How Low Will Silver Go?

Thanks Yakpoo. I believe that 3rd chart of yours with the blue GLD is the equivalent of the above chart I posted. Now we have some context. :thumb:

It appears that Jesse Crossroad's chart is definitely starting at the high point (3.6 million oz).

 

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I thought we were talking exchange inventory levels. If not, I am mistaken in what I wrote about.

 

We are. I wrote that before I finally found the data I was looking for in the charts.

 

Well I am confused now. The first chart I posted pages back shows 3 million oz as of 2010. Jesse's chart shows 3.6 million oz as of 2009. But the Kitco charts Yakpoo posted show 35 or 36 million. Somebody's numbers are off. I guess I'll have to do some more digging but I don't have time right now.

 

When you have time, and if you can find it, all I am saying is we should look at what inventory levels were in the 90's until now to put COMEX inventories in perspective. During a bull market its pretty normal to be more activity, therefor more demand to have physical storage there. If investment money is flowing out of PM due to other investment options, it COULD be natural for physical inventories to be lowered due to lack of demand. That is why I was saying only looking at a few years inventory may not tell the whole story.

Find a chart from 1999 or 2000 that proves me wrong, and I will be the first to admit I was wrong. I love learning new things based upon sound data.

 

A bit off topic...but here's an interesting WSJ article explaining the recent drop in Platinum and Palladium supplies...

http://blogs.marketwatch.com/thetel...es-hit-a-12-year-low-in-2012-johnson-matthey/

Don't get me wrong...I'm not anti-PMs, I just want some fundamental reason for making the investment...based on verifiable information from trustworthy sources.

 

My only comment Yak would I would be careful about "Russian state stocks appear to be exhausted, (my paraphrase)". I only say this in light of the agreement Russia and South Africa signed recently commting each other to "supporting" the price of platinum and palladium. Because of that agreement, I would not be surprised if Russia is simply keeping it off the market to increase the price.

Doesn't change my opinion of the potential for the metals really, just wanted to remind everyone there might be more going on than meets the eye.

 

Yes, this correction is more violent than even I expected, but like mikem pointed out, picking tops and bottoms is a fool's game. The NFP number came out better than expected, which has propped up the dollar and the stock market. So arguably the economy is temporarily picking up. Assuming the dollar continues to gain ground, silver will likely suffer. I thought there might be a bounce to 25-26 this summer, but now I'm not so sure. I do expect we will hit the teens by the end of the year. The short-term movements are really hard to predict. In the long run, I won't rule out another major advance by silver to new highs, but the economy must really tank for that to occur. I think the arguments here can be broken down simply to precious metals investors (bears on the stock market) vs. stock market investors (bulls on the stock market).

Ultimately, the success or failure of the Fed will determine where silver goes.

 

Not sure I really buy into this. Especially for silver, I believe there is a case it will rise even in an up stock market. Granted its rise up into the 30's and 40's was stoked by fear of a global meltdown, but the 90's slump was fueled by massive governmental selling of stockpiles. Neither are good references. Get fear out of the market, (not quite sure what price level that is, maybe between $16 and $22), and from there I would expect decent returns from silver from there on out. Not outstanding, but inflation level or better. IMO we have simply went from one market scenario extreme to another, so the last 25 years to me are not great indicators of what will happen going forward.

 

That's possible. Call me crazy, but if the parallel universe theory is true, then all scenarios will occur. However, the world works in terms of probabilities, so some outcomes are more likely than others, though we may be limited in our ability to process information in a way that would make us better prognosticators.

Currently, silver is performing inversely to the dollar. Over time, I suppose it's possible for correlations to form or break down. Plus the factors impacting the silver price are numerous. If there is one thing I hope some have grasped from my posts, it is that breaking down Silver Institute numbers on supply and demand, or looking at a static number like the cost of production of last year or the year before it, is not a solid indicator on where the silver price is headed. Now, I know my predictions can be terrible at times, since I'm only human, but the inverse correlation between DXY and silver has been evident recently. It's not a balanced relationship, however: silver swings wildly disproportionate to the dollar's movements and future expectations about it. On the other hand, factors such as supply vs. demand and the cost of production will have to be accounted for eventually, and thus will significantly affect the price of silver in the long run. The problem is that the long run can mean years, or even many years. Assuming the dollar strengthens significantly relative to other major currencies, silver may plunge beyond almost everyone's expectations due to panic selling. However, a deflationary scenario such as that one will surely be met with significant monetary easing by the Fed, which will propel silver out of its lows. I have shared my skepticism about the Fed's long-term plans though, so I won't beat that dead horse in this post.

 

Always wise take these articles with a grain of salt! :thumb:

For me, even if Palladium falls to $0.00...my three (3) Ballerinas aren't going to bankrupt me. I was just pointing out that there may be other PM investments worth investigating...other than Silver.

 

Actually I have been looking for a ballerina and cannot find anyone with any in stock. Do you know where to pick one up?

 

You'll have to pay a premium. These are about 15% over spot, but they look pretty nice.

http://www.ebay.com/itm/140792207383?ssPageName=STRK:MEWAX:IT&_trksid=p3984.m1423.l2649

 

I just came to the realization that I may have been too hard on those who scrutinize supply and demand and cost of production numbers. I believe, upon some reflection, that though they can be taken out of context, they can be an excellent way to establish an entry point into silver as an investment. I say this because silver's range over a year-long period can be very wide, either swinging way too high or low relative to fundamentals. I have not really delved into cost of production, but I have read or heard estimates ranging from as low as about $10 to $30 per ounce. Generally, estimates tend to hover around the $20 area. So studying cost of production would be a worthwhile endeavor for someone looking for a good entry point. Such a study, of course, would involve selecting the sources one believes to be the most credible. If one concludes $20 is an accurate estimate of the cost of production, then $20 or less would be a buy (especially the further the price drops below the cost). On the other hand, one important caveat to such an analysis is that the cost of production may change substantially from year to year, which I believe to be the case. I know this may sound obvious to some of the members here, but it could provide some guidance to those wondering if they should put money into silver, given its recent correction.

 

Well, I hope you take this in the humorous context that is meant, but DUH !


BTW, if you read justafarmer's post, he made a very good case that the cost of production is in reality, much lower than the around $20 accepted value, something that I have also suspected.

 

Come on Mike.......lets use this interlude to calm down the personals ( even if it is meant to be humorous).

 

No problem Jim, jolumoga is an interesting, complex type of guy. I thought he might appreciate it, if I am mistaken, I do apologize.

 

Stock delayed but best price I could find by far, ($40 over spot)

http://www.providentmetals.com/1-oz-palladium-ballerina-russian-25-rouble-999-fine-coin.html

 

Lol...I'll offer mine for $5/each...if I don't have to deliver!

Seriously, though...that's a great price if you can get an order in. :thumb:

 

8 left! They probably won't go that fast though just because not a lot of people know about them.

Only downside is will probably have to wait 4-6 weeks for delivery since its delayed stock.