Silver trades to $50 an ounce | Hacker News Reader

Silver trades to $50 an ounce

investinglive.com

47 pointsacadapter84 comments

Something cool about Silver and Gold is that we have such a long history of how they translate to labor.

https://people.duke.edu/~charvey/Media/2013/Hurriyet_May_2_2...

> In the era of Emperor Augustus (27 B.C. to 14 A.D.), a Roman centurion was paid 15,000 sestertii. Given that one gold aureus equaled 1,000 sestertii and given there was eight grams of gold in an aureus, the pay comes to 38.58 ounces of gold

Today, 38.58oz of gold would be a salary of $156K/yr.

If we do the same for silver, it comes out to about 470oz of silver. So $23,500/yr.

If we compare that to a US Army E-8 (say 80k/yr), we can argue that gold has doubled its value relative to labor and silver has dropped to almost a quarter.

How do we get to 38oz of gold? 15k sestertii at 8g per 1k would be 120g of gold (aka 4.25oz), right? Also, where do the silver numbers come from?

Interesting approach!

In the Augustean system, 1 aureus = 25 denarii = 100 sestertii (not 1000 sestertii as stated above).

But at 8 grams of gold per aureus, the ~40 troy ounces of gold annual salary is about right.

Also, this may have been the brass sestertii at 25 grams.

> In or about 23 BC, with the coinage reform of Augustus, the sestertius was reintroduced as a large brass denomination,

That's 375kg of brass which would fetch about $1700 in today's dollars at scrap prices.

Knowing $125 price per gram of gold it's funny they need to convert to non-metric system to calculate price.

One aureus is approximately $1000 of gold value. And as a collectible item it is worth $3k-10k.

When people are talking about inflation, what inflation statistic are they referring to? CPI has been below 3% since May 2024.

Precious metals (silver, gold, platinum, palladium) have out-paced Bitcoin.

USD:EUR hasn't gotten worse than 5-year lows, same with USD:GBP.

I don't think these statistics support "money is fleeing the U.S." or "tariffs are causing runaway inflation", unless I'm missing something? You could paint it as "wealthy people are hedging against globalized recession / future break-downs in trade", maybe, but then why are precious metals out-performing bitcoin?

If anything this feels like "momentum"-driven speculation, similar to what we're seeing with some of the biggest companies in the S&P500, and similar to what we saw in late-2020, where the numbers are front-running a plausible but as-of-yet-unrealized narrative.

What indicators that people are finding useful to make sense of this?

Grocery prices, utility bills, gas prices, insurance premiums, property taxes or rents all are part of the real coat of living.

The political fairy tale that is the CPI stays low to avoid having to increase government payments for social security and the like.

When my mom and dad bought their home 50 years ago, they took out a mortgage to buy a home. My dad was a "light equipment operator" with the county road department. My dad's paycheck was their only income. They paid off the mortgage in 12 years on his salary alone, while raising three kids.

Today, the county road department still has a "light equipment operator" job and it pays about $52,000 per year. The house they bought 50 years ago is now worth $940k.

There's no way a couple with a single income of a "light equipment operator" could afford that house today.

In fact, even a light equipment operator's boss, the foreman/supervisor couldn't afford that home on today's wages. Maybe a light equipment operator's boss's boss, the a "superintendent of public works" would have enough income to afford the house that 50 years ago a light equipment operator was able to afford.

It really shows how an increasing percentage of the value of a worker's labor has been systematically extracted and transferred from workers to owners.

I agree with you that these have all risen in cost. All of those (excluding property tax) are included in CPI.

What inflation metric, in your opinion, accurately captures those costs?

To clarify, the CPI story is this: we had a period of high-inflation during COVID/the war in Ukraine and our recovery from COVID / reorganization of energy supply chain away from Russia. Now, we're back to normal-pace inflation. Since prices are a one-way ratchet, we're stuck on a new+higher plateau, but we're not still going up at the rate we were in 2021-2022.

