WatchAlthough it didn't crash as quickly as I expected, the chart is pure bubble crash at this point.
1. well defined parabolic peak
2. well defined bull trap
3. lower highs, lower lows
4. bear market trend that isn't anywhere close to capitulation
I wouldn't touch the stuff under any circumstances unless it drops near $10 an ounce.
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Sold mine in summer of '11, pretty glad I did.
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Iwog, are you getting into any healthcare or insurer stocks?
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FortWayne says
I own Bristol Meyers for the dividend, but that's about it. I have a few bread and butter dividend stocks, my new positions in California Munis, and real estate.
Thinking about a return to long positions in oil, but not yet.
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Shrewsbury, MA
You could buy put options on Silver....
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AJ1201 says
If silver approaches $30 again, I might write some call options, but although I hit the top almost perfectly, I was wrong on how fast the bubble would deflate and put options have a nasty habit of expiring.
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So what's your thoughts on gold now?
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New renter says
Same as silver. Investors are saturated with both and the only way gold is going to move much higher is if a central bank starts buying up huge amounts of it.
Furthermore production is ramping up big time and supply is going to start overwhelming demand no matter what happens.
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Iwog,
I beg to differ. I tend to believe silver will have a nice bounce to the up side (25%-30% up) when it hit $20. If it broke $20, it would likely accelerate to $10 rather quickly in my opinion.
I thought you own SNY too, but I guess that's no longer the case.
If you like bottom fishing, this is where you accumulate CIM. It pays 15% dividend annually. I believe the dividend cut for this stock is over. Although $2.25 was definitely a better buy, $2.40 is not that far off. I was too busy working and didn't have time to look at it till now. :(
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E-man says
Sorry I forgot about SNY. I'm still holding and happy.
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Man that was some drop. I guess eventually excitement ends when too many think that fundamentals are failing.
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Not short anymore but I'm selling SLV calls every week. I'm getting kind of addicted to writing options so hopefully I don't get stuck with a bear market rally.
I'm still predicting silver will continue dropping until the 10-15 range.
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Skokie, IL
I am and have been selling put options on silver. And the price of silver is near a bottom here and certainly ain't headed anywhere lower in any hurry. I have been bullish on gold and silver since 2002 and I mighty glad about it.
We can know this is near a bottom because of the price of the mining stocks. The miners are not doing well at these prices.
So if these were some kind of bubble silver prices the miners would be making a fortune.
Silver is one of the few good investments out there. Natural gas might also still be good.
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It's options expiration day! =)
I hope you didn't get whacked on those put options. The ones I wrote are expiring worthless today so win one for the duckie.
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I doubt silver will ever go below $25 again, paper money is just to dirt cheap and it's piling up fast. Interest rates would have to go up considerably for the money piles to dry up. I do agree with you regarding the business cycle ramping up, if they go in ten year cycles we've got quite a number of years to go before the prices relax, the glut comes, and the cycle goes bust. Likely they will collude like the housing market, and put it off as long as possible, then when it comes, it should be fast and furious. I like physical vs. paper but have learned to only buy during recessions.
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Good trade Iwog
It sure took it's sweet time and gave anyone who wanted to short it their price for the last several weeks no chasing involved.
Looks like the market is pricing in a Romney victory and his re election in 2016.. But I could be wrong :P
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Goatkick says
Same here. Congrats on the trade.
Goatkick says
Goatkick, I got a good laugh out of that knowing what Iwog thinks about the election's outcome.
Thanks for the laugh though.
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E-man says
Hey ur welcome !
I'm pretty sure Iwog got a chuckle also.
Trade smart guys !
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Goatkick says
I see. So that's why it's down.
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E-man says
That's disgusting! You should be ashamed of yourself!
http://www.urbandictionary.com/define.php?term=cim
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Scagnetti says
LOL! Not sure where your mind was at today, but that's some tight ass you got there. We were talking about dividend stocks, and you came up with this?
Thanks for the laugh though.
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exponential phase yet so don't expect prices to go back to $10/oz. You should expect prices of $120-$3000/oz going forward
Three thousand dollars!?
That's roughly 500 hours of a minimum wage laborer's work.
I don't think human labor has ever been that cheap, denominated in a precious metal, in all of human history. That would work out to two tenths of a cent per hour back when an ounce of silver was a silver dollar -- and a day at Henry FOrd's factory got you five such ounces. Not even on slave plantations; not even in prisons did anyone ever work that cheaply.
Are you pricing in a hyperinflationary event in the US that destroys the dollar utterly and sends every saver to financial ruin?
