Gold/silver paper smackdown coming?

Thanks, that's what I'm thinking. I'll talk to him tomorrow.

 

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Re: Gold
Tim Iacono has been a good read on SA for years; he is also short-term bearish. Gold is looking wan, relative to previous 'rallies-after retracements' : this next phase of QE does NOT appear set to 'boost' Gold as it did before. More WEAKNESS (lower POG) ahead I think.

http://seekingalpha.com/article/1135811-it-s-getting-hard-to-be-a-gold-bull-these-days

 

Well personally I believe any short term weakness is being caused by central banks artificially suppressing prices. They want you to think gold/silver are weak so they can buy it all up on the cheap to bolster their monumental losses which are coming~ Then when they have enough or the suppression schemes go bust, then we will see precious metals skyrocket to new all time highs.

I see no reason to be bearish on gold or silver, anyone who says so is trying to buy up as much as they can as cheap as they can~

$.02
J

 

I did end up buying, but more than that, about $36 face for 21.75x face. I feel okay about it, but I am nervously watching the silver prices on Kitco. If they level off I'm okay.

 

Are there more places you can open a mine and extract PM for less than today's prices? Are mines expandable? Is there concern these historical ABNORMALLY LARGE mintages of silver bullion may go down, and hundreds of millions of ounces of silver be returned to the melting pot?

Those would be reasons to be bearish.

I agree with some of them to an extent, and believe silver could drop $5 and not be unfairly priced at all, maybe even $10.

Am I saying that because I want to buy more? Not really. My "pile" is set really, and I only buy junk silver if I want the coins.

I guess I am always REALLY nervous when someone says something should either go up or its proof of manipulation. To say a market for a commodity can only "fairly" go one direction I believe is falling victim to pundits. It makes me just as nervous as when I hear someone say those immortal words in investing, "its different this time".

 

Well as I have stated before supply and demand will rule, and silver will be the first one to rear its head due to the massive short positions the large central banks have. Gold will go up but not nearly as much as silver as there is plenty of gold go around for now~ That is until all the paper holders who have 100-1 oz claim tickets... most of them won't get any and may as well hold onto dollars which will be worth as much as toilet paper eventually, but if you are smart and holding physical you won't have that problem.

I believe silver should be much much more expensive then it is considering its many industrial uses, we have burned up pretty much all of the silver ever mined in history EVER. We currently use up about 800-900 million ounces a year, mining deposits are not as rich as they once were, and we are using more and more every year.

Certainly one day we will probably be able to dig up the landfills and refine silver from old electronics, but that will only happen once the price reaches a level which makes it worth while to recycle it from there... In the mean time we are recycling all the easy stuff, but still consuming it at a rapid rate.

Here is an excellent little article with a video attached which explains it in a clear and easy way... http://businessinvestorpro.com/how-much-silver-is-in-the-world/

But basically it says that if every american (approx 350 million people) were to buy 2 oz of silver, we would consume the entire annual mine production. Certainly you can argue that the silver is not technically gone... but look at it from an industrial usage stand point, they CONSUME over 800 million ounces a year and in fact if we were not currently recycling as much silver as we are, we would be running a deficit of silver each year... look at the numbers for yourselves... they don't lie~

http://www.silverinstitute.org/site/supply-demand/

 

This needs to be taken in context. We are also amid an abnormally large, and in fact the largest expansion of both debt and the money system that has ever occurred. If the mintages were abnormally large on a percentage basis as compared to the percentage of debt/money expansion then I might be concerned. This is the very reason why people are buying metals which are necessitating the large mintages, and until that reason changes the buying trend should continue. When the day comes that metals are not as desirable then there could be a flood of selling, but that's not going to happen unless real interest rates go positive. That's not going to happen without deflation, and deflation has contingencies. It will either bust the too big to fail banks' balance sheets and lead to the great reset, or it will require bailouts which will be inflationary and push real interest rates negative again thus reinforcing the need for PMs.

 

This is the first time I've seen the 2011 data for this, and I found it interesting that the "old silver scrap" entry was the highest it has ever been now at ~250 MOz. That means mining supply met less demand, and required pulling from existing holders of silver to meet the shortfall more than ever before in 2011. I would really like to see the 2012 numbers.

