Inflation in America - Part II: Pondering Platinum

[Guest]

Re: Inflation in America - Part II: Pondering Platinum

Don't forget the other important part of physical PMs: portability. $100K in silver is a serious 150 lbs - not easy to run with that strapped on your back. ...

GRG55 wrote he likes oil because it is all irrevocably consumed, but 90% of all the silver produced in history has been consumed as well, and is no longer recuperable as it's consumed in minute quantities in such a broad range of products it is well and truly "gone". It is easy to conceive of it as just "sitting there" in vaults, like Gold but actually almost the entire annual mine production is consumed yearly, with only a small percentage making it's way into investment stores. What happens if investment demand perks up just a little bit? In fact there is still something like a 200 million ounce annual deficit which is made up entirely from recycling and the assumption seems to be that "recycling will always be available".

Meanwhile, 90%++ of the silver is used in industrial applications where it is "non-discretionary".

When CPM or other analysts refer to it "going into surplus" they count the recycling as part of it's perennial, "organic" supply. If global production is only 650 million ounces, and there is a 200 million ounce shortfall made up from recycling, that means there is a one third structural shortfall in annual silver production, in a world where it's current investment demand is only 7%.

Compare this investment demand to gold's 90%++ existing pure investment demand for potential. One of these two is heavily undersubscribed as an investment. This means for example, that in any environment where there is a sharp drop in investment demand for precious metals, silver is in the medium term 90% less susceptible to dis-hoarding than is gold, as only 7% of it's present demand is due to safe haven buying. This is very counter-intuitive. People think silver will "fall much more than gold" in a sharp drop in inflation expectations, but those investment demand numbers suggest this probably has a good deal less basis than people assume.

Silver has more, and faster growing industrial applications than any other metal, by far. A bet on silver, just as much as a bet on oil, is all about global economic growth. It's "Safe Haven" monetary attribute is in fact by far it's minor present component. Pure investment demand for silver is tiny 7% of it's present overall demand.

Silver is first and foremost an industrial metal, a strategic, and critical industrial metal second only to Uranium. It is irreplaceable in any and all critical electronics, worldwide. People think it's some sort of second fiddle to gold for the doom and gloom crowd - not at all, it's a play on inexorable global growth, the premier metal (and commodity) to leverage the entire commodities boom. Investment demand will follow, and all it takes is a rise to 20% investment demand to turn silver into a pressure cooker in terms of price action. At prsent day value, silver is outrageously cheap relative to oil.

Check out this price action. Silver looking like it's got some real "moxy"

GOLD ON JUNE 5 2006.jpg

SILVER ON JUNE 5 2006.jpg

[metalman]

Re: Inflation in America - Part II: Pondering Platinum

GRG55 wrote he likes oil because it is all irrevocably consumed, but 90% of all the silver produced in history has been consumed as well, and is no longer recuperable as it's consumed in minute quantities in such a broad range of products it is well and truly "gone". It is easy to conceive of it as just "sitting there" in vaults, like Gold but actually almost the entire annual mine production is consumed yearly, with only a small percentage making it's way into investment stores. What happens if investment demand perks up just a little bit? In fact there is still something like a 200 million ounce annual deficit which is made up entirely from recycling and the assumption seems to be that "recycling will always be available".

Meanwhile, 90%++ of the silver is used in industrial applications where it is "non-discretionary".

When CPM or other analysts refer to it "going into surplus" they count the recycling as part of it's perennial, "organic" supply. If global production is only 650 million ounces, and there is a 200 million ounce shortfall made up from recycling, that means there is a one third structural shortfall in annual silver production, in a world where it's current investment demand is only 7%.

Compare this investment demand to gold's 90%++ existing pure investment demand for potential. One of these two is heavily undersubscribed as an investment. This means for example, that in any environment where there is a sharp drop in investment demand for precious metals, silver is in the medium term 90% less susceptible to dis-hoarding than is gold, as only 7% of it's present demand is due to safe haven buying. This is very counter-intuitive. People think silver will "fall much more than gold" in a sharp drop in inflation expectations, but those investment demand numbers suggest this probably has a good deal less basis than people assume.

