How Low Will Silver Go?

Those statements just are not true.

1. Mexico, South America, China and Russia have many silver mines, strictly silver, that mine for industry. First Magestic is one that comes to mind right now but they are all easily found with a google search on "silver mines".

2. There is a graph I will have to find on their site that showed industrial demand drastically dropping off in 2010-2012.

 

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The existence of primary silver mines doesn't negate that the majority of silver is mined as a byproduct. These statements can coexist.

 

The real question is whether that level will be just the next in a series of legs to the downside or if it'll represent a bottom. The one year chart continues to look lousy and doesn't suggest that a recovery ought to be expected, at least in the short term.

 

Im not going to get into a long drawn out economics backed speech. But this is 100% spot on. Remember this was said. Closest thing to an accurate prophecy you will see.

 

If it drops into the mid teens, I'm pushing some more money into silver ETF's. I've already stuck my little toe in the water when it dropped below $23.

 

Thanks. I have been studying economics and learning as much as I can since I began my interest in the silver market, and lately I have been learning the mechanics of the forex market to broaden my economic view. While I'm no expert, I believe those who understand the fundamentals of the currency market can see things going on that others cannot see regarding silver. One notable phenomenon as of late is the strengthening of the dollar relative to other currencies, and this has coincided with the drop in precious metals. So silver can be seen as trading inversely to the dollar, and, though that inverse correlation is not perfect, it is visible. Likewise, future expectations about the dollar will influence silver.

I pointed out in another thread that a strong currency is dangerous in today's environment, and that was met with some skepticism by some numismatists who are bullish on stocks and the economy. Yet virtually all major industrialized countries are cheapening their currencies to compete in the global marketplace. In his latest speech, Bernanke also addressed deflationary concerns with the CPI, and emphasized, in his own way, a strong dollar will be met with more easing to fight deflation. Temporarily, the monetary easing by other nations can boost the dollar given its reserve currency status.

I was pleased that Jim Rickards also agrees with my view:

http://www.youtube.com/watch?feature=player_embedded&v=-r0uXX4gX9Y (skip to 12:05 to get to the interview with him)

While I will acknowledge that silver has taken a beating, and that the permabulls have been dead wrong, and that even I have been dead wrong in my assumptions about the strength of silver as an investment, I'm not convinced that the anti-silver bugs appreciate just how fragile the global economy is right now, or even some of the major forces driving down the price of silver. Hey, I could be wrong and the stock market may continue to give them more gains, but I have a feeling we are in for another crash within the next few years, if not imminently. Sure, there may not be the utter chaos that some people think will arise, but the stock and possibly the bond market will take a severe beating sooner than many realize.

 

So, no more to da moon?

 

If markets remain orderly, current indications suggest not, given your horizon isn't too far out. But lots of things could happen with that "if" that could upset the conditions underpinning this analysis. An unanticipated catastrophe, such as a pandemic or major war breaking out, or an economic tipping point being reached with cascading consequences, anything of that nature could change things virtually overnight. But then the price of silver might be the least of our concerns; reaping a windfall doesn't always provide the expected benefit if chaos reigns otherwise.

 

I am amazed at how well silver is selling lately. People are still buying. I am always scouting out new coins if I can buy them at a reasonable price. Yes, the price of silver is down, but the allure is still there. We'll see what happens. It's always a gamble, but a better one than putting money into a stock market that may crash tomorrow. I can't imagine a scenario when silver goes to worthless, and that happens to stocks all the time.

 

People are still paying 30+ an oz for silver on ebay

 

1. The MAJORITY is a byproduct. I never said there weren't any primary silver mines, there are obviously. But there are not enough to make up the majority of production.

2. Please do.

 

Yeah, and people just paid over $1800 each for four coins i can buy all day long online for $1700. There should be a whole new class of stupid called "Ebay stupid".

