this may be a dumb question, but....

[freespirit]

as i watch the spot price on silver fluctuate, i wonder.....

is the actual value of one ounce of silver (currently $36.17) gaining & losing value exclusively (on it's own merits), or is it also reflecting the fluctuation of the FRN's purchasing power, and if so, to what extent?

i may not be asking this question properly, but maybe another way to put it is, is the silver gaining and losing value, or is it the FRN that silvers' value is based upon?

like i said, may be a dumb question....

[mamboni]

as i watch the spot price on silver fluctuate, i wonder.....

is the actual value of one ounce of silver (currently $36.17) gaining & losing value exclusively (on it's own merits), or is it also reflecting the fluctuation of the FRN's purchasing power, and if so, to what extent?

i may not be asking this question properly, but maybe another way to put it is, is the silver gaining and losing value, or is it the FRN that silvers' value is based upon?

like i said, may be a dumb question....


Silver is appreciating relative to gold, so it's price reflects it's higher intrinsic value over and above nominal price increases secondary to inflation.

[freespirit]

thanks, mamboni...that helps, but i'm still a little foggy on the whole thing.

sorry, this is all new to me....

i'm not sure i even know how to ask my question...lol

thanks nonetheless.... ;D

[Sparky]

Both. I can think of 3 things that effect the spot silver price:

- Domestic inflation.
- Dollar devaluation relative to other currencies. "International" inflation, if you will.
- Speculation.

Of these three, speculation is the one that causes the chatter in the daily spot prices, and the short-intermediate rises and falls. The other two determine the long term trend.

[gunDriller]

it's like a clock with millions of parts affecting the motion - market manipulators, Talmud-worshippers, just plain folks, G-S.us'ers, new participants ... etc.

[freespirit]

would it be fair to say that the "actual value" could be expressed as say, 2-3% less or more (for example) than the "quoted value", having taken these variables into effect? or would it be better to consider the average spot price over say a 6 month period to get a more accurate depiction of value.

i understand that there is a difference between price and value, i hope i am able to express myself clearly enough, i am still very green with PM's....

[undgrd]

Both. I can think of 3 things that effect the spot silver price:

- Domestic inflation.
- Dollar devaluation relative to other currencies. "International" inflation, if you will.
- Speculation.

Of these three, speculation is the one that causes the chatter in the daily spot prices, and the short-intermediate rises and falls. The other two determine the long term trend.


Would you lump consumption in with speculation? I would say consumption has become a measurable indicator to track.

[Sparky]

Both. I can think of 3 things that effect the spot silver price:

- Domestic inflation.
- Dollar devaluation relative to other currencies. "International" inflation, if you will.
- Speculation.

Of these three, speculation is the one that causes the chatter in the daily spot prices, and the short-intermediate rises and falls. The other two determine the long term trend.


Would you lump consumption in with speculation? I would say consumption has become a measurable indicator to track.


That's a good question. I would say it's a component of speculation, but so is inflation. So I guess it should be identified independently as a 4th "thing". But it changes slowly, like inflation.

[Sparky]

would it be fair to say that the "actual value" could be expressed as say, 2-3% less or more (for example) than the "quoted value", having taken these variables into effect? or would it be better to consider the average spot price over say a 6 month period to get a more accurate depiction of value.

i understand that there is a difference between price and value, i hope i am able to express myself clearly enough, i am still very green with PM's....



Hard to define "actual value" with precious metals. Silver has industrial uses that give it a fundamental supply/demand value. But it also has a precious metal component, which is very difficult to pin down. The main value in precious metals is "perceived". In some respect, this is very similar to fiat money. (GSUS blasphemy!) The thing that sets PM apart is that there is a limited supply that is costly to add to. Gold also does have some industrial use, and it's visually appealing, which establishes an intrinsic value that is not present in other "rare" tangibles.

To more directly answer your question, I think a multi-month average of spot price is a better gauge of underlying established value. Most of us here think it is currently under-valued, but that has yet to be established.

