04 January 2012

Gold The Most Explored Mineral Commodity

Got a post up on the corporate blog on how 50% of all money spent on non-fuel mineral exploration during the last 15 years was spent on gold exploration.

And from the "who can make the most dramatic price forecast" department comes The Possibility of $1,000 Silver before Hyperinflation. Has anyone made a higher call?

To save you reading the whole article, here is the key logic behind the headline:

"...with gold at this relatively conservative top of $10,000 - if silver is at its historic 16:1 average in relation to gold - silver will be $625 per ounce. We have also explained above how it is entirely possible for silver to overshoot this 16:1 average, which is normally what happens when a trend has been misaligned for such a long period of time. If silver does reach a 10 to 1 ratio as it has done before at different times throughout history, then we would be seeing a price of $1000 per ounce..."

I suppose when you start off with the assumption that $10,000 gold is "relatively conservative" then $1000 silver is not far behind.

The key "gotcha" is in the headline: "before Hyperinflation". That is not a situation in which you want to trade your silver for $1000 of soon to be worthless fiat.


  1. When I was first looking at precious metals I sought out some people my family trusted to get their opinions (as I knew less than zero), one of whom was a well respected gentleman at a large wealth management firm (he was also a closet pm bug). He told me that silver could go to $1000.. I stopped listening to him shortly after, but it's always struck me how a successful man could entertain such a remote possibility, let alone tell it to me (I was I think 19 at the time). Thank god I didn't know what leverage was.

  2. This article was just too timid.

    Come on, if it's going to overshot, it might as well overshoot to 1:1.

    While we're at it why not surpass gold for a while - isn't the "logic" that the great masses will only be able to "afford" silver, and create that truly extraordinary demand?


  3. "Come on, if it's going to overshot, it might as well overshoot to 1:1. "

    Actually, at one point in America's history, it did just that very thing you describe...

  4. "With the bullion in a silver dollar worth
    five cents more than the bullion in a gold dol
    lar the cross of gold does not look so yellow
    and the crown is not so thorny as it was. ."

    From http://chroniclingamerica.loc.gov/lccn/46032385/1919-12-01/ed-1/seq-1/ocr/

    Via: http://dont-tread-on.me/?p=5769

  5. http://professorfekete.com/articles.asp

    check out "140 years of silver volatility"

    where is sprott these days anyways? the lows may thus be near :)

    at the end of this, there will be a lot of silverbugs holding the bag, shaking their heads, wishing they bought physical gold instead.

  6. "50% of all money spent on non-fuel mineral exploration during the last 15 years was spent on gold exploration."

    Going on the share price of most of these 'explorers', they ain't doing a real flash job.

  7. A scholarly article called "Ancient Egyptian Silver" in "The Journal of Egyptian Archaeology", Vol.67, 1981, says "... silver in Ancient Egypt was highly prized and was a relatively rare metal when contrasted with the more readily available gold... even in later times silver was valued more highly in Egypt than, say, in the Aegean world. Cerny has shown that during the New Kingdom the gold/silver ratio remained fairly constant at 2:1, and this was maintained even into the Persian Period as compared with a value of about 13;1 in other parts of the ancient world..."

    There is only one constant in this universe, viz. change.

    If I had a penny for every time some ignoramus said, "That will never happen...", verily I would be a mega-millionaire.

  8. Good read on the hostory of money: What is “money”? Is it the same as “currency”? What about gold?


  9. Ok, all you Anonymous, your examples leave a lot to be desired.

    If the government sets the value of anything, you cannot give that as an example of a good ratio. I mean, if we make Anonymous president, he can set the silver to be 100 more valuable than gold by decree. So what?

    As for the Ancient Egyptian example, I could pick an islan in Polynesia where beef is more valuable than any previous metal. Why, I wonder? Set up a nice efficient trade network, good mining te hniques, and tell me about the price of silver in modern Egypt.

    The only thing I agree with is "never say never" - for a limited space/time interval anything is possible.

  10. Hey Bron,

    rumor weekend on the silver front, again.

    Some are suggesting $1M+ orders of silver = 30+% premium to spot...my understanding is, generally, price is lower the more one buys...

    any insight would be great.


  11. This was my response to that statement at http://screwtapefiles.blogspot.com/2012/01/is-someone-paying-zero-hedge-to-post.html

    Where does Turd get his info "that orders over $1 million go at 30% over"?

    Why aren't any of these desperate buyers coming to the Perth Mint? We'd make an absolute fortune selling 1000oz bars at 30%. Hey, I'm sure our Treasurer will do deals at 25%, you can save 5%!

  12. now now Bron... please don't confuse 'em with facts.

    The fairy stories are exciting, and its often fun to hear them.

  13. Bron, you might find this interesting


    It seems Sprott's 'silver' ETF is not the only thing trading at a premium. I don't buy their explanation though.

  14. Interesting that is not a closed end fund but and ETF with a market maker, but one who is having problems getting the underlying asset. Premiums will occur in that situation, but it will reverse at some point.