Silver has more, and faster growing industrial applications than any other metal, by far. A bet on silver, just as much as a bet on oil, is all about global economic growth. It's "Safe Haven" monetary attribute is in fact by far it's minor present component. Pure investment demand for silver is tiny 7% of it's present overall demand.

Silver is first and foremost an industrial metal, a strategic, and critical industrial metal second only to Uranium. It is irreplaceable in any and all critical electronics, worldwide. People think it's some sort of second fiddle to gold for the doom and gloom crowd - not at all, it's a play on inexorable global growth, the premier metal (and commodity) to leverage the entire commodities boom. Investment demand will follow, and all it takes is a rise to 20% investment demand to turn silver into a pressure cooker in terms of price action. At prsent day value, silver is outrageously cheap relative to oil.

Check out this price action. Silver looking like it's got some real "moxy"

[ATTACH]395[/ATTACH]

[ATTACH]396[/ATTACH]

silver bug! i bought a pile in 2001.

compared to platinum, 'looks' cheap.





so does gold...



i'd be lightening my load of platinum and buying silver with it.

[Guest]

Re: Inflation in America - Part II: Pondering Platinum

silver bug! i bought a pile in 2001. compared to platinum, 'looks' cheap. i'd be lightening my load of platinum and buying silver with it.

Yessir, I am an unabashed silver bug. She's lookin' mighty cheap relative to just about everything. "Cheap is Good"! Poor little Rodney Dangerfield-ette. She just cain't get no respect! And if I try to stuff any more AG in my pockets, I'll probably bust my britches. With silver you are either "early to the party", or you are "left behind".

[DrYB/C]

Re: Inflation in America - Part II: Pondering Platinum

We expect a leveling off or even a decline in commodity prices in the months ahead as the US credit crunch and recession impact global demand.

While a short-term "leveling off or even a decline in commodity prices" may occur, in the mid- to long-term, they are going higher,

1. http://www.nytimes.com/2008/06/05/bu...hp&oref=slogin

2. http://www.telegraph.co.uk/money/mai...ccwater105.xml

Consequently, as the prices of basic foodstuffs and water continue their rise

(rises that are not the result of any true current economic resource scarcity, but are the result of purposeful past [and current] fiat currency hyperinflation; the investment channeling of the hyper-inflated fiat currencies; and of other morally-questionable behaviors on the part of extremely intelligent and powerful persons and the individuals in their employ)

during a punishing (inflationary) debt-deflation, resource conflicts will begin to occur. Said conflicts will eventually become international in scale. Before, during, and after said conflicts arise, governments will become more totalitarian in nature, for obvious reasons, and eventually, to resolve these deadly conflicts, "neutral" third-party organizations will be placed in charge of "scarce" economic resources to assure their appropriate and sustainable distribution.

The synergy of an inflationary debt-deflation, price increases of basic foodstuffs and water, war, the necessary totalitarian evolution of governments under conditions of synthetic resource scarcity, and the eventual “benevolent” resource-allocating dictates of “neutral” third-party organizations, will, in the mid- to long-term, force human depopulation and the creation of an international green, sustainable economic order.

[metalman]

Re: Inflation in America - Part II: Pondering Platinum

While a short-term "leveling off or even a decline in commodity prices" may occur, in the mid- to long-term, they are going higher,

1. http://www.nytimes.com/2008/06/05/bu...hp&oref=slogin

2. http://www.telegraph.co.uk/money/mai...ccwater105.xml

Consequently, as the prices of basic foodstuffs and water continue their rise

(rises that are not the result of any true current economic resource scarcity, but are the result of purposeful past [and current] fiat currency hyperinflation; the investment channeling of the hyper-inflated fiat currencies; and of other morally-questionable behaviors on the part of extremely intelligent and powerful persons and the individuals in their employ)

during a punishing (inflationary) debt-deflation, resource conflicts will begin to occur. Said conflicts will eventually become international in scale. Before, during, and after said conflicts arise, governments will become more totalitarian in nature, for obvious reasons, and eventually, to resolve these deadly conflicts, "neutral" third-party organizations will be placed in charge of "scarce" economic resources to assure their appropriate and sustainable distribution.

