Silver is Crashing dramatically!

Going to the moon is so 20th Century. I think the price is silver is going to go to Mars!

...but it doesn't sound as good as "to da moon!"

 

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It's not uncommon for a Bernanke bump (up) or Bernanke bop (down) to reverse itself within 24 hours. It's a golden opportunity to make money on volatility, and the market makers rarely miss an opportunity. We're still under $30 but my line in the sand is and has been $1600 gold. If it holds beneath 1600 then we're looking at a bear wedge. If it holds above then it's a bull wedge. Silver may meander a bit but as long as gold stays strong silver will tag along.

 

That would be awesome - I took advantage of this dip!

 

Rhodium was down to $1,180 a few weeks ago. That's the only PM that's been consistently/persistently "undervalued" (relative to historic ratios) over the last ~18 months, IMO.

I suppose Gold and Silver will continue to retrace moderately if erratically: Au to ~1500-1550; Ag to $22.-25. Better buying opps in April or July.
But (IF/when) the sequestration fireworks go off in late March, many Paper asset prices will tank dramatically and PMs (priced in USD) will take a hit too, just like in 2008 ... the -25% plunge in Gold, have you forgotten already? Fasten your seatbelts, that'll be a sickening rollercoaster ride for any PM noobs here.

 

I just realized that platinum has a higher spot than gold. I wonder if that is a sign of what is coming...

 

GSR at 50+ as opposed to the historical 15-20 isn't undervaluing silver?

 

I understand that but if they make a change in the law to melt and extract metal from coins that will be awesome i think

 

Its legal for silver, and for cents and nickels its not a law just a Treasury directive. It was put in place to scare the smelters long enough to give them time for solutions, (which they still haven't come up with).

 

Your not allowed to melt Wartime silver nickels, just saying.

 

what im saying is that while peole are buysy destroying their pennys, i'll be saving the nice looking ones and selling them once pennys become rare after the cent is no longer us currancy....

 

It is driven by reduction in Platinum output and increasing demand (car sales). I been more bullish on platinum than gold or silver for past year or so.

 

I'm not bearish on Ag, but I don't buy that silverfishy 15-20x stat.
I'd consider the last 30yr avg GSR stat. Rolling avg # since 1973?
Last 10 yrs, NORMAL is ~50x on Kitco with high volatility (30-80x) also.

 

So basically you only care about the GSR since gold and silver were no longer circulating money. You've chosen either the absolute best or absolute worst timespan in history for a baseline depending on the outcome of this fiat experiment.

 

all gold commercials use this method, sighting the last tens years and not mentioning the previous years where a savings account smoked them.

 

No. The long-term timespan of 28-49 years is approriate to the adult lifespan/horizon of an active US investor. For future outlook, the most recent previous ~30year period (1983-2013) is more germane than any other (e.g. 1953-83, 1933-53, 1903-33 etc.) Since the USD$ has only floated since 1973 I'd also discount any other comparison, say, to periods/currencies backed by PMs (apples-to-oranges.) The 200-year average for the gold to silver ratio might be ~37 to 1, but that's almost totally irrelevant to living investors now.

Momentary and freak price dips/spikes excepted, I reject your assumed GSR reversion-to-mean of 15-20 Ag/ozt to 1 Au (400 year historical level). If something like that should happen (imagine Silver hits $120. when Gold is at $2,400. = GSR 20 in 2015) man should SELL Silver fast: that bell has rung!

As for my "baseline," the current GSR is approximate to the modern historical avg, not wildly askew. For the last 45 years, POG $1650 ÷ POS $31 = 53.22, almost spot on the GSR 45-year average. More importantly, the GSR charts below show great fluctuations (100>20) and volatility. So I wouldn't get too excited about GSR 35 nor GSR 70, either way.

It's true Silver has appreciated recently and I can envision Silver appreciating more (as I wrote "I'm not bearish on Ag") but that's no reason to overweight Ag. Why? Based on the last decade's data, Silver is a much riskier PM (POS has ~2x the volatility of POG.) So neither of these qualifications/clarifications mean Silver is undervalued (to me) nor am I "undervaluing" that PM. Rather, Ag risk profile signals CAUTION!

It's totally reckless for retail noobs to try and trade the GSR. Don't bother/try. Flipping bullion in the short term is a fool's errand with almost certain loss. Particularly in periods when paper currencies become unstable, retail investors can easily get crushed in poorly understood (market-timing) arbitrage gambles. Caveat emptor.

otoh - and because there are always exceptions - extraordinary bell-ringing moments can be the best time to buy/sell whatever's CHEAP-CHEAP/pricey in moderation. An historical 200yr LOW for Rhodium (in Au/ozt) is one such opportunity. So if you don't hold any Rh... consider a 3-5% allocation. That's just my two cents.




Goldprice.org's 1975-2013 GSR chart:

View attachment 240730

Matthew Green's crude GSR chart, 1900-1911
View attachment 240734

Bullionvault.com's 1882-2012 GSR chart
View attachment 240742

I'd never seen Palmer's Silver Price Chart, 1900-1982 before:
View attachment 240755

 

Howdy folks,

I suspect that Juan is correct about the GSR establishing a new equilibrium much higher than the historic 15-20 to 1 range. Hey, stuff changes and we need to also. Another somewhat related change in metrics is with the Gold/XAU ratio. This measures the POG divided by the XAU which is a set market basket of mining stocks similar to the DOW or other stock indice. Historically numbers higher than 5 represented a signal to buy stocks relative to bullion while a number below 5 was a signal to buy bullion relative to the miners. Well, it's at 11.62 right now and has run in the high single digits for this entire bull market. Anyone heeding it's signal since 2002 has gotten hammered as this number continues to get worse.

My thinking is that it's due to the bullion ETFs. Before they arrived upon the scene average investors pretty much had to buy mining stocks to play this arena with securities. There was no friendly way for the Joe 6 pack to invest in pm's unless he bought physical bullion . . . and many folks don't want to do this.

Anyway, this is another historic metric used by investors far and wide and these days, you better adjust how you read it. What the equilibrium level is these days? Geez, WTF knows?

peace,

rono

 

Duplicate, please delete.

 

I don't know why you are saying no. I said it was either the best or the worst timespan. It was not a yes or no type of statement.

Your logic is most certainly sound, however taking current circumstances into account which are far more relevant than past performance, if the dollar does not last until an investor's retirement date then precious metals are most certainly a good play. And since silver is volatile as you have stated, and risky which is true, if gold rises then silver should rise more so. If gold falls then silver should fall more so. If you think they will fall then why hold at all, but if you think they will rise silver is the superior play.

Now if the dollar survives and all goes well in the world then the GSR should probably stay near where it is. If not then a mean reversion would be imminent. It's all circumstancially based. To draw a line in the sand based on the past, any timeframe in the past, is foolhardy.

Selling your silver stack at $200/oz is also foolhardy, because that would be an indicator of the currency failing. Sure I would sell some, but only a small portion.

I've said it before and I'll say it again. For someone who is often pointing out the lies of the paper bugs, you sound an awful lot like one.

 

And just to think what would all of this long time range have to say if the earth was just 15 minutes off its orbit, or the 150 ft asteroid was 15 minutes off on Feb 15th, and Kablooie, there goes maybe China, the US, or all coastal areas 30-100 miles inland. If the world knew it was going to hit, but not certain where, what would they buy? Food, Fuel, precious metals?

 

Smile, I have been seperating 82 and earlier pennies from my change for a couple of years now for the exact reason you mentioned.

Nice to know I am not the only one thinking!