jim4silver
Silver Member
- Apr 15, 2008
- 3,662
- 495
PM's vs. stocks
Nobody can deny how well stocks have been doing for the past few years, as PM's have been dragged down. However, in the past week or so I cannot help but see just how much PM's are preferable to stocks when comparing which is best to own in a price downturn.
What I mean is, as I watch Netflix (which creates an awesome product) this morning drop 25% in one day, why do I prefer PM's in general to any paper asset? The answer is this, no matter what happens to the silver price I have an ounce of shiny (or toned) metal in my possession. With stocks, if they go to zero I have a certificate to show for it (most people don't even hold the actual certificate in their possession though). Unless it is taken from me I will always have that ounce of metal to hold.
Further, some folks here (and other places) have stated ANY asset is only worth what someone is paying for it (or something to that effect). These folks will say even sea shells have been money, or beads or tulip bulbs, etc. And that every item is only worth what someone is willing to pay for it. These folks will often throw out one exception, that is food and water, which have uses other than money and thus have some internal "value" completely apart from "money" or worth derived from that someone is willing to pay you for it. Since we need to eat to survive, who cares what you can get by selling said food and water, right?
My view is that everything that is said for food and water can be said for silver (absent a Mad max scenario). Why? Because silver has so many uses (other than value storage and money) in that it can be used in medicine, solar panels, all electronic devices, fibers in clothing, etc etc etc. Thus, even if nobody wanted to hold silver for investment purposes, there are still hundreds of other uses that will GUARANTEE silver's demand by at the very least, industry. Maybe they will only need to pay $1 for this metal per ounce, but buy it they must IF we continue to evolve technologically, or even if we only keep the level we have now. The same though cannot be said for gold.
Can this be said for any paper asset that you hold?-- I am not referring to the company or thing that said paper asset represents, but the actual paper thing you hold that represents what you bought. I will say to answer my own question the answer is NO. Just one quick example of this. Let's say you hold a stock of a company and said company goes into reorganization (like bankruptcy). If you hold the stock it can go to zero as the company shirks its debts and responsibilities. Then the company comes out of the reorganization process and gets to issue brand new stock; the old stock is now worthless--this is what happened to GM a few years ago. I know some poor old ba$tard$ that held their original GM stock as it dipped below $1 and these folks lost everything they had in said stock and most of their accumulated wealth (life long retired GM employees). Even though the underlying company is still around and now free of its past shackles, the former stock is now worthless. Such a dilemma cannot happen if you hold a physical asset that has many physical uses, like silver. As far as I know, the Gods will not let silver ever file bankruptcy. It is just not an option.
Just my opinion.
Jim
Nobody can deny how well stocks have been doing for the past few years, as PM's have been dragged down. However, in the past week or so I cannot help but see just how much PM's are preferable to stocks when comparing which is best to own in a price downturn.
What I mean is, as I watch Netflix (which creates an awesome product) this morning drop 25% in one day, why do I prefer PM's in general to any paper asset? The answer is this, no matter what happens to the silver price I have an ounce of shiny (or toned) metal in my possession. With stocks, if they go to zero I have a certificate to show for it (most people don't even hold the actual certificate in their possession though). Unless it is taken from me I will always have that ounce of metal to hold.
Further, some folks here (and other places) have stated ANY asset is only worth what someone is paying for it (or something to that effect). These folks will say even sea shells have been money, or beads or tulip bulbs, etc. And that every item is only worth what someone is willing to pay for it. These folks will often throw out one exception, that is food and water, which have uses other than money and thus have some internal "value" completely apart from "money" or worth derived from that someone is willing to pay you for it. Since we need to eat to survive, who cares what you can get by selling said food and water, right?
My view is that everything that is said for food and water can be said for silver (absent a Mad max scenario). Why? Because silver has so many uses (other than value storage and money) in that it can be used in medicine, solar panels, all electronic devices, fibers in clothing, etc etc etc. Thus, even if nobody wanted to hold silver for investment purposes, there are still hundreds of other uses that will GUARANTEE silver's demand by at the very least, industry. Maybe they will only need to pay $1 for this metal per ounce, but buy it they must IF we continue to evolve technologically, or even if we only keep the level we have now. The same though cannot be said for gold.
Can this be said for any paper asset that you hold?-- I am not referring to the company or thing that said paper asset represents, but the actual paper thing you hold that represents what you bought. I will say to answer my own question the answer is NO. Just one quick example of this. Let's say you hold a stock of a company and said company goes into reorganization (like bankruptcy). If you hold the stock it can go to zero as the company shirks its debts and responsibilities. Then the company comes out of the reorganization process and gets to issue brand new stock; the old stock is now worthless--this is what happened to GM a few years ago. I know some poor old ba$tard$ that held their original GM stock as it dipped below $1 and these folks lost everything they had in said stock and most of their accumulated wealth (life long retired GM employees). Even though the underlying company is still around and now free of its past shackles, the former stock is now worthless. Such a dilemma cannot happen if you hold a physical asset that has many physical uses, like silver. As far as I know, the Gods will not let silver ever file bankruptcy. It is just not an option.
Just my opinion.
Jim
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