patrick.net

Rightswingtrader says

Now when will I be rewarded in my quest to buy Silver Eagles under $26 and not pay the obscene premiums ?

I think you are going to pay premiums whenever you buy, however I'm hoping that that their absolute value will drop along with dropping prices but I'm not holding my breath.
- For example, right now Kitco has an add on their market page for junk silver bags; 6 months ago their premium over melt was $15 to $21 for a $100 face value bag (71 ounces, 30 cents/ ounce) - this week the premium is over $80 ($1.12/ounce).
I suspect that as spot prices decline, we'll see 'actual' (coin/ bar) prices stay high for a while, like the way gasoline prices take time to drop when crude goes down.

Silver ain't ever again going to see $15.

I was buying silver at $6 bucks and I still hold that silver. And now that silver is dropping under $30, I am actively writing puts against the SLV.

I see writing puts against the SLV as very safe at this level. If silver drops I will just roll them over to lower strikes. There is great demand for silver and gold as everybody sees that the central banks are devaluing the currency.

I see writing calls against silver here as very high risk. The risk of a rapid rise is too great.

E-man says

StillLooking says

Silver ain't ever again going to see $15.

You will be proven wrong. Who would have thought that oil would be selling for $30 a barrel in 2008 when it was selling for $147 in 2007?

Did you buy a house in Central Valley for $500k and said it will never going to drop to $100k?

Well, never say never.

Cheers.

Success isn't by chance, but by choice.

Perhaps, but at 15 I am backing up the truck. But how can it possibly happen? The Federal Reserve is keeping rates at 0% which means people need to buy silver or their savings get creamed.

I forgot to add, I am also writing puts in an IRA account.

No leverage at all. The decision is simple. Write puts on silver, Buy silver or sit on the cash.

I am long the SLV and I have also wrote puts against cash in the account.

I chose to write puts because it looks like silver is going sideways to down for the moment. If silver spikes it would have been better to have bought outright.

And silver trades with gold. gold maybe better but it is a whole lot more expensive right now.

After looking at charts it's easier to see how small or physical silver investors are along for the ride more than anything. The question is how long until silver demand brings us back to $15 silver.

I sold most of my physical silver a few weeks ago - turned a nice profit. Outperformed all the investments I've held for the past two years.

$15 silver? It's coming, but be prepared to buy a truckload.

Silver traded $34 this evening

I never bought an ounce since I never got my price...shame on me

Could be silver will skyrocket soon enough along with the gold.
Could be as soon as next week.

Workaday commute traffic in Tel Aviv and Jerusalem is just as bad as the worst big crowded cities in other places in the world. If I'z be gonna get hit with missiles (possibly tipped with bio or chem) and also tens of thousands of rockets lobbed over from terrorists hiding out nearby, in retaliation for something I did, I'd just as soon have it happen during holiday period when most people are at home instead of at the office, the school, or commuting.

I'd also do the deed during a new moon, like the one coming up on the Eve of Yom Kippur next week. Being a Sunday in the US helps, too, to mollify the POTUS when he gets told.

Maybe that's why the Canadian diplomats got outta Dodge late last week.

Re is not going to blast off with gold. Most real estate is Way overpriced.

If Real estate rises in Price, gold will blastoff. re is in a dreadful bear market in terms of gold. If you want to see a real bear chart look at real estate in terms of gold.

And Silver has been by far my best investment. How can you read a chart like that? 10 years ago Silver was at six dollars now it is at 30 some.

StillLooking says

Real estate is in a dreadful bear market in terms of gold. If you want to see a real bear chart look at real estate in terms of gold.

StillLooking, reread what you wrote above. It means two things. Either RE is undervalued at this time, or gold is over-valued at this time. Look at the home price/gold ratio, we are at historical low now. If you believe in charting or technical analysts mumbo jumbo, the home price/gold ratio is showing a double bottom. Basically, either RE will go up in value from here, or gold will tank from here.

