Topic: Silver undervalued or gold overvalued? - page 2. (Read 10199 times)

Fair enough. Your analysis seems reasonable. (I'm no expert).

There are a couple of factors that I believe could play in factor in changing the game.

1. Shortages. There is a lot of investment demand right now. In the USA retail silver sales are through the roof.



2. Large players coming to market. China, for example. Their government are bullish on silver.



3. Economic crash could result in a mining and exploration crunch. With silver already in a tight situation, this would be a very bullish event. All of the world's annual silver mining production is consumed in some way.



As we can see in 2008, industrial demand was about the same as the previous year and dropped about 20% the following year. The silver price dropped 50% a year early, in anticipation of the this. However the following year, 2010, silver rebounded very strongly, and although industrial demand did not increase from 2007 levels, total consumption (and price) rose sharply in part due to investment.



To me, this graph is misleading, as investment and industrial are not the only two categories. But it does tell a tale of a short-term decrease in the significance (but not necessarily the physical amount) of industrial consumption, yet some of that same silver is lost forever in the processes of industry.

And here is an example on how I see Gold prices.
http://chart.ly/hi5cdqh

5 completed Elliott waves. Perhaps a couple of $ more upside, then big correction.

Silver also completed 5 Waves up, but started its decline already in April 2011, again a leading indicator, and hence leading Gold as well.

Great discussion. Sorry for not being more detailed in my answers, I am working on a few important things. But o.k. here is my explanation attempt.
I am not really good at fundamentals, hence, my explanation might sound layman-ish. I am much better at charting but can't do an analysis now.
The main reason why I am bearish Silver is:

Silver prices have skyrocketed this year mainly behind speculation, which is not justified by the industrial value. This speculation is largely via leveraged tools, and in the current and more severe upcoming crash/crisis, people need to sell stuff to pay their bills, and this includes leveraged Silver derivatives. And Silver is not alone, as all assets will plummet in the midst of this historic crash.

And even if the current price seem to be justifies because of industrial use, this will also change as the economy falters and Silver demand shrinks..

Overall, midterm, over the next couple of years, this will drag Silver down.
Longterm I am relatively bullish Silver. It will be the first indicator that the crash is over. It is wise to keep some physical Silver even if it goes doen in dollar terms. If Silver rises again strongly from low single digits, then a new bull market starts. But based on my longterm time studies, this will not be before 2014.

Great answer.  

But I would like to hear your response.

The USD goes to shit in 30 years, and silver follows?

Has silver become more abundant?

Have we found replacements for silver in industry?

Why are you so bearish on silver?

"Don't hoard your silver coins, it will never be profitable." US President Johnson, 1965

He says this precisely because silver bullion was becoming too valuable to describe a shit US dollar, as the mint was in the process of changing to copper-clad coins.

http://news.google.com/newspapers?id=3P1OAAAAIBAJ&sjid=XgEEAAAAIBAJ&pg=4613,3314165&dq=don-t+hoard+your+silver&hl=en

Richard M Nixon on inflation, 1972: "Gas will NEVER a dollar a gallon.....Bread will NEVER be a dollar a loaf ! "

Great comment. They more pushback I get the more convinced I get that I am on the right side. And this has guided me and subscribers very well through the bitcoin swings, but also myself throughout the last decade of financial markets, using only technical patterns.

In 1980 US minimum wage was about $3.10/hour on average (in 1980 dollars). If silver rose to $50/ounce then, it would cost two days wages to buy an ounce of silver. If minimum wage today is set at $7.25/hour, then a silver spike equivalent to 1980 would bring silver to $116/ounce in 2011 dollars.

Are you telling us that silver has LOST value against the US dollar, after 30 years of non-stop printing of money?

Or is silver under-valued?

You decide.

Take a look at what's going on with the Swiss Franc, which has been at historic levels compared to the USD and Euro.  They are purposely devaluing CHD.  It should be noted that if you chart gold vs CHD, you will see that gold has not appreciated like it has versus other currencies.


