Jolene, certainly the other 2 guys are "in the chips", but the only "silver" Snow knows about is the loose change he fishes out of his pocket trying to scrounge the admission fee to see "sold out" shows of "Atlas Shrugged".























-- Modified on 4/16/2011 10:35:50 PM

-- Modified on 4/16/2011 10:41:34 PM

will hopefully jump in and either add to what I say, or correct me if my simple thesis is wrong.

First, all commodities have been going up for some time, and for different reasons. Gold is basically a monetary commodity. You really can't use it for anything. It's basically a hedge play against currency and inflation. You can look at how our dollar has been debased due to deficits, QE2 (printing of money), as 2 simple reasons.

Other commodities like oil, corn, wheat, copper are going up based on global economic improvement. The word global is key because of the demand in the emerging markets, including China, India, Brazil, etc. Global demand is just one factor. With oil you have geopolitical events that help drive the price higher.

Now to Silver. Silver is both a monetary commodity, and also an industrial commodity. A lot of industries use silver in the production of their products. Silver outperforms gold when precious metals go up. Look at the 2 metals since March 2009, when the market bottom, and the economy started to turn. Silver is up what, about 300% and gold about 75%. I might be off a bit, but you're right silver has been on a tear, especially since August 2010. At the same time, silver drops much faster when the economy tanks, because of the industrial use component.

I'm giving you a non-political answer to your question. GaG and marikod will do the same. Don't pay attention to some of the bizarre political bent answers. Hope the above helps.

I know that many pricey microphone diaphrams are made out of gold, but I only know that because I know audio engineering. I figured it had other industrial uses.

Why has silver gone so freakin' high all of a sudden? Last week is was still in the teens. What's going on that justifies such a hike? Is it the oil thing? The wars all over the place? Some company (or brothers) hoarding the stuff?

What gives?

-- Modified on 4/16/2011 9:59:32 PM

We've already established the douche bag part.  God forbid there be a thread about something real that you don't hijack with your BS.  Congrats on modifying your post twice.  You had to get that silver/loose change poetry just right?

speaking as someone who COMPLETELY missed the gold and silver boom and who is tempted to jump in every time those prices rise. I suspect St. Croix has had a gold fund socked a way for years and now is buying only the finest chardonnay and brie.

      Part of the answer is the availability of ETFS and a class of buyers who really have no idea what they are buying.
     
     Remember that 10 years ago, retail investors for all practical purposes were limited to precious metal mutual funds if they wanted to invest in silver. Now you can get a pure play on silver by buying a silver ETF. Tens of thousands of investors have flooded the market and raised prices by buying these ETFS. As as the ETF rises, they buy more.

     But if you are thinking about testing the silver waters Jolene, beware. No one really knows how the silver market will perform with this new class of buyers.

       One assumption is that if prices start to fall for fundamental reasons, the retail investor will panic and cause the market to crash big time. As St. Croix pointed out, even before ETFs the silver-gold price ratio differs greatly in up and down markets-  silver takes the elevator down while gold takes the stairs.

      Also be sure to distinguish ETFS that actually own silver and keep it in a vault in London like SIVR, and futures ETFS like DBS that own no physical silver and buy futures contracts each month.

     The problem with this second group is counter party risk and the contango – i.e., the futures contract bought each month may cost more than the spot price of silver. While the contango for silver ETFS has been strangely small to date (big difference for oil and gas) , I predict the silver contango will widen as clueless investors rush in.

     So go with the SIVR even though the fund has to pay those storage costs. Or try the Proshares AGQ if you want to gamble tha silver prices will rise – this leveraged ETF can hit the ball out of the park in a rising market. St. Croix and I always talk about these leveraged funds but we don't have the guts to jump in.

I have gone broke several times, but never bankrupt. There is a big difference between the two.

As to the rest of your post, I plead the fifth, which is about what a drank yesterday.

From what I remember, there is a long term correlation between silver and gold.  Currently silver Is trading below that point, It was at 26/oz back in feb and currently hit a high of about 42.  Hopefully someone can clarify, but from what I recall hearing, at the price gold Is currently at, silver should be in the 80-90 range to keep that  long term parity (16:1). So perhaps that could explain SOME of the recent gains.

were further apart than 16:1 (I thought it was closer to 30:1). Shows what I know. Thanks.

meant when I scanned the reviews. I particularly remember looking at the pictures of TS Christine and thinking "h'mm."

    Fortune smiled, however, and I figured it out before I experienced my personal Crying Game. So we all start somewhere.

    And in fact I bought the UNG after Katrina without understanding contango. I learned it after the fact as I wondered why the fund was not going up like the daily price of natural gas.