The synergy of an inflationary debt-deflation, price increases of basic foodstuffs and water, war, the necessary totalitarian evolution of governments under conditions of synthetic resource scarcity, and the eventual “benevolent” resource-allocating dictates of “neutral” third-party organizations, will, in the mid- to long-term, force human depopulation and the creation of an international green, sustainable economic order.

that's the cheeriest prognostication i've read all day.

the inflationary debt deflation... can anything stop it?

[Finster]

Re: Inflation in America - Part II: Pondering Platinum

... (rises that are not the result of any true current economic resource scarcity, but are the result of purposeful past [and current] fiat currency hyperinflation; the investment channeling of the hyper-inflated fiat currencies; and of other morally-questionable behaviors on the part of extremely intelligent and powerful persons and the individuals in their employ) ... during a punishing (inflationary) debt-deflation, resource conflicts will begin to occur...

Much agreed. How this happens is explored in detail in How Inflation Causes Shortages.

[ocelotl]

Re: Inflation in America - Part II: Pondering Platinum

Yessir, I am an unabashed silver bug. She's lookin' mighty cheap relative to just about everything. "Cheap is Good"! Poor little Rodney Dangerfield-ette. She just cain't get no respect! And if I try to stuff any more AG in my pockets, I'll probably bust my britches. With silver you are either "early to the party", or you are "left behind".

Add me to the silver bug gang, I've considered silver as a part of my portfolio since I'm working, not only because of me being mexican (ok, its part of our heritage and culture), also because of its interest to me as electronics engineer (I've seen how it is used and is a fundamental part of electronics, to the level of silicon, aluminum, copper, boron, indium, gallium and arsenic) and its monetary history.

The extra option I've took for the last 10 months (since the low of last july-august) is acquiring silver to around the level of the monthly payment of a financed car... I think that the day I stop thinking of my stack in ounces and begin counting it on kilograms will be the day I stop buying. Or maybe i'll consider an strategy change.

As of the subject of the main article, how a non investment commodity has followed inflation for the last decade, and has overshoot from the moment it began to be invested in, somehow reflects how we human beings tend to react to what we consider exchange means, the attribution of value to specific things is one of the bases of human culture. Not only scarcity of a desirable item makes it more valued. In that way there are things that are scarce, but as they are not extendedly used by humans, they aren't valued as such.

As we will keep giving value to things we need or use, it is mostly a safe bet the one to consider investing on durable commodities, and of those, the preferred ones are the ones that have an special appeal to us (gold, silver) or that are some of the pillars of our technological development (silver, platinum, palladium...).

Although in my opinion the future regarding human situation seems very difficult, at least until we do stabilize the population of the globe to a manageable number or begin colonizing asteroids or the moon (ok I'm dreaming on this, but the idea of harvesting a carboniferous rock, or a bunch of them can be considered as a possibility if we don't fall in a global war, also using the aluminum and titanium that is on the moon doesn't seem a very bad idea).

As it has been said. The game is not over, is at a third of its length, and it's better to be prepared for it instead of being sorry.

If there are no substantial changes, I'm thinking on a full kilogram (32 ounces and around a sixth) for tommorrow.

[GRG55]

Re: Inflation in America - Part II: Pondering Platinum

GRG55, do you have any suggestions about good ways to invest in oil for someone in the U.S.?

Thanks

Just as for gold, now more difficult to invest in oil compared to just a few years ago. All my "black oil" equities I have held for years. However, nothing remains static. Stealing a page from BMO's Don Coxe, look for companies with long-life reserves, unhedged, and in politically safe jurisdictions (that last is a tough one these days!).

I have largely stayed with companies holding assets in Canada, USA, North Sea and select SE Asia locations. Natural gas in North America and Northern Europe (France & Holland). I suggested some exposure to the higher quality, then badly beaten down Canadian nat gas producers and gas sector service companies a couple times in the second half of 2007. They have had nice rebounds ytd. Right now, with prices across the board for producers up significantly anyone looking for petroleum exposure has to get more creative.

Presently my best idea for petroleum exposure is the US based heavy oil refinery capacity owners, and I suggested Frontier and Valero in a post a few weeks back (look up the exchange on iTulip, as well as bill's post on Hyperion yesterday).