 

Exactly, they do not seem to get the memo when gold and silver prices go down, things seem to work a little differently in Ebay world . I'll bet if silver dropped to $10 (quickly) the majority of auctions would be going for $20+ for a couple months at least.

 

In my point of view now silver will no go to low but it will grow up. The current situation tells us that there are no chances of silver that the prices of silver will decrease.

 

That is why I am happy I didn't have any bids out there when the price started dropping. The phenomena is that once you make the bid you are pretty much stuck with it until the auction closes. Later the next seller logging on checks to see what the recent sales prices were, then tries to get that price. Of course there are also some perpetually higher priced sellers who post common $100 coins for thousands of dollars trying to catch the buyer looking for the most expensive coins (thinking that they must be worth the asking price). That selling tactic probably works as they keep doing it. Let the silver price stay down a few weeks however and Ebay prices will begin to drop.

 

Nope. The price of gold is in backwardation which means people are paying a premium over metal in hand vs. a futures contract. Since time is money this is an anomalous situation. While it occaisonally happens for brief periods of time we have never seen it persist for such a long time as it currently is which is evidence that the futures price is becoming increasingly irrelevant to the real market. According to Professor Fekete the price of gold will be extinct long before we see 5 digit price of gold. So no, we're not going to the moon, but the price valuation mechanism is coming back down to Earth in that measuring price in dollars is on its way out, and measuring value in ounces of gold is on its way back in.

 

Sorry, but I seriously disagree with:


"While it occaisonally happens for brief periods of time we have never seen it persist for such a long time as it currently is which is evidence that the futures price is becoming increasingly irrelevant to the real market"

Read more: http://www.cointalk.com/t227813-7/#ixzz2UsLSyFxr

What source is there for this so I can disagree with them as well? I was around in the 80's when the premiums for physical silver were higher MUCH longer than has been the case the last month or two today. Anyone claiming this is an unprecendented occurence is misinformed, and anyone trying to make the case higher premiums after a major market correction is meaning that market prices are becoming irrelevant to physical pricing is making a very dangerous leap of faith. I predicted repeatedly higher premiums in a correction, and honestly they have come down faster than I would have predicted. ASEs I can buy for a $3.50 premium right now, is that so much higher that previously? The only historically high premium right now I am seeing is on junk silver bags, (and Ebay of course).

 

Actually Chris, What InfleXion is talking about is true Backwardation. The real "spot" price which of course is for investment grade silver has been higher than a futures contract. Not by much, but it is there, or was there. These things are fleeting. This is not refering to the ridiculous premiums folks are paying for those "trinkets" which are sure to fall back in line. So a person who is willing to part with their physical "investment grade silver" can guarantee a profit, albeit small, buy selling their physical and buying a futures contract.

Now the bloggers are jumping all over this and of course the lemming permabulls are as sure to follow as the sun rising tommorow. They are saying this exists because people have lost faith in paper and the dollar and nobody wants to sell their physical, or there is such a shortage of physical that there is not enough around. Off course they are just spewing their rubbish again. If people had really lost faith in paper and the dollar, we would be seeing soaring interests rates and the dollar falling. But interests rates are minisule and the dollar is strengthening. So this is obviously not the case

It appears the true reason is more likely the collapsing interest rates have caused a situation where folks would prefer their bullion a bit sooner than later since the true interest rate for cash may actually be negative.


Sorry stackers, but backwardation is no guarantee that PM's will be rising any time soon.

 

So if someone knew this, why wouldn't they put their cash down and take delivery of a contract, and collect the arbitrage? Last I heard physical delivery is still being performed on Comex. They should put their money where their mouth is and act upon it.

Btw, does this also take into account all of the fees associated with taking physical delivery at the exchange? If you buy a $23 contract, by the time all of the fees, storage, etc are taken into account, it has ALWAYS cost you quite a bit more than $23 an ounce for the physical silver to sit in your warehouse.

 

I am waiting. As soon as it hits two dollars an ounce I will start purchasing tons of it. Shall we hold our breath and hope for that day?