$37 silver!

LOL. when do you predict this will happen, nostradamus?

 

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Q4 2012, based on the exponential trend:

 

The proper way to draw an investment chart is to draw it so that a line bisecting the x and y axis represents a 15% return. Otherwise, it can be distorted to show anything.

 

The chart is directly off of Kitco. I merely connected the dots wherever a bottom has put in. There's no other way to represent it. This is an actual representation of the gold price over the past 10 years. It has remained inside of the channels that I pointed out. And I initially created the chart months ago (Nov '10), and the price has continued to treat my trend line as support, even as it corrected fairly sharply. So you can either predict it will remain in the same trend as it has been in for the past 10 years, or you can predict that it will break down for some reason. But unless you have a fundamental reason for it to fail, the trend is generally your friend.

 

I have been and still am unloading all the silver I bought in 2008-2009 for as close to $10 per ounce as I could afford at the time. Than was the time to buy, now is the time to sell... I will sell all the scrap that I have off to the hungry fools and wait till it dips below $15 before I buy to re-sell again Good Luck with all these far fetched projections!

 

This is a good time to be a seller if one wishes. Profit is always much better than not. DCTJR80, at least you have made your own decision and not let greed take over. When you consider the total amount of physical silver in the world, then balance the amount controlled by businesses such as banks, mining companies, hedge funds, marketmakers, etc, with the amount controlled by coin collectors, survivalists, and political "analysts", the former group would, IMO, dominate the price action.

Jim

 

I started creating auctions for my silver as soon as it surpassed $20 an ounce, fortunately for me, in between work and family I have little time to write auctions, so I have only been able to sell a little off at a time and still have plenty to sell with prices reaching towards $40. I just hope I get a chance to write and sell before it dips...

 

I think you're going to be sorry to have done that come Monday. Gold and silver are in seriously bullish pennants right now, poised to explode past the $1440 and $38 levels imminently. Targets are $1550-$1600 and $46-$50, respectively.

I bought lots in 2008 too, and I sell after up-swings, but buy back on the corrections. You don't sell at the end of a consolidation pattern. That's when you buy a few extra options and hold on for the ride.

It's funny when people tell me that they're selling at the top and shorting now. They've been telling me that since 2002. I can't even fathom how much money they've lost.

You will never see $15 silver again. Not in the dollar as currently defined. Silver has a much wider range than gold, but at this point, the trend indicates that the minimum value for silver now is around $25. By the end of the year it will be $30. I could certainly see it going all the way up to the mid $40s and then dropping back to the high $20s. That would be an awesome buying opportunity. End of 2012 indicates $60 minimum. I'm not predicting a massive swing down again, but recognize the possibility. Gold not so much. If gold were to fall in the near future, it would break the trend, which I find doubtful. And if it did, then I would put in serious protection until a bottom is found.

I think that the next upswing is virtually inevitable and likely to start on Monday. That will probably bring us into May at which point seasonal weakness will set in and gold may retreat to $1500 to kiss the trend line again. I have no idea where silver will find a bottom during the summer, but probably not all the way down to the trend line. Either way, my current guidance would be to buy if you still can maybe Monday morning, and then sell or put on protection in the mid $1500s for gold and mid $40s for silver, and then buy both whenever gold hits the trend line again probably in July or August.

 

That is purely your opinion and my opinion is that you are an extremist counting on extreme events such as your signature indicates, you will probably be extremely wrong!

 

My issue isn't with the trend. It is with the presentation, Kitco or other. The slope of the curve is misleading because the chart is not drawn correctly, that's all.

 

The end of QE2 and a pickup in the economy "could" produce a spike in long term interest rates in the June/July timeframe. A scenario such as that might be negative for PMs.

You may have noticed that the recent run-up in silver prices has been associated with a spike in investor volume. Investors are pushing prices higher now and it was higher interest rates in 1980 that lured investors away from silver back then...just saying. :secret:

 

I really don't know what you're getting at. I did not pick any particular window or slope or anything. It is a perfectly accurate chart of the price per ounce over time. There is nothing misleading about it. The fact is that the price is growing in an exponential manner. That can mean one of two things... it will keep growing asymptotically to some line, which appears to be sometime early in 2013 (signifying hyperinflation), or the trend will fail at some point in a mania blow-off top. BTW, a plot of the money supply, oil, and other inflation indicators (I have such a chart on my blog a few months back) aren't too far off of what gold is doing, but gold has a much tighter, more obvious trend because it does not have many other outside influences which add noise. I don't know how you would draw it differently to make it not "misleading", but surely any manipulation you do to a basic chart of price vs time is going to make it more misleading, not less.

