Silver is dropping

Unfortunately it couldn't happen . Who would produce or could at $5 an ounce? Also, who would sell at $5 an ounce?

 

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Yeah, pretty severe drop.

This is the danger of ONLY investing in one thing. I serious do not care what that one thing is.

OTOH, in such situations is when people who are true long term holders stand out. Not right away, but if this market stays down for a while, please make sure you continue to buy. Don't go crazy, don't max out credit cards, but continue to buy when people are down on PM.

Its hard to buy when all you read is negative about an asset. In 2009 the only thing you would hear about stocks was bad, but I bought anyway. It can turn your stomach listening to your head rather than your heart in investing, but its usually best long term.

So, I would again say stay the course, and if you wish to long term hold PM as part of yoru portfolio continue to do so. Just do it gradually. Always remember markets can be irrational a lot longer than you can remain liquid.

Personally, these markets are starting to make me feel better about buying some PM again. I am starting to look around at "junk" world gold and silver harder, depending on the premium.

 

Memo to my self , Don`t bid on junk silver lots on ebay 3 days in advance .

 

On the bright side, you'll probably still get outbid by some bidiot. :thumb:

 

Yeah, but this is ANOTHER reason I never bid on Ebay except through snipes. I can cancel a snipe until a few seconds before the auction ends.

Btw, anyone else notice how silver and gold are two of the three biggest losers YTD of all investments on www.comparegoldprices.com? I thought it was funny. Silver was the absolutely worst place to put money of any investment so far this year, with a YTD loss of 13%.

 

It never works like that. Companies have fixed and variable costs. So they're usually better off producing and selling even if they have to do it at a loss, to cover fixed costs. So, it is possible although very unlikely. I honestly thing $20 will happen and maybe even a bit lower.

 

Even more complicated with silver since most is a byproduct of other mining. Its POSSIBLE, (very, very unlikely, just saying its possible), that silver could be $5 if copper and other metals were high. Silver would just be a byproduct, and not responsible for paying the mine's bills.

IMO $20 is possible. Miners are not getting rich, but its better to run at $20 than to shut down. OTOH $35 or higher is also possible. Depends on way to many variables that I am incaplable of guessing. This is all short term of course, one would expect these prices to all adjust for inflation over time, so 20 years from now people very well could be salivating at the thought of $27 silver, and calling us all stupid for not "backing the truck up".

 

I figure the lowest it could possibly go is the $5/oz it was selling for back in 2003, but adjusted for inflation/deflation. So maybe $10/oz at current inflation levels, or lower if we experience deflation. Of course the CPI isn't up 100% in the past 10 years, but I think the costs associated with mining silver certainly could be.

But yeah, if it ever gets down to $5/oz, it's second mortgage time!

 

Dude, $5 silver or $300 gold I would there with you. However, like you alluded to, mining costs have greatly exceeded inflation, so I doubt even $10 is possible for most mines for more than a couple of months. Even at $15 or below I would have to be staring at those $1000 FV bags of junk long and hard if they were selling for melt.

For me, (and just for me I am not trying to give advice and don't really care what you do), below $25 makes me feel safe buying, below $20 has me contemplating starting to "intentionally" buy XX amount per month, and below $15 has me considering if a few loser stocks can go to make some room for a new SDB full.

 

That all sounds good, but when are you "backing up the truck"?

 

Lol never. Just like I never sell my core position of PM to buy stocks even if I think they are a screaming deal, or to buy land if I believe its undervalued. Could/would I shift 5% of a portfolio around for what I believe is a good deal? Heck yeah. 10%? Maybe. I don't care, though, if gold was $10 an ounce, I am not risking every cent I own or will ever own on ONE asset. Many people have done so, owning just ONE stock, or just ONE country's bond, or just land in ONE area. Many have done VERY VERY well, I will not deny that. I am just too old to go back to $0 in the bank account again, I already had my divorce.

 

It's because in spite of continued selling of SLV and GLD, physical demand is very strong. eBay may be consistently on the high especially due to fees which would be discounted when trying to gauge value, but it is also a freeer market because it is what people are willing to pay. 90% premiums have been as high as they've been since 2008 and we are not even having the same gravity of market events, on the surface at least.