Gold is essentially the last monetary proxy which has not been overtly tampered with (it is not under any particular government's jurisdiction and, with the exception of guys like GS and Soros, no goverments really have much interest in its value - so at least government intervention is not an issue).  You can make a similar argument for silver. 

Fully disagree and we can at least agree to disagree :-)
What you are saying is what 99.9% of people believe. Hence, it is too late now, and the opposite will happen. I will bet 5 BTC with you that Silver will drop below 30 $ by Jan 12 and another 5 BTC for a drop below 10 $ somewhere between 2012 and 2015.

And by the way, you do not show the full (and most important) chart history: The previous Silver high of 50 $ in 1980. This means that Silver did not gain at all vs. this high, and when accounting for inflation, Silver today is down massively vs. 30 years ago..

I am sorry I do not agree. The Feds will continue to print fiat money and pumping it into our system.



Gold 75 to 2011



Silver 85 to 2011


They are heading all one way UP!

Personally I find it ridiculous that gold is where its at but the market does have a "herd" mentality and every crisis sparks everyone running to gold. When silver is in tighter supply than gold.

If you look at the data for silver in 2008 just as we were going into the recession it dropped. Personally I feel we are walking into another recession so if silver drops it will create a great BUY opportunity because when the economy of the world takes off the industries mentioned will need silver and will be willing to pay big bucks for it.

let me briefly try.
(I am on my mobile device and can't post graphs that would be needed to illustrate.)

Silver has been underperforming gold since april 2011 and has been shown above in this thread via the gold/silver ratio
Silver is also a very good leading indicator fir the broader financial market (stocks, etc). This underoerformance is a key element which I use in firecasting.
As long as silver remains below the 50$ mark,silver is in the first stages of amultiyear bear market.
Gold will remain a little strongezr than silver because gold is a safer heaven than silver in the financial crisis #2 we are already in.
But gold will also at least initially fall hard due to the needed deleveraging of financial institutions and individuals.
Basically I am saying that in this second leg of the financial crisis, all markets go down together, just some will fall a bit less

Target for silver is first the 27-30$ zone and then single digits by 2014-2016.
Gold will likely at least test the 1000$ mark before moving to record highs into 2000-5000 and even higher..

How is that so S3052? please explain?

How are they overvalued also?

silver and gold sre overvalued and will soon drop in dollar terms.
Silver will fall faster snd deeper than gold

Silver Has Risen Well today in Australia

Anecdotal evidence suggest there is one ounce of silver per 1000 cell phones. So yeah, there's barely any silver in ONE cell phone.

The point is, everyone has a cellphone or two, and we replace them probably once a year on average.

So, lets say one third of the planet owns a cell phone. 2 billion phones. That's 20,000 ounces of silver gone every year. Most of it will never be recovered.

That just for starters. Photographic film, solar panels, TV screens, ipods, microwaves, GPS, the list is endless. Is 200,000 ounces lost per year a reasonable number? That's two million ounces every 10 years, and the numbers will creep upwards.

The other problem is that because the amount of silver used is so small per device, even a large spike in the silver price would not cause a rise in electronics prices. So consumers will continue to buy, and factories will continue to produce.

How much silver is left in the ground? 100% of annual silver production is consumed in some form. There are no mining reserves left over.

My understanding is that 40% of available silver is used in industry and that reserves are at historic lows. Perhaps alternatives are readily available? Anyway, here are recent gold/silver price ratios:

electronics use copper for pretty much everything
silver only conducts slightly better and is barely used at all in electronics

I think tin is undervalued, or rather the food preserved within.

Seems like the general concensus is that silver will rise. Perhaps that's just optimism bias but if so optimism is a stronger force than I'd imagined

I'm surprised that no one has mentioned that silver has been in backwardation for months.  That suggests physical silver is in tight supply.

I accidentally voted for #4, meant to vote #1