It's TIME for all pm bulls to step and BUY physical.
Never mind that SLV has broken the Dec lows and is going to plunge.
Oh, hey cypherdoc -
I hope you're ready to gloat for about a week. I still wouldn't trade these markets even if my last name were Bernanke. Hope you keep stops in place to next month
I must've been 'lucky' to have called that three days in advance.
You can ignore reality, but you can’t ignore the consequences of ignoring reality. ~Ayn Rand
No amount of luck can prevent reality from crashing back down on your illusion; it's only a matter of time.
The relational values are my educated guess as to how each of several different types of value apply to each of the assets presented. Subjective is obviously from the subjective theory of value, just as intrinsic infers the intrinsic theory of value. Production value is the input cost, or the labor theory of value.
In the last one I think you mean the cost theory of value?
Hard to make a definitive choice between the two; cost theory seems more rigid, but they could both be applied with similar results. I think it might make more sense to apply cost theory to paper gold (when it was directly tied to actual gold in fixed ratio certificate form) because that has to take into account the underlying asset it lays claim to, even though the actual cost to product a paper claim certificate is marginal.
Well prices are determined through the subjective valuations of market participants. The production cost comes into it because if the price falls below the production cost then producers that produce at this cost will no longer be profitable. With less supply from production because of less profitability then there is an upward pressure on prices. This is due to markets tending towards equilibrium where supply and demand meet. When selling something, you do not want to run out of stock, so if there is less supply, the demand will be greater for the sellers that continue to exist and hence they can raise prices which will lower the actual demand because higher prices removes willing buyers.
All simple economics.
Yup. I think the confusion is two-fold: missing the fact that gold is a currency
and the paper representation of gold is not the same as physical gold.
Paper gold used to be a direct 1:1 claim on physical gold. That convertibility alone is what lent credibility to the paper. This is why the production cost, leaning more toward cost theory, is almost the entire valuation. The paper itself may be worth almost nothing, but what it represents is very valuable - and that representation is the entire valuation.
Once convertibility is severed, as it was in a sense during 1933 and again in finality after 1971, the value of the paper depends entirely on what people think it's worth. After having been psychologically conditioned to recognize the dollar being "as good as gold", it is very difficult to grasp the change that becomes "instead of gold".
A visual example, and the play-by-play:
- 0:00-0:05; going great
- 0:05-0:10; run away from deflation
- 0:10-0:13; going great
- 0:13; separate from gold
- 0:18; realize the danger
- 0:21-0:30; hit crisis and collapse
- 0:35 onward, pursue Keynesian/MMT policies
Listen to Ben Davies KWN podcast. There's a structural problem with how mining companies have been financing themselves. MANY will go out of business.
And when they do, their
real assets don't disappear like paper. They'll be acquired and capitalized on by stronger companies. The difference here is that returns won't be as high. Royalty companies (RGLD, SLW, TRX, etc) may be the best option.
Poll
