How Low Will Silver Go?

Yes, exactly, people do this and collect the arbitrage, and can make a profit after fees etc. (although small) This of course is why the situation doesn 't normally stay around long since this will tend to raise the bid. It is also easy to see why the permabulls will jump on this drawing the wrong conclusions that there isn't enough supply or folks have so little faith in paper, that they would rather pay more today for bullion, than the paper promise of cheaper silver tommorow. As I said earlier, this seem to be a case were interest rates are so low, folks are getting negative returns on their greenbacks after inflation while waiting out their sixty days for the contract, so they may be willing to pay a bit more to have it sooner.

 

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Yes, the stock market could crash tomorrow. So could PM, or Real Estate. As I recall, in 2008, all 3 of those asset classes were hit hard. I remember the Gold & Silver crash in 1980, & then basically a 20 year Bear Market in PM. As far as "stocks becoming worthless all the time", that's a real stretch. Maybe if you're the worst stock picker of all time, & had bought Enron. But as long as there have been stock market indices, the S&P, the Dow, the FTSE, whatever, all stocks as an asset class have never "become worthless".

I love silver, & I'd like to buy more, but I wouldn't buy it just b/c an occasional (really bad)company--& it's stock--might "become worthless". Just sayin'.....

 

Pretty soon key economic numbers will come out and will determine whether the dollar rally continues or runs out of steam and corrects. Currently, noted currency analysts are bearish on the U.S. dollar and the S&P500, claiming they are likely going to experience a correction given their prolonged bull runs. When market consensus builds too much, it is known as a "crowded trade" and is a bearish indicator in the short term, because new buyers are needed to continue bull runs. PMs have been depressed under the assumption that the Fed would begin tapering asset purchases. So if the numbers come out negative it will be a boost to PMs by weakening the dollar, since the Fed will be forced to continue easing. So we may see a bounce to 25-26 if the dollar drops. Again, this assumes the numbers come out poor or if the dollar significantly corrects in the near term.

 

Even whisper numbers on the indicators are very often wrong. It is true the dollar rally might have some corrections, every thing in economics have constant re-evaluations and corrections. The continuing and longer bull market for PM doesn't seem rosy either when one looks at such indicators. I often find that "noted experts" whether they be currency or stock or PM, usually have their own personal play in mind and seldom are forthcoming with their own investments.

There are many times more "stock buyers/sellers than PM buyers/sellers. Stocks can handle "crowed trades" much easier. Stocks are valued on return and possible future returns, a measurable value. PM are valued on fear, offbeat reasoning on some mysterious and unfounded "value" that will someday be revealed to the unbelievers. With the direst of reports , I can see maybe a gain of $1 /oz silver. With a continuing gain in the USD, a dip of a $1, and a possible multidollar slide in silver if the reports are gung-ho. I think many are seeing that contrary to popular press, the US economic plan is working.

IMO.

 

I don't claim to really know anything, but the thing about the stock market, bonds and dollar that really scares the dickens out of me is how much "propping up" is done by the Federal Reserve. The term buyer of last resort, and free money to the big players should be enough to scare anybody, and probably should scare everyone.

 

Peace,

First, the Fed did nothing to "prop up" the dollar. The dollar is strengthening "in spite" of the Feds actions. In fact, that was the Permabull's main point, that all the added liquidity would surely weaken the dollar and PM's would soar. That didn't happen. Now as far as propping up the Equities market, look at it this way. Well lets HOPE the Fed propped up Equities, because that was the plan. I feel more comfortable knowing things are going "as planned" then the other way around.

Now contrary to popular "stacker" belief. The plan is not QE forever,the Fed WILL unwind. When it does, the ride will be a bit bumpy, but these guys making these decisions are not as stupid as the bullion community would have you believe. We have seen tightening many times before, and also contrary popular "stacker" belief, equity markets can and do rise in a tightening environment. History is proof to that.

