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Where is the bottom in silver going to be?


By iwog   Follow   Fri, 23 Sep 2011, 10:50am PDT   10,151 views   96 comments
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Now that the bubble has blown up, the important question is how low will it go?

There are several ways I've calculated this number. First of all, speculative bubbles tend to bottom out at about 20% of peak value. This was true for oil, the Nasdaq bubble, the 1929 stock market crash, and the 1980 silver bubble. The no-brainer way to analyze this is to simply say silver is going to do again what silver did before. This means silver will be selling for $10 an ounce in 3 months. Here's the chart:

The problem is that silver's chart most resembles the Platinum bubble. The platinum bubble bottomed out at 36% of peak.

Platinum is much more scarce than silver and my guess is that it was speculated in to a far less degree than silver was, therefore I would favor the 20% model over the 36% model. Picture a tight market in industrial platinum versus millions of troy ounces of silver being dumped into the market from SLV and Comex vault hordes. However there's a second way to compare the two that also favors 20%. Both metals were essentially ignored by investors during the 1990s as inflation was low and all eyes were on the stock market. During this time, Silver was selling for $4.25 an ounce and Platinum $400.

After the bubble, Platinum settled out at about $800 per ounce, or twice its value during this equilibrium period. If silver was to do the same, it would settle out at $8-$9. It's a good fit and conforms to the platinum chart I like so much.

So that's it folks. I personally will not sell my short positions or buy long positions in silver until we see $10-$15 again. It might be a short wait, and I'll be ready to buy when we get there. Oil, the Nasdaq, and Platinum all had huge rallies after the bubble collapse and it should be a great time to buy. All the economic factors are still very positive for metals, but they aren't going to stop the selloff for now.

This also means that short plays might still be very valuable.

Disclaimer: I'm short up the wazoo in silver.

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Goatkick   Mon, 26 Sep 2011, 4:24am PDT   Share   Quote   Permalink   Like   Dislike     Comment 57

What you experts have day jobs ? :P

Guess someone will show up when we head lower
Silver almost $6 higher from recent low //only 30 k on a 1 lot SI contract
be careful

Goatkick   Mon, 26 Sep 2011, 11:07pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 58

Ok make that a $7 pop off mondays low in Silver.

Iwog no comments at all ? Dare I say you only talk ur book ?

hooch_raider   Tue, 27 Sep 2011, 12:35am PDT   Share   Quote   Permalink   Like   Dislike     Comment 59

Silver going to $15????

Gold below $1000????

You know Iwog....anything is possible. In my humble opinion, you are dead wrong. Best of luck to you.

-Hooch

NuttBoxer   Tue, 27 Sep 2011, 3:35am PDT   Share   Quote   Permalink   Like   Dislike     Comment 60

Bubbles and primary trends are not the same thing... Silver and gold r money not just commodities... Widely publicized by GATA physical is way overleveraged, when it gets called in will shoot to the moonand all paper traders will just have, paper... I love hearing people say there 401k dropped 20% for the year while my physical investment has gained 100% each year

iwog   Tue, 27 Sep 2011, 4:11am PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 61

goatkick says

Ok make that a $7 pop off mondays low in Silver.


Iwog no comments at all ? Dare I say you only talk ur book ?

You're kidding right?

I posted my silver thread and detailed my short positions last Monday and Tuesday. Silver was selling between $40 and $41 during that time.

http://patrick.net/?p=1035459

As I write this, silver is selling for $31.70 more than 20% lower than last Monday. What would you like me to say? That my silver short has exceeded my wildest expectations? Okay my silver short has exceeded my wildest expectations. I still see silver going under $15 in less than 6 months.

Instead of all this posturing, why don't you tell us your prediction?

middleman   Tue, 27 Sep 2011, 6:40am PDT   Share   Quote   Permalink   Like   Dislike     Comment 62

iwog, I've been screaming silver bubble since Summer of last year. I hope you are right because I'm betting the farm it's crashing.

pdh   Tue, 27 Sep 2011, 12:04pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 63

Silver fell because USD spiked on news that it wasn't the Euro. How long is that euphoria going to last? Silver needed/might still need a correction, but you wouldn't buy equities based on past performance, why would you do the same for commodities?

iwog   Tue, 27 Sep 2011, 12:17pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 64

pdh says

Silver fell because USD spiked on news that it wasn't the Euro. How long is that euphoria going to last? Silver needed/might still need a correction, but you wouldn't buy equities based on past performance, why would you do the same for commodities?

