaporating and while the rest of the world faces famine, with videos plastered all over the media, the average person will react with a fear factor that compels them to buy precious metals to save themselves from the increasingly painful effects of food price increases into the 20-30% range and gasoline up maybe $2-3 dollars a gallon.
People are not stupid. They may be slow to realize the effects of inflation as they scrape by filling the grocery cart and the fuel tank.
Unlike those early to enter the massive bull run, those who have not boarded the silver bullet train will scrounge up any funds available to buy an increasingly scarce supply of precious metals, hoping to avoid being the last passenger on this train.
Those who got IN first got the best deal. I fear that everyone else will not fare as well.
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A lack of confidence on the “IF” Silver reaches $75,00! Only the surviving upper middle class
which also includes the rich, will participate in buying Silver. This is not the general population.
Only a very limited percentage of the population will. There is the option to save cash also as
“No, this can’t happen in America”. The more desparate countries and countriy governments
will drive the price up quicker than our country populous.
Ranger from Texas
Everyone: repeat after me: “silver is the poor man’s gold”
Their other option left is to buy copper. Copper is also way more undervalued than silver. Plus, there are still a lot of copper pennies left in circulation compare to silver coins.
Some of the poor (Like me) will keep buying but not as much. Not all poor are sitting in front of the latest computer game or buried on facebook or otherwise distracted by whatever crap the government uses. I see it coming and am preparing as best I can. I can almost ride out an entire year now without needing to grocery shop. I paid off my house and car a long time ago also (even though my top income was $26k, now disabled and still doing okay on half that).
Great article AGXIIK.
For some reason… Never mind. The one thing I’d comment on is the stupidity of the people. One of my best friends who is a pretty smart, we talked about inflation and silver. I told him simply that when we print dollars prices go up and that metals maintain purchasing power. He kept arguing that prices were raised from the seller.
Also, I’ve scoured through “When Money Dies” which talks about Germany’s hyperinflation and the saying was always ” a mark is a mark”! Essentially the people thought it to maintain its integrity while the “greedy” businessmen raised prices.
Were they oh so ever wrong. A lady in the book traded a silver fork for a bag of groceries. Bad times.
So true that most people don’t understand the basics of price discovery since everything is so manipulated these days. Whether they think it’s normal for the government to control prices, or for businessmen to take a unilateral position on pricing, it shows that they are uninformed. They aren’t able to get to first base and they will never understand the mechanics of PM and the obvious logic of maintaining purchasing power over time.
Good post AGXIIK, right on the money. Being a prehistoric dinosaur, I still read a paper newspaper. My local Gannett paper, which I refer to as the “fish wrapper”, is almost comical in its coverage of PM’s. Rarely are gold and silver mentioned except in the agate type. The other day silver went up $1,00 but did that rate a mention? No. However, the ups and downs of Apple and Facebook are always covered in detail. And, needless to say, all the phony numbers such as inflation, jobs reports, etc., are presented as gospel. “Green shoots” and “the recovery” are everywhere. One day soon, the sheeple will realize their foolishness and the mania will begin.
In my opinion, it’s noteworthy that the copper-silver ratio is now at 137:1, down from 128:1 last week. This compares to a rough average of 120:1 last year.
There’s not a scintilla of doubt in my estimation that the banknote scheme is rapidly disintegrating and the most effective alternative to it is the venerable old, tried and true, metallic standard. In which case, copper, silver and gold will need to be rationalized against each other, tending toward exchange rates that had evolved pre-banknotes. If silver’s rarity for purposes of circulation has truly been magnified by industrial demand, then that condition would be reflected by this copper-silver inter-relationship. Still, the copper-gold ratio has no good reason to be 1:7069, given that the historic ratio is 1:2000, except that banknotes are tremendously overvalued against gold, with gold in turn overvalued against silver, leaving copper as the very most suppressed of all.
