Price of Silver and Theories?

Anyone have any theories on when the next rally will come on the price of silver? What will cause silver to move up and beyond $40 an ounce next time? Anyone have any insight or theories?

The way I see it it should go up in price and if it don't maybe that signals the end of the recession as we know it. Personally I was waiting for the price of silver to reach $55 oz to dump it on ebay and that never happened. What do you think a person in my position should do, sell now or hold? :thumb:

 

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The last few days silver has been around the $35 mark. I'm guessing you bought at $40 since you specified it in your upward scenario. Add in the discount by the dealers and you will be out $7 to $8 an ounce. If you can wait, your present loss is on paper. The question to you is: How long can you wait? I think some of the newer investors loaded up their credit cards buying, and now those balances will start to accrue interest and need a minimum payment. If that is your situation you might want to consider selling, get out of debt and take your loss. This is why you don't gamble with money you can't afford to loose. That $50 barrier will be broken one day but not until the market setters agree to it. I think this last upward trend opened their eyes a little and the next time they might not be as fortunate and in control. If you can wait till then; do it. IMHO.

 

Depends if you can afford to take the loss if it goes lower.

The next big move up in PM's? If they go a lot lower, the historical cycle would be 10 to 20 years before it moves again. All the burned investors and the public remember how it plummeted and stay away.

 

Check out my post on the "Silver To Settle In The $28.00 Range?" thread. I would just repeat it, but that seems tacky. Basically my impression is that silver will stay pretty stagnant until QE2 ends at which point we will see a drop to the next most opportune buying scenario. We may see $40 before then, but I'm definitely anticipating a drop before things take off as they typically do the second half of the year. After that I think $40 will be considered a bargain.

The housing market is pretty clear that we are not near the end of the recession, and I also think "measured inflation" has a long way to go to catch up to real inflation (money supply growth exceeding growth of goods and services). A lot of that excess liquidity is just sitting in a big wig's account somewhere, but if it ever hits the mainstream I would expect the impact to show.

I am of the mindset of buy (physical) as much as you can afford to lose as often as you can, and never sell. Even if it goes down from when you bought, it's not a loss unless you sell. Silver is a bumpy ride, but I think all PM's will continue to rise over the long haul. Sure you could sell on the tops if you can peg them to maximize profit, but if a shortage pops up or a disaster happens or it becomes illegal or [fill in the blank], you may not be able to resupply. I measure in ounces, not dollars. Just my 4 cents =)

 

I see this repeated often, and it is bad investment advice. Denial is the thinking behind turning small losses into large ones. If the current price is below your cost, you have a loss. Whether or not you choose to sell and turn it into a loss for tax purposes is irrelevant. People get into the mindset that they can't "afford" to take a loss when they already have one. The smart thing to do is to just make sure your money is invested in the best idea you can come up with at the time, even if it requires you to sell one and buy another. Remember - you don't have to make back the money the same way you lost it.

Anyway, that said, there has been tremendous technical damage to the silver market from the recent drop, and it seems to me that it is going to take some base building before the next leg up. The marginal cost of production for new silver mines is probably in the neighborhood of $20-25, so that is probably the floor, but I think it will stay in the $30s for awhile - no guarantees - just my best guess.

 

Bad investment advice from a fiat profit standpoint maybe, but not from the standpoint of ensuring you don't get caught with nothing but potentially worthless paper IOU's. Maybe it is still a loss even if you don't sell, but that could eventually become a gain or an even worse loss unless you lock it in and sell. So it's a moving target regardless. PM's have been pretty consistent the last decade or so, and I only offer advice that I myself follow, which operates under the assumption of only spending what one can afford. Whether it's good or bad is a matter of opinion.

 

I can't believe silver speculation is still a topic on CT. Bottom line...if you want to sell your silver...and the spot price is above $18/Oz, then...SELL, SELL, SELL!!! (imho)

 

If not for margin hikes we'd be looking at $50+ silver. I fail to see how one week of interventionist actions negate mountains of fundamental evidence.

 

The reason why there are so few really successful investors is that some sell too quickly, usually telling themselves "you can never go wrong taking a profit" and other become married to their investments and try to find reasons why this time it is different and it is never time to sell.

 

It does cost you money in additional commissions and fee's coming and going in the market like a yo-yo. You can't panic every time the market moves. In silvers case, it was more like 30%, but without knowing what he bought at, its hard to say what his risk is either. He may have lost his big opportunity, but he might be able to wait some if he still has a little profit to play with. It appears the OP does not have an alternative investment since it was not stated. So he is asking in or out, no strings attached.

 

Watch & learn.

 

This article puts it better than I ever could. I do anticipate sub $30 prices considering where things are currently, how the upcoming couple months typically perform, and the (unlikely yet purported) prospect of an end to QE, but that'll be the last train out of town IMO.

http://www.mineweb.com/mineweb/view/mineweb/en/page31?oid=127298&sn=Detail&pid=102055

 

If it ever gets to the point you need PM's to buy a loaf of bread, you had better have a lot of lead put away.

 

I still like gold and silver, but not as much as I did when prices were much lower. A major problem I have with folks like Julian Phillips is that he is a gold newsletter publisher, and started relatively late in the game. It is highly unlikely that he will ever write an article bad-mouthing gold or telling his subscribers that it is time to cancel their subscriptions and try something else. Since he can't be objective, nothing he says is relevant in my opinion.

 

Lots of sound, thoughtful posts. Very good reasoning and logic.

The truth is, silver will fall back to under $20/oz in the next 6 months. I know this because I dreamt it.
Lance.

 

LOL...you go DOG!

 

I certainly can't fault you for that line of reasoning, but I can't argue with any of Julian's reasoning either.

 

I am one who feels that an end to QE2 is already figured into the market, both stock and commodities. And except for a initial downward trend by the Retail market, which others will take advantage of, the markets will continue about as they are, with a 1/4% interest rate increase or not. If there is an extension of QE2 processes, and I feel there is a high chance, as the European economy is shaky, and the Fed can make hay without hurting the USD too much, then I would expect to see an increase in stock and PM prices, as European buying should increase. IMO. Lots of "IFs" in any discussion of the future. I could be wrong, but I am staying out of silver, moving into gold mining stocks with proven reserves, added significantly to rare earths stocks for my speculative portfolio.

Jim

 

I have to be honest. I invest in the gold market through ETF's and a broker who has the lions share of my earnings in other things. I own physical silver as a hedge and play with it on a personal level. I don't think I could ever put serious money in silver. However, it does force you to become aware of all the financial forces which influence all the markets. But everyone can pick their own route to get to where they want to be. Just try your best to avoid the one's with dead ends and don't be afraid to make a U-turn if necessary. Along the way enjoy the company and the spirited/good conversation. I'm old and I'm going to bed. Good night. :>)

 

That's an important point that is often overlooked. I see people post things like "my holding period is 20 years" and "I'll never sell" and "if you don't sell you haven't lost money." This mindset is what causes failure in investment plans. It takes mental flexibility to be successful. There will come a time when gold and silver will be the worst holdings.