I heard that the summer time is the most irritating time to watch the gold and silver markets due to the fact that a smaller number of people can slide the market quickly up or down since there is a much lower amount of activity from people being on summer vacations. The thing I have to ask is yesterday the market was down fairly strong overseas before the US market woke up, and once the US market got going there was a pretty significant rebound. Today I look at the market from overseas and see a rise pretty opposite of what happened yesterday. So the question is why is overseas so unstable, and I keep hearing about a downward trend that gold and silver are supposed to be seeing during this time? Gold has stayed close to the $1300 market for that last month or so and silver is stuck between $19 and $20. Are we going to see the market take a bigger dip or is this it till we hit the fall and the market rebounds back upwards?
The day to day stuff is just noise, unless you are a very active trader it can be ignored. Now as far as Au and Ag being "stable" for a month, that is not very long and I would consider it closer to just resting, than being stable. As far as the general direction, odds are it is still going down.
I'm in India. They have place restrictions on the amount of gold that you can import based on how much you export. Since India is a big purchaser of gold, it had some impact on world-wide gold prices. Indians are also good at figuring ways around these restrictions. Thus, it's impact wasn't as great as expected. It probably also had some impact on silver prices. It is my understanding that India is the largest silver importer in the world.
Silver is now over $20 per ounce. So it appears to have strong support at this level, considering some here were predicting it would go to $10 or lower. The reality is that many silver producers will either lose money or will have to cut down production at this level, because the costs to mine silver (as a byproduct or not) have risen substantially due to decreasing ore quality and rising oil prices. Silver will never again see $10 an ounce or lower, despite claims here that the total cost is at that level or lower, unless there were to be a severe deflationary depression with collapsing prices across the board, in my view.
Hoping for more of those big weird sudden drops. I've been waiting for $18's (and lower), but, got tired of waiting and decided to buy a few tubes of buffalo rounds at $19.39. I just want to build my ounces as cheap as possible and plan on holding long term as one hedge to insanity.
I completely agree with Jolumoga. Yes the paper price can go lower, and if the derivatives market starts unravelling it will impact all paper prices. I consider this an eventuality considering that last month the BIS reported there are $441 trillion of interest rate swap derivatives, and that is a lot of money at stake if interest rates start to rise which will occur if QE loses effectiveness or if the Fed tapers outright (not likely considering the dominoes I just outlined). Point being the paper price can and may very well go to zero, but as we know the cost to get it out of the ground and refined is roughly $20/oz so you can bet that the only people who will sell it for cheaper than that, regardless of the paper price are those who are hedged, those who are willing to sell for a loss, or a handful of old hands that bought at cheaper prices. The majority would be from dealers who hedge, and hedging does not happen without derivatives. By nature a derivative is not a real asset because it is derived from the value of something external to it. In a world where derivatives can be created based on other derivates the result is infinite counter party risk chains, and thus quadrillions of dollars are leveraged at magnitudes of between 50:1 (standard in the too big to fail realm) to 400:1 (Goldman Sachs) as interest rate swaps are only a portion of the total. So then we can deduce that this particular $400+ trillion of derivatives, which were very congenial on the way up to balloon balance sheets without adding any underlying value, will require over $20 quadrillion in assets if they are to ever unwind. Considering all real assets on the planet add up to roughly $1 quadrillion by most estimates this does not appear to be a situation that can be remedied without default, and at that point we won't be measuring wealth in any sort of paper.
Yeah, for a while it was trendy to bash silver as an investment, and it was pointed out how the bulls here were silent or disappeared. Well, I predicted the bears would be silent on an upturn. With silver's pop over $21 per ounce today, it appears as though the precious metals bull run is far from over. After all, with a soaring stock market and low inflation expectations, the groundwork was set for silver to be pounced to $15 or under, yet it did not happen. I respect different opinions here, but the idea that the total cost to mine silver is under $10 per ounce is just ludicrous. That is a misreading of basic accounting and a fantasy -- as if we are still living in the year 2000, when oil was still cheap (extracting silver and other metals from mines requires a lot of oil, as I understand it). Now, I am not going to jump up and down and declare victory, because silver may get pounced again temporarily. It just seems that the call of the bull run's end was very, very, very premature.
If the bull is over now then it was over in 2008 and 2004 when we saw similar sized down moves. Even at these prices metals are still up 400% since the bull run started. As was the case in 2004 and 2008 these down moves resulted in the most optimal buying opportunities, and it appears to me we are now through with the low in this buying opportunity having bounced off the lower bollinger band while it was turning downward, as occurred in previous silver bottoms over this bull run.