I'm just looking for a way to weather the storm should our currency gets devalued significantly over a short period of time. RE passed the test of time over and over again throughout history so it's a nice hedge against inflation or hyperinflation. If we muddle along the bottom here, my RE holdings will do great. If we go into this slow downhill grinding in RE prices, interest rate will keep on dropping, which means refinance and increases yield or ROI.

Maybe I'm just over analyzing the situation, but that's why people are buying insurance. Insurance is mostly for that big one time unexpected event. :)

E-man says

if the dollar loses its value significantly over a short period of time. Kind of like high inflation or hyperinflation scenario.

Have you thought about a scenario where you could have a period of severe deflation (credit contraction) followed by the response (massive money printing) leading to a loss of confidence?

I'm just saying that the economy is much more non-linear and it's not a high inflation vs. deflation path.

uomo_senza_nome says

Have you thought about a scenario where you could have a period of severe deflation (credit contraction) followed by the response (massive money printing) leading to a loss of confidence?

I'm just saying that the economy is much more non-linear and it's not a high inflation vs. deflation path.

Actually, that's the scenario I want to prepare for. History showed that it's deflation than hyperinflation. My RE will do fantastic in a hyperinflation period. However, I want to be well prepared for the short-term severe contraction period, which may lead to civil unrest, so I can prosper later.

The severe contraction period reminds me of late 2008, but our government took massive preventive measure so the downturn was relatively brief if you will. Our government has the power to do so much that the scenario I'm thinking of will only happen briefly. Also, it seems like the world catches a cold when we sneeze so we also have that leverage that others don't have. I guess carry on with the money printing. :)

E-man says

Actually, that's the scenario I want to prepare for.

So I think this where what % of savings you put into gold *really* matters. Because if we have a credit contraction, gold is actually going to seriously crash (leverage being destroyed) and could even go as low as $200 an ounce. One should be prepared to weather through this contraction period with their gold intact (meaning you shouldn't have to sell your insurance because your house is burning).

If it is followed by massive money printing, the insurance you have should protect you through that scenario (only if you can hold on to it).

E-man says

The severe contraction period reminds me of late 2008, but our government took massive preventive measure so the downturn was relatively brief if you will.

yes, but a second time around -- there's less appetite for more bank bailouts. So we could have more banks fail.

E-man says

Our government has the power to do so much that the scenario I'm thinking of will only happen briefly.

I think so too. but I do think the power stems from the fact that world's savings is US debt. I think the world savings medium landscape is changing. So this power may not be as strong as it once was.

E-man says

Also, it seems like the world catches a cold when we sneeze so we also have that leverage that others don't have. I guess carry on with the money printing. :)

That's true though. It is in the world's best interests to see the US get its act together (fiscally). The extreme views in US politics makes it that much less likely that we will, before another major crisis.

E-man says

I guess my question would be, can we go into hyperinflation because everyone in the world is dumping the dollar. I know highly unlikely, but I'm analyzing anyways.

There are good reasons, why this is unlikely to be the catalyst. By that I mean, the dumping of bonds may not be the cause.

Here's a recent news link regarding this:

http://www.bloomberg.com/news/2012-09-11/china-s-u-s-debt-holdings-aren-t-threat-pentagon-says.html

E-man says

Can this happen without us going into a credit contraction?

Does the credit contraction ever stop? :) by which I mean debt levels are already too high and left on their own, debt defaults would be seriously deflationary. The way I see it -- The Fed is acting like a giant who's trying to slow this debt mountain falling down. It can't prevent it from falling down, but it can reduce the severity of it.

So I think credit contraction is ongoing and will continue for the foreseeable future.

E-man says

Under this hyperinflation environment without credit contraction, I think bond would go into the toilet too.

Yes, the scenario you are describing is similar to Weimar Germany and the effects will be similar. But I don't think US is Weimar, which is why my guess is it is less likely.

