$50 Silver in 2011 predicted by CNBC analyst

Silver is back up to $30 this morning - yippie!

 

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Another article about $50 silver ...

http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=16521

Here is an excerpt ...


Among the reasons that (I) anticipate an even greater percentage increase in 2011 silver prices compared to the strong 2010 results are:

1. The London Bullion Market Association (LBMA) has virtually no silver available to fulfill contract obligations. At the March 25, 2010, Commodity Futures Trading Commission (CFTC) hearings, both Jeffrey Christian and Adrian Douglas testified that gold and silver markets in London, which are theoretically 100 percent backed by metal, only had enough gold and silver in the vaults to cover 1-3 percent of the contracts.

2. The London gold and silver markets are both in backwardation. In normal commodity markets, futures prices are higher than the current month, or “spot,” price. The higher future prices normally reflect the prevailing interest rate less a small amount for storage costs. This normal condition is called contango. When a market is in backwardation, this is an indication of a severe supply squeeze. In other words, that means that there is insufficient physical commodity to fulfill maturing contracts (let alone future contracts).

For more than a year, the London gold market one and three months contracts have been in backwardation - meaning that the spot month price was higher than the prices of these future contracts. Since Nov. 5, the six-month contract has also been in backwardation, which has never occurred in the London market during the available database that goes back to 1989. In silver, the supply shortage is more extreme, where the six-month contract has been in backwardation for much of the past year, and continuously since June 2.

The only way to cure a market in backwardation is for prices to rise high enough to reduce demand and to encourage greater supply.

3. Testimony at the CFTC hearing in March pointed a direct finger at JPMorgan Chase’s London office for suppressing prices in the silver market. The whistleblower, Andrew Maguire, also released copies of his e-mails with CFTC enforcement personnel to show how he tried to provide this information to the CFTC in the months before this hearing, but had not received a satisfactory response.

4. On Oct. 26, CFTC Commissioner Bart Chilton issued a statement saying he is convinced there have been violations of the Commodity Exchange Act with respect to the silver market that resulted in the suppression and manipulation of prices. He urged prosecution of the guilty parties.

5. Starting on Oct. 27, a series of lawsuits (now about 25 or so) were filed against JPMorgan Chase and HSBC, the two banks suspected of having the largest silver short positions on the New York COMEX. Two of the suits were filed by law firms who hold the records for collecting the largest settlements under the Sherman Anti-Trust Act, Commodity Exchange Act, and Investment Company Act. These are firms who are able to cherry-pick the cases they expect to win easily, so they need to be taken seriously.

6. After failing to report - and even denying - that big banks such as JPMorgan Chase had been holding a large short position in the COMEX silver market, the mainstream financial media started reporting a few weeks ago that JPMorgan Chase had reduced its short position since the beginning of 2010.

In a Dec. 13 letter to CFTC Commissioner Chilton, analyst Adrian Douglas drew attention to the fact that U.S. banks have been reducing their COMEX gold and silver market short positions over the course of 2010. However, foreign banks that are exempt from CFTC regulations have been increasing their short sales. In the silver market, the new short positions from foreign banks over the past five months have more than offset the decline in U.S. bank short positions. As a result, total short positions continue to rise. You can review a copy of Douglas’s letter to Chilton at https://marketforceanalysis.com/article/latest_article_112010.html.

At the Dec. 16 CFTC hearings, Chilton shared much of the information from Douglas’s letter, implying that U.S. banks may be trying to hide their short positions by moving them behind foreign fronts.

7. There are a growing number of reports that owners of COMEX gold and silver contracts, who elect to take delivery upon contract maturity, are being settled for cash instead of with physical metal. In examining the daily movements of silver in and out of COMEX warehouses, the total inventories have declined more than 10 percent since midJune. The analysis also shows that when a large deposit of physical silver comes into the COMEX, it is invariably withdrawn within two trading days. To me that is a sign that there is more demand for metal than the COMEX can supply.

8. Since early October, the 10-year US Treasury debt interest rate has jumped 35 percent. This is a significant sign that the value of the U.S. dollar will fall in the next few months.

9. One of my most accurate sources of inside information, a London metals trader, stated in a recent interview that gold and silver buyers in the Far East were having such great difficulty locating physical metal to purchase that they were now buying paper contracts in order to dump billions of U.S. dollars. It is the purported plan of these buyers to later purchase physical metals as they are able to locate any quantities, with little regard to how much above the spot price they may have to pay, and close out the corresponding amount of paper contracts as they do. In the video posted at zerohedge.com, the last tidbit of information is that JPMorgan Chase may be shorting silver to the Chinese government as part of this activity.

10. Much of the gold sold by the International Monetary Fund was channeled through the Bank for International Settlements. The largest chunk of this gold was purchased by India’s central bank. India’s purchases have supposedly been deposited into unallocated storage - where they may be subject to multiple ownership claims. Because of the risk of losing ownership of gold placed in unallocated storage, a growing number of Far East and Middle East buyers of gold and silver are removing their purchases from London vaults to other locations where this risk is absent. If the London contracts really were backed 100 percent by the underlying metal, this would not matter. But, as you can see from the foregoing information, the decline of physical gold and silver stored in London’s vaults is starting to matter very much.