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underwaterman says
While I agree (and hope) that money will eventually be reset to some kind of non-fiat standard, I wouldn't be so sure that it'll be based solely on gold. The money supply has expanded so far in excess of the gold supply that I suspect that ultimately there will be a multi-metallic, or even metal-plus-other-real-property (oil? land?) standard that encompasses more of the real wealth of the world.
Historically that sounds more realistic than today's ratio. 16 to 1 was William Jennings Bryan's rallying cry, wasn't it?
If they take (money supply) / (gold supply) when reverting to the Old Dollar, that will happen, but the question is whether there will be a stage of hyperinflation to get us there. I sincerely hope not.
If people were paying a 100% premium for eagles, they were being foolish. If the dollar collapses, an ounce of silver with a .999 Fine stamp on it from a reputable assayer will be just as good as one with the US government's engravings on it. I'll gladly take two boring rectangular bars over one round coin!
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As John Embry says, people are going to be shocked at howfastsilver ascendsinprice since there is no supply and everyone will want eagles. In 2008, when the1stfinancial criseshit, silver was $15/oz but silver eagles went for $30 (a $15 premium). The $3000 number isnotas extreme as the ChrisDuane gives inhisSonsof theLiberty videosandwork.
This is bullshit. Back when Ag was 12-14$ per ounce (four years ago), the premium for eagles wasn't much over 1$
The PM ship has sailed. Sure, prices may buoy up and down some, but people buying at these levels won't realize any significant gains, especially when you factor in total (opportunity) cost of the trade
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How about investing in driveway gravel? Maybe we could start bringing our " Unwanted" gravel to dealers and make big buxs. I heard about this on some right-wing radio show. Buy gravel now to save for doomsday. That's right... buy gravel now!!!!
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Over in the middle east gravel is a commodity and hard to come by. When our military is done with a road they scrape that gravel back up and move it again to where they need it.
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Reading these ramblings makes my head spin
You are going to take a bath relative to your expectations for these PMs.
this ship has sailed
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The cost of taking silver out of the ground is too low and is in the $10-15 per ounce range. Production will increase until demand is saturated and there will be significant overshoot to the down side as is always the case.
Right now silver production is well in excess of industrial demand and the balance is being stored by investors. The ONLY road to new highs in silver is accelerated demand by investors. Not flat line increase in demand, accelerating demand.
This is a dynamic market with industrial use far exceeding investor demand. People who buy silver for investment purposes are the small fry. They are insignificant to the larger market. For example industrial consumption of silver by the electronics and medical industries were 500 million ounces in 2010. ALL of those pretty coins minted for collectors and investors totaled 100 million ounces. Even jewelry use was larger at 167 million.
The bottom line is that unlike gold, the silver market cares much more about how many iphones get produced than it does about hyperinflation. A 20% decrease in industrial demand could DESTROY the silver market and swamp smaller investment demand with a flood of excess and unused metal.
I was a big believer in silver and gold and for years I touted them on this board. I'm not so sure about gold, but I am continuing to short silver through writing call options and I can't imagine another run to $50 like happened last year.
Much more likely we go under $20.
http://www.silverinstitute.org/site/supply-demand/
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underwaterman says
I'm sorry but I've looked at this issue extensively and this is simply incorrect. Silver would continue to be produced even if it was $4 an ounce because it is the byproduct of so many other mining activities. True costs for silver are similar to true costs of sawdust which is used to construct lumber and the true cost of waste oil which is used for biofuel.
In fact if there wasn't a market for it, silver would have to be discarded after being separated from copper, tin, and gold.
I want to be clear about something. I've been a silver bug since I was 14 years old. I used to buy and sell silver coins in middle school. From 2002 to 2011 I had 10,000 ounces of physical silver stored in a vault and countless shares of SLV. My entire life has been saturated with the love of this metal. I know all there is to know about it. I've read every scrap of data on it.
However you cannot fight a market where production is exceeding consumption by 20%. Investors do not have limitless appetite for a non-performing hard asset, ESPECIALLY when another hard asset like real property earns and income and is at historically low levels.
I've done extremely well buying silver and extremely well selling it too. There is no road for silver to go back to $50 an ounce. None.
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From your chart, mine production is 761.6 (2011) vs 594.5 (2002) which is a 28% increase for 10 years and is a 2.8% yearly increase only. In 10 years, the industry has only been able to increase production 2.8%/year even given the technological advances. This is something Eric Sprott keeps pointing out.
"Compound interest is the eighth wonder of the world. He who understands this, earns it,,,,he who doesn't,,,pays it"
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underwaterman says
It comes from "net implied investment" which is nothing more than "this silver isn't being consumed so someone somewhere is hoarding it"
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underwaterman says
I had an extremely good reason to buy in 2002. I had money then.
I was broke during the 1990's. My silver purchases in the late 1990s were limited to a few silver rounds or eagles twice a year at a coin show.