Whether or not the governments and bankers hatched their goal of universal banknote ‘money’ for nefarious or innocent ‘managerial’ purposes, their plan necessitated denigration of the money metals to progressively overwhelm each component … starting with copper. Commerce is comprised of untold trillions of daily little ‘bread and butter’ transactions and if command of commerce is to be accomplished, the medium common to THOSE trades is indispensable of total control. To wrest that command, complete discreditation of copper was their supreme task.
By the rational evidence I see in the markets … it STILL IS!
I also was thinking about that before if copper is more undervalued than silver. In 1919, an Indian quarter eagle which is made out of gold that is worth 2.50$ in face value can be exchanged for 10 silver quarters and 10 silver quarters can be exchanged for 250 copper pennies. An Indian quarter is worth 209.73$ in melt value, 10 silver quarters are worth 60.90$ in melt value while 250 copper pennies are only worth 5.91$ in melt value. That’s one of the reason why I hoard copper pennies but the problem is that copper pennies take too much space.
PatFields: Do you have a source for that 1:2000 ratio? I’d love to read more about it. Thanks for the interesting comments (and Sumkid too …. thnx).
So it looks like that if silver pass 50$ per ounce, our next focus would be 75$ per ounce as a target. I believe that we will pass 50$ per ounce thanks to QE3. 2-3$ per gallon for gasoline? That’s really cheap because at my local gas station, it cost on average 5.50$ per gallon to buy regular gas. I think you meant 23$ per gallon if you’re wrong. Anyway, good post!
Sumkid I was thinking about the US price for gas. Canadian prices are a good bit higher but overall the prices will rotate upwards given the political instability of the ME and all the factors in the fuel and food price inflation.
Pat Fields I was not aware of the copper to sivler ratio. 70% of silver production is a byproduct of base metal mining. Is copper one of thos ebase metals and would its mining affect the supply of silver or its price?
@AGXIIK This is a very nice post. Saw it other places also. Congrats!
Good article AG. Always on the mark.
I am in but not ALL in. Still hedging everything; cash, stocks, mutual funds, etc. Waiting to see if the predicted drop occurs before Friday.
Love reading your articles AGXIIK, thx man!
The Fed will most likely announce on September 13th a program to purchase a fixed dollar amount of Treasuries and Mortgage Backed Securities until the unemployment rate falls below 7%. I do not believe a QE-3 will be called. I am betting on the No Call as I want to buy 1500 Ounces of Phyzz and I’m not paying 34. I believe this announcement will be another watered down Twist type of plug to the bucket full of holes. I was right last time when this forum was flooded with Qe3 expectations and it didnt happen. Am I the only one in the world with a No QE call?
Silver Psycho: If the Fed comes out and says it will buy a fixed dollar amount of T-notes/bills and MBS, that would defeat the point of adding an employment rate target because the fixed amount of funds might not be enough to reach the stated employment target. But your hunch overall conforms with what some of the Fed jawboning has been discussing recently — and I think you’re on to something. A handful of voting members suggested an open-ended target based on employment. So, we might very well see no comment on the dollar size to be allocated towards the purchase of T-notes/bills and MBS, but a stated employment rate target declared. Regardless, that will be called QE-3 by the media, even if the Fed tries to call it something else.
What I’m most interested in seeing is how the Fed might try to claim this is going to be a sterilized operation. Given insufficient demand for Treasuries and an inability to conduct more Operation Twist to support the long-end of the bond market, the Fed is basically stuck. Monetization can’t be avoided. The lipstick soon to adorn this pig is going to be mighty interesting.
Flying Wombat, the ‘source’ for the 2000:1 copper-gold ratio is a 20 Dollar gold coin, given that a Dollar is 100 ‘cents’.
To equate copper and silver in today’s market requires converting avoirdupois pounds and troy ounces to grains, dividing the former by 7000 and the later by 480, then do the division for ratio.
Thanks
I’m curious if that ratio has been something seen throughout history. If I ever get around to checking coinage from other periods or find an existing study, I’ll post here.
Great article, AGXIIK!
Thanks,
Mammoth