Any economists out there?

[50centsaver]

If the global economy slows, I mean really slows like so many are saying it will, will gold, silver, copper, and nickel go up? or down?

And why?

If importing and exporting slow way down, many more jobs will be lost. People won't have money to spend.

Isn't is true that many people have to buy metals for them to go up? People out of work will be scraping by just to buy food and gas.
Many will have to sell what metals they have just to eat and drive.

My feeling is everything including metals will go down. Please tell me I'm wrong.

[frugalcanuck]

I believe you are right in your thinking. But thats just me. I think everything will go down in comparison to the FRN.

[Beau]

If the global economy slows, I mean really slows like so many are saying it will, will gold, silver, copper, and nickel go up? or down?

And why?

If importing and exporting slow way down, many more jobs will be lost. People won't have money to spend.

Isn't is true that many people have to buy metals for them to go up? People out of work will be scraping by just to buy food and gas.
Many will have to sell what metals they have just to eat and drive.

My feeling is everything including metals will go down. Please tell me I'm wrong.

.
Sorry I can`t tell you that because you are right.



.

[OneBiteAtATime]

If the global economy slows, I mean really slows like so many are saying it will, will gold, silver, copper, and nickel go up? or down?

And why?

If importing and exporting slow way down, many more jobs will be lost. People won't have money to spend.

Isn't is true that many people have to buy metals for them to go up? People out of work will be scraping by just to buy food and gas.
Many will have to sell what metals they have just to eat and drive.

My feeling is everything including metals will go down. Please tell me I'm wrong.

Now lets throw a monkeywrench into it. Not only is the global ecomony slowing, but the basis for ALL money across the world crashes - The FRN. When, not if, but when the world unpegs from the FRN, you're metal holdings along with other real assets that you can hold in your hand go up in value. So yes, short term everything goes down, but long term - everything of "real" value goes up. Not necessarily vs the FRN because what happens when there is no FRN?

Everyone stop what you're doing and look at the crazy man in the room.

Your PM holdings will always have value vs whatever trumped up unit of currency TPTB dream up - IF THEY LET YOU KEEP THEM.

[pennypicker]

In theory everything you say makes logical sense and therefore one would think all metals will fall as the world economy tightens. However, during this deep U.S. recession several of the country's largest auction houses specializing in vintage sports memorabilia are setting all-time sales records and are experiencing record highs on countless rare baseball cards. In other words even though millions of Americans are seeing their discretionary income shrink, the number of millionaires has greatly increased and this is responsible for record prices being set in high-end collectibles.

I have a feeling that even though the average American will see their discretionary income further decline in the ensuing years, the number of rich will continue to increase as will the number of super rich. And if the silver market is truly being manipulated by super rich then perhaps the value of silver will NOT decline as one would otherwise think.

The rich pull the strings in the country and they will pull them the way they see fit.

[justoneguy]

another question is,
Do you have the kahunas to hold thru a gigantic dip in price ?
or will you have to sell your ASE's for $5 each to buy bread?
I believe that PM's are going to nose dive if/when we have a global depression.
Than later Bang, Zoom to the moon baby

[theo]

If the global economy slows, I mean really slows like so many are saying it will, will gold, silver, copper, and nickel go up? or down?

And why?

If importing and exporting slow way down, many more jobs will be lost. People won't have money to spend.

Isn't is true that many people have to buy metals for them to go up? People out of work will be scraping by just to buy food and gas.
Many will have to sell what metals they have just to eat and drive.

My feeling is everything including metals will go down. Please tell me I'm wrong.

You may be right in the short-term. A deflationary recession will bring asset prices down including gold and silver (temporarily). However, governments and central banks will respond with more money creation. This is why gold and silver are far better stores of value than unbacked fiat currencies which can be printed without any serious legal restrictions.

[50centsaver]

"I believe that PM's are going to nose dive if/when we have a global depression.
Than later Bang, Zoom to the moon baby.."

Then doesn't it make sense to sell what gold and silver we have now, then BUY when it goes way down?

[68Camaro]

Agree - PMs will be nearly valueless, please sell everything you have to me... ASAP...

[barrytrot]

First off, the worst prognosticators of our time are "Economists". I'm talking about the famous ones. They are more all over the board than anyone and for some reason never take flak for being completely wrong. I wish my job was so easy!

Secondly, there are a thousand things that can happen if the "global economy" slows.

Thirdly, you need to remember that the many governments out there have about 50% of the money and about 1% of the "brain" and they will try to "create policy" which pretends to try to "help grow the economy". For anyone that thinks for 5 seconds it is laughable to have the most inefficient organization in the history of mankind trying to make the economy better.