Silver lost 20% in two days. How much did the dollar gain? .2%?

mdovell   Wed, 28 Sep 2011, 1:11am PDT   Share   Quote   Permalink   Like   Dislike     Comment 65

I'm surprised no one mentioned the shipwreck found with 200 tons of silver
http://newsfeed.time.com/2011/09/28/200-tons-of-silver-found-in-north-atlantic-shipwreck/

If this can get on the market even in the next few years that can lower demand a bit... at 30 oz at 2,000 lbs a ton..200 tons...

192 million more put on the market.

terriDeaner   Wed, 28 Sep 2011, 3:12am PDT   Share   Quote   Permalink   Like   Dislike     Comment 66

I saw that too. Since it's basically in a locked vault for a while (needs to be salvaged with lots of paperwork to do... ), I'm not sure it will affect events over the next 6 months much.

thunderlips11   Wed, 28 Sep 2011, 3:20am PDT   Share   Quote   Permalink   Like   Dislike     Comment 67

To me, it looks like Gold and Silver will be moving down slowly another 5-10% for the next few weeks, and then move sideways for a couple of months.

At that point, it could surge again if things are still lousy. But both need to settle out for now -

Barring any market shaking events like an EU collapse, which I don't think is likely. Most EU doomsayers are politically motivated, IMHO. "Damn Socialists! John Galt told you it would all burn!" Given the huge power and wealth of French, German, Scandinavian businesses and overall economy (approx California/Texas/NYS in power and size), they can more than prop up a few Arkansas (Portugal and Greece) indefinitely.

Fiat is even expanding into the US domestic market for the first time.

Greece and Portugal are nothing, the have a GDP like one or two poorer US states. Italy and Spain will be in a coma but won't die. Ireland is already out.

China is still the black swan. There is so much local fraud and corruption, particularly in land sales and leases, which the central government tries to reign in. One big bank or business failure can send a shockwave through the economy.

I think the key to China is to consider it a late 19th Century economy. It will run up big for a decade or more, and then have a helluva slump.

iwog   Wed, 28 Sep 2011, 3:59am PDT   Share   Quote   Permalink   Like   Dislike     Comment 68

middleman says

iwog, I've been screaming silver bubble since Summer of last year. I hope you are right because I'm betting the farm it's crashing.

I think you're pretty safe. $20 by November and under $15 by February.

terriDeaner   Wed, 28 Sep 2011, 4:02am PDT   Share   Quote   Permalink   Like   Dislike     Comment 69

thunderlips11 says

Given the huge power and wealth of French, German, Scandinavian businesses and overall economy (approx California/Texas/NYS in power and size), they can more than prop up a few Arkansas (Portugal and Greece) indefinitely.

thunderlips11 says

Greece and Portugal are nothing, the have a GDP like one or two poorer US states. Italy and Spain will be in a coma but won't die. Ireland is already out.

Interesting comparison... consider though how these countries would be screwed by the Eurozone outcome you describe. They are all heavily interconnected in terms of banking and trade.

As far as the analogy goes, consider also that many of the the big US states are broke (Cali, IL, and NY in particular...) and would have no political will or means to bail out a smaller state. And it seems like there is less and less political will in Germany for further bailouts.

thunderlips11 says

China is still the black swan. There is so much local fraud and corruption, particularly in land sales and leases, which the central government tries to reign in. One big bank or business failure can send a shockwave through the economy.

I think the key to China is to consider it a late 19th Century economy. It will run up big for a decade or more, and then have a helluva slump.

Another good point. Without Chinese demand, Germany would be screwed.

uomo_senza_nome   Wed, 28 Sep 2011, 4:29am PDT   Share   Quote   Permalink   Like   Dislike     Comment 70

iwog says

$1350 puts on GLD.

Iwog - you mean $135 puts on GLD or $1350 put on gold futures?

Also is there an easy way to correlate gold price fall to GLD? For instance, if gold hits $1300 by Dec, what will be the price of GLD? $120?

uomo_senza_nome   Wed, 28 Sep 2011, 4:37am PDT   Share   Quote   Permalink   Like   Dislike     Comment 71

austrian_man says

For instance, if gold hits $1300 by Dec, what will be the price of GLD? $120?

