what signals the end of the bull market right before it crashes?

My point is that with an increased market base, there is a potential for a greatly increased demand. Generally, the greater the demand, the higher the price. But to go back, the production cost of Silver is $5.27 an ounce according to the report released by the Silver Institute in 2010. The perception that Silver has a much greater value has allowed the prices to rise. As long as people are buying at a price, that price will hold. I am saying that today, the price may be based more on consumer perception and participation than any time in the past.

I mean if the people in Asia start buying Silver at $50, that's what the price will be. And I just don't think the experts are taking this approach into consideration ? IMHO

gary

 

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But looking back to 1979-80 the market also greatly expanded with participants. I believe having lots of new participants leads to greater instability overall in the market. The die hard silver bugs and industry will provide a base, but all of the new silver owners weren't interested in silver before, and its very easy for them to become disinterested again.

I just feel the biggest signal would be new silver bugs asking "What signals the end of the bull market?". The more of these questions I see, the more I would be concerned. Short of that, I would look for other markets recovering. If housing starts to turn around, or the market takes off, or if the Fed allows people to get decent returns on the bond market again, I think any of these could be cause for concern since it could precipitate selling of PM to fund investment in these areas.

Just my opinion.

Chris

 

I'm just going by experience in other markets. The internet tends to increase supply available to consumers more than the demand from new consumers. And the Silver Institute cost figure of $5.27 an ounce is total garbage. Look at all of the silver producers and try to find a single miner that has an 84% profit margin on revenue on their income statement, which is what it would take for this number to be correct at current prices. What SI probably did was to assume that silver is produced at zero cost for all multi-metallic mines. The inability of SI to calculate the total cost of production in a complex mining operation doesn't mean the cost is zero. This is why many people distruct the SI numbers.

 

Medora, that's quite a list of 'ifs' there... tell me, do you see ANY of those things in your crystal ball, anytime soon? I don't.. but then, I don't have a crystal ball.. And I'm not sure which I'd rather see...housing turn around? I could list my (custom built log) home for sale for at least what it cost to build instead of 1/4 of that; ...market turn-around? Maybe my 401k would 'come back' to what it was 3-4 years ago... Bond market? (I don't think I have bonds..but do certs count?) Well maybe there'd be some interest worth talking about. Hmmm, all these things could happen, and pm's drop like a rock... and then I guess I"d be in the same boat I am right now. Six to one, half-dozen to another..

So I'm paying attention to all the listed 'signals'.. and hoping to read them half way close to right, and most importantly, hope/plan for correct timing.

If, if, if..

Lucy

 

Supply and demand.. good luck finding Perth lunar silver for $50/oz. Cost of production is well below the sale price on a lot of items. Make it for cheap, sell it for as much as you can. Precious metals are not immune to the entrepreneurial spirit. They are probably more in tune with it really than a lot of other things =) Speaking of Asia, they are dropping bonds like they're hot. I wouldn't be surprised to see them really start upping the precious metal consumption after they're no longer facing any risk based on what happens to our paper.

 

Lucy, I guess there are quite a few if's, but they all don't need to happen, just one. I was just throwing out a few things that if any one of them happen may affect the PM market. If I knew the area of investing that will take off next I sure wouldn't be working for a living.

Overall, I view a lot of capital out there, with no great place to invest. I believe this is leading to some of this capital flowing to the PM market, as well as panicked small investors. I am intentionally trying to spread my money around, (what little I have), simply because I believe when we start getting good news, and a lack of bad news, some area of the market, (not meaning just stocks, meaning all markets), will explode. I just sure wish I knew which area.

Absent that, diversify.

Chris

 

But they are two different markets to begin with - cash market and futures market and they don't necessarily have to run lock-step.

 

IMO, they have already disconnected (and most likely moving apart) There is now quite a premium to acquire a common ASE. Highest that I remember seeing.

 

Several years ago on CoinTalk I suggested the possibility that the physical and paper price could eventually disconnect. And I was "condemned" for the heresy.

 

This has been suggested by a lot of people.

 

Like I have posted before, the premiums are based upon dealer's beliefs as well. I view raised premiums after recent higher prices as dealers either believing the market will go back up, or not wanting to "lose money".

This was extremely common in the early 80's and took years of lost sales before these dealers went back down to a normal premium based upon market prices. I would say if the market stays where its at today it would take 6 months or more before you see traditional premiums for the most part.

Chris

 

I've thought G&S were near a top for a couple of years now. The incredibly widespread interest, including by people who weren't into PM at much lower levels. People who now think G&S are a "safe" investment. But I don't see the PM interest quite as crazed--yet--as it got in the late 1970's.

