Q. David Bowers on Silver

[exbingoaddict]

There are many sharp minds here so I wanted to share this.

I was skimming a recent issue of coin world. Reading Q. David Bowers The Joys of Collecting piece as it was titled "Popular delusions. Observe lessons of history".

In his article he pointed out that 1950-D Jefferson 5 cent rolls were trading for $1,200 in 1964. Now they’re going for about third of that. Mentioned a book Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackey in 1841. Brought up the Dutch tulip bulb bubble. Cited a study that the price of silver being over $25 per ounce had no basis in reality. That use for silver was film industry and mints. The only reason for the rise in price of silver was investors demand. Said silver was not gold and therefore held not world monetary value as a hedge against devaluation of the dollar.

All in all it was pretty much a back handed slap to silver. Ok, I understand the following the masses is not always wise part. 50-D nickels and the classic tulip bulb case is quite a stretch. Silver is a community after all, not a collectable baseball card. However, he does make a point that the run up in silver is investor driven. However, I think he may be a little off downplaying the industrial use of silver.
Personally, I think Bower’s may be a walking tome of numismatic knowledge. But is he stepping out of his realm talking about bullion? Is Silver a hedge against a falling dollar or is gold and other (i.e. oil) commodities the only ticket?

Thoughts? Comments? Ideas?

[Treetop]

He kinda contradicted himself there by my count. He says silver is industrial, it isnt monetary. While also admitting its being run up right along with gold by INVESTORS. Obviously if people around the entire planet still think of it as money as they do gold well then it is so. In fact its been climbing much faster then gold, from those investors, so saying it isnt monetary taking all that in is kinda silly imo.

That said it is indeed also industrial. Think of this though, many I personally know still do not think of gold as money either (except for pirates) its jewelry. What makes this mans perspective that gold IS money and silver isnt any different then a few people I know who see neither gold nor silver as money??? Many here of course think of gold and silver and many copper as money. These three metals historically have been money for a long long time. Why? Well... there are solid reasons why people picked these metals specifically but it was money because everyone agreed it was. Its as simple as that. It held its place through the ages as money, because it couldnt be readily inflated..

Besides those investors there is also simple inflation. Hard to peg what percentage of silver and gold rises are inflation caused and which are investors who clearly all think silver is money....

There is certainly truth to the mob mentality thing hes talking about. However I do not personally see that as the case with silver or gold or other hard assets. The world reserve currency, the one that is the back bone to much trade worldwide... is from a country in debt so steep it is not likely to change. Especially since no one is trying to alter the course AT ALL. There are many other factors as well of course, but this is a BIG deal. this cannot last forever. This isn't an american problem it is a global one. We will be paying the piper at some point. It will change the shape of our lives. Let alone the ripples it would cause in other places, and energy issues and so many other things.....

So yeah hes right, the mob mentality can run up the prices of anything. As people scramble to hop on the bandwagon. Look at those 5 ounce state quarter coins for proof. But I dont see that as the case at this point in time for silver. Or any time for the next few years actually. Although people or even governments scrambling may indeed have the prices spike more then the fundamentals imply, I personally think its clear the trend will be up for some time...