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Notes -
Seventeen days ago, silver was $90/oz from APMEX. That was list price of a 1oz round, shipped and everything. Spot price was ~$80.
Today, it's $120 shipped, $110 spot, over +30% in a little over two weeks.
Gold is at $5185 for a single round delivered to your door, up from 4650, or 11%. Using spot it's about 12%.
Is this hyperinflation? Is this de-dollarization? A bubble? Does this have anything to do with Venezuela? With Iran? Taiwan? AI?
I'm honestly grasping at straws here, because metals aren't supposed to do this. I've been worried about the specter of hyperinflation since 2008, but it never really materialized, and so my worries were able to be soothed by looking at the lack of hyperinflation in reality.
You can't even tell anything happened in 2008 when you look at the money supply, but you can't help but notice that we've nearly x5 the money supply since December 2019.
Then again, silver is a useful metal. It gets blown up in missiles, it gets used in microchips and electronics, solar and battery technology, and more. Business building these things will simply pay the price for the metal they need and then use it, driving the price up regardless of speculation, but I can't believe that the usefulness of silver has quadrupled in the time since it was going for $25/oz.
Any asset can be a shitcoin if retail bids it hard enough. There are good reasons for silver to have gone up, but nowhere near this much. Retail sees it, like gold, as a way to invest in "hard money", to avoid your dollars being inflated away, except it's cheaper than gold. And then they're not price sensitive about it at all. And then it gets high enough that speculators get washed out by new margin requirements, big buyers of silver get nervous they'll be screwed if it goes up more and lock in the price, people get short squeezed. For the same reason that accurate prices are good for an economy, this is bad for the economy! It causes silver to be inefficiently allocated among productive enterprises, all so gamblers can get their fix, because Seahawks vs Patriots isn't quite as exciting as pumping a trillion dollar market cap asset.
In a surprisingly apt example, The Great Silver Bubble says that movies were cancelled in 1979 because the Hunt brothers had created a shortage of film by buying up all the silver. The amount of heirloom silver melted down so short sellers could overpay for it and deliver it into the Hunts' longs was also socially destructive.
The good news that time is that the Hunts ended up paying for their fun - the unsuccessful attempt to corner the silver market cost them 1.7 billion dollars (6.5 billion adjusting for inflation, 17 billion adjusting for GDP growth, so a loss that would embarass Bill Gates but not Elon Musk)
And they only ended up paying for it because of pressure by the Fed. So much for the free market!
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