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Revisiting Silver

By iwog   Follow   Mon, 2 Jul 2012, 11:12am   25,949 views   292 comments
In Lafayette CA 94549   Watch (1)   Share   Quote   Permalink   Like (3)   Dislike (1)  

Although 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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1. E-man Follow Befriend (31) 34 threads 2,545 comments San Jose, CA Premium

   93   7:25pm Wed 28 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike   Underwaterman & Dunnross, Looks like you guys did extensive research on precious metal. We will have to agree to disagree. There's more than one way to invest & make money. I hope you guys will make money as well as us housing investors. See you guys at the other end of the tunnel, or shall I say see you at the top? Cheers.

2. uomo_senza_nome Follow Befriend (13) 787 threads 1,542 comments

   94   8:10am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says James Turk the founder of Goldmoney, author of one of the best books on gold and gold history, and gold banker for Dubai for 20 years? So what? Attacking the source instead of the content I posted is called ad hominem. Of course you can choose to ignore me or the facts. Cheers

3. E-man Follow Befriend (31) 34 threads 2,545 comments San Jose, CA Premium

   95   8:38am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says “We are headed for over $3,000 if gold remains in the current logarithmic channel that it’s been in since the beginning of the bull market in gold. However, there is a good probability that when gold bottomed at $680, a new, higher rising channel began. If that is true, and I think it is, we should approximate $4,500 sometime in early 2014 ... “I (also) think, like I wrote the other day (on KWN) that silver is headed for $100 at a minimum. The reality is this is ... a 3rd of a 3rd (wave), and this should be a really big move. It’s all there, it’s built-in underwaterman, Although gold has the potential to go up to $4,500 and silver has the potential to go up to $100, they don't interest me as much because I can't leverage it with OPM. I have a couple of properties where I leveraged 20:1 and the other one is 100% leveraged. From a ROI standpoint, one of them has return way north of 1000% in 3 short years, and the ROI on the 100% leveraged property is infinity. Both of these properties are currently minting money. After some refinancing next year, more properties will be 100%+ leveraged so I'm investing with OPM. I don't think I can do that with PMs. With that said, the real estate investment ship has pretty much left the dock for me. Looks like I will have some money to invest into other things next year. I'm contemplating on hedging against amargedeon scenario so I will have 10% of my networth in physical gold. However, here is the concern. What's the likelihood of Uncle Sam confiscating gold if shit hit the fan? They did it during the great depression. What makes you think they won't do it again? I guess the reason you're investing in gold is because you're betting on hyperinflation in the future? As you know, the Fed is still pumping a lot of money into the economy to generate inflation at the moment. I guess you don't think the Fed will have the ability to mop up the excess liquidity once we recovered from this Great Recession? I guess my question for you is why precious metals? Why now? Apparently you believe it's not too late to jump on this bandwagon. To me, they might retest their recent high, but that's it. Looking forward to your response. Dunnoss, you're welcome to respond because you're also a goldbug.

4. woppa Follow Befriend (3) 2 threads 178 comments Bronx, NY

   96   10:31am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   Guns and ammo will be more valuable then silver and gold in a currency breakdown. Pile guns and ammo.

5. iwog Follow Befriend (48) 273 threads 12,494 comments 47 male Lafayette, CA Premium

   97   11:58am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says So Iwog, when the discussion started 6 months ago, silver was sitting at 27.10 the week of July 6th, 2012. It is now sitting at 34.10, a 26% gain 5 months later as of today from the time you wrote off silver as over in a classic bull trap. What do you think is causing the price of silver to gain 26% since July given the supply is 4.6% increase this year? It certainly seems to be going opposite your prediction. I was using platinum in modeling the silver bubble. Used for predicting the crash from $44 to $26, it was absolutely stunningly perfect, almost to the day. Unfortunately for my prediction, the silver chart diverged from platinum which was probably caused by 2 things: - Silver being widely held with a much larger market and relentless marketing. - Silver ETFs. Here's the 1980 bubble. I would suggest shaving the top $!5 off the top because it was due entirely to the Hunts attempting to corner the market. It shows several secondary peaks however each one successively lower. I don't discount another charge at $50, however falling well short of $50 will convince a lot of the die hards that the jig is up.

6. woppa Follow Befriend (3) 2 threads 178 comments Bronx, NY

   98   2:08pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   I've actually given this a great deal of thought. Perhaps it's for another thread, but lots of land , a vegetable garden, some animals, solar panels, wind turbines, batteries to harness the energy, a couple wells, a house that can by heated by wood, all things on my list. It all means nothing if you don't have the guns and ammo, the skill and the will to use it if you must. You'd just be setting up a nice life for the next person who does have that skill and will.