I don't know if G&S are overpriced now, but I can't see them as any great bargain. If you load up on gold at $1600, or silver at $30, are you convinced that gold will go to $2500, & silver to $60? They probably will, someday, & it wouldn't surprise me, but I'm not willing to spend a lot of my own $$ on G&S after they've both gone up several hundred % in the last 10 years.

By the way, I lived thru the G&S Mania of 1979-80, & subsequent crash. It was really nasty, & I learned a few investment lessons (the hard way). I've been told a # of times on diff. PM forums the last couple of years that the 1970's-80's Bubble & Crash have Nothing to do with what's happening now, no relevance, & another crash & bear mkt in G&S can't happen again.......

An asset class that can't crash or go into a Bear Mkt after such a huge rise......???

 

Very well thought out remarks!

 

The S&P 500, the index of the 500 largest companies in the USA, rose 120% in just the 11 months between Mar 2009 & Apr 2010. It currently sits ~100% above that low mark. Yet there is nothing in the US economy that would suggest these stocks should be at this level except "market intervention" of the Federal Reserve, one of its stated functions. Yet there is no condemnation of this compared to that given to gold and silver.

The owners of Netflix might be wishing they had thought about it a little more. LOL

 

Yes sir, but we are talking about longer horizons. Your dates are intentionally picking extremes, starting at the very bottom of a major correction, and selilng at the very top of that rebound. Look at the price of the S&P over a 5 or a ten year time frame and compare versus what has happened to PM in the same timeframe. If you wished to say that 10 years ago it was at the bottom of a correction for PM that would be fair, but I simply do not think the timeframes you are picking are representational of the overall market trends. Its the exact same as if someone arguing against gold pointed out the value it lost between Jan 1980 and Feb 1981, and them saying that PROVES gold is a bad investment. Both statements are simply untrue, and founded on intentionally manipulated time frames picked.

The owner of Netflix has nothing to do with the overall market, the poor stock performance is purely a reflection of his dramatic price increases, mass confusion of his customers, and just general ineptitude.

Btw, as a general point to everyone, always be VERY careful when someone makes an argument picking seemingly random date ranges. Usually they are choosing those dates to make their point for them, but also usually the dates intentionally misleading. Choosing the date range is one of the most used financial manipulations out there, what the person is saying is technically true, but the conclusions are usually misleading.

No offense meant Fatima, I just think choosing your dates WAY overaccentuates your point. Choose a more innocuous date range and I am completely open to considering your point.

Chris

 

On the other hand, the S&P500 is still no higher than it was a dozen years ago or so [going from memory]. The earnings per share are much higher now than then and this is the more likely cause for the current level of the market rather than some phantom manipulation that some folks think is fun to speculate about but never provide any evidence for.

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/spearn.htm


My personal take is that the present level is just about where it belongs -- not cheap, not expensive.

 

I am probably what many would consider one of the newcomers. My interest sparked in 2004, and I didn't dive in until 2008. However the reasons I got in are just as valid now as they were then, and if I had no core position I would spend as much at today's prices as I did when silver was $10. Precious metals aren't a get rich quick scheme for me. It's about having something of value in case fiat currency loses its value. I see no sign that monetary policy is doing anything to strengthen currency, and numerous signs that it is being weakened. We have had the current monetary system for over 40 years, and the average lifecycle is closer to 25. Trillions of dollars in debt that can never be repaid have no alternative but to eventually default. It's not about price, it's about events, at least for me personally. One day there will be another bear market in precious metals, but not under the current monetary system.

 

EPS figures as compared to years ago have been distorted by money printing and stock buybacks to enrich executives. NFLX did this very thing where they were buying back stock instead of investing in the company and look what has happened to them in such a short time.

The people have been so brainwashed about the stock market they end up getting taken time after time. Yet, there is still no condemnation anywhere close to the constant derision that is lobbed at gold and silver. Well, I suppose if we had common sense having anything to do with it, we would not have an economy that is falling apart. Good news, it's not as bad as Europe. Bad news, we will probably end up bailing them out again.

 

I like this piece of advice, and it is going on my "ten point" list (in my arsenal)

Thank you
Lucy

 

Dear Heart that was the point. Try reading it within the context in which it was given. The point, in case you missed it, was that people will pick dates and then cast derision at gold & silver buyers, but they will completely ignore the same thing in equities.

BTW, You are not exactly one to be preaching this to anyone since you have brought up the 1980 gold bubble many many times.