The new silver bubble

siver just ssems to be going up and up. i beleive we are entering another silver bubble where silver could hit $40, $50 even $55. probably QE forever won't help with that. its too expensive, for me anyways as i am a kid, to buy hence im more working on the collecting aspect rather than the stacking aspect of my coin collection. but like the last $50 its bound to pop eventually, the question is when and how low will it go. but when it does, its high ho silver galore for me.

 

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It will probably go up quite a bit, as it is affordable, and gold will retrograde--that is the way they seem to act over the years.

 

Certainly love your optimism! We are still a long way from $50 silver though... depending on what drives it throughout the end of the year i'll be happy to see $40-$45. Then i'm gonna sell most of the stash and start over

 

What do you mean, "bubble"? Silver's posted big gains for two days in a row! It's never going to go back down again!

 

PM were down by almost 15-20% just a couple of months ago, and almost no threads where people were buying heavily in order to have a profit by now. Most people don't start the buy mantra until the move already has a goodly amount in it, and say when it goes down, they are going to load up, but they usually don't due to fear of further decrease, and are likely to always be chasing the rising price later. As PM prices go up, the chance of them continuing each 10% increase becomes less, and true for the reverse. I am still selling appreciated paper PM instruments and holding cash or reinvesting into related areas. My feeling is that the support bottom for silver is still in the 25-27 range, and that is where I would start accumulating again. Now is the selling trend ( proportionally stepped) for those who have appreciated assets, In My Opinion.

Jim

 

The characteristics of a bubble are:
- Record high prices
- significant gains [e.g., 100-200% or more] in the recent past - parabolic pricing
- widespread public participation
- widespread use of leverage to buy the asset in the bubble
- a lot of hype about entering a new age and conditions that will propel the price upward for a long time
- large transfers of investment dollars out of other investment categories into the bubble category

I don't see any of this happening in silver. However, I think the path of least resistance is up.

 

Kitco says today its up 97 cents, 1/3 due to inflation, 2/3 due to trading. Also need to note that when prices are going up people are buying more of it expecting to short it for profit. Now whether its a bubble depends on how much is being bought for short sale. Im on the fence right now about metals. There is little industrial demand for them due to the worldwide recession and economic issues. I see prices falling just as much as going up over the next 4 months. Obviously alot is pending on the election results coming up and european problems. Id say hold or sell a little off. I think odds are in our favor of a better entry point in the near future. The only factor going for it is investment demand, because people dont want to keep there money in stocks and worthless dollars and euros. This does not mean investment demand for short sale, this is a long term demand. I say no on it being a bubble.

 

Personally, I think it's a combination of a few things. Silver's been down/stagnant for a while, so it might be a short term pump for profit taking. Could be partially caused by the run up to the election and the thoughts of QE3. I'm of the mind that it'll rise a little more, steady out for a short while, and then drop back down to where it's been.

Either way, I'm still buying a little here and there, mostly proof sets / 90% when I can get a real good deal, and turning in junk silver for rounds and bars as I come across them. If for some reason it crests $50, I might consider selling a bunch, and then seeing where it goes from there.

 

I don't quite understand this remark if you are referring to physical gold, as people commonly do not buy gold in order to short in the future. True some buy gold to sell at a higher price in the future, but this is not shorting. Shorting means to sell borrowed shares or borrowed physical rather than one's own, hoping to buy it back at a lower price. More favor shorting by buying put options on PM ETFs or future contracts, where the possible loss if fixed, whereas shorting shares or physical in "limitless" and brings margin calls, that one may not be able to meet and causing forced selling.

 

I meant buying it short term either day trading or to hold less than 1 week. I day trade it with my kitco pool account.

 

I don't understand what you mean by "demand for short sale," or "buying more of it expecting to short it for profit," or "bubble depends on how much is being bought for short sale."

 

Pump by whom? It doesn't make sense for someone to run it up ( using funds) only to sell it. That assumes everyone else will fall into the trend and that is dangerous. I would discount this.