Because of the "third" item above the odds of the "global economy" slowing without some ludicrous response from the government are probably nil. Since the government's creativity level is even smaller than it's intellectual capacity that likely means increasing inflation by pumping out more "paper money" so people say, "hey the economy is growing, my government check is now 25% higher." Meanwhile those with JOBS are taking it in the shorts.


Anyway, because of the governmental intervention the results of economic change are always different than they logically should be. And by different, I mean WORSE.

Could PM's go down? Possibly, but since the true inflation adjusted price of PM's is still quite low, I wouldn't count on that, especially in a "market" controlled primarily by ridiculous government policy.


Also, for this exercise remember that "going up or down" means in relation to FRN's. If there are twice as many FRN's then everything has the propensity to increase in "cost". Not everything will, of course, but most things will.

[beauanderos]

Without taking the time to go back and see who raised each point, let me just say that... logically... your concerns are valid. But then consider this. You're worried that someone might have to liquidate their holdings in order to get by. Who would that be? Well, most likely... one of the 99%. One who, most likely, would not have that much worth socked away in precious metals in the first place, comparitively speaking, to one of the 1%. What is the statistic anyway? The top one percent control something like 50 or 70% of the wealth? Yes, in a recession or depression... there will be FEWER buyers for precious metals. Will this result in a pullback in prices? Not if those fewer buyers have GREATER wealth than the sellers. As this whole "race to the bottom" of depreciation of ALL global fiat currencies accelerates, those who are wealthy are beginning to wake up and smell the coffee. What do you think they talk about at their lavish soirees aboard their super yachts? As they cavort about in their expansive suites in the towers of Dubai? As they attend their polo matches or watch their stables of thouroughbreds race at the Kentucky Derby? Do you think they worry about gasoline going up? About the price of bread? Heck no, they laugh with sidesplitting mirth, at the travails of the little people... of the vanishing of the middle class... if they think about these issues or that social class, at all. Most likely, the middle class are invisible to them, a mere "working class" herd. No... what they talk about is finance. And in the world of jet-setters, they talk in millions of dollars, as we talk in hundreds. And as more and more billionaires purchase purchasing power insurance (they aren't "investing" as they don't need to earn money in that sense, they need to protect and preserve what they already have), it is becoming trendy to obtain gold in vast amounts, and that is what you would hear being whispered about in conversation, were you able to eavesdrop. Not so much so silver, as it is not easily sourced... but as the one percent will help ensure a continuous price rise of gold, so shall the 99% assist in the rise of silver. Yes... some people will be forced to sell what they have to in order to survive, money has a way of moving from weak hands to strong, but if you personally are approaching a point where you are considering selling low, with a plan to buy back lower... you might want to scrutinize your budget and see if there aren't lifestyle changes you could make, dramatically modifying your spending... even on a drastic basis, to increase your discretionary pool of funds, in order to preserve what precious metals you might have now. Even draconian measures to retain your REAL money would be preferable to cashing it in now, particularly if you're only going to "waste" the funds obtained on frivolous items like fancy electronics toys, Starbucks, dining out too often, the latest fashions, unnecessary vacation travel, an unneeded second car, etc. It is far better to scrimp NOW, in the name of delayed gratification... and purchase or maintain your precious metals stash, then it is to continue the self-indulgent lifestyle that most sheeple are engaged in, oblivious as they are to the economic crisis that continues to worsen about them. At some point in time, your stoicism will be rewarded, and you will no longer find living a spartan lifestyle exigent... but will instead be able to purchase ANYTHING you desire... because of the sacrifices you made earlier. IMHO

[barrytrot]

Great analysis Beunaderos!

[68Camaro]

Thanks to both Ray and Barry for top notch comment...

(I hope the rest of you all recognize the tone of my previous post and that i'm not really suggesting that you sell...)

[Mossy]

I have to go back to re-read this more carefully, but something I think is a mistake that many people make is to try to make all commodities equal.

Cars and beans are both commodities. Today, a car might be worth a hundred 50# bags of beans. What about after a crash? A car is not worth even 5# of beans?

Also, boomers have loads of "stuff" that could all be called commodities. What relative values now? What relative values 5 years from now? Add to this that retiring boomers are going to want to turn these assets into money, and so are their heirs. All this collected and accumulated stuff is going to hit the market and it's going to lose value.

[barrytrot]

I have to go back to re-read this more carefully, but something I think is a mistake that many people make is to try to make all commodities equal.

Cars and beans are both commodities. Today, a car might be worth a hundred 50# bags of beans. What about after a crash? A car is not worth even 5# of beans?

