Is anyone buying silver at $44.56

Investment professionals suggest having a certain percentage of your total investable assets in precious metals -- usually around 3-5%. Some people go for more. Because coin collecting for me is both a hobby and an investment, I'm willing to let my max go to 8-10%.

The advantage of this approach is that when precious metal prices take the value of your holdings above a maximum level, sell just enough to bring the percentage back down again in line with your goal. If prices plunge, buy just enough to bring the level back up.

Do this once a quarter, and you won't have to worry about whether prices will keep skyrocketing or start to dive. No more guesswork about where prices are going. It brings some peace of mind (at least it has for me).

 

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That $50 price in 1980 was a temporary, artificial spike due to the Hunt brothers trying to corner the market. I wish the media wouldn't keep saying that silver is at a 30-year high with 1980 in mind. In fact, the 1980 yearly average was only about $22 an ounce, according to Kitco.

 

I bought some silver earleir this year, but am holding back now. One thing that I have not seen commented on yet is that you all are wording it wrong: don't say "Silver is $46.61 an ounce." Say "Today it takes 46 dollars and 61 United States cents to buy an ounce of silver." In plain English, it isn't that the price of silver is going up, it is that the purchasing power of the dollar is dropping. And at an alarminc rate, I might add. This is why oil is going "up." Since most oil is traded in dollars, the world demands more of them per barrel, so that they can buy the same amount of goods, is all. The real problem is: when you look at government currencies over the history of mankind, you see that once a country exits the gold standard, the currency survives between 50 and 75 years before collapsing. If the US does not get SERIOUS abouts its monetary policy soon (and we ought to get back on the gold standard, to be honest) then those of us with mercury dimes will be using them to buy meals because a dollar won't be accepted anymore.

 

Is the collapse of the dollar imminent?

It sure seems like it.

 

Some folks are buying at these prices. Just look at those who are buying those ATB's 5 oz pucks. There were folks who bought at $1600 , $1,800 and even above $2,000.00 for the set totaling 25 oz's of Silver.

 

A lot might depend on what The Bernank says at his press conference this week ...


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For sure $50/oz for silver will be a bargain.

 

I think think that Bernake can do anything anymore, outside of reinstatement of gold backing. I am curious to watch silver this coming week, though. A buddy of mine told me last week that he had a chance to buy a set of those 5 oz ATB for $988, but passed. They were NGC BU. I would really like to buy one just to see/feel that sucker in my hands. Is it true that those are actually US 25 cent pieces? Is the government trying to tell us something? Namely that they think that the correct price of silver ought to be a nickel per ounce? I am pretty sure that hte dollar isn't THAT strong!

 

A lot of time your food prices are slower to rise that others I remeber buying king size snickers for 79 cents a few years ago cant touch them for that price now

 

I am just playing. I have been buying more Mercury dimes though. Picking up some lots and going through them. Really want a decent 16D to complete that set though. lol Plan to offer a few rolls in a week or so, depending on the market price. Maybe I'll get that hole filled yet ?

 

I remember when there wasn't a "king size" Snickers bar. Only one size and it cost 10 cents.

 

That's true, but the point I'm trying to make is that silver is going nuts relative to most any other measures of value and non-speculative demand can't support these prices.

Since August of last year (the exact time I predicted a pullback in PM prices), silver has been on a parabolic rise....



Fundamentally, I believe I was correct. What I didn't take into account was "tulipomania"; the irrational behavior a crowd develops with they feel they've "missed the boat". They want to believe the rise will continue unabated and latch onto any story that supports that belief...and become hostile towards those that offer contradictions.

In 17th century Netherlands, demand became so strong for tulip bulbs that people would pay up to 10 times an annual working wage for just one (1) bulb. When the tulip market crashed, there was nothing to do but plant them. That's why, to this day, there are so many tulips in the Netherlands. Well, that, and the fact that the Dutch are just crazy about tulips.

 

It's both, but mostly it's that silver is going up. If you disagree, please point out a few common goods whose prices have risen at silver's pace.

Food? Nowhere close. Oil and gas? Yeah, they've been shooting up, but again, not nearly as fast as silver. Real estate? Wages? Hah!

