Gold/silver paper smackdown coming?

Good evening everyone,

Had to post this, just in case I am right I think we are about to see another smackdown of gold and silver prices via a paper flood later this week. We have been on an uptrend for the past few weeks and I'm sure the powers that be don't like that. No hard facts to base my theory on, just a gut feeling I guess.

One thing I have noticed, although it may be just a coincidence, is that when APMEX announces emails about a sale on silver products, a smackdown occurs within 48 hours of the close of their sale. I noticed this particularly because I made a few purchases during their sales, then watched the price get smacked down in the following days. I wish I had filed all of their emails so I could go back and compare but I deleted them.

Well in checking my email today I recieved an email from APMEX for a pretty good deal on 10oz silver bars etc. but thought it was wierd that the sale was for a 1 day only 24 hours sale which ends at 3pm CST 2 hours before they close for the day.

Maybe i'm just going crazy~ Or maybe i'm just hoping it will happen so I can stack a few more pounds of silver away for the apocalypse

Thanks for listening - you are my therapy group
J

 

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The U.S. Mint is TELLING you, by suspending ASE sales temporarily, that silver supply is tight, although there seems to be plenty of junk silver around. The time to worry is when the debt-limit negotiations go into the ditch.

 

I think it will probably get smacked down. But it might spike up first or maybe stay flat for awhile.

 

"...I think it will probably get smacked down. But it spike up first or maybe stay flat for awhile."

That pretty well covers all the possibilities.

I noticed this morning that Citigroup has changed their outlook for gold:

"...At Citigroup on Monday, analysts cut their gold forecasts for 2013 by 4.2% to $1,675 a troy ounce and 0.2% to $1,653 a troy ounce for 2014. Their silver price forecasts remained unchanged." I could not locate their current silver forecast, but seem to recall it's around a 5% gain for 2013.

I see evidence, even among CT members, that expenses of daily living are causing some folks to liquidate their stacks. I think that trend will accelerate later in the year, especially in Europe, and that will create downward price pressure, more so if the world's central banks sell off their silver (don't think they have very much) in order to buy gold.

Nevertheless, I'm still a buyer, not a seller.

​

 

Even premiums on junk silver are high. Dealers paying 65 cents over spot in some cases, where they used to pay less than spot and sell for around spot. That is another bellwether of supply constraints.

I'm not sure whether we will see a smackdown soon. Doing it right now with supply as it is could backfire and tighten supply even further if there is merit to the constraints, and could have more of a counter effect potentially. So any smackdowns at this point will have to be weighed carefully, but the COMEX did recently add a sizeable portion of physical metal so they should have a little room to breathe still.

 

I guess it depends on what type of supply "constraint" this is. Is this a "they can't mine/refine/produce the silver fast enough" situation, or more of a "holy cow people bought way more than we expected and we ran out of on-hand inventory" situation.

In my mind, the former would bring a higher rise to the pricing and possibly bring a higher stable price shelf through the year while the latter will cause a simple short-term spike in pricing until inventories are replenished and then it'll dip back down and stay lower.

Either way, I'm in the "just keep buying" camp, cost averaging over the long haul. I'll not be spending a bunch of money in one shot, but just spreading out the same money over longer, so the fluctuations "hurt" less. And I'm sticking with mostly silver right now, possibly a little small fractional gold here and there.

 

I think it is a mixture of higher then normal demand keeping the refiners/miners busy... but also a lack of people willing to sell at the current price levels. If the price goes higher you will see more silver on the market. Although I still believe silver will be in shorter physical supply then gold in a few years causing prices to rise.

Problem being that the paper pushers are keeping the price suppressed allowing large institutions/investors to buy up physical at low prices... once they have the physical they need I believe the price will skyrocket leaving those without physical metal wiping their tears away with their paper ETF certificates... which are probably just digital nowadays so they will just be weaping at their computers

$.02
J

 

I am not 100% sure but I think large bullion dealers hold a short position against their holdings of physical. This enables them to protect themselves from losing money when precious metal prices decline. They make money on the spreads in an up or down market.

The debt ceiling debate may cause a decline in PM short term however we all know both parties will eventually come together and ultimately raise the ceiling. More debt = Devaluing USD

I hate the argument that paper silver is not the same as physical. Last time I checked, you can purchase silver on the COMEX and receive physical 1000oz bars. Why is it that everybody believes their is a conspiracy against precious metals? Nobody calls manipulation when PM prices rise.

I am long Silver, Platinum, and Palladium.

 

The US Mint "supply constraint" is real but meaningless to POS. US coin buyers are a trifle of the physical mkt (however important in their own minds.) But psychological hype may push US bullion premiums HIGHER in the short term - dealers will (and should) milk this 'Silver shortage' nonsense for all its worth.

