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Hecla Mining Co. Message Board

  • averycoolguy69 averycoolguy69 Apr 8, 2011 10:34 AM Flag

    Is my logic correct or I am way out there?

    Was looking back at some old articles from Dave Morgan, Turk and others. It seems most refer to the 1980 price of silver as the "Hunts manipulation event". I don't agree but lets take the Hunts out of the equation.

    silver lost 50% of its value after the Hunt brothers so if silver in 1983 was 20 dollars per ounce lets start there. We all know that the US government made available all its silver which numbered in the billions of ounces thus kept the price low during th 80s.

    If money and credit supply in 1983 was 1.8 trillion, today its over 18 trillion dollars....Thus just that fact silver should be 200. But wait. We had at least 7.5 billion above ground silver for investment in 1983. Today barely 1 billion. Being very conservative, say today's above ground silver supply is half of 1983 thus the 200 dollars per ounce should be at least 400 dollars per ounce.

    we also know in 1983, Russia was the Soviet Union where no citizen could own silver. China was Red China where no citizen could own silver. India was nothing like today in terms of a growing middle class, so very few owned silver. S Korea no where near the economic power it is today. In other words, todays silver investor potential market has got to be at least 5 times what it was in 1980....but heck lets not even consider this thus making the 400 dollar per ounce a very very conservative call at the least in the next two years. AM I wrong?

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    • Also, fear is moving PMs.
      ETFs play an important role in big volume.
      In the 80's it was inflation.
      Today it is a weak dullar.
      Not just silver,but most commodities are up.
      I.E. hard assets.

    • >we also know in 1983, Russia was the Soviet Union where no citizen could own silver.<

      Wrong

      > China was Red China where no citizen could own silver.<

      wrong

      >India was nothing like today in terms of a growing middle class, so very few owned silver.<

      Indians prefer gold and have plenty

    • Your message is an interesting approach to valuation and I do not wish to challenge it.

      However, I read a lot of messages on this board that refer back to $50/oz silver and the Hunt Brothers. I was a young, foolish investor back in 1981 who got hurt in the brief surge in the price of silver, and therefore remember the event well. A few points:

      Silver went to $50+ ever so briefly. A chart of the event would resemble a very tall obelisk on the prarie. The run up was quick and the crash was a matter of days. By 1983 wasn't silver was flatlining at around $5, if my memory is correct (I'm to lazy to find a chart). And would do so for at least the next decade.

      My point is this. Referring back to that brief price explosion in 1981 is pointless if trying to price silver for the coming decade. If the same surge happened again during this coming year, I predict that 95% of the posters on this board would not be able to call the top and get out with the perfect timing required in such a quick up-down event. Aside from a few brief weeks of craziness, silver was below $8 throughout the 1980s--as I best recall. The $50 price lasted so briefly that few benefited.

    • Didn't use the short of the investment banks as we don't know exactly how much short they are and how they will pay most of these shorts (I guess premium of 20% and above). So put that down as a positive we are not adding. Again I know the price of 400 in the next 2-5 years might seem extreme but when in 07 we had about 210 billion in total deficit and last month we exceeded that figure in just one month, I don't think our brain can wrap around some of these numbers.

      That is why I am thinking in terms of supply, demand, past price, etc. When you look at it this way the future price of silver goes up very very fast. Also don't forget the Hunt brothers bought as much as 200 million ounces in a 7 billion ounce market and moved that price that high only to be shutdown by much higher margin rates and Vockler raising the interest rates to over 20%. Can you imagine what it would happen if Ben raised the rates to say 10% now? LOL

    • No, your logic is dead-on.

      It WAS the Hunt Brothers who caused $50 Silver back when, however.

      As someone else mentioned, there's about a 100-1 ratio between "paper Silver" and the real metal.

      When it becomes apparent that MANY will be "paid" in U.S. Dollars when these derivatives settle, and what the Dollar's condition will be at that time, you've got a SHTF moment.

      When that occurs, you'll see limit-up days in the PM markets.

      $400 Silver seems a stretch, but I see $100 as being a pretty sure thing in a couple of years.

      B

    • You are way out there.

      1) 80's was the Hunt brothers who lost most of their fortune in the debacle.

      2)you only consider supply and not the demand side. remember economics? The elasticity of demand intersects with the supply slope due to rising price will cause alternatives, etc (for non-investment such as electronics)

      3) money supply has an impact but it is never a simple ratio.

      4) 400 an ounce is tin foil hat time.....

      SM

      • 4 Replies to sandiegoman99
      • sdman-
        Your #2 point is of no merit.
        I think he covered the demand side pretty well....
        "we also know in 1983, Russia was the Soviet Union where no citizen could own silver. China was Red China where no citizen could own silver. India was nothing like today in terms of a growing middle class, so very few owned silver. S Korea no where near the economic power it is today. In other words, todays silver investor potential market has got to be at least 5 times what it was in 1980.."
        That's just the investor side. Now, you have to add in the multiple industrial uses (growing).

      • 1) 80's was the Hunt brothers who lost most of their fortune in the debacle.

        **Don't forget I didn't use the 50 dollar price but 20 dollars

        2)you only consider supply and not the demand side. remember economics? The elasticity of demand intersects with the supply slope due to rising price will cause alternatives, etc (for non-investment such as electronics)

        ****For most applications there is not alternative to silver. You don't use silver in the clothing industry because its cheap but because its the only antibacterial substance. you can't use anything else in solar panels as silver is the most reflective element...silver is not like a diamond that can be made, its an element with very unique properties.

        3) money supply has an impact but it is never a simple ratio.

        ****That is true but when money supply is that much out of wack not only in terms of the dollar but every other currency AND credit (don't forget that because in 1980, credit was only for the few and mighty) a 10 fold increase in the price is very conservative IMO.

        4) 400 an ounce is tin foil hat time.....

        I wonder what people said in 1971 when gold was 35 and someone stated to them its going to 840..lol. Again your arguments above don't hold water, especially since the above supply right now is so low, compared to 1983.

      • You should invest in Alcoa.

    • Nope, that sums it up nicely.

 
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