Not true. Even though silver use in photography has gone down, we are still using up the same amount of silver every year. Silver mines around the world have produced on average 617 million oz per year for the last 10 years, yet for the last 10 years we have used on average 885 million oz per year. If everyone in the world went digital and nobody used silver for photography starting tommorrow, we would still be running a silver deficit of about 150 million oz per year at least. Today photography is probably only about 10% of what we use silver for.
Back in December of 2009 when gold made record highs, a lot of people said they would buy gold when it pulled back under 1000. However, it never got down to that level and may not do so for a long time or ever. It seems obvious that precious metals will continue to rise in price now that entire countries are on the brink of default and the only solution that our political leaders can find is to create more debt. So the question is, when will all of those people who now realize that their paper dollars are a depreciating asset get into gold and silver to preserve the value of their wealth?
Semantics. Excellent way to make an argument. I think you'd find there's a GREAT DEAL of difference between a trade that lasts 10 seconds and one that lasts 10 years.
Now Europe has seen into the abyss there are dozens of million people with a 20% savingsrate worrying and looking for a safer alternative for their savings which should be supportive of the precious metals prices going forward.
Gold is for people with great wealth to protect. Most people in the world are poor or are net debtors..they have nothing to protect. In fact inflation is good for debtors(why do you think the USA govt has allowed the rapid debasement of the $?). And the ones that are able to save a few dollars here and there wont benefit from owning a few ounces of gold. They would be better off with cash on hand IMO, this is all panic and momentum by funds and banks. Tradeable, but all fluff at this point.
true range - great point! Cash is an asset class.... as long as 1 or more asset classes is deflating/inflating, there are always good opportunities to participate in whatever trades you want - for liquidity, value, volatility, yield, growth..... Gold is like wearing bowling shoes. You need to be sure you're going bowling, otherwise you look foolish. Steven Drobny's new book "invisible hands" has a few chapters where they criticize the Harvard Endowment Model, which worked well for 15 years then blew up in 2008. The chapters discuss the importance of cash during crises, because they enable you to actually trade into underpriced assets, or buy volatility, etc... being cash poor like the Harvard model (it's actually negative cash) is a dangerous way to invest longer term. Instead, the books fund managers that are interview encourage tactical asset trading which is only possible when you're cash levels are high during crises.
I agree. However, there is also a significant population of people between these extremes with a modest positive net worth--especially baby boomers. When your net worth is $50-500,000, the prospect of losing a big percentage of your life savings to inflation and a declining currency value is of great concern. IMO, this is all panic and momentum by funds and banks. Tradeable, but all fluff at this point. [/QUOTE] That is the attitude of people who do not own gold. However, as the world economy worsens, more individuals are realizing that we are in a real crisis that will have real consequences and are purchasing precious metals as a hedge against a financial catastrophe.
I was waiting for the catastrophe argument. I'm curious. Do any of you gold bugs think that if the entire system comes crashing down that having gold will do anything for you? Do you think you can go to the store and exchange gold for food? Can you plant it in the ground and reap the fruit of the goldtree?
That is the attitude of people who do not own gold. However, as the world economy worsens, more individuals are realizing that we are in a real crisis that will have real consequences and are purchasing precious metals as a hedge against a financial catastrophe. [/QUOTE] I hear you...I just happen to disagree. If your net worth is 500k I would argue that you should just be tinkering with gold. Like 20% of your worth max. And lets face it whats 76 ounces(current 1z AGE offer on BD.com/100k) really going to protect you from if you have like 10-20 years to live? I have owned gold and I am not an anti-gold. I just think that if you have little means you can do better to prepare for the TSHF/financial collapse. Like food storage/water storage. Thats all.