Is there an inflation metric that contradicts this narrative?

Gold and silver hitting all time highs, stock market at insane levels. We have an asset bubble even though interest rates are high. Why is this?

It's fiat that's going down everywhere.

Always has been. Especially since 1971.

Inflation is being priced in.

Globally faith in the USD is being lost, and anyone paying attention knows one of Trump's main economic goals is to weaken the dollar. He also clearly wants to tamper with the fed and economic data, which just ads fuel to the fire.

Meanwhile there isn't really a solid alternate to the dollar, so precious metals are default.

Yeah. I remember my mother asking me "If inflation is here, why isn't gold going up?"

But I think that the answer is "pricing in". When there's a month of inflation after 15 years of none, you price in a one-month blip of inflation. When you look at a year or two of inflation, plus the deficit with no end in sight, you price in inflation forever. Those lead to two very different prices.

gold has gone up more than most stocks in the last year, FYI. If you price the S&P in gold, it has declined steadily since 2000. Chinese industrials have increased priced in gold since 2000, incidentally.

Gold and silver is most likely from China buying a massive amount (to decouple from the USD slowly). Unsure about the asset bubble but interest rates are “high” compared to the zero interests days, still low historically. Assets are the best way to wash away inflation (you pay your debt with today money) so could be the reason.

Eh, they're not that high if you look back to the era of stagflation:

https://fred.stlouisfed.org/series/MORTGAGE30US

People are afraid of the volatility of the USD, especially with the expected rate cuts coming up, and preferring to buy gold/silver instead.

Tradfi is increasingly becoming a dog shit product.

[ ]

Advent of FATCA means it's hell for normal Americans to bank overseas.

You're basically locking yourself into a tiny box by carrying tradfi products. Most lower middle class people will never notice because if you do things like "receve paycheck, go to grocery store" then you'll never see all the walls built around you. But people with money notice.

> Advent of FATCA means it's hell for normal Americans to bank overseas.

> But people with money notice.

skill issue.

you need more money.

Yeah but even with more money your foreign bank is required to rat you out with no warrant, not appealing.

So sad.

Reminds me of Elon Musk recently complaining about how hard it is to be a billionaire.

It's hilarious how much Americans would be willing to sabotage themselves if only they could inconvenience the accountant or lawyer of a billionaire.

unless you have more than 1 passport

If your other passport shows you were born in US your bank will still hold you to FATCA controls, and even if it doesn't show that then they're still bound to FATCA and can be punished if it's uncovered you're a US citizen.

Uncertainty. It means that there is a lot of uncertainty about our near future.

Most of the market's upward movement is from a few stocks that are getting lots of juice from Federal policy.

Gold and silver are at record levels because of capital fleeing fiat due to lack of confidence in central banks -- Trump is actively attacking the US Fed trying to destroy Fed independence. Because the dollar is the world’s funding and invoicing currency, big moves by the Fed reset global financial conditions—pushing other central banks to react even when their domestic cycles don’t match.

Real estate has stalled, hiring has stalled, car buying has stalled (so much unsold inventory dealers can't afford floor plan!). Farmers are getting a $10-$15B bailout / hush money. It's just a matter of time until the correction occurs.

The spike in equities is also based on the assumption that the equities will weather the inflation and still end up as a store of value, but I think that's naive.

Take TSLA, currently "winning" in the special olympics micro-market of the tariff-protected US EV market, and losing internationally -- Musk just did a $1B buyback to juice the price. Take NVIDIA, finally going to get real competition from AMD but spiking after US "deals" juiced the price. Chinese GPUs are 12 months behind and rapidly closing the gap and will be half the price per perf/watt (TSLA investors pretend Chinese EVs don't exist, but not for long).

Imagine 30-120 days out once the national guard is occupying and helping ICE detain more and more of the workforce in the most economically productive 90% of the country!