 

It IS different this time. Never before have ALL the major nations of the world been technically BANKRUPT. And digging themselves deeper into debt.

In addition, the "price" of extracting silver is skyrocketing; look at the trend of big miners' earnings.

 

First, please name the central banks that have the "massive short positions in silver". They MAY have shorts for gold, but that is simply trying to make some money from their gold reserves. Its a smart thing to do if you have an asset that just has to sit there idle.

Second, um, yeah, but they won't. If every American did this, or did that, or even the third thing markets for EVERYTHING could change dramatically. What if every American woke up tomorrow wanting a pop tart? Pop tart prices would EXPLODE!!!!!
Anytime any has to resort to such nonsensical argument it worries me that you don't have any real arguments to support your position.

As for silver, its the nature of the graphs and disagreements how to read them. You read silver used for creating bullion to sell to investors as a "usage", I view it as "inventory" that can come back onto the market any time. If evaluating the overall demand for cars do you ONLY compare this demand to new car production, or do you account for the numbers of used cars available for purchase as well?

Btw JJK, nothing personal just disputing points with you in the name of discussing these issues here.

Chris

 

I don't think the Federal Reserve has short positions. They just give free money to their primary dealers who hold short positions on behalf of their "customers". Of course nobody in charge wants the price of metals to rise because that would require sound monetary policy, which would require sound fiscal policy from Congress in the absence of money printing, which would require cutting entitlements, and then the torch, pitchfork, and guillotine sales go through the roof. They've really backed themselves into a corner by placating the public at the expense of the public's well being.

 

This is about 90 days ago. The numbers may be disputed or massaged, but the trend is there for everyone to see.

"...In my daily conversation with Ted Butler, he broke the numbers down even further. '4 or less' bullion banks are short 63,383 Comex silver contracts... which is 97.6% of the entire net short position of 65,426 contracts. '8 or less' traders are short 76,168 Comex silver contracts, which represents a stunning 116% of this same short position. And the most grotesque number of all [when you take out all the market-neutral spread trades] is that JPMorgan, all by itself, is short about 40% of the entire Comex silver market!!! The full-colour COT graph for silver is linked here."

See www.caseyresearch.com for current readings and estimates. If futures break out big-time, several big U.S. banks (not foreign central banks) are at risk of insolvency. All this has little or nothing to do with the gold market or the POG, which has a different mindset.

 

First off nothing personal taken - that's what the discussion boards are for... If I bold brint or capitalize it is simply because i'm putting importance on that word etc... that being said!

JP Morgan has a huge short position - This is a few years old I think, but here is the only article I could quickly dig up regarding their short position, I also recently watched a really good video which I will post when I can find it again... Here is a quote from the article...
"NIA exposed in 'Meltup' that JP Morgan was short 30,000 silver contracts representing 150 million ounces of silver. This is one of the largest concentrated short positions in the history of all commodities, representing 31% of all open COMEX silver contracts."

http://www.prnewswire.com/news-rele...an-billions-in-losses-says-nia-106058478.html

Next, I think you are looking at the 2oz per american thing all wrong, it is not an argument , it was mearly a comparison to show supply and demand in a simple fashion. Clearly every american won't do that just as everyone won't want a Pop Tart tomorrow. Lets just take another situation with round numbers, there are roughly 6 billion people in the world and if you take the top 1% that is still 60,000,000 people! Sure all the 1%'s aren't doing it for this is just another scenario~ So say half of them are silver stackers and buy 100oz each... that is 3,000,000,000 ounces of silver for investment demand!!! If you consider a few simple things such as those who are buying gold/silver are buying ALOT of it and not just 100oz each, I don't think these numbers are that far fetched~ How much paper silver is out there? I'd bet a whole lot more then there is physical, a WHOLE lot more~

As for the last argument, I do not read silver used for investment as "usage", I agree it goes into the stockpile for investing. Let's actually look through the numbers on the chart I pointed out already here - http://www.silverinstitute.org/site/supply-demand/ - That the numbers I was quoting for "usage" do include coins and medals, but i'll play with the numbers a bit and lay them out here... from the 2011 statistics...