 

I don't think I would use Ebay as the market indicator. ASE's are still very high there, yet I can buy them for under $30 all I want. Maple leafs I can buy under $29, and cheaper on both if you buy a box.

Ebay I see as a pretty high priced bullion source unless its an item which is not standardize and people are not adding up correctly. I have bought under melt world coins before on there.

 

The thing that I'm seeing is that there is almost no silver out there unless you want to buy from the mint. At a number of the lcs in my area only have real junk "junk silver" available at these prices. To say nothing about the availability of gold bullion at any price. You can buy numismatic without any problem but 90% 40% is almost completely gone.

I'm finding that dealers are happy to buy at this level but very leary to sell at it. However, if this drop continues they will have to sell to get off of some inventory.

Plus as we get nearer to the magic $5 level I don't think that anyone will have silver and if gold gets to $1,000 you won't see anything there either.

On a side note, do you think that the mint will cease selling at some point?

 

I don't take into account the fees involved on eBay for the price of silver coins unless the seller offers it as buy it now. The buyers don't care what fees the seller are getting charged with, but they still buy silver coins for a decent premium over melt.

 

Exactly. It's called diversification. If you are 100% confident that your one investment is correct, go all in. But if you're wrong, you're really, really wrong, and you could lose everything. Go back and read some about the Enron employees who were heavily invested in their own company stock. Same thing for folks that worked for MCI. Make two choices and you only have to be right 50% of the time. Make 3 choices for investing and you only have to be right 33% of the time. Will your three choices outperform the one in a best case scenario? Of course not. But will your three choices have the same risk of losing 100% of your investment? Nope. The likely hood of three different assets (and I'm assuming not just 3 stocks, or 3 mutual funds, but 3 different classes of assets) all going to zero value at the same time is extremely low. That's why I own stocks, land, and yes, some precious metals. I don't anticipate retiring off of any one of them, I anticipate retiring on all of them.

 

Maybe it depends on geography. Last weekend at a show I noticed they still were trying to get $32 for an ASE, and 22-23x for junk. They had quite a bit of inventory though, just higher, (too high), of prices. I just checked www.comparesilverprices.com and bags there are going for under 21x face at this moment.

I agree buying physical PM in a declining market is very tricky. Many dealers are counting on people not keeping up with prices, so keep their prices high. Also, to be fair, not a lot of people are rushing to sell. Another thing going on is dealers are hesitant to place orders to restock for fear its going down further.

So, against that backdrop, you have to be extremely careful. Myself, I think the internet will help a LOT, since now you can deal direct with large sellers of this product, and avoid being locked into only paying local dealers prices. I would use those websites, like www.comparesilverprices.com in such an environment more than ever. Btw, I have no connection with the site, I only mention them because I think its a terrific way of comparing premiums quickly.

Almost everything is working against a PM buyer in a down market. Do your research and don't get taken.

 

So what your saying is junk may not be junk, and coins may be worth red book price guide lines? LOL
For a short period of time.
Biged

 

Those LCSs that are not selling clearly are so used to prices going up for the last decade or so. At some point, they'll need cash and will have to liquidate. And, LCSs and retail investors don't move the market. There won't be any shortage of retail bullion. Remember that every year, bullion is added to world supplies and hardly any is permanently destroyed. So, we will always have more physical bullion than the year before. Everyone is hoping for a quick move higher and I don't think it will happen. In a few months, when people start really questioning bullion as an investment, they will all liquidate.

I sold a ton of ASEs to a local guy at $2 over spot when spot was around 32. We were chatting and when I said that I was expecting silver to go lower and he was shocked! He very strongly disagreed with me. He said, we'll see $50 in a couple of months. So glad I dumped it all then.

 

I don't think that I said that coins may be worth red book prices at all. Just that they appear to be more plentiful at this time. Plus what 90% I'm seeing is in pitiful shape. But bad looking silver is still silver.

There has been such a run on silver in my area that almost everything that see is dregs. I think that a lot people are just not selling unless they need the money and then what they are selling is the junk of their holdings.

I've had more than one dealer tell me that they are holding onto their stock for as long as they can because they have more into the stock that they can sell it for.

I was looking for some generic 90% silver dollars and I'm really not finding any out there. Maybe it's different in your area.