But in all seriousness, you should consider getting in the market. Cds are joke right now and there really is no place else to be.

but add the word backwardation. It was probably back in early 2007 when the guys of Fast Money would use these terms daily. Hell, for a few days I thought contango was a new tango, and it had something to do with Argentina(lol).

I also had no clue on various rare earth metals, their various applications, and the role of China. I actually had no clue about a company like Molycorp, until Brian Kelly of FM went on and on and on about it. This stock has gone up over 600% in a year. Did I buy? No, but it did help me with a refresher on the periodic table.

When was your most recent "Crying Game" experience. Oh yeah, March 24th against Arizona. That's for the chardonnay and brie comment.

kind of guy.

     Yes, that wound still burns brightly. Losing is bad enough but to a PAC 10 Team? Even worse, that fat windbag Charles Barkley kept saying through the prelim and at halftime that Arizona would win - and he turned out to be right. Ack.

      But maybe we've discovered a great new pick up line to use in a bar- "Hey babe, how do you feel about contango." If she thinks it's anything other than a new tango, keep on walking.

   And one more thing St. Croix-

Wait till next year.

PS:  Don't forget the money snow finds in his couch and the $$ he earns cleaning up at the glory hole. As for GaGa, he never claimed to be "monied" just to paying a lot of taxes, going bankrupt a lot and nailing lots of bargain-rate chicas. Not that there's anything wrong with that!  I do believe he makes a lot of money, it's just that there's not much left over after his primary expenses for things like housing and groceries.

I'm far from an expert on commodities but I do know that gold is far more than simply a monetary commodity.  Here's short excerpt from Geology.com on the uses of Gold in Electronics and other manufacturing.

"The most important industrial use of gold is in the manufacture of electronics. Solid state electronic devices use very low voltages and currents which are easily interrupted by corrosion or tarnish at the contact points. Gold is the highly efficient conductor that can carry these tiny currents and remain free of corrosion. Electronic components made with gold are highly reliable. Gold is used in connectors, switch and relay contacts, soldered joints, connecting wires and connection strips.

A small amount of gold is used in almost every sophisticated electronic device. This includes: cell phones, calculators, personal digital assistants, global positioning system units and other small electronic devices. Most large electronic appliances such as television sets also contain gold.

One challenge with the use of gold in very small quantities in very small devices is loss of the metal from society. Nearly one billion cell phones are produced each year and most of them contain about fifty cents worth of gold. Their average lifetime is under two years and very few are currently recycled. Although the amount of gold is small in each device, their enormous numbers translate into a lot of unrecycled gold.
Use of Gold in Computers
  Gold is used in many places in the standard desktop or laptop computer. The rapid and accurate transmission of digital information through the computer and from one component to another requires an efficient and reliable conductor. Gold meets these requirements better than any other metal. The importance of high quality and reliable performance justifies the high cost.

Edge connectors used to mount microprocessor and memory chips onto the motherboard and the plug-and-socket connectors used to attach cables all contain gold. The gold in these components is generally electroplated onto other metals and alloyed with small amounts of nickel or cobalt to increase durability.

is the fact that people want to invest their money somewhere, and with the falling dollar and people's lack in faith that we can actually meet our debt obligations, they are investing elsewhere....

No no; I'm not looking to buy - haven't the funds or

the knowledge to go that route. (Heck, I might just turn in the single ounce I have for gas money - which is another ball game altogether.)

But, I make jewelry as part of my civie job (the retail, not the writing) and the prices of sterling- and fine-silver wire and sterling findings, and precious metals clay has gone through the roof. I had to back off from using gold a year ago; now I'm having to back off from silver, too.

I just wondered why silver was getting so tilted.

Thanks though for the input.

Have a laugh on me: I had to look up the meanings of ETFS and contango, and who/what SIVR and DBS are. I had a vague knowledge of what futures contracts meant, and I knew what spot silver meant, but the above were a whole other language to me (and I'm not talking hobby-style Greek which I understand quite well).

the fact that you felt so compelled to post this must mean I am the center of your thoughts!!!!

Guess I should feel guilty because I don't care what you think and don't really think about you at all  

the current ratio is roughly 35-1.
investors of all stripes are slowly diversifying out of USDs into hard assets of all types in anticipation of 1. the dollar no longer being the universal currency and 2. the coming governmental credit collapse due to excessive obligations.

i believe the demand will continue for monetary commodities until investors feel the US has it's financial house in order.

see that happening anytime soon?

not me.

I am so flattered by your continued obsessive attention, snowcone!

I know I'm still far behind in understanding them. But, anyway, I thank everyone who's helped me understand a bit more of the financial world. Someday I hope to actually take part in it and invest!

And not just in silver wire for caging cabochons.