Thread: Silver vs Gold

Which should you buy, and why? Which will prove to be the better investment in the long term? Let's compare and contrast.

Why is gold useful, and why is it particularly useful as money? Gold is valuable & portable because it's rare & not easily counterfeited. Gold is fungible & exchangeable because every bit of .999 fine gold is similar enough to be like another. Gold does not rust as it's imperishable. These properties make gold a good store of value, a medium of exchange, and a unit of account. Therefore, gold is easily tradable with a narrow spread, meaning it has a small price between the bid and ask-the prices to buy and sell. Gold is therefore the ultimate liquid asset, a luxury, and is why gold is money.

The remainder of this editorial by Jason Hommel can be found at: http://www.gold-eagle.com/editorials...mel080104.html

I left the opening paragraph or so, but if you wish to read it in full, follow the link. I deleted the remainder in accordance with copyright & Fair Use policy. This editorial is Copyright 1997-2005 vronsky and westerman.

-SkinWalker

H.L.Hunt. 8)

Please consider sources to be covered by Fair Use & copyright and try to avoid copy/pasting of large amounts of text and whole articles (particularly when copyright is clearly indicated).

Also, its helpful for the spirit of discussion if you are able to offer some of your own opinions & thoughts and perhaps ask questions.

Well, he does raise some good points. However, I get the impression that he has purchased a bunch of silver (or silver futures) and is trying to say anything he can to get other people to buy silver so that the price will go up. For example, he says that silver’s higher mass/value ratio is actually a good thing for people who want to use it as money because its high mass would make it hard to steal very much of it. That’s just silly. Back when money was backed by gold there were regular transfers of large amounts of gold from one country to another; any time the cost of shipping the gold was less than the cost from the currency exchange rate, people would ship the actual gold rather than the paper money. This wouldn’t be practical with silver.

He also says some kind of strage things, like "The economists were proven wrong because people back then recognized the real situation--that dollars were defaulted contracts and fraudulent pieces of paper. "

It seems to be in line with the "monetary protestor" thing where people claim that since U.S. funds aren't actually covered by gold, they don't have to pay their debts.

I work as a collector for a major credit card company while I'm putting myself through school and I ran into one of these people a couple of months ago.

Originally Posted by SkinWalker

It seems to be in line with the "monetary protestor" thing where people claim that since U.S. funds aren't actually covered by gold, they don't have to pay their debts.

I work as a collector for a major credit card company while I'm putting myself through school and I ran into one of these people a couple of months ago.

Ha...I would love to hear the explanation behind that reasoning...

I will make it a point to pull up that internal bulletin from our intranet and take some notes then pass it on here.

I love the subject of gold and silver! I once bought 3o ounces of gold bars in Indonesia. They were manficient! What a beautiful gleam! It is the most beautiful metal on earth!

Right now, India and China are very propserous---and in both, people love to wear gold. The Chinese take to gold shops where we have jewelry shops. There is so much 24 carrot gold jewelry in them that they emitt a gold shine that can be seen and sensed clear out in the street. In each jewelry display case one can find a small glass of water! It is unending Chinese custom for it to be there and there is no other reason for it. You ask the owners why they water is there and they have no explanation!

In Perth, Australia, they mine and mint gold, and at the mint is a stand with a brick of sold gold inside. Over it is a glass cover with a hole in it big endough to stick your hand and feel the gold. If you can pick it up with your hand, you can have it! But gold is heavy and the gold brick has been there a very long time!

If you take a lookl at the weekly spot price of gold, you will see a gradual accelerating trend upward. The reactions are getting smaller and the up moves steaper. What this means is that we are heading for a buying climax in the months or weeks ahead.

One is tempted to try to profit from that, but beware! There is no easier way to lose all your money and end up in debt than gold futures. Gold stocks bought on margin are also suicidal. I have a gold stock account (not on margin!) that saw a 24% total decline just in this last reaction we are just now climbing out of! I am ahead again, just now, but this is no way to live! If you do not care to sleep at night, do not mind feeling depressed and worried all the time, it is alright to buy cheap gold stocks! Otherwise, welcome yourself to a NORMAL life!

charles, http://humanpurpose.simplenet.com

I really don't think that he is trying to get people to buy silver in order to increase its price. Simply because you'd have to be fairly stupid to think this would work, and I don't believe he/she is that stupid. There's no way on earth that a few of us buying a couple of silver futures would have any impact on the market price. Unless he wants us to buy them off him.......the plot thickens...