I will add that, contra Peter Schiff, I suspect the Fed may actually taper down to $60-65 billion a month in purchasing securities later this year, not because it believes the economy is rebounding (arguably it is not) but because the Fed is concerned about the development of asset bubbles and other consequences to QE. This could cause a spike in interest rates -- where this leaves us, we'll find out! Of course the economy might tank as a result, but the government can simply continue to modify its statistics to show the economy is growing when in fact it is not.
Its funny but silver this week so far has had a very strong rebound and appears on its way up again. The question is if it's going to last or decline again next week. Gold and silver have been so volatile the past couple of months, I have no idea whats next. Personally for purchasing reason only, I hope for another big decline just to get a large order in. Time to be patient I guess...
I'm neither a PM bull nor bear. I simply try to be a calming influence when either bull or bear runs amuck. I'm the guy that said silver wouldn't go over $50/Oz. I'm also the guy that says silver is a "buy" again below $18/Oz. I'm also the guy that predicted that Gold and Silver would end 2013 at $1325 and $25. We went down way to fast and need to come up a bit to meet my prediction. What I didn't count on was the shift in the Gold/Silver ration. I thought it would stay between 50-55 and it jumped up to 60-65. I still think Gold will stay about where it is and Silver will go up from here to the end of the year...we'll see.
Short covering and poor corporate profit reports. Let's see how the third quarter turns out. manufacturing strength "should" push silver up more than gold.
Man, I miss silver in the low 19's... especially with new 2014 govt. bullion soon to be released. Going to really cost more to buy now...
$23 looks darn good to me at a 50% discount from the high. 10 years from now I would not be surprised if people were saying "Man, I miss being able to trade paper dollars for real money".
Too be fair though, $45 looked great to you also. IIRC there is a lengthy post explaining what a screaming good deal it was at $45. Not trying to be a jerk, it is just important for new folks to understand the track record to make their own decisions
Not quite. I never said silver was a screaming deal when it was $45. It was after the fact when it dropped lower I said that silver is still a screaming deal even at $50. But yes, $45 looks great to me. I'm not a slave to money and I'm not in this for profit. $100/oz looks great to me, and so does $500/oz, since I calculate fair value at minimum $1,500 per oz. Flabbergasted? Allow me to explain. Historically, and inevitably, the price of gold is and will be determined by money supply divided by gold backing that supply. The nature of money evolved out of the intrinsic properites of metals (fungible, divisible, durable, and portable), and that role has been usurped by an inferior model to enable money printing ad infinitum (metal backing prohobits inflation in excess of mining production). We are currently disconnected from reality, but as the saying goes you can ignore reality but you can't ignore the consequences of reality. Assuming we have all the gold in Ft. Knox based on monetary expasion the price of gold should be around $12,000 per oz. If there is no gold there then the price of gold is infinite in relation to debt-based fiat dollars and thus is a good buy at ANY price since it is commonly understood that debt-based fiat currency cannot indefinitely be conjured to pay off debt with debt, and exponentially growing debt can never be paid off by linearly growing GDP. Therefore it is an eventuality that this unsustainable model will be need to be replaced, and the only question is when. Taking the gold/silver ratio into account. If we use current mining numbers it should be 8:1. That would put fair value silver at between $1,500 and infinity when measured in debt-based fiat dollars. If we use the available supply numbers the gold/silver ratio is roughly 1:10 in favor of silver. That would put fair value silver between $120,000 and infinity. Additionally, according to the Austrian school of economics, which should return to prominence after this Keynesian failure runs its course, only gold and silver can extinguish debt. They must rise to absorb the $2 quadrillion in rehypothecated derivatives in order to avoid a jubilee/global default. The only way around it is to destroy the debt-based money that's been created over the past decade or so, or at least back prior to when derivatives were conceived, and the financial system needs that for life support so it's not a viable solution. I believe we will see what the case is over the next decade or so.
There is a perception that the almighty dollar is good no matter what the Fed does, and no matter how many are in circulation (electronically as well as physically). As long as that perception is maintained, things will go along like they have, more or less. It is the proverbial "House of Cards." Cyprus made the dollar look good to the international community. Gold had already been tarnished, and as someone put it (and I paraphrase): "There weren't any clean shirts, and the dollar was the least dirty shirt in the hamper, so that's what they grabbed." Then Cyprus dumped their gold and the near term course was set in concrete. When we get to the point where the Dow depends entirely on a few words from Bernanke and completely ignores the actual performance of the companies and the country, we are divorced from reality. And here in Lala Land, you can throw out the rules because there aren't any. Me, I haven't sold a single coin, and don't intend to for the foreseeable future. My safe is full of "overpriced" silver and platinum, and some not-so-overpriced gold. I am nowhere near a hardcore prepper, but I do have a modest amount of food, water, fuel, guns, ammo, cash and PMs. (enough to make me "feel" prepared) When the house of cards falls, I'm sure the experts will call it a "Black Swan Event." Like nobody saw it coming. Yeah, right...