Never mind, answered my question:

(total ounces * projected price per ounce) / total outstanding shares

For $1300 - GLD share price equivalent is $126.

iwog   Wed, 28 Sep 2011, 4:42am PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 72

austrian_man says

Iwog - you mean $135 puts on GLD or $1350 put on gold futures?

$135 puts on GLD. I'm only toying with gold futures. All my big money is on silver futures, silver options, and SLV.

Goatkick   Wed, 28 Sep 2011, 4:44am PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 73

There u are Iwog

I was getting my feelings hurt because you didn't respond to me that day. Listen I know you're never wrong and you love Ronald Reagan but don't get snippy with me.

I'm the real deal my friend. Nice shorts you crabby old liberal

BTW guys I trade SI futures along with CL and GC and I'm not mocking you when I say "BE Carefull "

Also I leave the predictions for u guys meaning pro bloggers. I have to turn on a dime u know be like water.
I'm also filthy rich and I vote Republican . :)

Goatkick   Wed, 28 Sep 2011, 4:59am PDT   Share   Quote   Permalink   Like   Dislike     Comment 74

Hey Iwog

What do you think will happen to premiums on the physical Silver Eagles ect if we hit your target? Have you sold all your physical Silver/Gold or is this a hedge? Thanks u crabby Pekin Duck

terriDeaner   Wed, 28 Sep 2011, 5:15am PDT   Share   Quote   Permalink   Like   Dislike     Comment 75

goatkick says

I'm also filthy rich and I vote Republican . :)

So then why are you hanging around here instead of zooming about and running over peasants in your solid gold rocket-car?

EBGuy   Wed, 28 Sep 2011, 5:21am PDT   Share   Quote   Permalink   Like   Dislike     Comment 76

a_m said : Never mind, answered my question:
(total ounces * projected price per ounce) / total outstanding shares
For $1300 - GLD share price equivalent is $126.

Don't forget the time component. All other things being equal, GLD loses around .12% (not an absolute max) of its total ounces per quarter to pay trust expenses and marketing fees. Not a huge deal, but IF the GLD trust becomes a heavy net seller, those still holding shares bear a greater percentage of the past expenses.

iwog   Wed, 28 Sep 2011, 5:22am PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 77

goatkick says

Also I leave the predictions for u guys meaning pro bloggers. I have to turn on a dime u know be like water.

Gotcha. So how would you describe someone who's not willing to take a position, who's not even willing to even take a guess at the direction of the market, but sits back and flings insults at people who do?

Goatkick   Wed, 28 Sep 2011, 5:25am PDT   Share   Quote   Permalink   Like   Dislike     Comment 78

A regular guy who's in a business and see folks pretending on the internet
Hey I'll leave u alone in ur sand box

Goatkick   Wed, 28 Sep 2011, 5:26am PDT   Share   Quote   Permalink   Like   Dislike     Comment 79

terriDeaner says

goatkick says

I'm also filthy rich and I vote Republican . :)

So then why are you hanging around here instead of zooming about and running over peasants in your solid gold rocket-car?

Have posted here maybe 2x in the last 2 years but my car is made of Platinum silly.

iwog   Wed, 28 Sep 2011, 5:30am PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 80

goatkick says

Iwog

You're such a whiny bitch

You edit everything and have no sense of humor.

I'm beyond ur peer yet I was willing to shoot the shit my bad.

That's nice, but you didn't answer my question. Why would you refuse to take a position, then sit around hoping someone else's prediction will come up wrong so you can attack them? What would you call him?

Pretty scummy behavior if you ask me.

Goatkick   Wed, 28 Sep 2011, 5:38am PDT   Share   Quote   Permalink   Like   Dislike     Comment 81

Why make a prediction here ? So I can be like u and argue I was right when I was wrong ? EX 2007-present

Wheres your clearing house statement showing your position ?
No google docs either
Seriously I'm not going to virtually spar with you .

Like every Lib when you have no point or facts u call someone a scumbag. It's useless

Goatkick   Wed, 28 Sep 2011, 5:39am PDT   Share   Quote   Permalink   Like   Dislike     Comment 82

Last word.