E-man says

I guess I've been reading too much and thinking too much. It's time to snap out of it. :)

:)

"Real estate is in a dreadful bear market in terms of gold. If you want to see a real bear chart look at real estate in terms of gold.

StillLooking, reread what you wrote above. It means two things. Either RE is undervalued at this time, or gold is over-valued at this time. Look at the home price/gold ratio, we are at historical low now. If you believe in charting or technical analysts mumbo jumbo, the home price/gold ratio is showing a double bottom. Basically, either RE will go up in value from here, or gold will tank from here."

I am not so sure we are at a historical low. 100 ounce of gold is 160-170 Thousand dollars. In 1900 this would've been $2000. $2000 in gold had a lot of buying power in 1900.

And we have gold rising with all sorts of other commodiies. I see rampaging inflation. At some point the powers that be will be forced to act. They will have to raise interest rates stop the bond buying and sell the bonds they have.

We can't have deflation with present policy. And when they act to stop inflation, housing prices will drop first.

StillLooking,

To put things in perspective. Is gold cheap or is housing cheap now? Of course, we can argue this time is different. Time will tell. I haven't a clue on this.

Actually a million bucks can still buy u a decent chunk of Chicago . Literally city blocks if u don't mind the bullets :)

Borrowing is what's cheap right now, and inflation is fed policy, as a mere pheasant I have little skin in this game. Inflation is not bad in the U.S. due to the dollar peg, but it's a problem elsewhere.

Thanks for the replies gents. I hope this thread stays active along with Silver

errc says

What the hell does that even mean?

Do you know the difference between the paycheck economy and the rentier economy?

@49, yes

@50, i guess i just disagree with your use of the term "consumer"

well, if you're going to label people as consumers, then the flip side would be producers. When i read your post about consumers seeing their share of wealth increase, it doesn't add up to me.

consuming resources/stuff does not make one more wealthy. maybe it depends on what your definition of wealth is

Wealth - all material things produced by human labor, having exchange value

which reminds me, about a different instance where we seem to have different definitions for economic terms. You said that you are a Capitalist, and that you believe that land is Capital, but that doesn't jive with some of my understandings of economic terms.

Capital - Is wealth, used in the production of more wealth

Land - would be all the material universe outside of man and his products. which is different then capital

So i'm still not certain i agree that the "solution" to our "problem" is for 'consumers' to see their fair share of wealth increases via changes in the tax code. Net consumers by definition should be less wealthy as they consume resources, unless they are producing at a rate equal to or greater then their consumption, no? what am i missing here,,,,,,,,,

errc says

So i'm still not certain i agree that the "solution" to our "problem" is for 'consumers' to see their fair share of wealth increases via changes in the tax code. Net consumers by definition should be less wealthy as they consume resources, unless they are producing at a rate equal to or greater then their consumption, no? what am i missing here,,,,,,,,,

I agree.

The problem though is the real world is far from Georgism.

what we need is to reduce the debt levels in an orderly fashion and therefore we need wage and job growth.

Hold on folks. Capitalists have been trying very hard since WW2 to equate themselves with Entrepreneurs. The two are usually NOT the same.

For example, Woz and Jobs were two middle class kids with great ideas but little money; they had to convince capitalists to invest.

The Walton Family doesn't have many ideas, but they have a lot of money.

We need entrepreneurs, but as to who is the capitalist is very open; any institution or person can put up investment capital. It doesn't have to be individual wealthy people.

Just a quick reminder: Capitalists != Entrepreneurs. Sometimes they do, but not necessarily or even usually.

@thunderlips11

>Hold on folks. Capitalists have been trying very hard since WW2 to equate themselves with Entrepreneurs. The two are usually NOT the same.
:
:
:
>The Walton Family doesn't have many ideas, but they have a lot of money.

Unfortunately, most Americans believe that they are one and the same.

Haaa Ok
Oil had a mini flash dump yesterday also...good times