I also think Suncor and Canadian Oil Sands are worth tracking for purchase in the event we have a significant sell off in oil and oil stocks. Talisman Energy is also worth a look as a diversified play in oil and gas, North America and international. The company has not participated compared to its peers. All three trade in Toronto and in New York.

Once again, please do your own due diligence. I am not a financial advisor, professional investor, etc.

Edit Added: Also there are several oil (and other petroleum) commodity ETFs now available which expand options beyond trying to pick the best producers/refiners.

Another Edit Added: I would suggest you stay away from Big Oil (Chevron, Exxon, BP, etc) as I view them having unsustainable business models.

[Guest]

Re: Inflation in America - Part II: Pondering Platinum

Add me to the silver bug gang, I've considered silver as a part of my portfolio since I'm working ... I'm thinking on a full kilogram (32 ounces and around a sixth) for tommorrow.

Hola Ocelotl,

He notado que usted es un seguidor fiel de Sr. Hugo Salinas Price, a uno de los autores más claros para la plata. Usted sabe, México puede ahora tener menos petróleo para las exportaciones, y eso es una perspectiva difícil. ¿Pero qué sus exportaciones de plata valdrán cuando la plata es en $300 por onza? Esto es potencialmente una nueva bonanza para su país.

A propósito, estoy pensando en buscar un pequeño hogar abajo en el Lago de Chapala en Guadalajara. No es muy lejana volar, de San Diego. No pienso que tendré que esperar muchos más años, antes de terminar ese plan. ¡Las cantidades algo inmodestas de plata que he comprado en los últimos años en $8 por onza pagarán mi boleto - y mi nuevo hogar en el Lago, también! ¡Pienso que el metal de plata tiene un futuro notable brillante en los diez años próximos! Y mientras que sabemos ya, la plata es México, y México es plata!

Respetos, Lucas ( Silver bugs of the world unite! )

p.s. - A propósito, mi mejor consejo es comprar agresivamente su asignación prevista completa este verano. He notado que los problemas con petróleo consiguen cada año peores para el mundo, y la inflación seguirá para cada uno. En esta situación, si usted cree esto es una protección confiable de la inflación históricamente, y usted cree que la inflación debe seguir el precio del petróleo, después la compra en etapas grandes dará recompensas. Pero ésa es apenas mi preferencia personal.

[ocelotl]

Re: Inflation in America - Part II: Pondering Platinum

Hola Ocelotl,

He notado que usted es un seguidor fiel de Sr. Hugo Salinas Price, a uno de los autores más claros para la plata. Usted sabe, México puede ahora tener menos petróleo para las exportaciones, y eso es una perspectiva difícil. ¿Pero qué sus exportaciones de plata valdrán cuando la plata es en $300 por onza? Esto es potencialmente una nueva bonanza para su país.

A propósito, estoy pensando en buscar un pequeño hogar abajo en el Lago de Chapala en Guadalajara. No es muy lejana volar, de San Diego. No pienso que tendré que esperar muchos más años, antes de terminar ese plan. ¡Las cantidades algo inmodestas de plata que he comprado en los últimos años en $8 por onza pagarán mi boleto - y mi nuevo hogar en el Lago, también! ¡Pienso que el metal de plata tiene un futuro notable brillante en los diez años próximos! Y mientras que sabemos ya, la plata es México, y México es plata!

Respetos, Lucas ( Silver bugs of the world unite! )

p.s. - A propósito, mi mejor consejo es comprar agresivamente su asignación prevista completa este verano. He notado que los problemas con petróleo consiguen cada año peores para el mundo, y la inflación seguirá para cada uno. En esta situación, si usted cree esto es una protección confiable de la inflación históricamente, y usted cree que la inflación debe seguir el precio del petróleo, después la compra en etapas grandes dará recompensas. Pero ésa es apenas mi preferencia personal.

Agradezco el esfuerzo de responder en español. Aunque mi línea de pensamiento respecto a la plata ha sido, como indica usted, la de un seguidor del padre del dueño de la televisora del Ajusco, a lo cual uno el hecho de que la fuente más abundante y omnipresente de plata amonedada en este país es precisamente en la cadena de establecimientos de grupo Elektra, también de Hugo Salinas Pliego, no he sido un lector asiduo de sus libros, aunque conozco de su existencia.