2011 Total supply is derived from the following catagories - Mine production, goverment sales, old silver scrap, producer hedging and implied net disinvestment

Total Supply in 2011 = 1,040,600,000 oz

2011 Total demand or my "usage" figure includes - Industrial applications, photography, jewelry, silverware and coins and medals (coins and medals accounted for only 118,000,000 oz of total demand)

Total demand in 2011 = 876,600,000 oz

The remaining 164,000,000 oz. is the inferred investor demand, basically because of everything supplied that is all that was left and certainly some of that may have been used up as well but for arguments sake i'll leave all that and i'll give you all of the coins and medals out of the "usage" catagory~ then we can assume the following numbers

1,040,600,000 = Produced

758,600,000 = Consumed

282,000,000 = Invested

So taking into consideration that the total supply number included over 250 million oz of recycled silver, I think it is safe to say that we are already recycling just as much as we are producing in coins and medals as well as investment demand combined. At that rate just how long are we going to be able to recycle that amount? We consume 3 years worth of recycling each and every year... Are you ready to turn in your 2012 Silver Eagles over to Apple to make sure you get the next iPad? I know i'm not... now certainly Apple is not gonna come knocking on my door any time soon, but they are going to get it from somewhere cause paper ain't gonna cut it~

As for the car production argument, I think I pretty much addressed that with the recycling argument, but when was the last time you melted down a 1990 Ford Mustang and turned it into a 2013 Ford Mustang and little or no cost? How many 1990 Ford Mustangs are left out there? I don't know, but I do know that we already used up most of the silver ever mined, EVER, so now we have to rely on recycling it or else we won't have enough to supply the demands of industry... So the price simply HAS to rise.

There is no better alternative and in many cases there is NO alternative to silver~





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I really don't know what will happen. I just can't resist silver if the price is good. I can't stop myself from buying some more. I have a disease. I think if the price went back down to $20 I would be in real trouble.

 

Just one tiny adjustment to boost your calculations. The Census Bureau says world population reached 7 billion in March 2012.

So there's even more little folks squalling for PMs, but there's a big shortage of silver spoons a-comin' any day now.

 

Considering what else you could be spending your money on that you would never get your money back from, it's not so bad I used to buy every paycheck, but I guess I've reached my core position because I am putting more priority on other things now. Good enough time to buy though IMO.

 

I'll be trying to beat you to the trough...$20 silver will force me to do things best not discussed in a family forum. I sincerely hope it never happens...I shudder to think of the chaos that would produce in the 'little guy' market.

 

Not sure what chaos you're talking about. At $20, a lot of weak hands would be forced out, but it's a paper loss for the stackers, unless they've figured out how to buy bullion on margin or by (ugh) credit card.

Personally, I would sell my stocks and go ALL IN. That's what I want to do anyhow, over time, but that price would force my action, for better or for worse. I would have an absolute fire sale on CraigsList just to raise cash to hold in reserve. That's the function of my stock account now, a source of instant liquidity, not for retirement, as I am already retired.

Turning my stock account into silver would satisfy me, I think, for the foreseeable future. Despite my misgivings about the dollar and where it's going, I still want 20% of my assets highly liquid. I'm going to need a different car one of these days, that's one reason; not a new car, maybe a 2010.

If European stock markets crash, or the Euro plunges, or a country or two dumps the Euro, you could very well see $20 silver, not on fundamentals, but on margin calls and other short-term pressures. I would not expect $20 to last more than a month. My only ongoing adjustments would be to cancel any travel plans, drive less, eat cheaper food, turn out more lights, and keep the house at 73 instead of 76, the kind of small economies that save you a couple of hundred a month.

I think that, for some time, it would be VERY hard to sell coins and other collectibles.

Once the liquidity crisis is over, I would never expect to see silver at $20 again. Gold, I'm undecided; there's a big disconnect there, I need to read the gold bears' case.

 

But they would be way more inclined to accept $1000 USD in Apple goods or food than $1000 is spot silver. I would guess out of a random sample of earthlings would go 95% apple- 5% silver. IMO. Not saying that is good or bad, but that most people are not stacking or hoarding PM.

 

Agreed. Good luck to 'em.