pugdog
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Dec 11, 2005, 9:25 PM
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I was reading the late news this weekend, and it seems silver has hit an 18 year high, and gold has hit a 25 year high.
Silver has been fixed in recent days between $8.50 and $9.03 per ounce!!
A few weeks ago it was hovering at just above $7, and that was high enough to have a number of suppliers raise catalog prices.
That puts silver prices at about $0.29 per gram! That's bullion prices. So, any manufacturing costs are on top of that. So, at $7/ounce silver is $0.22.5 per gram, so that is an AMAZING increase! Almost 30%.
I'm not sure why, since with photographic consumption of silver down staggeringly over the past decade, the overall supply of silver is more than adaquate to meet demand. Perhaps, marginally profitable mines were closed, but at these new prices, they are again profitable. Gold prices are manipulated by supply, with a few major producers essentially controlling the worlds prices. Silver is not quite so easy to control. But, without the massive consumption (non-recoverable) of the photographic industry waning, the demand for silver is way down.
If you read the various papers, there is a stated shortfall of silver every year, and "inventories" or "stock piles" are dwindling.
If you trace back most of those stories, they seem to be coming from investment firms, especially those that push silver coins (essentially worthless).
Gold prices are an indicator of economic health and stability. They go down, and stay stable in good times, as people sell off their gold. The prices go up in unstable times, as people loose faith in any one currency and put their "money" into gold -- a universal currency.
Silver prices and other precious metal prices will follow gold's lead. A $1 increase in the price of silver is a far greater "move" than even $10 in the price of gold.
I don't see silver going up to the $50 or $60 an ounce that these various "investment" firms are pushing. "Hoarding" of silver as the Hunts did, is not going to have a benefit to any investment group. These firms are trying to get you to spend your money now at $7 or $8. If they really believed silver was going to go to $50 or $60 _they_ would be investing in it, and trying to keep it quiet. *NOBODY* "shares the wealth" as it were.
So, the bottom line of this message is: Silver prices are rising. They *may* reach $10-$15 over the next year or so. Will they go back down? Maybe. But the short term effect is that if you like to use silver in your jewelry, NOW _is_ the time to stock up on the parts, beads and findings you may need over the near term.
With the prices hitting new highs this weekend, it will fuel a short-term rise in prices as people speculate.
That means higher costs for all the jewelry makers who just want beads, and are not really interested in the "market value" or "investment" potential of their creations.
Prices in silver have risen from about $6.40 last year, to over $9.00 this weekend. That should tell you something.
While it's around a 40% or so increase, it's still only about $3 per ounce.
If your jewelry contains a full ounce of silver, at retail, or discount retail prices, the cost of that jewelry has gone up from about $1 gram, to about $1.50 per gram, or about $15 for that ounce of silver.
Wholesale prices are different, and higher-end gallery prices are different, but last year, wholesale silver was about $0.60 per gram. This was for average cast silver and similar. Some places were as low as $0.34 per gram (how, I don't know!), and the higher end was about $1.20 "wholesale".
Retail prices ranged from about $0.75/gram to $4.00 per gram for manufactured beads (with some things, such as alphabet blocks going for as much as $6 per gram in higher-end boutiques).
I did a *lot* of shopping/comparason last year trying to understand silver prices as we began importing our own Bali Sterling.
So..... if you've been looking for the take home message. Again, silver prices are up about 40% in the past 16-18 months. Retail prices are going to rise greatly as wholesalers who have been hoping the prices will go down and have been holding the line on silver prices now start raising prices and passing along EVERYTHING on a weekly basis (Fire Mountain Gems now does a weekly London price fix on their silver). That means retailers will have to raise prices, and most jewelry retailers have a 2-3x mark up meaning _huge_ increases in the costs of sterling silver jewelry -- or less silver in in the jewelry (eg: more glass, crystal and gemstone).
IF you can, buy as much silver as you plan to use in the next 6 months or more NOW. Prices ARE going to keep going up. It's a cycle that feeds on itself. Will they come down? I don't know. But I don't see them staying up, for a large number of reasons. It's a poor substitute for gold, and there is plenty of gold available. I see more of a readjustment of gold prices and supply decisions than for silver.
That's just me. But, you will see higher silver prices every time you go to buy some over the next few months to a year, at least.
I don't see silver as an "investment." But, if you make or sell jewelry, and like to use silver, you can head off some of your higher costs by buying enough silver now, and "cashing in" on the higher prices of the silver market when you sell. It will cushion the effects of the higher prices when you go to buy more (replace) your silver.
Just a few thoughts. You are free to agree or disagree :) As always.
PUGDOG's Rock & Bead Shop
Pittsburgh, PA 15217
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