If the dollar is losing value, all prices, and many wages, should be inflating apace. Silver is outrunning nearly everything.

To get back to "plain English", if the dollar price of silver has quadrupled just because the dollar is shrinking, why has the dollar price of gold only gone up by 2/3 in that time?

 

I don't think that all goods and sevices can move at the same pace. Perhaps silver was lower than it should have been before this recent run up, or maybe we are witnessing an inconsistency between gold and silver only because silver is so much more cheaper than gold. I can't tell you how many times I have recommended a stock to a friend when it was above $50 a share only to hear "it is too high - if they do a split, then I might buy some." I bought Chipotle last year at $90 and had a number of people tell me how dumb I was. "Wait for a split" - still waiting!

I have a great book on gold (currently loaned out to a friend) but I wish I was re-reading it right now and taking notes on its contents. It broke down the destruction of many governments' currencies over history, and what struck me most was that once a government watered down its intrinsic value and moved into a purely fiat currency, they couldn't help themselves from printing currency until inflation toppled them.

Gold and Silver have held their value over the mellinia. But I also think that Platinum, Palladium and Rhodium are good alternative choices.

You do have a good point on wages, though. I wish I could offer an arguement there one way or the other. They are not going up much, but the minimum wage was raised, which hurts smaller businesses. I guess what I am thinking is that for goods there are so many other factors at play - metals are so darn basic.

Does anyone understand what happened in Zimbabwe a few years ago? I have not seen a story on them in years, but their infation was like a million percent a year. Did people negotiate wages with thier bosses each morning, or what?

But I don't think that comparing Tulip Bulbs to Silver is valid. I mean, can't you start growing more bulbs? It is a plant, after all. Didn't that crash come partly because they actually ramped up the rate of tulip bulb reproduction near the end that were for sale? Surely if the number of ounces of silvec being miwed in the world doubled in the next 3 months, that would flood the market and bring the price down, but I have no idea what the total aunces of silver are in the world, or what the mining trend is - that would have to be factored in, I guess.

I also heard that in the colonies in the US early on, merchants would hide barrels of spices to make those prices skyrocket short-term. Until the next ship arrived with 4 more barrels.

Well, the bottom line is that we will see, for sure! Like I say, it is going to be fun to watch! I am curious to see if silver goes to $51 this coming week, or if it begins to retreat. *shrug*

I will wager a dollar that we see $51 on 4/29/2011. But I hope it doesn't happen!

 

Cost averaging the upswing

I started selling my Silver around March 10th and continue to do so - cost averaging the upswing. I'm even selling the foreign stuff now and it is selling well. I think it is the right decision - but we will have to wait and see.

It's a tough trick to wait and try to sell-out at the blow-off point.

The Danester

 

Actually, that's what's so interesting about the 17th century tulip trade...it took time to create new tulip bulbs. All sorts of financial instuments we see today got their beginnings during the tulip bubble; short selling, futures contracts, derivitives, etc. to meet demand. People were buying and selling tulips where there were no actual tulips involved...just the "idea" of a tulip. ...sorta like the naked short contracts of today.

You can read all about it in the Wiki-link I provided in the original post...or here. :thumb:

 

Yes - I read that some more and now I am seeing that it was varieties of bulbs with some kind of virus that kept them from reproducing? Also it appears that not everyone in society was involved in trading them either. But how many gold commercials do you see on TV these days?

I had done some research a few years ago on some of the precious metals. My main goal was to answer the question "Given that I am a human on Earth, and I think that precious metals will ALWAYS have value, how much of each Siver, Gold, Platinum and Palladium would I need to own, to have 'the average amount'." In other words, their are about 6 billion people, so if there are 3 billion ounces of silver, then I want to own 1/2 of silver, and so I would be average. It led me to learn a bit about how much exists and what the production is like. Of course everything is an estimate.

So when the Hunt brothers drove silver up to $50 an ounce, they owned 200 million ounces, which was about half of the annual production, I think. Or they called it "available silver." According to a number I found somewhere, 416 million ounces are mined each year now, so the real question is what are the demands? It sounds like "the float" or available for sale or use in making products, is really low right now. But can silver mines up production easily?

