PM's in a nose dive today

enough? =) Most likely will hold off for a few days. I'm not a big time spender. My goal is to someday possess 10k oz of physical silver. If that was represented by the peak of Mt. Everest, I would currently be at the bottom.

 

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At $26 and change per oz I can get average circulated common date Morgans and Peace dollars at close to $20 apiece from a local dealer, I haven't been able to do that in over a year.

Time to load up.

[video=youtube;JA7WdnCJU7Q]http://www.youtube.com/watch?v=JA7WdnCJU7Q[/video]

 

I beat you to it i called Silver hitting 20 and Gold 1400, 3 months ago . I know i got slammed in RP forums for that.

 

Good thoughts sir. The only point I disagree is physical market overrunnning the paper market. There is simply too much inefficiency in the physical market, and too many things a paper market can do that a physical one cannot for me to ever see this happening. How are major producers and major users supposed to hedge future production with a physical market?

Just my opinion.

Chris

 

It is a good time to watch and wait, and when it is time pounce on the good prices. ?

My questions are;

What is going on in the marketplace to cause the rapid decline in both gold and silver prices?

When will we know it is time to buy?

 

I'd say when it starts going up...you should have bought before that...

 

So what is your time frame for these numbers? So far, you have been wrong for 3 months by your own admission.

 

Till Spring 2012 i see gold and silver hovering around those levels however by Spring i believe US debt issue will once again come back to haunt us.

 

Kitco 2 year technical chart suggests a floor at $26. if it breaks through that the next floor is $18. that is my newbie read on it anyway. Do tech charts mean anything in this day and age or are there to many current events to put any weight in it??

 

My view of technical charts is:

1. They are useful because other people use them. Its a self fulfilling prophecy effectively.

2. They are useful for short term trade decisions absent major news. If something like an outright default on Spanish debt, or a major shock to US debt coverage, happened, no technical trading can help with that.

Overall, I like to plan where I want to be 10 years down the line, and if by using technical trading I can get there cheaper I will. I simply refuse to use technical trading for any predictive value long term, but some do, and I think its a very dangerous game.

Chris

 

Although I was criticized for stating I felt Silver was in a bubble, in a recent thread. I think it's going to fall some more, and maybe a lot more. The current threat y Iran to block the shipment of oil in the event of sanctions might send the price of oil up a lot. Whenever one commodity gets the interest of the financial bloc, others get sold. Add that to the smart money short sales and I am seeing a possibility of the Silver "Bubble" leaking.

I feel anything that is valued very high above its production cost is in a bubble. Sorry, but being cynical has sure saved me a lot over the years, even at the sacrifice of potential profits. But not making some of the potential profits is a lot easier for me to withstand than the actual loss of capital.

I think I will wait another few days or weeks before buying and keep what I have until the dust settles.

Just sayin'

 

Since we are talking about paper PM prices, then any analysis that ignores the situation at the comex is folly at best IMO. There are two important events taking place there. One is the situation caused by the MF Global debacle that I mentioned above. Big investors have pulled out. Second, December is an options expiration month for both silver and gold. Anyone looking at pricing history has to consider what these types of months has meant to prices.

 

Not bad thoughts sir. Buying only because prices have fallen a little does not make it a safe purchase. Human beings are funny, numbers stick on our heads. Just like $25 seemed outrageously expensive when we were used to $10 silver, $25 seems like a screaming deal when we are used to $35 silver. In both cases its $25 silver, but humans view it differently.

I am not rushing out to buy at today's prices, but think they are getting more in line to reasonableness. I am just cautioning everyone about this perception issue if you buy just based on what it was worth a few months ago. Always remember many people did the exact same thing to tech stocks in 1999-2000, buying on dips and thinking they were going to make a fortune. Buying on dips only is a deal if KNOW it will come back up. If you are simply gambling you think it will come back up, then it is gambling.

Chris

 

I am a lifelong value investor, but I have also given technical analysis a try with pretty good results. Charts can be a valuable tool for identifying trends and patterns that have had a high success rate in the past. They are also very useful for setting stop loss orders to avoid the major news events you fear, which provides significant downside protection. I completely agree that charts have NO predictive value, and I think this is where people go wrong. What they do is identify what you should do today [buy, sell, hold or do nothing]. Anything beyond that is purely in the imagination of the investor.

 

It seems like only yesterday I was being lambasted for suggesting that silver wouldn't go over $50/Oz. I recall one person writing a scholarly analysis of why silver was "fairly valued" at $134/Oz. What a difference a day makes!

 

It is a lot safer to wait until silver prices have bottomed and started back up [if that is what they will do]. The old phrase about catching a falling knife is true. It's a lot safer to buy $3 above the ultimate low than guessing at the exact bottom.

 

Yeah, that "scholarly analysis" I got reamed for picking apart as well. It was a "dazzle with bullcrud" kind of busy, official looking modeling that at its heart was deficient. He had as a "worst case" like a 1% chance silver may only be $15, like a 3% chance it may be only $25, and the like. Never be afraid of calling out such crazy models, the model itself was fine, it was his assumptions that were completely flawed.

 

There is a lot of the day left, but it appears as of now, both PM's and the stock market are moving up again.

 

FOR WHATS ITS WORTH

I daytraded for almost 5 years. Wrote a book about such.Always on the watch for those who I feel have a better grip than I on market movements. Such is the case in the following post I took from a blog from a person who has been uncanny in calling tops and bottoms. For entertainment purposes I will share with you his blog written 17th December:

"There appears to be upside by Dec 27th for both Silver (red line target) and Gold. However, the cycle analysis indicates extreme weakness in the S&P starting from Dec 28th to the 30th, and continuing into January 6th. This market-wide weakness likely will also initially manifest in late December in the Gold and Silver markets causing some weakness amid forced liquidations and panic.

So while the recent bottoms for Gold and Silver are likely to be retested, and probably undercut slightly in late December, the charts are super bullish into early 2012 for both metals.

The move higher in January is slower for Silver initially than Gold, but while Gold rises steadily, Silver finishes with a parabolic rise to $37 for the Silver futures!

All of the methods that I use including symmetry, geometry, cycles, and cycle analysis are extremely bearish in late December. Not only that, but the market is confirming with leading indexes (such as NDX and DAX) leading down for months already.

The crash is anticipated to start from Dec 27th or 28th, and could reach the 1044 SPX target on January 6th. Steep declines may come on Dec 28th through Dec 30th according to the cycle analysis system.

This summer, I used the same cycle analysis system to pinpoint a selloff into August 10th +/- 1 day, and mentioned this date many times in my July analysis. It is the same system that I am using this time as well."

As a note he also supplies charts to illustrate his opinions.

Who knows? But, I sold my Gold and Silver I was holding (I am a dealer) last Friday. Appears that we was right on target again...Steve

 

I'm sure we'll see a few "dead cat bounces" before things get sorted out.