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RE: The r0ach report vol 1: It's time to back up the truck for silver

in #money8 years ago

The argument against silver is that a lot of its industrial demand will crash heavily in both a deflationary or inflationary environment. If the system seizes up - there simply won't be any capital flowing to any industry that consumes silver. There is also the argument that silver is no longer monetized and the elite who will hold 95% of global capital aren't interested in silver, only gold. You're safer hedging your bets with the UHNWI, rather than the plebs that carry only debt-based assets (eg. Fiat).

Having said that - silver was demonetized partly to fuck over the chinese, whom stacked it on masse many moons ago and they now love silver again, and this time have a better hand than much of the west with their gold and other hard asseta, including infrastructure.

Look, there are so many confounding inputs and outputs and times are different - so knowing how this plays out is still up for debate. You want all 3 assets with the largest portion in gold because gains are there no matter what. Silver and Bitcoin carry much more risk but will pay immense yield if they win.

The trick is to remember that energy underpins the entire system. Does bitcoin work in a scarce energy environment (oil)? I suppose it will as bitcoin farms are fuelled by other types of energy supplies that will remain plentiful eg. Solar, hydro and coal. Silver as the poor man's gold is relying heavily on the new lower class stuck in poverty to provide the demand for silver when their bank accounts are empty.

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You brought up a few points that I wanted to address, but I thought it would make the page too long. One being, it's not all that hard to utilize gold and silver for transactions with random people selling big ticket items. If a guy is selling something like a boat, you can say, I'll take it if you'll accept payment in gold and silver bullion, and usually get some interest.

The key factor here is, it's ingrained in people's minds that gold is extremely valuable, while less people know about silver. American silver eagles are very liquid - the most liquid form of silver, but it's far more easy to get some random person's attention by mentioning gold. If you wanted to keep your current bartering ability as high as possible, while also trying to keep your upside potential high, you'd likely want to go 50/50 gold and silver.

For people who are in it for the potential windfall profits, a 70/30 silver to gold, or even 100% silver allocation makes more sense. Gold also has extreme granularity issues. It's not like Bitcoin where you can just keep dividing it down lower and lower. If the price of gold skyrockets, people don't start trading atoms of gold; that market cap spills over into the silver market.

As for what types to go for, if buying gold you should probably be getting 1 oz government issued coins, as they're the smallest size you can get with low premiums. Anything smaller than that with gold is pointless to me as the premiums go much higher. For silver, the low premiums are in 1 kg or 100 oz bars. You can find low premiums in some non-governmental rounds like 1 oz Sunshine Mint, but people tend to trust government issued coins far more.

Having said that, 1 oz silver coins would probably be the most useful metal and coin size combination possible in a real economic collapse - and you do get the premiums back when you resell them - plus Eagles being the most liquid form of silver, so I lean heavily towards 1 oz silver coins with a few 100 oz bars here and there.

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