The US economy is facing the greatest coordinated sabotage it has ever faced and as soon as the real numbers come in things are going to get very very ugly. The country seems to have forgotten that central planning does not work.

> Gold and silver are at record levels because of capital fleeing fiat due to lack of confidence in central banks -- Trump is actively attacking the US Fed trying to destroy Fed independence.

That may be part of it. But another part is the US deficit. There is no way that's sustainable. The Fed can't fix it; Congress has to. And do you see any reason to hope that Congress will?

I think there's zero chance that congress will fix it. It can't fix relatively easy, low-hanging fruit such as PBGC soundness and social security soundness, so I think there is little hope for anything else.

The problem is not congress itself but the peoples' lack of desire to hold members of congress accountable...

In an inflationary economy like the one we have, "the market is at all time high" is not really a useful statement since it's the normal state of affairs.

Similarly, the currency value is perpetually at an all-time low.

All right, but gold doubling in two years is something more than a reflection of the amount of inflation we've had in the last two years.

Sure, but gold and many other assets are at a 50-year high even when adjusting for inflation:

https://www.gurufocus.com/economic_indicators/4534/inflation...

I agree, that would've been a much more interesting statement.

I'm going to rightly be accused of ad hominem for pointing this out, but entertain for a moment that the people calculating inflation are generally directly or indirectly funded by the same federal government that causes inflation.

Losing faith in the value of the dollar in the face of our crazy fiscal position?

The one thing that baffles me is energy prices. We haven't seen this oil/gold ratio since the pandemic, when demand for oil plummeted.

EVs and renewables might account for reduced oil price.

EVs appear (to this midwesterner) to be in the noise. Renewables though…

Chinese oil imports are down in 2024 and 2025. It's not a big drop, but it's real. And for commodities, small changes can swing prices significantly.

butchered quote: 99 buyers, 100 sellers: price goes down, 101 buyers, 100 sellers: price goes up.

Renewables are a quarter of electricity generation now, and in some states are the majority of generation. They're also a decent chunk of all energy though that number's harder to pin down.

GDP is no longer tied to fuel consumption. You can't fight near-free "fuel" and near-zero opex, the renewables slice is only going to increase. I wouldn't trust any metric or rule of thumb tied to coal/oil/gas prices any longer.

All of this is consistent with expectations of a slowdown or recession.

The only exception is the stock market but I believe there’s a lot of literature that if you remove the AI stocks from that there isn’t much S&P growth either.

Additionally with the dollar dropping over 10% the stock market real increase isn’t as high as it appears either.

for the past century, the global economy has been a machine for turning fossil fuel into money. carbon output was very directly correlated with growth. that hasn't really changed yet but the writing is on the wall.

also, manufacturing and shipping just fell off a cliff.

I was just wondering if oil is the next asset to inflate.

Wsj had a great explainer on this today:

https://www.wsj.com/finance/investing/gold-screams-debasemen...

(Sorry, archive.ph not responding)

Can you tl;dr?

"Asked a friend":

Key Themes & Arguments:

   1.  Divergent market signals
   •   Gold has surged (~50 %+ over the past year) and the dollar has weakened, suggesting investor fears that governments may resort to inflation (i.e. currency debasement) to ease debt burdens.   
   •   But bond markets—especially through long-term inflation expectations embedded in yields and inflation swaps—are relatively steady and show little sign of expecting runaway inflation.

   2.  Why the disconnect?
   •   The article posits that different investor motivations may be in play. Gold’s rally might be driven not purely by inflation fears, but by geopolitical risk, central bank reserve behavior, and rate cuts/expectations of falling yields.   
   •   Meanwhile, bond investors appear anchored by beliefs in central bank discipline, moderate inflation, and weak job growth, which limit inflationary pressure in the view of bond markets.

   3.  Longer-term concerns still loom
   •   Over the long haul, the mismatch between rising debts, low taxation, and persistent spending may force a reckoning: either austerity or inflation. The article suggests many politicians will prefer the inflation route.   
   •   But for now, that outcome seems distant. Bond markets are not pricing in that scenario imminently.