[sunnyandseventy]

What if one (prior to boating accidents and prone to absent-mindedness) has more ounces of gold than silver? Would it be wise to trade some gold to have more silver?

[Neuro]

Probably it is best to compare the price of silver, to the price of things that you normaly buy or want to buy. If you need less equivalent amounts of silver to buy that, then your silver has gained in value. My silver has definitely gained in value... My gold has been more stabile, but overall it has gained some, over the last 4 years I have been in on it

[Sparky]

Probably it is best to compare the price of silver, to the price of things that you normaly buy or want to buy. If you need less equivalent amounts of silver to buy that, then your silver has gained in value. My silver has definitely gained in value... My gold has been more stabile, but overall it has gained some, over the last 4 years I have been in on it


This is true Neuro, but this doesn't really address the O.P. If last week I could buy 20 cans of soup with my ounce of silver, and today I can buy 25 cans, and next week I can buy 23 cans, how many cans of soup is my silver really worth?

[Serpo]

What if one (prior to boating accidents and prone to absent-mindedness) has more ounces of gold than silver? Would it be wise to trade some gold to have more silver?


I did with some at 47 ratio

Basically silver is still a better bet than gold in the immediate future.

Havnt heard of people wanting to get back into gold that own silver in a big way lately.
Look what is going on with silver, silver has the opportunity to break a lot higher than gold ever will and may be worth as much as gold one day.

[Serpo]

Probably it is best to compare the price of silver, to the price of things that you normaly buy or want to buy. If you need less equivalent amounts of silver to buy that, then your silver has gained in value. My silver has definitely gained in value... My gold has been more stabile, but overall it has gained some, over the last 4 years I have been in on it


This is true Neuro, but this doesn't really address the O.P. If last week I could buy 20 cans of soup with my ounce of silver, and today I can buy 25 cans, and next week I can buy 23 cans, how many cans of soup is my silver really worth?


Over 100 cans of soup plus.....++++ :sun:

[StackerKen]

I like Mamboni's answer best :)

[Sparky]

as i watch the spot price on silver fluctuate, i wonder.....

is the actual value of one ounce of silver (currently $36.17) gaining & losing value exclusively (on it's own merits), or is it also reflecting the fluctuation of the FRN's purchasing power, and if so, to what extent?

i may not be asking this question properly, but maybe another way to put it is, is the silver gaining and losing value, or is it the FRN that silvers' value is based upon?

like i said, may be a dumb question....


Silver is appreciating relative to gold, so it's price reflects it's higher intrinsic value over and above nominal price increases secondary to inflation.


If that were true, it would maintain that relative appreciation during downturns, which it does not. During the 2008 PM slide, the ratio went from 50:1 to 85:1. I think its more accurate to say that its intrinsic value is more influential on its total value compared to gold, but sometimes the influence is negative. During downturns when the sentiment is that the economy is slowing and silver will have less industrial demand, this intrinsic component works against it. The next downturn will be a test of this theory; let's see what happens!

[undgrd]

If last week I could buy 20 cans of soup with my ounce of silver, and today I can buy 25 cans, and next week I can buy 23 cans, how many cans of soup is my silver really worth?


The problem with this statement is, Silver can be traded for things other than soup and, soup can be traded for things other than silver. You could make that comparison if soup and silver were the only thing the other could be traded for...but they're not.


I hate to say it but, soup and silver are worth whatever someone believes it's worth...just like everything else.

[SLV^GLD]

I hate to say it but, soup and silver are worth whatever someone believes it's worth...
Just ask Esau.

[Neuro]

Probably it is best to compare the price of silver, to the price of things that you normaly buy or want to buy. If you need less equivalent amounts of silver to buy that, then your silver has gained in value. My silver has definitely gained in value... My gold has been more stabile, but overall it has gained some, over the last 4 years I have been in on it


This is true Neuro, but this doesn't really address the O.P. If last week I could buy 20 cans of soup with my ounce of silver, and today I can buy 25 cans, and next week I can buy 23 cans, how many cans of soup is my silver really worth?
Your silver is worth whatever the best buyer is willing to pay for it, at the time.