Now you say this scares the dickens out of you, well yeah, it is a bit scary making monetary decisions that will effect you and your family for many years, but didn't the drop of Silver from $48 to $22 shake you up a bit too??? According to the permabulls, PM's were a rock solid SAFE investment. What happened???

Well the undeniable fact is the "stackers" got it wrong, in fact they got everything wrong.

So the only question now is what to do now. Well, it is not the time to make excuses. There is just no place for excuses in the world of investing. When you are wrong, you lose money, plain and simple. Yes, the bullion bloggers will tell you they were right and it was those evil banksters who were manipulating silver, yada, yada, yada that hosed you over. If it wasn't for them you would be rich by now etc, etc. Well that just does not cut it in my world. Wrong is wrong. If these bloggers are so smart, why did they tell folks to invest in such a "crooked" market in the first place? So, instead of excuses, and more of the same rhetoric that lead folks down a very bad path, maybe it is time for a little re-evaluation. JMHO...

Good Luck Peace...

 

Excellent! :thumb:

 

I just find it interesting that some currency analysts I have been listening to, who tend to play both sides of pairs, are pointing out that the stock market rally has been fueled by the Fed and lacks a strong fundamental basis. It's not just PM bulls who are pointing this out. I think the dollar index can easily move closer to 100 later in the year, but only because other central banks are easing and because global growth may be slowing. This would be highly deflationary and ultimately bad for stocks. The U.S. does not function in a vacuum. Also, the stock market has shown vicious cycles in the last 15 years. I think we can see a scenario in which both the stock market and precious metals drop significantly some time in the future. As well, real estate may be reestablishing a bubble. Both the stock market and real estate depend on the Fed.

 

If you are saying, there are still a lot of concerns, WELL YEAH, there are still many things that can go wrong, but on the other hand, this could be the beginnings of the biggest bull market in the history of the world. We don't know for sure, but out of all the axiom's on Wall street, none ring truer than the market climbs a wall of worry. If you wait until there is nothing to worry about, and all looks rosy, I can almost say for certain, You missed the rally. Sooooo........ if there was nothing to worry about, well then I would really be worried

 

Hey man, I have no problem with stock market bulls coming into the bullion forum and giving an optimistic view of the economy and being bearish on precious metals. But I think both sides, the bulls and bears on precious metals, are filtering information based on their biases. What I have come to realize is that the bears in this forum are a bit anxious because they (seem to) have money in the stock market. So it's not like one side is objective and can get on any moral high ground based on temporary movements in the economy or markets. I'm not attacking anyone personally or directing my comments to any specific person; I'm just pointing out that the bias attributed to the precious metals bulls is evident in the bears, particularly when they clue others in to their personal stake in the stock market.

Let me emphasize that so far the bears have been correct, but it's possible for both sides to be correct at different times of the year. I believe if the economy begins to slow down again and precious metals rise, it's likely that the bulls will be pounding their chests again, but they won't be any more enlightened. This is a Fed-driven market right now, and when a group is making gains there will be more dopamine kicking into their brains, a mania if you will, making them think they are really smart. I think we are experiencing a wealth effect due to the rising real estate market. Again, I don't think the Fed can drive the market successfully over the long term, but that's why we have bulls and bears to debate.

 

I think I get what you are trying to say, but I think you are missing something important. Being a PM bear is not a lifelong commitment. I was not always a bear, and there will most likely be a time when I turn bullish. This is also the case with most if not all of the other bears as is evident by many of them specifying an entry point in the PM market. On the other hand, being a permabull (stacker) where the strategy is buy all day every day, for the rest of your life is just not a strategy that is in line with my thinking. YMMV

 

Back to silver, went to a local show today. LOTS of silver for sale, philharmonics around $24, and junk silver around 17.5 times face. Seems like everyone is restocked. I haven't seen that much for sale at this show in over six months.