US bullion buyers might prudently await the likely Gold retrace, come March/April June. (That's just my two cents! Assuming Ag follows Au down in bigger price moves.)
On the other side of this argument, Bron dismisses the idea of Silver Seasonality: http://www.perthmintbullion.com/Libraries/Website_Downloads/120619_Silver_Seasonality_1.sflb.ashx

Also check the Barron's Roundtable for 2013 in this and coming issues. (Marc Faber did not attend this year; Fred Hickey filled the Gold-Bug seat.) This is what I've been saying, too.
http://blogs.barrons.com/focusonfunds/2013/01/22/barrons-roundtable-is-bullish-on-gold/?mod=BOLBlog

If Silver typically has ~2x the volatility of POG, there could be another spectacular Ag decline when Gold gets whacked (again): that's the point to BUY, POS ~under $25. maybe as low as $19?
I don't think anyone here should be a Seller of bullion, either.

 

People seem to want to be recognized as a great bullion forecaster, but they are afraid to take a solid position. If you can't make a case besides the cat spit up a hairball on your ASE, or say up, down, both, and if not, it is a paper conspiracy, then don't predict. I can accept those who honestly say it is a "guess", but most others seem to be whistling through the graveyard hoping that if they say so, their value will be protected.

If you want to predict, stand up and make a markable prediction( like 1700-1710 on 3/1/13). Then if you are correct, you can claim to have gotten it right this time, repeat 10 times and you may have a following. If you are wrong, then you are wrong, no big deal unless you are a dealer. I feel there are way too many economic variables to make a close prediction on PMs. IMO.

 

I honestly don't know enough about bullion investing to give any real opinion but I would like to see silver drop so I may finally add to my pathetic stack.

 

I wonder how long that will last. Junk silver is still being sold at spot here, and paying less than spot. I wonder how tightly correlated different areas of the country are on silver premiums.

 

The best contribution "forecasters" can make is the discussion of macro-trends, based on careful reading of a lot of sources, plus a few statistics. For instance, if Reuters reported that Belgium and Netherlands had completed selling all the silver their central banks hold, and immediately used the proceeds to buy gold on the open market (this is "made-up news"), that would be highly significant.

To read that Dealer so-and-so is selling 5% under spot this month, that could mean that Mrs. Dealer ran a red light and t-boned a Mercedes, and they're a little short, just twenty grand collision coverage [that only fixes the Merc's titanium voice-controlled, programmable, low-drag, telescoping, taco-warming, radar-detecting side mirror]. But I digress.

I agree, saying silver could go up, down, or sideways is useless. And when I post, you may remember the fact that I do not plan to SELL silver unless I have a dire emergency. I also don't get concerned the least bit about 1% moves in any direction, although if that happened every day for a week, I would step up my pace of reading all the gee-whiz commentators to look for someone's innovative insight.

 

I've been seeing huge premiums on everything including junk silver.

 

One news fact that I haven't seen mentioned is that India ( reported as world's largest gold buyer) has raised the tax on gold imports to 6% from previous 4% 'to reduce a record current- account deficit, and moderate demand for PM. About 80% of India's account deficit is due to gold imports'.

So a question becomes, will this decrease the purchases, frighten Indians into paying the extra tax and buying more, or increase the local premium when buying/selling within India, etc.? I think this has the possibility of affecting the POG more than many other factors. IMO.

 

A good example of a macro-trend.

 

http://www.cointalk.com/t220262/#post1611051

 

This is 2 weeks ago:

"...Gold is India's second-largest imported commodity by value, behind crude oil. The country imported about $60 billion worth of gold in the fiscal year through March 2012, compared with about $40 billion in the previous year.

The government doubled the import tax on gold to 4% in March 2012 to reduce demand. That, and a drop in the Indian rupee's value against the dollar, have kept local gold prices higher compared with global rates.

According to the most recent available data from the World Gold Council, India's gold demand during the January-September period of 2012 was 607.6 metric tons, down 24% from a year earlier."

 

True Juan, the articles in that post did mention the possibility or intention of Inida to raise the tax, but nothing about an Actual raise of the tax I mentioned.

 

"There will be tariff and non-tariff restrictions on gold imports" sounded definitive to me.

http://www.cointalk.com/t220262-3/#post1619876
New guy to watch? Indian Gold analyst T. Gnanasekar called for a possible intermediate bottom near $1,550-65 range in the coming months but sees Gold closing higher in 2013.

(Posted that short term Low, because I agree. The Bigger Low, more like July, and I'm not so Bullish for Year end)