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underwater, i skimmed over most of your posts, read word for word some of them.
I remember in the late 1970's, my Safety Ed/classroom driver Ed teacher in public high school in San Jose telling us kids he was hoarding silver so he could retire early. He was not my driving instructor, but was for some of my friends. They told about him having the place on his route, where he could get out and buy some more silver during the lesson.
Back in the classroom where he would discuss the merits of silver to the rest of us, well his apologetics sounds a lot like yours. "Good luck", because luck is what it will be if you do well on it.
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Madison, WI
I hang on a couple of silver forums myself. Some of these guys don't just buy a couple ounces or even a hundred at a time, they buy a thousand. I have never seen such investor demand for silver. Imagine the demand of the rich, probably creating underground vaults. I even know of one person, not rich but who had to build vault in their basements for the silver inheritance.
I'm not a metals expert but I think we are in a bull trap. I'm seeing silver miners start back up, same for gold miners, even the small operations, it's profitable now. My only advice for underwaterman is wait until the next recession hits and maybe then you'll agree a little bit more with Iwog, keep your dry powder ready for it.
That's what I'm waiting for. Silver is the patient man's game. That is why I started buying in 10-20 oz. chunks/dips learning more and more as years go by.
Some of these silver estimates are based on declines in fossil fuels, well, we've still got enough oil to fry ourselves, look at the tar sands. We keep coming up with better technology to get to the stuff. Yes, we've taken the easiest stuff first but their is plenty more where that came from.
Only higher fossil fuel costs, green revolution, or solar parring with electric costs will send silver prices skyrocketing, but that's just what I think.
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Short term (now-3 years):
Silver has consolidated for a year and a half. If you look at the 10 year chart 1 1/2 - 2 1/2 years is pretty much par before the next move up. This crisis is an order of magnitude bigger than the 70's crisis, yet silver hasn't come close to the inflation adjusted high...I don't understand why anyone would think it's over. Even if the fundamentals are bad it should still rise do to bubble greed mentality.
Medium term (5-10 years):
Gold 5k-10k? Silver $300-$1000?
Long term:
Pure silver has the highest electrical and thermal conductivity of all metals. Silver possesses the lowest contact resistance of all metals. Add to that its strong antibacterial properties.
If you understand anything about peak oil you understand how important silver is going to be. My biggest worry would be silver being declared a strategic metal by the government or military.
If Central Banks lose control all bets are off. I would hedge with something you think is good during a greatest depression, and The Long Emergency. Also one should hedge hyperinflation/WWIII/'Free Gold' by holding some gold past the expected bubble peak. If gold goes to 5k-10k it will likely settle at 2.5k-5k long term, so still a great buy.
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everything says
Several bull traps. The chart is unusual, that I admit. However a series of lower highs and lower lows is NEVER an indication of a healthy bull market.
The failure of silver to exceed the previous peak should be a huge warning sign.
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-We are just now entering the timing band for silver to break the previous peak. Since it had the largest run up and correction so far obviously it wasn't going to break out any earlier than the 3 previous moves and corrections (04,06,08)
-Gold made a series of lower highs and lower lows in 2008 and then went on to exceed the previous top by 85%
-Benny still had more tricks up his sleeves like nominal GDP targeting
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Underwaterman: Your conspiracy theories are somewhat deluding reality.
The business model goes in ten year cycles, I would say that business cycle is ramping up, I see silver production is still peaking, but so is investor demand which is pushing between 15-20%! I like to compare the silver chart to the gasoline chart, they are quite similar, but for me, gas is easier to understand. Still, if you think silver is going up when the next recession hits then good for you, buy more now, but I'm waiting until people are desperate for cash to back my truck up.
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I dunno about what the nominal dollar price for silver oughta be right now. But for the extreme inflation scenario it may be a safer bet for joe sixpax like me than gold.
Besides the 1934 precedent with the gold for Americans, there's other problems with it if the price is too high. Like, I could see a scenario for any legal sale of gold having a 1099 form being issued for every trade. Or, a sophisticated counterfeiting with plating of tungsten pieces. Sure, a bullion dealer may have the resources to authenticate it but not a Joe Sixpak like me. And, anything physical with a high value density per milligram becomes a theft/robbery target, like on your way from your hidden stash to the place where you trade it for cash.
Probably silver is the "safer" one.
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Silver costs around $10 to take out of the ground. As long as the price remains high, silver production will continue to increase until there's a glut. It's the natural progression of any market.
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iwog says
Could be. I don't doubt it because I dunno. The overall cost basis of my position which I haven't added to since early 2007 is something like around $7-8.
My point is, if I'z gonna be a paranoid inflationist Joe Sixpack then physical silver might be safer to work with than physical gold.