Sure doesn't look like any physical shortage, at least around here. I am sure there will be another reason from the permabull websites about how they weren't wrong forthcoming...... Listen, we all are wrong in life, it just ticks me off when people are too arrogant to admit it.

 

Personally, I will probably be putting more into the U.S. dollar against other currencies, and will likely accumulate gold at these prices. I like gold because it's more internationally-recognized, though silver is looking much more attractive than before because it overshoots downwards. So I am bullish on the U.S. dollar over the next few months*, but only because other nations are worse off and we have the greatest military. I still think precious metals are a good hedge to the dangers in the financial system. And I hope, I hope, I will get my day in the soapbox later in the year if the stock market crashes and precious metals are scooped up, but either way I'll be OK because unlike stocks precious metals can't in theory go to zero, and I will likely be buying dollars along the way in the highly-leveraged currency market. I also don't think stackers are doing things wrong, to the extent that they are saving in some form while most Americans are using their credit cards and building up debt.

*We may, however, see a correction in the U.S. dollar in the very near term that causes silver to reach 25-26 as I posted earlier, but then again, the rest of the world seems to be generally worse off at the moment because the U.S. at least has the global reserve currency.

 

Looks like the market manipulation is having the intended effect, namely scaring the uninformed out of the PM market. People are going wobbly in the knees and selling low which is EXACTLY what they want you to do.

Buy low and sell high my friends!

I'm not a big fan of Warren Buffet, but I have to give it to the man, he does know how to get filthy rich:

 

People need to consider what the world would look like if the S&P 500 was to become worthless. If companies no longer made money or could pay their debt. If you are going to believe in these scenarios you need to consider what their effects would actually be not just that some asset would have dropped in value.

 

Who are "they" ?

 

If you have actual names, I'd love the see them.

 

So would I.

The point is valid, though. When markets are going up all kinds of people jump on board, believing the investment will only go up forever. Then when it corrects they bail. Classically small investors buy high and sell low, because they chase whatever is "hot".

I would rather follow the German model of "get rich slow". Buy assets when everyone else is either badmouthing them or ignoring them. I bought silver in the early 90's, I bought farmland coming off a major farm crisis, I bought a lot more stocks in early 2009. Is it easy to buy when everyone is saying you are an idiot to do so? No, it is not. I have made some major errors as well, usually buying in before the entire correction has happened. I freely admit my errors, and will describe them to anyone if they wish the details. If you are not honest with yourself about how you messed up, you might do it again. This is bad enough, but when websites touting a product refuse to admit they were massively wrong, that is when I get grumpy.

Is silver at this buy point right now? IDK is my only answer. I have thought about buying some more, but haven't pulled the trigger yet. If I were sitting here today with no PM at all, I think I would be slowly buying at this price/premium level. I might miss the opportunity, it might go lower, I never said I had a crystal ball, just thoughts. I think silver is ok priced right now, but definitely could have some room on the downside. Now that premiums are pretty much back to normal, its a more attractive play.

 

Btw, just looked over at Coinflation, and the Headlines there are:

1. Silver shorts playing a "dangerous game" and the jist is they will lose huge when the expected massive runup comes
2. Physical silver a huge demand - "artificial suppression" will not last long
3. "Once in a lifetime opportunity" to buy silver cheap right now. That one is curious, since for about half my lifetime I could buy silver around $5 an ounce, I wonder why buying at $22 is now the "opportunity of a lifetime".

Anyway, that is the jist of the latest round of ignoring the obvious and making excuses coming from the pundits. In the meantime, silver is down 24.6% YTD, by far the worst investment possible for the year. You know, if they would simply ADMIT THAT, and talk openly about how far its dropped, I would accept that as a much more valid reason to buy now than their other excuses. In fact, that IS my thinking. I might buy despite the pundits.

 

Yeah, it might be a good time to start buying, but my gut is telling me it is still too early, but I certainily wouldn't fault someone who wants to do a little DCA here. It is just not the slam dunk easy call it was a few months back.