What will determine value?
 

This is my first post to the forum and the first among many questions.

In a post collapse economy what will determine the value of PMs? Who will set the value? Will the value of PM's be consistent from one region to another? How will the value of PM's be communicated?

I made my first purchase of $ 250/ face 90% silver dimes last week and am trying to extend my comfort zone before purchasing more. I'm retired with about 40% in stocks, 10% in cash and 50% in government securities and have no debt to speak of. I do have a need for current income hence the stocks and government securities.

Thanks,

-bob

Re: What will determine value?
 

Well its not an answer to your question but i would get as far away from the goverenment securites as you can

Re: What will determine value?
 

There are two forces driving PM value;
The law of supply and demand.
The crooks at Comex.

Niether is currently independent of the other, but Comex control weakens as demand increases and supply does not meet immediate demands so when that happens the prices will go up.

The Comex is mostly sleight of hand and illusion but the masses are drawn to it like moths to a flame.

You are on the right track buying 90% silver coins. Welcome to GIM.

Re: What will determine value?
 

Hey bhowle, Can't answer what will happen in a Post collapse economy. The thing to watch as you might already know is the US dollar, that will determine what Gold will do before any collapse.

Re: What will determine value?
 

The eternal law of supply and demand.

You have it, they need/want it, price goes up.

You have it, they don't need/want it, price goes down.


You and your trading partners. There will be no cartel controlling the price.



No. Transportation availability/difficulty will be a major factor, as well as local cottage or other industries needing PMs.


That depends on the level of collapse.

Ultimately, it will be the same way it's always been...word of mouth between buyer(s) & seller(s).

PM speculation/manipulation will be, for the large part, a thing of the past.

Re: What will determine value?
 

I have to second this.

Government "securities" are in the same category as FRNs...a (cheap) promise to pay, revocable by the stroke of a pen.

Re: What will determine value?
 

Generally decent answers to tough questions, mjk, but I gotta take you up on this one.

It's always been word of mouth? Is that how you, or your local dealer, or your online dealer, or the most of the GIMers here track the PM price? I don't think so.

I think the chances of there being no electronic communication after a financial collapse are remote. But if that were to really happen, and we had to rely on word of mouth, the variability in the "value" of PM at any given moment will be so wide that every "trade" would be a challenge. The price used in a trade may vary by hundreds (or even thousands) of dollars from town to town, or from day to day. Probably those holding the most PM will be willing to give more of it to get a trade done (i.e. lower PM price) than those who hold little of it and must be extremely cautious on what they trade it for. Also, there would probably also be a lot of "holding" until electronic communication is restored.

Re: What will determine value?
 

Spot prices are something that is relevant in a "global economy" where cheap, efficient transportation makes the entire world one's market. But, despite this, even with the relative stability of today, buyers & sellers still set their own prices, usually in strong relation to spot, but not necessarily. Ultimately, it always comes down to a person-to-person communication, whether in person, or on the phone. You simply cannot go anywhere to buy PMs and say "I'll give you spot price for this and this." Depending on your relationship, you may be able to dicker on the amount over spot, which ties into what I said above. Even if it's a firm over-spot amount, it's still a buyer/seller communication.

Depending on what exactly the "sh*t" is that hits the fan, electronic communications could be mildly, moderately, or severely disrupted, or, disabled altogether. Even in situations like Katrina or the Northridge quake, telephone communications are moderately to severely disrupted even though most fiber is still connected...the use spikes hard, and overwhelms a system intended for a much lower volume of calls. If even a few major communication hubs are destroyed, or if such a scenario like an EMP burst occurs, electronic communications will be unavailable or might as well be unavailable. Even a major economic depression crippling telecommunication companies financially could severely disrupt such communications (AT&T can't pay engineers, most engineers won't show up for work).

Re: What will determine value?
 

But wait a minute. The whole premise of this thread is that there is no means to communicate the spot price to either party! Or worse yet, perhaps there IS no spot price, because there is no longer a functioning market to establish it. What then??

Re: What will determine value?
 

Then my original statement is applicable without qualifiers.

Re: What will determine value?
 

Hoarder,

I have to almost dissagree that supply and demand equilibrum drive the value of PM's. Supply and demand in PM's is infinate, or more properly unquantifiable as you alluded to in your criticsm of Comex. Actual private and public hoards of PM's are vast as PM consumption is miniscule compare stock to flow ratio. I believe 'constant marginal utility' is what give PM's their value.

I'm not trying to be arguementative, I'm sure you don't, but most people overlook the property of constant marginal utility of PM's

Re: What will determine value?
 

the true value of something is determined by the value it brings to humans, always.

Re: What will determine value?
 

Welcome bhowle.

Things are not the same for precious metals as they are for other matters. In other matters words are often used interchangeably, so they casually assume that value, worth, and price are all the same concept. But in PMs you need to understand EXACTLY what you are talking about. That is because your investments depend on a lot of things that other investors don't pay attention to.

The VALUE of a thing is what you can do with it. Gold and iridium are about equally scarce, but gold has a lot of uses and iridium is only used to harden the tips of ball point pens. So gold has more value than iridium and is priced accordingly. Note that if you are making ball point pens you need iridium, not gold, so you would be willing to trade gold for iridium. The WORTH of a thing is exactly whatever you get for it. The PRICE of a thing is whatever a buyer and seller agree on to make the exchange. All three of these depend on who is buying, who is selling, and what else they might do with their resources.

Assume for example a TSHTF situation and two people hold PMs. One gets hungry and trades his PMs for food. He was thinking of PMs as no more than a savings program, and when he needs something he spends his metals. The other fellow thinks of his PMs as capital to be used for rebuilding after the situation has stabilized. So he eats weeds or something and when conditions have improved he has financing to start a new life. Each has gotten what he wanted, but the differing opinions of VALUE led them to very different estimates of WORTH, and therefore they demanded very different PRICES for their holdings.

Re: What will determine value?
 

Note that bhowle joined in April of 2007, so this is not a new question and bhowle is not a new poster. Although he only ever posted once.

killer2021 has been dredging up a bunch of old posts for reasons known only to him/her. Go take a look at his post history over the past couple of days. Nearly every one of his posts has been a very short, usually trivial, response on a long-dead thread. It is intriguing. I wonder what killer2021 is doing? Sending signals to someone, perhaps?