The above list is not exhaustive of all the reasons why I expect silver prices to soar in 2011, possibly within the next two months. However, I think you better understand that the reason for the strong investment demand for silver (and also gold). It stems from an expectation of a huge drop in the value of the U.S. dollar and an almost total collapse in the trading of “paper” silver (and gold). While the Journal article mentions a projected 2010 surplus of more than 64 million ounces of silver, this figure does not account for the huge silver short contracts that, literally every day, are coming closer to imploding and inflicting huge losses on those who do not have physical silver in their direct custody or stored in segregated storage under their personal name.

For The Wall Street Journal to even give front page coverage to the silver market is an encouraging sign that the general public is starting to realize what is happening. I hope that the Journal’s reporters can pursue this story even further. I am confident that this would result in an even more eye-opening story for the newspaper’s readership.

 

All quotes from the SLV iShares Webpage today. So one could get physical delivery of silver if they have about 50,000 shares. Many do not read the prospectus for ETFs or any stock for that matter before they invest.

I do not have or recommend SLV shares at this time.

 

Just a few points. One, regarding your point 2, backwardization is also a classic sign that the market expects prices to fall. It is not, as you claim, only indicating shortage of metal.

On point 5 I would say simply that thos two banks are the market makers in this asset, and the way the markets are designed the only way to create the derivative is to short it. This is to be expected, and has always occurred. Have they shorted too much? Perhaps, but a large short position is fundamental to creating a market.

For point 10, I would be extremely nervous if I were a bull about the Journal reporting on the market. The last time this market got this much press was 1980.

Listen, you could very well be right about the market in 2011, I am just extremely nervous about such high speculative activity, activity that can quickly reverse and flood the market back with all of their recent purchases. Speculators proved that a couple of years ago with oil, a couple more back with housing, and a few years before that with tech stocks. Hot money moves quick, and such speculation in a market is not where I wish to be. I like investing in areas with no press coverage.

Chris

 

These are not my points ... this stuff came from the web article (link provided) at the top of the post.

By the way ... just curious what you are investing in right now ?

I couldnt think of anything that doesnt have any press coverage -- maybe the lack of press is why i cant think of it!!!
(hmmm ... beenie babies maybe)

 

I am investing in some gaming stocks with exposure to China, some banking sectors, a few international value companies, and some REIT's. If any news is coming from these areas, it is bad news, which I love. I love buying on lows. I did that in the 90's when I bought up a few thousand ounces of silver, when no one was talking about it. Volatility can make a lot of money when timed right, I just don't have the knack or stomach to try that. With the weakness I see, I even think some collector coins not tied to bullion is not a bad buy right now.

EDIT: Btw, the article you referenced is just like a 1,000 articles I have read since the 70's. Doesn't matter when its written, it is always bullish on PM, (because that is what he is trying to sell you. )

 

Isn't it amazing how just 12 hrs or so after the pronouncement of possibly $50 silver and $1800 gold, a big outbreak occurs. Yes the US $ was weak in the morning, but not during the whole trading day, so is it really a sustainable move? We should have a better idea in a week or so. I have a gnawing suspicion some "biggie" wanted to sell some PM shares at a higher price.

 

market manipulation never surprises me (apparently the US Govt was trying to manipulate the silver market lower for years)

that's why i am holding my silver hoard for at least 10 years ... i dont worry much about these short-term multi-dollar moves up and down

just as long as silver is higher in 10 years, i'll be a happy camper

 

$20 silver by the end of 2011 wouldn't surprise me. I think we have a bubble, and it will burst sooner or later.

After all, what are people going to sell in order to dive back into real estate (or jetpack stocks, or whatever is "next")?

 

Im guessing its going to be less than $1,000 and more than $15 an ounce. Anyone wanna place bets?

 

Everything i bought was at 17 an oz, im just going to hold it forever. It may be a bubble but im just going to ride it out unless i need to sell for financial reasons

 

Numismaster gold will exceed $2,000 before the end of 2011.

http://numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=16778

 

I certainly hope it will hit $50, I'll stocking up now. :yes:

 

The rumor on 2 email services I subscribe mention that several large concerns bought puts on precious metals Friday and would try to bring the prices down, but there was still worries that the public or another large concern might buy whatever they sold , and they would not make a gain. So even the manipulators are unsure of what the real demand for PM are at this time. I would not be buying or selling any commodity at this point until a firm move is made. At this time of writing, the PM and most commodities are up, mainly due to a slight drop in the USD, ( still high at 81.32) and rise in Euro ( 1.29).

 

I'm only buying now because I'm paying $1 above spot . Ya USD still less than CAD :thumb:

 

Yeah i think its funny that the books printed just a few years back say something like $9.99USD or $14.99CA forget coins I'm just going to buy a bunch books drive to canada and sell them there. That's about $5.00 in profit per each example above, and those are the cheap books.