 

Indeed, higher interest rates (much, much higher -- such as the 20%+ prime rate in the early 80s) could dampen demand for precious metals. However, the economy is not improving. Nothing which caused the crash of 2008 has been fixed. The "too big to fail" banks are bigger than ever and sitting on bigger "assets" not yet marked to market. Debt, both public and private, has gotten worse. And the illusion of recovery is only due to massive debt spending and over $4 trillion printed by the Federal Reserve. Not only would higher interest rates plunge the economy into depression, but it would explode the federal deficit bigger than tax revenue! If you think a $1.65 trillion deficit is bad, wait until the annual interest on the national debt alone is over $3 trillion! It is simply not feasible for interest rates to grow enough to seriously suppress precious metals. The Fed won't allow it. And if they fail to control it, then inflation will far exceed any interest rate since the Fed will have to monetize the interest on the national debt, so PMs will continue to grow. If you truly think that the Fed will allow the Greater Depression (despite all of Bernanke's rhetoric to the contrary), then get out of PMs. If you believe that Bernanke will drop money from helicopters before permitting the kind of collapse which would accompany 20% interest rates, then PMs are both excellent insurance and a great investment.

 

?

 

The point is that any rising number series can be made to look exponential by manipulating the X axis. So the long accepted standard for investment returns has been to draw it so that a line bisecting the X and Y axis to represent a 15% rate of return. Kitco didn't do that, so the rise appears greater than it actually is. That's all.

 

I'm not sure what you mean by "bisecting the x and y axis". "Bisect" means "divide into two equal parts". For a chart with increasing value on the Y axis and increasing time on the X axis, such a line would necessarily represent a negative rate of return!

Maybe you meant "a line going from the lower left corner to the upper right corner" -- but that doesn't make sense, either; it would prohibit the Y axis (value) from starting at zero, and moving the origin from zero is one of the most effective ways to distort a chart like this.

The problem I have with the "to the moon" graph is that the curves (1) don't accurately track either tops or bottoms, and (2) aren't described -- are they supposed to be parabolic, exponential, hyperbolic, or something else? They look like they go asymptotic at the right, which means they're predicting that either the value of silver goes to infinity or the value of the dollar goes to zero. If one believes that, and believes it'll happen by the end of 2012, one should say so explicitly.

When I look at that graph, I see a pair of curves drawn with a conclusion already in mind, and adjusted so that most of the data points fit between them. Over time, the data hew more and more closely to the bottom curve, and over the last two or three years they rarely even approach the middle curve. I would bet most of my life savings -- indeed, with my present allocation among stocks, bonds, cash, and PMs, I suppose I am betting most of my life savings -- that gold will break through the bottom curve any day now, even as it continues to climb.

Of course, you could fit any number of different curves to this dataset. The whole point of markets, though, is that you can't predict them by curve-fitting (or anything else) -- because, if you could, so could the other participants, and the pricing would change to take that into account.

By presenting a graph like this, PG is effectively saying "I'm smart enough to see where this is going, but the big market-movers aren't". I have to view any such claim with deep skepticism.

 

The market, if left alone, sets interest rates quite efficiently. There's little political appetite for more quantiative easing which will most certainly produce higher interest rates once the current round of stimulus ends...the national debt MUST be serviced.

I agree with everything else you say with just one notable exception. You state that...

The FASB "Mark to Market" accounting rule was a really DUMB idea!! "Mark to Cash Flow", is clearly the correct method to price assets in an inactive (or otherwise inefficient) market. The FASB adoption of FAS-157d proves that point.

An excerpt from Wikipedia...

Note that in April 2009, the very week FAS-157b was revoked, the artificial market crash of 2008/2009 ended and the markets righted themselves...it's amazing how well the economy works when you get EDITED: No political rants !


EDIT: :taped-shut:

 

I don't care for the way that silver ended the week. The largest volume/hr was negative on each of the last 3 days ( wed-Fri). Even though silver finished higher on Friday than it began, it was on very small volume, probably bargain hunters. Also if you are into "candlesticks" and technical analysis, there are signs that Monday may be a short term pivot ( unless of course another linked factor changes significantly.

If I were cautious, I would wait to see if silver breaks 38.25 with volume for a while before buying, or if it breaks 37.30, consider selling.IMO.

I am a trader of PM, not an accumulator, and only for my family accounts and trusts. Good luck and patience.

Jim

 

I'm sorry that I can't explain it. Try this -- a line moving from the origin upward and to the right should have a 15% rate of return when drawn at a 45 degree angle. Or something like that. If you compress one access or another, you can make charts exponential or inconsequential. Before charts were only available via chart services [pre internet] that's the way it was done to make them all comparable. But of course it is always more important to understand what a chart means rather than what it says. It seems that many people spend about 2 seconds on a chart and draw a conclusion, and it just isn't that easy if the purpose is understanding.

 

Maybe it's an example of seeing what one wants to see, but the graph looks pretty clear to me. You could set either axis super high and it still maintains its relationships and projects the same values, it just may not look like the same familiar shape. Since we are at an all time high, you can't really get any better view. If we were looking at a small piece data I would say lets zoom out and get more perspective, but we already have it on the X axis. I don't know that looking back further on the Y axis would really provide anything relevant other than perspective, as opposed to having a real impact on the current trend.