Also - what if 1 or 2 mines account for a decent percent of total worldwide production, and ane of them has a cave-in. That will surely drive the price up too.

You are SO right about the financial instruments too. I mean, when you begin trading sight unseen and in quantities that are unrealistic to physically produce, then you have a problem. I think that Enron agtually sold UNUSED network bandwidth to other companies as a type of insurance that they could use this bandwidth if they needed too. Kind of like the gas station selling you 50 gallons of storage in their tank, so if you wanted, you could put some in there and get it later. If you could get like 5 cents a gallon a month, you could make money on empty tanks! I mean, then if you USE it, well that is another 15 cents a month.

So this is what I wonder: is all this silver being traded physically? All the silver I own; I physically own. Is anyone buying like thousands of ounces and paying 10% a month over ten months? If so, then leveraging is going to push prices up incorrectly, I think.

Whoever brought up the inflation adjusted price - yeah, that throws another wrench in things. If silver's price could be $125 based on inflation, then there is really no reason that it wouldn't go there for sure, unless demand dropped or production goes way up. Can you imagine if silver was $125 by the end of 2011? Wow! I would be selling some of my silver for sure.

 

That's just it...so would every baby-boomer granny out there with a chest full of banged up sterling that hasn't seen the light of day in 20 years. Each year tens of millions ASEs are sold...and that's just US bullion.

Mines that were shutdown as unproductive 20-30 years ago (when silver was $4/Oz) are opening backup. All this while industrial demand is declining. Silver alternatives (such as copper) are being used due to high silver prices and a slow worldwide economy doesn't help.

We're swimming is silver, but the price keeps rising like a space shuttle liftoff. Something ain't right...I declare Shananigans!! (South Park reference ).

"Oh! ...but the dollar is dropping!" Yeah, right...I'll believe we have $50 silver when I see $16 gas.

"...but silver's been undervalued for years!" Maybe so...that's why it went to $18.

"Naked Shorts! Naked Shorts!" Come on...the Big Boys don't care about delivery; they just want to make a profit. The underlaying commodity is just a means to keep score.

 

The reason why silver is going up and will continue to go up is because the world is trading-in their US dollars for precious metals. The dollar does not offer the safety it once did and no one has faith in it. The world is expecting the "to big to fail" dollar to weaken.

Most of the people predicting silver will soon fall are the ones that sold a long time ago. Their charts and graphs told them to sell, and they continue to preach. I am baffled as to how silver climbs yet the same folks continue with their rhetoric.

I am so glad I didn't join this forum 6 months ago, who knows, but I might has believed all the babble and sold. I hold on to 500+ oz of silver and I dare not sell. I know silver will continue its aggressive climb not because a chart, a graph or historical comparison, I base my conclusion on what is happening now.

To smart for your own "good-ism". Don't let this happen to you.

It's not to late to get back on the bus.

Besides the silver thing, I am glad to be here...: )

P.S. I wasn't going to post this but after PMing back and forth with a newbie to the site, he mentioned how he started to get cold feet from what he was reading here. People are being influenced and that is a huge detriment to their financial future.

 

Well of course, you have an opinion, and in all sincerity, I see many more " to the moon" and "can't miss, etc", than "sell now!!". Yes some do sell, but they probably have profits, maybe even good profits. Whereas those who still hold the silver only have "paper profit". If you deal with silver mines, silver ETF, mixed gold and silver producers, you can buy and sell in an instant, so it doesn't matter if you sell one day, wait for financial releases, and then decide if you wish to buy in or not. If you deal in physical silver, I think people will have a lot of hurt trying to get out, as the bullion companies can read charts also, and won't be at all quick to buy bullion back, or at a huge discount, when many try to get out. That should be explained to a newbie also. Giving strong opinions to someone unknown should be carefully considered, as they may make assumptions about one's knowledge. Trend following works as long as the trend stays true, but no trend goes forever. Exit points and conditions should be determined before buying any bullion, IMO. I left silver this morning, with good gains, and will most likely wait until after Weds. speeches and comments before deciding my course. IMO.

Jim