It's pointless for u to post again I got the last word be a man and dont reply

iwog   Wed, 28 Sep 2011, 5:42am PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 83

goatkick says

Why make a prediction here ? So I can be like u and argue I was right when I was wrong ? EX 2007-present

Obviously not, therefore I was correct. You don't want to make a prediction (because being wrong is too horrible) so you sit back and wait for other people to be wrong, then you come troll them.

Like I said, pretty pathetic.

¥   Wed, 28 Sep 2011, 5:42am PDT   Share   Quote   Permalink   Like   Dislike     Comment 84

LOL. The conservatives on this site are some of the lamest minds around.

Surely they can't be this stupid in real life.

Goatkick   Wed, 28 Sep 2011, 5:58am PDT   Share   Quote   Permalink   Like   Dislike     Comment 85

Bellingham Bob says

LOL. The conservatives on this site are some of the lamest minds around.

Surely they can't be this stupid in real life.

“Nessuna soluzione . . . nessun problema!„

My point exactly I know this is a California site
What's lame and why do u resort to name calling ? What's your point ? Thanks

Goatkick   Wed, 28 Sep 2011, 6:01am PDT   Share   Quote   Permalink   Like   Dislike     Comment 86

Iwog

I made a prediction here in 2007 and I was right but what's the point ? You made predictions and u were wrong but whats the point? You said u were long from 2007 - 2009 the DJIA and could actually been short and me long .

It's pointless I know you're a self proclaimed intellectual but believe me you have thin crispy skin. You would get ur head dunked in toilet on any trading floor / room /office

iwog   Wed, 28 Sep 2011, 6:04am PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 87

That's nice.

So how would you personally describe someone who's not willing to take a position, who's not even willing to even take a guess at the direction of the market, but sits back and flings insults at people who do?

Goatkick   Wed, 28 Sep 2011, 6:06am PDT   Share   Quote   Permalink   Like   Dislike     Comment 88

Pardon my grammar but the SPU's shit them selves at the close here.

My question was about premiums on Silver Eagles if Silver trades down into Iwogs targets.

Thanks

uomo_senza_nome   Wed, 28 Sep 2011, 6:07am PDT   Share   Quote   Permalink   Like   Dislike     Comment 89

EBGuy says

Not a huge deal, but IF the GLD trust becomes a heavy net seller, those still holding shares bear a greater percentage of the past expenses.

thanks ebguy! good point.

Goatkick   Wed, 28 Sep 2011, 6:10am PDT   Share   Quote   Permalink   Like   Dislike     Comment 90

Iwog

Argue with ur partner I'm just asking a simple question here.
If insulting someone who talks his book constantly is wrong I dont want to be right.
There is no proof ur short none what so ever and I was pointing out the nominal draw downs with the counter trend rally from Mondays low in Silver but ur such a virtual bully u took it personal.

Goatkick   Wed, 28 Sep 2011, 6:13am PDT   Share   Quote   Permalink   Like   Dislike     Comment 91

I'll hang up and listen for my answer.

Thanks gents.

iwog   Wed, 28 Sep 2011, 6:15am PDT   Share   Quote   Permalink   Like   Dislike (1)     Comment 92

goatkick says

Argue with ur partner I'm just asking a simple question here.

goatkick says

I look forward to rubbing salt into the 100% I'm certain calls here.

goatkick says

What you experts have day jobs ? Guess someone will show up when we head lower

goatkick says

Iwog no comments at all ? Dare I say you only talk ur book ?

goatkick says

I was getting my feelings hurt because you didn't respond to me that day.

goatkick says

You're such a whiny bitch. I'm beyond ur peer

Goatkick   Wed, 28 Sep 2011, 6:28am PDT   Share   Quote   Permalink   Like   Dislike     Comment 93

Iwog

You're scaring me >yes I think your a douche bag but get over it man.
You showed up when we headed lower just like I thought u would... Hey I made a prediction !!!

Patrick   Wed, 28 Sep 2011, 8:14am PDT   Share   Quote   Permalink   Like   Dislike     Comment 94

goatkick says

he who cant be named without a hissy fit.

Personal insult. Deleted.

Patrick   Wed, 28 Sep 2011, 8:16am PDT   Share   Quote   Permalink   Like   Dislike     Comment 95

goatkick says

You're such a whiny bitch

Your account is now disabled.

atst1138   Wed, 28 Sep 2011, 8:45am PDT   Share   Quote   Permalink   Like   Dislike     Comment 96

Thank you Patrick!

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