Where is Silver going?

Not only is silver running out because of industrial uses, but it is also being hoarded up more than even before by collectors/investors. When I started investing in physical silver, people looked at me like I was some kind of crazy person. Now just about everyone knows about investing in silver and may have done so themselves, especially with our shaky economy. From my past experience, I don't see silver going much less than it is now. I predict about a $50-$60 peak this year. I will slowly start selling around $40-$45 in case it dives off, I will get some of my profits.

 

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The path of least resistance is UP!

 

If the US Treasury announces an intent to SELL THE GOLD RESERVES (say 5% over 2013), look for Ag to have double the downside of Au in 1q-2q 2013.

 

I've never been comfortable with the idea that debt is good - under almost any circumstances. It is sometimes necessary to buy houses and cars since most peoplel have to live someplace and drive to work. But whether or not it can be easily repaid depends on not suffering prolonged unemployment, disability or illness and many other unforseen factors. So I would say never excuse debt by talking yourself into believing it is good.

 

Outside of following inflation and somewhat oil, why do you say that Cloud?

You yourself said predictions without analysis is useless.

The one data point, (personal observation, etc), that I saw Sunday was interesting. I was at the largest monthly coin show in the Twin Cities here, and there were new bullion sellers. The major bullion seller around here is a husband and wife team who are more traditional bullion sellers. They have a few coins but really deal with junk PM and bullion.

The new sellers were a couple of guys in suits. They didn't have very much for sale, mainly ASE/AGE and foreign equivalents. I was curious and started talking to them. They have an office in downtown Minneapolis and deal mainly with business people. I think they were mainly at the show to buy.

I started asking them questions, probing their knowledge, and guess what? They sound identical to the same "sound bites" and "knowledge" that comes from gold bug sites. After a while I couldn't stand what they were saying and started disagreeing with them about certain things they were saying, like silver is a much rarer metal than gold, cost to produce an ounce of gold is over $2000 an ounce, etc.

I don't know what to make of this new breed of sellers, or if it means anything, just thought I would throw it out there that this is the "professional advice" many newer buyers of PM are receiving.

 

I think the silver bull market is still in place inspite of the drop from the all-time high. I base this on the long term chart and lack of excitement from the media, investment community and main stree investors. This isn't the way powerful bull markets usually end. But everyone must determine for themselves how they want to view the market. I don't think silver can be purchased based on fundamentals anymore. The price is too high to consider it undervalued. So it is more of a speculation now.

Regarding your observation about the silver buyers, this is just another data point to indicate we are probably closer to the end of the silver bull market in terms of time, but not necessarily in terms of price.

 

For Cloud...

"I've never been comfortable with the idea that debt is good - under almost any circumstances."

Well, here's one circumstance that applies to our fellow coin and bullion collectors. I would much rather take out a car loan at zero percent (widely available) for 60 months, than sell off my coins or bullion so I could pay cash. [Incidentally, I agree with you in principle, I have ZERO debt, but we're entering an unpredecented era of financial chaos.]

As for houses, I guess I am way out of the mainstream. It is still much too soon to buy a home; they are still overpriced. Within the next two years, I predict there will truly be desperation sellers -- their last asset, their only way to get a grubstake to start over (as renters, that is). The housing crisis is by no means over, and the banks still have millions of foreclosures "on hold," well aware that this is not the time to flood the market. Plus the "low-hanging fruit," so to speak, has already been picked; the most stable and highest-rated buyers have already...bought.

As for consumer credit, and very high levels of trivial consumption that got many folks into trouble in the first place, selling off coins and bullion is preferable to taking on more 18% debt, I guess. But far better to cut expenditures to the bone, and avoid any such necessity in the first place.

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This weekend, I had 8 fairly pricey lots in Stack's "International" auction in New York, and the items did not do very well, only about 5% over the low end of the gross estimate. Still, I think it would have been worse later, so I'm satisfied. The bottom line is that the smart money already has a huge selection of coins and currency to bid on, and they can be very selective and/or not bid at all.

When desperation selling kicks in, auction realizations will be lousy, across the board. But there will be no downward pressure on bullion, and if the dollar's tanking at the rate of 1% or 2% a month, that's the time to kiss your FR notes good-bye, load up on bullion, and pay cash whenever you can, as the lowest interest rates in a generation will have already started rising.

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agreed!

 

If we are entering an unprecedented era of financial chaos, I'd rather do it without debt.

 

You got the memo! Thanks for sharing that.
I can only wonder what the numismatic haircut will be, off 2007 highs.

 

We're up to over $31 today. I think it may float up to around $35 before tanking again just before the debt ceiling, when it will rise again toa round $35. I'm not buying any serious amounts now, but I could rue my decision in a couple of months...

 

Silver up $0.62 today to $31

 

I think there's enough instability out there that silver will stay over $30 for the time being. I can't even predict 2013, but I am not selling too much yet. Once it hits $50, I might have other ideas.

 

I am usually wrong on my predictions regarding metals but I have felt that silver and gold are both very over priced and have been for years. I see silver at $7 and gold at $450... I know that is just crazy but that is how I see it.

 

Your ounce of gold/silver is still just that, an ounce of gold/silver... Your metals are not worth more... it is your dollars which are worth less~

 

I hope you're right. I always want prices to come down, not go up.

 

correct, and I don't see the dollar making a strong comeback any time soon, I think it will be worth even less if not nothing in time

 

JJK78 - that is not exactly right. The price change of PMs contains at least three factors: influences of recent economic events and decisions, inflationary expectations, and consumer demand. It is not based solely on the declining dollar.

This is easily proven by looking at a chart of a dozen major currencies showing the price of gold or silver for 10 or 20 years and noticing the wide fluctuations in the shape of the graphs. If your theory were true, the graphs would all be the same shape; not congruent, but the same shape.

The primary PM website www.kitco.com recognizes this, and every day posts a short analysis after the close: [commentary of 14 Jan 2013]

"Did gold really go up 0.20? No. It actually went down -0.50 in real terms, but US Dollar weakness makes it appear to have gone the other way.

Gold price Change due to Weakening of USD +0.70

Gold price Change due to Predominant Sellers -0.50

Gold Price: Total Change +0.20"

 

The dollar is actually losing purchasing power much slower than the 70s or 80s. I simply don't understand those who believe its losing so much purchasing power.

 

Except that the "official" numbers omit food and energy (gasoline), grossly understating reality.