Parte de mi interes en la plata se originó, en forma incipiente, a fines de la década de los 70's, aún siendo un niño. La emisión durante el gobierno de López Portillo de los "Morelos" (1977-79, 100 pesos, 20 gramos de plata pura) fué la causa para que mis padres me instruyeran sobre la historia reciente de la numismática mexicana, incluso salieron los comentarios sobre la adquisición de "olímpicas" a raíz del nacimiento de nosotros. Una mayor formalidad en el interes se originó a partir de la reintroducción de la plata en el cono monetario nacional en 1992 (10 y 20 nuevos pesos) y su posterior retiro debido a la combinación de la devaluación de diciembre de 1994 y el posterior despegue del precio internacional del argentino metal.

El Sr. Hugo Salinas Price ha sido el grán difusor del uso de la plata mexicana como fuente de ahorro para la grán mayoría del pueblo mexicano, pero también la familia de muchos de nosotros, con sólo comentarnos sobre la importancia y variedad de nuestra historia monetaria ha resultado en la base del interes de invertir en plata de muchos de nosotros. De hecho siempre he encontrado interesante la visita a las casas numismáticas.

Respecto a la posibilidad de que se mude usted a las cercanías del Lago de Chapala, no tengo porque disuadirlo, ni replicar ante ello, Estar a una hora o dos de la segunda ciudad de este país en un punto con grán potencial acuífero no parece mala idea.

[kingcopper]

Re: Inflation in America - Part II: Pondering Platinum

I'm an unabashed silver bug only because of it's underrated industrial future. Between photovoltaics, future use in portable battery systems, and catalytic converters; I'll keep buying while it's cheap. I've heard that nearly all new laptop and cordless powertool batteries will use silver as soon as 2010. These batteries do not overheat or catch fire, have great memory, and hold more and longer charges than conventional portable batteries. I think silver will be the big winner in the near future in regards to precious metals.

Also, in regards to transporting precious metals for use as currency; gold is great when crossing the border and silver is great for buying daily needs. And in our future, unfortunately, one morgan could theoretically buy the grocery store.;)

[NerdyBoy99]

Re: Inflation in America - Part II: Pondering Platinum

Newbie question. Is it worth paying a premium for Maple Leaf coins or Morgans? I intend to buy a significant amount to keep handy. You know, just in case...

[Guest]

Re: Inflation in America - Part II: Pondering Platinum

Ocelotl -

He pasado los últimos cuatro años comprando plata (casi por instinto), porque la mayoría de los consejeros recomendarán el oro. Pero en el año pasado especialmente estoy leyendo a mucha gente que sugiere claramente que una crisis monetaria internacional es inevitable ahora, en el plazo de los cinco años próximos. Usted mira el oro, y puede ir fácilmente encima de cuatro a seis veces. Pero cuando sucede eso, es casi imposible imaginarse que el mundo no mueve atrás hacia un "re-monetizacion" de los metales.

Está en el contexto de eso, que el precio presente, muy bajo la plata comienza a mirar un pedacito asombrosamente. Es posible que este metal puede levantarse diez veces a veinte veces en esta clase de desarrollo. Esta clase de desarrollo no sucede comúnmente. Es quizás " una vez en cien anos" en probabilidad, y estos acontecimientos del tiempo largo crean mucho movimiento muy grande en clases relacionadas. Y por eso es probable ahora que la plata va definitivamente a hacer algo significativo.

Respeto.

[bart]

Re: Inflation in America - Part II: Pondering Platinum

Newbie question. Is it worth paying a premium for Maple Leaf coins or Morgans? I intend to buy a significant amount to keep handy. You know, just in case...

In my opinion, yes for Maple Leafs since they're 24k and no for common date Morgans. If a real SHTF scenario, I don't think Morgans will make a difference over regular silver dollars.

[grapejelly]

Re: Inflation in America - Part II: Pondering Platinum

I like 24kt gold because it is hard to fake.