Precious Metal Report

By quixjote on Jan 11, 2011 | In Uncategorized | 7 feedbacks »

Today a friend of mine reported that he got paid in Silver. With the price of silver hovering around $30 an Oz today (In USD) and up over 500% since 2001, It makes me really wish I had bought silver many years back. We have always been taught that the precious metals do great in a weak environment and right now... our USD is pretty sickly.

Data for Precious Metals since 1995

As you can see: The prices of precious metals has definitely gone up over time. In part to general laws of Supply and Demand, in part to the weakended state of the USD. Granted, it is only a % difference, but at the time of this post the current live data listed that out of a $8.60 Price Per Ounce increase for gold, $0.40 of that was because of a lower value for the USD. On the other hand, when our dollar is strengthing it accounts for a slightly slower gain in price for gold. Earlier during a USD upswing, there was a -$0.10 change in the USD which kept the price of gold DOWN slightly.

Now that I have seen a live example of people getting paid in Precious Metals, if anyone wants to pay for my Computer and Consulting services in Precious Metals, Great! (Especially Gold!) ... So lets see, that means that right now my rate is about An Ounce of Silver an Hour. (Normal rate is $35.00USD/Hr)

Edit: Picture to be updated soon, but thank you Steve Hyland for correcting me on my math terminology. Gold since 2001 has only increased by 412% and Silver 572%

"The Bubble":

The Bubble: As Discussed in Topic on Facebook

Gold hit it's last major peak back 1980. It's peak was just over $800/oz. Then: A rush to buy silver instead. This devalued gold to a point as low as $230 for almost 15 years.

This IS expected to happen again, however it is not estimated to happen until right around the $2100-$2300 per oz mark. Which of course means it will probably happen right about the $1800 per oz mark. Chances are, it is too late to take advantage of the Gold market this go round since when things drop again they will level out around the $650 per oz range.

This once again leaves silver to fill gold's shoes. It too will experience a fall in value eventually, but it's floundering point generally levels out at a higher rate than gold.

You want a real scary picture? Go and look at the current stock market trend vs that of around right before the second major crash of 1940. If we follow as close to history as we have been so far, then I am not looking forward to the trend of the stock market starting between March to May.

Now: What happened to gold during that time? It remained consistent. Silver? Silver saw a steady increase until the 80's till the event I mentioned earlier.

Even though the stock market and general america was not in good shape, the USD became the world reserve currency in 1944, which helped keep US prices lower for many things, including oil. What happens when foreign countries stops trading things like oil, in USD?

Tags: economy, gold, market, money, saving, silver, usd
Comment from: Steve Hyland [Visitor] Email
@ The Bubble:

Top of post: Gold peaked around $800 and dropped to less than half that, despite inflation, for the next 15 years.
Since then it has gone up to nearly $1400.
Bottom of post: Gold is consistent...!? That's not consistent, it's a roller coaster.

Even banking money is unwise now. Interest rates are dismal, so it's anybody's guess what happens next. Bottom line, there's no safe haven any more. Everything is risky, even burying gold in your back yard.
01/12/11 @ 13:11
Comment from: quixjote [Member]
@ Steve Hyland:

The comment about Gold remaining consistent was in regards to after the fall of the stock market in 1944. Check out http://www.kitco.com/LFgif/au883-999D.gif . Until the early 70's Gold was indeed relatively consistent. Even before the '40's it was consistently about $20/oz

If I could more detailed daily data, I would love to see the day to day changes instead of the monthly or yearly averages that far back. If I had to guess, prices would have fluctuated in the same "Roller Coaster" pattern as current, but to a much less noticeable scale.

It will be interesting to see how both precious metals pan out during the next couple of years. If things pan out as I am expecting though, chances are I may be making a few purchases in the next 3-5 years.
01/12/11 @ 13:48
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01/24/11 @ 10:51
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01/28/11 @ 08:10
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02/01/11 @ 15:29
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