Silver: Another Significant Drop Coming?

Silver bottomed out at about $16.50 a couple of weeks ago and has since been hovering around the mid $17 range. There hasn't been much action since the $16.50 mark, just a few cents up and down here and there. I just checked kitco and saw that silver has dropped $0.11. I know that's nothing major, but is this possibly the beginning of another drop, maybe below the last one of $16.50?

What do you all think?

 

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Let it rise, let it fall. It doesn't matter to me. I bought all of mine when it was below $6. I'll wait until it goes above $50 before I sell.

Chris

 

maybe gonna drift a bit lower before years end ....

 

Eh, not enough of a swing yet. I am with Chris buying most of mine much cheaper. I bought a little bit of gold, but that was more I always wanted the coins.

 

17 to 16.50 is not that significant

 

within the next two years I believe that silver will be at a $14 as low as $12

 

I think that when the Dollar is no longer the best smelling edited :Language among currencies, then you will not be asking how much and ounce of silver is in dollars. 1 year , 10 years makes no difference. Did anyone see that the FED Reserve member from the west coast said that QE4 is not out of the question? The dollar index at 86!!! Who is kidding who? Oil at $85 a barrel? really?

 

How long have you watched the market?

 

The answer is simple and can easily be obtained by divination.

Take a silver coin and go out in the street. Flip the coin in the air.

If it is snatched out of the air and taken away by a passing stranger, silver will go UP.

If it lands in the street and rolls away to fall down a drain, silver will go DOWN.

If it lands in the street and just lies there, you have a poor connection with the divine, check all cables are connected and your account is up to date, then repeat the process till you get one of the two definitive answers.

 

You basically just picked random numbers, didn't you. There's nothing to support those specific levels.

The place of the dollar as the primary reserve currency wouldn't alter the fact that Americans would still price silver in dollars. If the dollar gets supplanted by the Yuan or Euro as the world's reserve currency, it likely won't be in the next decade. We're looking at 2050 as the earliest that will likely happen. The Euro is tied too closely to the strength of the US as a world power to supplant the dollar, so the only viable candidate is the Yuan. A world with the RMB as the reserve currency is, however, unlikely until China decides to fully unpeg the RMB from the dollar. It would take another 30% spike in the value of the RMB against the dollar to put Yuan into the discussion as a reserve currency. China doesn't want this, as it will weaken the position of China as a primary manufacturing economy for the world.

The dollar index may weaken back to the mid-/high- 70s in the face of further easing, but the fact that the dollar didn't completely collapse after the first three rounds indicates that it would take a HUGE shift in policy to cause a collapse. QE4 isn't as big of a threat as a decision to allow interest rates to float up by 250+ bps. That is plausible and would be a huge detriment on the financial, construction and transport sectors. Coupled with the semi-freeze on infrastructure advancement in the US, seeing a spike in borrowing costs could cause the US economy to come to a complete halt.

Any pullback in PM prices, at this point, would be driven by interest rates, rather than demand for the underlying metals. Investment demand for new discoveries will likely be near 0 already. Fear of purchasing is the same as fear of holding. If individuals are unwilling to sell on the pretense that they expect the metal prices to go up in the short run, they should be buying. The fact that so many are sitting on the sidelines is indicative that the herd thinks prices are going to continue to collapse. That is typically a signal that you're nearing a market bottom.

 

highly unlikely the Yuan will be healthy enough to be the world currency in my lifetime, too dependent on the US. The euro????????? Please, euros' on life support now and has no future unless big reforms take place in the EU.

 

Very well put.....when I mean dollar thinking one has to realize it has lost value. It might be 86 against the other currencies but still it will not buy you what it did 10 years ago.

 

There's no sign of a bottom yet.

It's been so long since silver traded this low that picking a bottom based on prior support levels is just a guess.

 

Why should it? Some inflation is a good thing. It keeps the economy going.

To judge the strength of the dollar, first look at our inflation. Is it greater than 5 or 10 percent? No? Then compare it to other currencies to see how our currency is doing compared to theirs.

The Dollar Index is helpful of course, but it is limited in scope since it only compares the dollar to a handful of other currencies, and China is not one of them.

Ten years ago, the dollar would buy .78 Euro. Today, it buys .79. Not much change really.

The Yuan? Ten years ago it was fixed at 8.2765. Today it buys 6.013. Big change, but what was responsible for that change? A fall in the value of the dollar against most other currencies including the Yuan? Or a rise in the value of the Yuan against most other currencies including the dollar?

Great Britain Pound? Ten years ago: .544. Today: .622.

Canadian Dollar? Ten years ago: 1.22. Today: 1.12.

Mexican Peso? Ten years ago: 11.53. Today: 13.48.

 

We're nearing the end of the dollar, but the pound is still around even though it stopped being the reserve currency a long time ago. Reserve currencies last around a hundred years, give or take a few, so we still have a decade or two, maybe. I think Britain's reign went from 1860 until 1944, so that's a little less than a hundred years. That gives us until around 2030, but we could be knocked off the pedestal earlier due to a number of factors. The top contender now is SDR's, issued by the IMF and containing a basket of currencies. We'll see... Meanwhile silver seems like a safe bet to me.

http://en.wikipedia.org/wiki/Reserve_currency

 

Here's another really interesting article about the average lifespan of a fiat currency. The British Pound is still going, but the average lifespan is around 27 years:
http://georgewashington2.blogspot.com/2011/08/average-life-expectancy-for-fiat.html

 

Not

Not long at all. Only about 3 years. I just noticed that there was a little drop in spot price and thought maybe it would dip below $16.50. I just wanted to hear what the people who have watched the market for many years thought.

 

No need to write articles on the average life expectancy of gold backed currency because they are all extinct.

 

Could you elaborate on the last part of this? I enjoy reading your posts. I think you think similarly to myself in some aspects.

 

It's a good sign that while the stock market is tanking, silver is holding its own. It may not stay that way, but who knows?