Quite possible. If you have access to financial charts, throw up the spot gold, spot silver and the EUR/USD, and if you can't see a direct relationship, my next comment won't make much sense. Right now the USD is determined more by external events ( as you mentioned) as well as the inverse relationship of the EUR ( How things are financially going in Europe). Currently, since gold and silver are internationally priced in USD, a decrease in its strength compared to the rest of the world ( mainly Euro-nations) increases price of the metals and visa versa. The USD strength is affected by world events (Politics of all sorts), world financial strength ( especially so the ones that are in the basket of world currencies). etc.

PM do not drive the USD currently, the EUR/USD ratio is driving the price of PM.

Quite possible and reasonable. But one can tell if PM are increasing due to their own, when they move UP contradictory to the EUR/USD ratio or independently. But I have only seen that one day in the last couple of weeks. Likewise a reverse would pend bad for PMs. Bullion bulls blogs like to believe the PM are independent of such and have some intrinsic "value" they are moving towards.

IMO.

Jim

 

day trading or less than l week, on a big up day like today the majority is going to be short sellers

 

Betting against a powerful trend that is just starting is highly dangerous. Most of the large, successful professional trading funds seem to be trend followers of one sort or another.

 

There were a few threads to be fair. Isn't it amazing, though, how when PM goes down the activity of threads go down dramatically? I bought about 25 ounces of junk silver this summer, but not because I wanted to buy silver, it was just that I was not as nervous about buying junk coins at those levels, and I wanted the coins. Rising prices do nothing but stop me from buying, it will never shake loose any coins unless it gets crazy like $50+ in a short period.

 

Rises in silver in reaction to market dynamics aren't bubbles, they're part of the ebb and flow of a market. Bubbles is when widespread purchasing and hoarding creates a tenuous market position of unsustainably high value. That's what happened in 1980, and with housing in the middle of the '00's. Are all your friends stocking up on silver, running to the dealer, buying 10oz here and there? No? Then it's market dynamics in action, not a bubble.

 

this summer I've increased my PM holding 100% ... I believe there are people who accumulated without sharing day by day what they did.
Another issue are so called weak hands without agenda who buy/sell when there is an action without any idea other than make quick profit/fix loss.

Today I'll bid again on silver and if I buy it then I feel better then let it go

 

My understanding of the terms are (1) If you have possession of an entity such as a share, option, future contract, etc. you are "long". (2) If you then sell them or never had them, and have zero units in hand or account, you are " Out of the market" on that specific unit (s) or (3) If you sell something such as above that you borrowed from your broker or you don't have and don't intend to get, ( naked ) ,you are "short".

If you have 10 oz of silver ( you are long 10 ounces) , if you sell 9 of them , you are still long 1 oz. Sell that one and you are out of the market. If you have 10 ounces and sell 15 ( 5 which you borrowed from the broker), then you are short 5 ounces which must be returned within a certain time and you are charged a fee ( margin ) for that time until they are returned. I am not sure if the "pool" you mentioned allows short selling, but I would be interested in the margins they charge for shorting with their PM.

This is why I was a little confused about your use of "short".

Jim

 

^Your answer is a little confusing. If you possess a share of stock, you own what it represents. If you own a futures contract, then this means you promise to pay X for Y at some point in the future. i.e. you don't own Y. It's a significant difference. Both are called being "long" because in finance "long" means you win if the price goes up in the future, but the stocks are different than futures in what you can do with them and the risks involved.

Theorhetically an owner of stock can take it to a futures market and enter a short position against it. So in essence they are long in the stock market but short in the futures market on the same stock.

 

My take on the OP is that gold and silver will go much higher, not because they are entering a bubble, but because they have been in an anti-bubble for the last century in an attempt to keep them from competing with the dollar. At some point I do anticipate them going past fair value and into a bubble, but not until we get a currency that is not based on debt.