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....

[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?