   4.  Possible scenarios ahead
   •   If economic growth maintains momentum and the recent softening in jobs is transitory, the Fed might reverse course—undoing rate cuts or raising rates. That could challenge gold, stocks, and bonds alike.   
   •   Only if policymakers allow inflation to run unchecked (or effectively “print money”) would the “debasement trade” fully materialize.

Couldn't find a non-paywall for it, but Google AI mode managed to give a brief summary:

Gold prices are rising sharply, suggesting investor concern about currency debasement through inflation, while the bond market forecasts long-run inflation will remain near the Federal Reserve's target. This discrepancy is likely driven by separate narratives, with gold potentially fueled more by central bank diversification and speculative buying than a pure "debasement trade"

Thanks! Really unsatisfying answer, though.

Here is an sharing version of that link, it should work for non-subscribers: https://www.wsj.com/finance/investing/gold-screams-debasemen...

I keep wondering when the hangover is going to hit The Market.

I've been told though that it's a meme stock market these days. I don't believe that though — there are people trading billions of dollars in this machine. Perhaps they're waiting for the music stop and hoping they're not the last to grab a chair.

It is very hard to look at the P/E of TSLA and run with the idea that the market is pricing things rationally. Even if you somehow feel bullish about that company, the massive rise in stock price at the same time the concrete sales news started to get worse should be a pretty big alarm bell.

The numerator is increasing (assets, i.e claims on future value), far outpacing the minuend in the numerator (actual future value).

The denominator is also decreasing (value of USD).

Fun times.

> Why is this?

Massive gilded-age-levels of wealth inequality that will be politically impossible to address (neither US political party has a unified will to do it due to donor capture, and only the one with less will to do it has any national power currently) until there is a substantial economic crash.

Yeah, I've been walking around with a signboard reading, "The End is Near, Substantial Economic Crash Soon!" So far, I have always been wrong.

I feel like something broke during COVID. My only thought is people want their money to make money (I mean, I know I do), and apps like Robinhood normalized speculation and gambling as "saving your money" and "stocks always go up."

We've had an unprecedentedly long period of growth that a lot of the younger "investors" have known nothing but. So this will be their first real bubble burst.

My little brother-in-law is only 27, he was too young to really remember 2007-10, and he started gable-vesting during lockdown, and when you turn $10 into $120 on some meme stock, you feel like you are up, even though the 50 other bets lost money.

Basically when enough people know nothing other than "stonks go up" and "apes strong together" you can keep pumping, but eventually the dump comes for all of us.

I'd be surprised if the Robinhood brigade was having a global effect. And COVID seems to be everyone's go-to for, well, everything.

I suspect this is just The Cycle. The one that has happened time and time again in the last 100+ years.

Wealth is becoming more and more concentrated at the top end of the distribution. Folks at the high end have a lower marginal propensity to consume, and thus invest more in assets. This increase in demand causes all assets to rise.

Generally agree but I'd note politically influential rich should generally prefer productive assets, while people expecting to have to shove the most valuable thing they can find up their ass while running past machine gunners at the border will generally prefer gold.

Gold is totally irrational if you think you'll have the reigns of the country, since you will always win having land and factories under that scenario.

It signals the rich think they're losing control.

At the governmental level non-Western aligned governments are reacting to freezing of Bank of Russia assets. Freezing of foreign currency reserves was really unexpected. Russia was forced into default because they could not access their USD/EUR.

almost all wealth is cash flows from future labor income. Labor is just heavily leveraged on their own future labor. Kind of like AMD levering up on future gpu sales.

Price of hamburgers also at an all time high: https://pos.toasttab.com/blog/data/burger-prices

Conclude from that what you will. Personally the cost to keep myself alive relative to the amount I'm making is more interesting than shiny metals.