I just read the whole long article. It was written by someone who knows his subject, but why would anyone use it here for discussion? It is two and half years old! All the charts are now obsolete. Conditions have not remained the same.

charles

It's an interesting paper for its perspective. I disagree that silver is better than gold for use as money for exactly the reason he thinks it is better: the vast majority of it is still underground.

That means the amount of silver on the market can be increased dramatically at any time if people simply start mining it. And, if the price ever does go up, that's exactly what will happen: people will start mining it more.

I mean: the main reason gold gets so popular from time to time is that it's a very effective hedge against inflation. The supply isn't going to go up, or at least not by very much. So, if you buy a bunch of gold before an inflation hike, you can sell it afterwards and it's value will (probably) have kept pace with the inflation.

silver has a marketable value, other than jewelry which is in fact the only value of gold. if it were still used to produce photographic paper, the value would be twice what it is today, which is 13.15 per ounce today.

both silver and gold are by products of mining, usually where copper is found. the fastest moving non-precious metal is Nickle which is 23.00 a pound and used in stainless steel. there are some strictly silver mines which have by products of other mineral, but somewhat rare. ironically one large and yet mined field is in Venezuela*. by the way copper is selling on the markets for about 3.35 per pound and the most common of all metal Aluminum is going for about 1.50 per pound.

all of the original theory for maintaining wealth through inflationary periods by buying gold are pretty much void in todays world. a lot had to do with the Hunt brothers, when a few years back managed to manipulate the silver prices up to 50.00 per ounce. many countries still hold gold reserves but the none come close to the value of the money value of there GDP.

*Crystal Mining Company, KRY stock ticker holds the rights, but waiting for permission to mine, which may not come...

Kitco.com, is the largest world trader in metals, also has a very good site to follow the world activity and current prices. at any time my computer is on, i see current precious metal current quotes from around the world.

Originally Posted by kojax

It's an interesting paper for its perspective. I disagree that silver is better than gold for use as money for exactly the reason he thinks it is better: the vast majority of it is still underground.

That means the amount of silver on the market can be increased dramatically at any time if people simply start mining it. And, if the price ever does go up, that's exactly what will happen: people will start mining it more.

I mean: the main reason gold gets so popular from time to time is that it's a very effective hedge against inflation. The supply isn't going to go up, or at least not by very much. So, if you buy a bunch of gold before an inflation hike, you can sell it afterwards and it's value will (probably) have kept pace with the inflation.

Does anybody know why is it that gold is such a good hedge against the inflation, maybe because of steady demand???

If you live in Country A, invest 1000 whatever with 0 inflation and gold does nothing with no change in inflation...the value of that investment in that time is 1000 whatever's (no change). On the other hand if your inflation rate (cost of products in your country) increases 100%, which happens on occasion, that gold on the world market assuming no change, is then worth 2000 whatever's to you personally to what you can purchase. Of course the reverse is true if every ones rate is above your rate.

The value of commodities, silver, gold, oil included, is based on market forces or that which traders in a commodity will pay for delivery of a particular product at some point in the future. Beyond this its somewhat complicated...

Gold and silver do trade percentage wise to each other and unless inflation is an obvious problem, not normally suggested for an investment.
Aside from the actual bullion (product) there is mining and manufacturing of gold silver products, which trade according to the metal themselves, as a rule.

If I were an adviser, which I am not, I would always suggest no more than 5% of a stock portfolio or income earning property to be in precious metals of some form. Today in the US the value of what a trade in ounce of gold or silver, will buy you three times what it would five years ago. There is a collectible value of both these metals (numismatics) which could be considered and some items have out paced inflation, the values of the metal and all other investments in the past few years, generally in Gem, high grade and RARE uncirculated coins...

[quote=wienertakesall][quote="kojax"

Does anybody know why is it that gold is such a good hedge against the inflation, maybe because of steady demand???[/quote]

To me it is easy to understand. Have you ever had a few gold ingots in your hand? It has characteristics no other metal has. It FEELS good and looks good. In Singapore, I would walk by jewelry stores and notice that all the jewelry was 18 carrot gold. The yellow sheen from inside the shops could be seen out in the street. There is all the difference in the world between a gold coin and a shinny brass one. And, it does have electronic-industrial uses as well.

chas.

obivously gold is a liquid asset. it doesnt loose its value. it helps as a long term investment. it has a good value than silver. compared to gold there is no other thing which glitters.
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