With respect to the drop in oil prices today, I don't think it's so much a reduction in the threat of inflation as it is a perceived notion that the price of oil was out of sync with global demand. However, if, like the U.S. the fundamentals (national debt, overuse of printing press) suggest your currency will continue to weaken, this abatement of an inflationary threat could best be viewed as short term relief. Over the longer term, it is likely that the Euro will likely weaken against the dollar due to Euroland sovereign debt problems. However, there are plenty of emerging countries that have currencies that will appreciate against the dollar and the Euro because their balance sheets are so much stronger. If you're competing with stronger economies for oil and commodities with a dollar that continues to weaken, eventually you'll pay more even if demand for the commodity is static. A fund manager I respect was asked a few weeks ago whether he favored PM's over oil as an inflation hedge. His answer was that he didn't favor either one because both would work equally well. He was saying that PM's follow the price of oil. Of course, if you want to own the physical commodity, gold and silver take up a whole lot less space.
I read the rather heated discussion about "calculators" in the now closed thread "This is Why No $50 Silver." My own views about "Asset Calculators" and other black boxes purporting to predict the price of a particular market component is that they are mostly garbage. It was good to see other members of this forum challenging the claims the authors were making. The fact of the matter is that it is impossible to create a "calculator" that can model all of the market variables including the most difficult variable of all, human behavior. Really good investors realize this and it keeps them humble and sober when they are making investment decisions. It's good to be on a forum where dead ends are challenged by other members. Being on the west coast and occupied at work during the day, I tend to be a "late poster". Hence, I didn't get involved in the fray..but it was entertaining and educational reading.
Would it be smart to at least buy on paper now since physical silver is in short supply? Then switch over at some future time, any down side to this?
well if your having trouble getting the physical silver then buy into paper but keep getting physical if you can... not saying you need to or anything but if I wanted to have a position in silver more I would work it that way myself...even if your in paper...your still in silver...think of it as 2nd place and at least in this 2nd place you get make a gain when silver goes up...
My primary local dealer that does huge internet business is still completely out of ASE's ... this was true at $50 and still true at $35. And they just pushed back their "shipping date" of 2011 ASE's to May 31. I spoke with the owner at length on wednesday and he was telling me that everytime silver dipped a little bit he would get piles of orders for 500 count sealed green boxes. Domestic orders not foreign. When he sold out of 2011 ASEs, people started ordering all the older dates (selling at higher premiums). His stock of Silver Eagles is completely gone. He said he was actually embarrassed having no stock of ASE's since they are so popular and he considers himself a high volume dealer. He did say he still has some 90% pre-64 junk silver, but that stock was low on that too. I then asked him if shipments of ASE's from the mint had slowed down. He said he didnt know exactly what they were doing, but he thinks the mint's production of ASE's has slowed down quite a bit since January. He reasoned that the mint feels they can make more money selling silver coins to collectors at higher margins (things like the commems or proofs) -- and that the $2 (5% to 7%) profit margin by the mint on an ASE was too small for them to be motivated producers. He also thought that the mint was having a harder time getting enough raw silver to produce ASE's in quantity (although he admitted this was only his theory). [As aside: the dealer didnt share this info with me - but I got the impression that they might be a 2nd tier distributor not a 1st tier -- that is, I think he might get his supply from a 1st tier distributor not directly from the mint -- however I am not sure -- I did ask him this question but he didnt really answer it. I did notice this mornning that APMEX was also OUT of 2011 ASE's and they list the "shipping date" as May 13th. KITCO also appears out of ASE's. Looks like this supply shortage is becoming more widespread.] I was watching this site to get a feel for the monthly production of ASE's ... http://americansilvereagles.us/2011-silver-eagles/ but they havent posted any new info since the January and February 2011 monthly summaries. If anyone knows where I can find the info on the monthly production of 2011 ASE's for March and April, let me know as I am curious about monitoring this. It's noteworthy that January showed the largest production month of ASE's in the history of the series (over 7 million ASEs produced in 1 month) -- then the Feb production fell by 50% -- and I think that drop was not due to a demand drop but due to supply shortages. This certainly is interesting -- physical silver still appears to be in really short supply -- while the price drops 30%. My feeling is a continued drop in the price of silver is only going to increase demand. Another thing I noticed is dealer's spreads on 100 count and 500 count ASE's have increased over the past month. This is something someone posted in a video a while ago, that the spread to buy physical silver would start to increase due to tight supplies even in an environment of falling prices (due to massive selling of paper silver contracts in the ETFs).
Provident Metals is selling the 2011 ASE at $40.00, cash, shipping not included, with a June 1 delivery, if anyone has the urge.
"June 1 delivery" -- so they are out of stock too interesting Silver is down to $33.75 ... and you cannot find an ASE for delivery from a dealer. I guess you can still get them on ebay from individuals selling.
You can buy the 5-ounce 2011 pucks at just over $200.00 each now also. Things are beginning to get a little more appealing.
I saw a guy on CNBC talking about silver earlier in the week (Monday I think). I cannot remember his name but he seemed to know a lot and was not overly biased in any direction. He noted that the increased margins and subsequent sell-off by large institutions last weekend led to this "correction," but he also presented a strong case that these margins may be relaxed later in the year and that some bargain hunters will buy in at the floor as well. He predicted that this correction will bring silver to between $30-35/ounce, but that silver will reach $60/ounce before year end. He noted some of the fundamentals still in place that will lead to this rebound. Again, this is only one person's opinion (and not mine) but if silver plateaus between $30-35/ounce over the next week or so, I may start thinking that this guy knew what he was talking about. TC
I wonder when the free-fall will level out? I went to buy some silver rounds from APMEX this morning, in the time it took to process my order, the spot price per coin fell another .40, so I held off on checking out. Silver is in my target range of $30-35 for buying into this dip. It's just hard to pull the trigger when you know you could get a significant discount just by waiting a few hours.
How far down do you think silver will go? I'm thinking about buying again, but want to wait for the correction to end. But at the same time - A guy I know just asked me if I'd buy his 5 90% Kennedys for $60... hmm. Tempting, since that's right at melt now, but I'd hate to see the correction plunge another $10 or so... What do you think? What's a realistic end point, or a "worst case scenario" endpoint? Edit: Bannon, looks like we share the same dilemma :thumb:
So with Soros and Slim out of the way, and if the margin increases are over, prices might flatten out soon unless some other large sellers still need to liquidate.
I think that what will happen is what usually happens. Most of the people who were saying they planned to buy the next dip won't. They will wait until prices are just a little lower, then wait some more. Then one day silver will shoot up and they will have missed another opportunity to buy. Offsetting this is the possiblity [low I think] that the PM bull market is over. Nobody knows which is the case, which is why there aren't more rich people.
Words of wisdom. It's really a study in one's level of risk tolerance, and more broadly, human nature.