When the price of everything goes up at the same time it's not because everything is more expensive, it's because each unit of currency is worth less in terms of real stuff.

And contrary to the typical gold bug narrative, it's not because central banks are conjuring new money out of thin air.

Because the numerator in all those fractions is the dollar, which is rapidly losing the worlds trust, as a store of value. Eventually we'll see what happens when you try to divide by zero.

It’s the same when you look at it in euros.

To teach my daughters about investing when they were young, I gave them some actual silver coins that I purchased — thinking these are tangible things, they can track the price. Of course I bought at the peak. They're adults now but just might be seeing a profit on their coins.

I suppose lesson learned?

There is a time to buy, a time to sell, stocks and gold go through clear cycles where one outperforms the other, currently stocks have been outperformed by gold for 25 years.

My kids bought silver recently and are up 17% in about 2 months.

Ha ha, shaming me as a dad, are you?

While assets like stocks do better when currency depreciates in the short term, unless customers have proportionately more currency the price has to fall in-line with the currency in the long run. Gold etc. track a basket of currencies more effectively.

I wrote an article about this in 2022 titled "This is not Normal": https://jonpauluritis.com/articles/recentfinancialhistory/

feels pretty relevant again...

The dollar index has fallen 11% this year and it doesn't seem to slow. It's great for assets, Gold being a prime example, and people with assets but bad for consumers. It's hard to see how this will not turn into inflation since we import so much and those good are only getting more expensive.

We don't have an asset bubble the prices are just adjusting to the lower dollar.

I bet the FED will have to increase interest rates next year and that's when we'll see a collapse of asset values and since markets tend to over correct, it's going to be painful for all holders. Be ready...

Does this mean the dollar is down, or os this more of a flight to safety?

> Does this mean the dollar is down, or os this more of a flight to safety?

both

Dollar is down~11% ytd. Silver is up 76%

It’s the debasement trade. Going off the gold standard in the early 70s started the eventual snowball of the USD currency collapse and the last few years has picked up steam.

No political party will ever choose to fiscal prudence when they can just print print print. This is why Bitcoin exists.

I hear this from time to time, and yet for 55 years, having decoupled from gold, untold wealth has been generated. It is as though the economy is not zero-sum.

Everything is completely normal.

I carry a real United States Dollar, minted in New Orleans in 1901, as an example of hard currency, aka real assets.

It takes between 38 and 39 paper Reserve Notes to equal its value. If Trump isn't removed, I expect it to be 100:1 before the midterms.

I mean, you can't use it in any meaningful way as currency without involving the "fake" dollars, whys it the real one? It's hard to even talk about it without mentioning those other dollars!

Have to imagine someone carrying around a real book of laws (maybe they have Leviticus, or the Code Napoleon, or they've got a nice re-chisel Hammurabi's tablets) - unlike the paper law of today

It's more "real" because it has value that doesn't decrease arbitrarily when the people in power decide to print a couple trillion to deal with the latest hot topic.

The value of silver has also been decreasing arbitrarily as traders trade it! Just like real live dollar bills! That's literally what the article is about, Silver is finally making it back to prices (in real dollar bill terms) not seen for 14 years.

Yes, the prices of all things vary according to the market supply and demand. That's very different from the government creating 25% inflation in 5 years.

I can't recommend enough that you read "How Countries Go Broke" by Ray Dalio. There's even a free PDF: https://economicprinciples.org/downloads/How-Countries-Go-Br...

Dalio explains the currency cycle, which starts with hard currency, goes through some various stages until there's pure fiat, and then goes back to hard currency.

45 year cup and handle patterns playing out in gold and silver, both going much higher -- governments cannot borrow their way out of debt, current paper currencies going to zero value over time -- Dow down over 70% measured in gold over last 25 years -- etc. etc.

Why do you pick 25 years? If you measure, say, the 25 years ending in 2022, the Dow is up measured in gold. It's only the last 2 or 3 years that gold has taken off like a rocket.

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