Unrest in Egypt, and inflation in china, Gold and Silver stuck on a roller coaster

When reading and watching the news, the one thing I notice is no matter what is going on in this country including what Bernanke has stated the US government is going to do with bonds, there are still a ton of reason gold and silver have not plummeted like most of us have been expecting. There is a good chance it won't happen as long as countries like China and India and Europe are in the fold with all the issues going on abroad.

I think that gold and silver are stuck on a roller coaster that is a very unsafe ride at this time. I love the fact that silver and gold is lower then it has been in a few years, but I am concerned with our global economy, and with the fact that no one really knows how this is gonna end up, so I ask all the smart and knowledgeable people on here to please make your own opinions on whats going to happen over the next month in regards to this topic. Please make your statements but try to have something to back it up before posting, there are a lot of people on here who will have no issue correcting you if your off base with your answers.​

 

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Buy physical for the long run – pm’s have always increased in the long run.

 

The sky is falling, the sky is falling...

 

This excludes me....

 

I predict the prices will fluctuate forever with really high and low points every few decades. I predict every little rise and fall will be followed by panicky and smug predictions of doomsday

 

A timeframe of one month is going to be difficult for even the most knowledgable insiders to nail down. Precious metals are a longterm investment. If you're trying to get in and out for a quick buck silver is a very volatile market and could payoff big or burn you big.

I don't claim to have any idea what will happen, but I voted that it will drop to further lows for the following reasons.

Gold and silver are both below cost of production. The market is showing us that cost of production does not matter. CEOs of miners do not seem to mind operating at a loss for whatever reason. So there's no reason to think that will provide support since it hasn't so far.

Gold backwardation is also increasing. That means that in spite of all the arbitrage and profit taking going on by selling physical at a premium to the futures prices, demand is still outpacing the supply that arbtirage is bringing to market. Therefore the market is also telling us that arbitrage will not provide support.

We know that the market is determined by paper contracts which have only a small fraction of the metal they represent, and therefore the price can do anything. I am reluctant at this point to even say that technical support matters. When someone can sell 5 million ounces of gold or all the silver mined in a year in a single session that will break technical support with ease. The stops have been flushed out already.

It has been reported that the COMEX gold inventories are draining at the fastest pace on record, and that JPM has offloaded it's massive short position inherited from Bear Stearns at sub $20 prices and is now in the process of going long on SLV. That short position is still out there somewhere diluted among the big banks, but for all we know it could be tied to some derivatives in retirement funds since they can invest those however they want.

As such there is evidence that the very forces who have been suppressing the price of silver are now preparing to profit from their rise. However it stands to reason that they will not be done positioning until all the physical metal has been acquired, and right now the COMEX still has some metal. As long as they have metal for the big players to gobble up at super low prices I don't see why they don't keep knocking it down and buying it cheaper and cheaper to maximize profits. There is nothing to stop them until the exchanges run out of metal. Once that happens then the physical price will diverge from paper and the exchanges will either go away or become obsolete for buying physical, or the exchanges will be forced to replenish inventories at the physical price which will become the new market price determinator instead of paper proxies. I do feel that will inevitably occur and lead to exceptionally higher prices, but I do not see that happening in the next month. So we could be in for more downside until the wealth transfer is complete. Although it is a fine line and it might just stay where it is until then as well. Or it might go up

 

how do you know?

 

Good to have you back, and I finally figured it out. You are pulling our leg aren't you ? You really got me good......

 

These people have a pretty good series on mining costs for a few of the bigger miners.

 

since gold and silver are by products of copper and other mining, how do you figure that's corrct?

 

In the cases where silver is a by product of the primary mining material, the companies take the revenues from silver and use them to come up with their all in costs of the primary material mined.

Do you have some information you'd like to let us in on?

 

common sense tells me they aren't mining metal for less than they sell it for.

 

So nothing to add then?

 

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you mean like speculating, fear, panicking and linking to sites like silverseek and zerohedge?

 

No, I was actually asking for something substantial that you may have read in the Wall Street Journal or Washington Post, or maybe some inside information you might have, since it appears you have many sarcastic questions, and no answers or information.

 

Since it appears I'm going to get nothing....

If you look at the financials of some of those mining companies, you'll see that they're spending a lot of money on research and exploration. They're doing that because they're making enough profits that they can and it makes sense that when you're mining is profitable, you find a way to add more materials that are profitable into the market. They can reduce their costs by cutting the expenses of research and explaoration, because it doesn't make much sense to try to add more of the product onto the marketplace, when the price/profits don't dictate that you do. That is common sense.