Also, boomers have loads of "stuff" that could all be called commodities. What relative values now? What relative values 5 years from now? Add to this that retiring boomers are going to want to turn these assets into money, and so are their heirs. All this collected and accumulated stuff is going to hit the market and it's going to lose value.

The "collected stuff" is by-and-large NOT going to be PM's. Other than the people on this board and others, people's "stuff" includes JUNK and maybe an ounce or two of silver and/or gold in some jewelry form. That's it. a few hundred ounces or even pounds added to market, even of gold, is a micro-blip.

[Mossy]

The "collected stuff" is by-and-large NOT going to be PM's. Other than the people on this board and others, people's "stuff" includes JUNK and maybe an ounce or two of silver and/or gold in some jewelry form. That's it. a few hundred ounces or even pounds added to market, even of gold, is a micro-blip.

Truth.

My "collected stuff" is mostly garbage with value if I could use it. Even the extra ammo and rifles I bought have lower price tags than when I bought them. I got caught buying the wrong "stuff". As I look around /now/, I realize that everyone else bought the same "stuff", and the relative value of what I have is going to drop.

I allowed myself to be influenced by the "you can't eat gold" foolishness. It's going to cost me.

[barrytrot]

I allowed myself to be influenced by the "you can't eat gold" foolishness. It's going to cost me.

Especially since you CAN eat gold

[Mossy]

"I believe that PM's are going to nose dive if/when we have a global depression.
Than later Bang, Zoom to the moon baby.."

Then doesn't it make sense to sell what gold and silver we have now, then BUY when it goes way down?

Yeah, well, all last week we were hearing "bad week for PMs this week", meaning the market value was going to drop. Markets were closed from Weds to today, and this morning?

BOING!

You pays your nickle, you takes your chance.

[BamaJoe]

Some good comments here. I would just add that those with REAL money will not be will not be worried about selling their rolex or island vacation spots to buy peanut butter and bread - they will be buying real assets with an eye to the future.

Take a look at what gold and silver mining stocks in the 30's during the depression and massive deflation. History tells you what to expect in the future.

[Rodebaugh]

I have to go back to re-read this more carefully, but something I think is a mistake that many people make is to try to make all commodities equal.

Cars and beans are both commodities. Today, a car might be worth a hundred 50# bags of beans. What about after a crash? A car is not worth even 5# of beans?

Also, boomers have loads of "stuff" that could all be called commodities. What relative values now? What relative values 5 years from now? Add to this that retiring boomers are going to want to turn these assets into money, and so are their heirs. All this collected and accumulated stuff is going to hit the market and it's going to lose value.

Yeah I am sitting on a goldmine with all my McDonald Shriek glasses and Dale Earnheardt collector plates.

Ray has a point BUT you have gotta be careful folks. Don't forget to live a little. You can't take that silver and gold with you and your kids will just cash it in for cigarettes and lotto tickets when the old man finnaly kicks the bucket. As with everything: Find a balance.

[beauanderos]

I have to go back to re-read this more carefully, but something I think is a mistake that many people make is to try to make all commodities equal.

Cars and beans are both commodities. Today, a car might be worth a hundred 50# bags of beans. What about after a crash? A car is not worth even 5# of beans?

Also, boomers have loads of "stuff" that could all be called commodities. What relative values now? What relative values 5 years from now? Add to this that retiring boomers are going to want to turn these assets into money, and so are their heirs. All this collected and accumulated stuff is going to hit the market and it's going to lose value.

Yeah I am sitting on a goldmine with all my McDonald Shriek glasses and Dale Earnheardt collector plates.

Ray has a point BUT you have gotta be careful folks. Don't forget to live a little. You can't take that silver and gold with you and your kids will just cash it in for cigarettes and lotto tickets when the old man finnaly kicks the bucket. As with everything: Find a balance.

Those who are late to the party on a limited budget, might want to live conservatively and build a nestegg of real money. If you've already done so, and you can sleep soundly at night with all that is transpiring about us... then sure, live a little. It also makes a big difference if you're on your own, or part of a family.

[dan53]

I think its the uncertainty created by a slowing economy, a faltering stock market, and spiraling energy costs that drives up the price of precious metals. I think thats ONE of the variables that affects pm prices.

[shinnosuke]

Any economists out there?

Has a sovereign central bank experiment with a fiat currency ever ended well for the common citizen?

[barrytrot]

Any economists out there?

Has a sovereign central bank experiment with a fiat currency ever ended well for the common citizen?

Everyone that lived in the United States their whole life and is currently dead: YES for them.

[justoneguy]

"Even if you're on the right track, you'll get run over if you just sit there." - Will Rogers