Dust flux, Vostok ice core

Dust flux, Vostok ice core
Two dimensional phase space reconstruction of dust flux from the Vostok core over the period 186-4 ka using the time derivative method. Dust flux on the x-axis, rate of change is on the y-axis. From Gipp (2001).

Sunday, September 8, 2013

The endless crisis in silver

In 1999 I was in dire straits. A company I had done a lot of work for had collapsed, owing me a lot of money. I was in the throes of a life-altering illness. It would be a few years before I could walk again without considerable pain, which is a tough condition for a field geologist. I was desperately broke. And I was reading articles by fellows like Ted Butler about an impending apocalypse in silver, which threw me into a panic. How to get silver before this impending crisis that was due to explode any day now.

There was a coin shop not far from where I lived, and they sold Canadian silver coins--at that time the half-dollars were going for $3. I had no idea how much silver was in them, so I looked it up on the internet, and found that it was probably the cheapest way to buy silver when you only had $20 or so to spare, so I started buying them--them and the silver dollars. Twenty or thirty dollars worth, maybe once or twice a month.

Eventually, health improved, and I did some teaching, and began to buy a little more--but still probably no more than $100 a month. I went to church sales in Leaside, and bought lots of spoons, old-lady jewelry (to this day one of my wife's favourite pairs or earrings I bought at a church sale for $2), and the occasional salt shaker. Within a couple of years these sales became overrun by professional buyers, but when I started I had the field to myself.

In about 2006, the owner of my neighbourhood coin shop congratulated me for my strategy. He saw a lot of people rush into it in 2004, who then rushed out of it when the price suddenly collapsed. One of the clerks in the shop tried to get me interested in some elaborate currency-trading program (probably yen carry-trade, but I didn't look into it). He assured me that with this program I would make money exponentially and be able to retire in only two years. I asked him what was wrong with coming in every time I got paid and buying a little bit of silver, and he just rolled his eyes.

About a year later the coin shop suddenly melted down. I don't know what happened--the owners suddenly had to leave the country with a lot of unpaid debts. I suspected the currency-trading scheme. There were rumours of customers who had put up money for silver or gold that was never delivered, which made me glad everything I had bought was cash-and-carry. The store sat empty for several months before new owners arrived--but it wasn't the same. I started buying elsewhere.

So here we are, nearly fifteen years after I started buying silver. In the past two years I have sold rather than bought. There has been no silver apocalypse, although writers like Ted Butler are still writing about it. To be fair, Butler does state that you should not worry about an impending crisis, just buy silver a bit at a time and put it away. But the underlying message seems to be designed to create an undercurrent of panic. I know, because that's what I felt in 1999.

I like silver. I really do. I'm glad I have some. But I'm even more glad that I bought it a little at a time, and didn't get sucked into the hype about a civilization-altering spike in its price. The argument of impending silver shortages has been out there for decades now. Perhaps it will happen someday. I think the argument is harmful, especially to folks who are just starting out, because it can induce the kind of panic that encourages them to take risks in acquiring silver--risks that are especially harmful in the event of sudden collapses in price (of which there have been several). And if the price spikes don't happen quickly, they are likely to lose confidence.

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