7. NuttBoxer Follow Befriend (1) 26 threads 188 comments Chula Vista, CA

   99   3:04pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   iwog says I was using platinum in modeling the silver bubble. Used for predicting the crash from $44 to $26, it was absolutely stunningly perfect, almost to the day. Unfortunately for my prediction, the silver chart diverged from platinum which was probably caused by 2 things: - Silver being widely held with a much larger market and relentless marketing. - Silver ETFs. Here's the 1980 bubble. I would suggest shaving the top $!5 off the top because it was due entirely to the Hunts attempting to corner the market. It shows several secondary peaks however each one successively lower. I don't discount another charge at $50, however falling well short of $50 will convince a lot of the die hards that the jig is up. The 1980's bubble hinged on two brothers attempting to corner the market, we have nothing of the sort going on here. Your chart at the beginning is at least 5 years too short. Silver has been the primary trend for the past 12 years, and will continue for another 3-8(my money's on 8). You need to think longer term investment. As long as our central bank continues to inflate, gold and silver will continue to rise.

8. iwog Follow Befriend (48) 273 threads 12,494 comments 47 male Lafayette, CA Premium

   100   5:27pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   I'm open to the possibility that silver has one more run up before the final crash, but there's no question in my mind that I'd rather have the bulk of my money in real estate right now. Not only do I see 100% appreciation over the next decade, but 70% leverage and dividends to boot. I still think that once people get back to work and hyperinflation simply doesn't show up, people are going to bail out of metals. You can only hold a non-performing asset for so long. It was all great while silver and gold made double digit gains every year, but things have flattened out now.

9. Bellingham Bill Follow Befriend 29 threads 1,476 comments Bellingham, WA Premium

   101   6:05pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   to break real estate the middle class has to be broken. a la the 1930s. The System is biased against letting this happen, unless the blame can be put onto The Other Guys. . . http://research.stlouisfed.org/fred2/series/CUUR0000SEHA

10. woppa Follow Befriend (3) 2 threads 178 comments Bronx, NY

    102   6:36pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   Americans are little bitches, we could be at 50% unemployment and we'll all sit there with our tails between our legs. If you really believe so surely in hyperinflation the only reasonably intelligent course is to start a homestead at least 4 or 5 hours away from any major city, learn to grow food and raise animals, and learn to shoot guns and horde munitions. Hopefully you would have other various skills required to stay self sufficient (maintaining you're electric car). Only then would I begin buying gold and silver. That's just me.

11. woppa Follow Befriend (3) 2 threads 178 comments Bronx, NY

    103   6:49pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   If we experience deflation and then hyperinflation, to the point where a loaf of bread costs a million dollars, then I really have to believe people would be killing each other to survive. I am not a genius on this subject, I have only done enough research to have a very basic understanding of what the theories and scenarios are that some people believe will come true. I also read a blog called fofoa, although I admit a lot of what he writes is well over my head. He believes that silver will be virtually worthless and only gold can be currency. I am not sure why, I have to re-read.

12. Bellingham Bill Follow Befriend 29 threads 1,476 comments Bellingham, WA Premium

    104   6:54pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says I read recently that once the debt to GDP reaches 60% and we are sitting at 100%, the country always defaults because the interest payments can't be paid interest paid to ourselves does not leave our economy. Debt owned by foreigners is at 35% currently.

13. Bellingham Bill Follow Befriend 29 threads 1,476 comments Bellingham, WA Premium

    105   8:51pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says hyperinflation will not happen if we owe only 65% to ourselves Hyperinflation happens when spenders -- the "middle class" -- have more money than there are necessities available on the market to be purchased, and the price of necessities just soaks up all the extra money, and the monetary authorities just keep adding money to keep the insanity going . . . Our economy has a massive surplus of "necessities" -- well, food at least. Fuel is arguable here but at least the natural gas supply glut is saving our bacon to some extent: http://research.stlouisfed.org/fred2/graph/?g=dhb shows that natgas is at 1995 levels in real terms. (rising gasoline costs are just making us economize more on gasoline usage, and there are still much more savings here to be had, though rising diesel costs will push up producer costs on everything, but the embedded fuel cost in products is not that significant, really) http://research.stlouisfed.org/fred2/series/FGTCMDODNS is federal government debt, at it does look scary. But adjusted by the interest rate, we get: http://research.stlouisfed.org/fred2/graph/?g=dhc and that shows how our debt service costs aren't any higher than 1990! Interest being paid to domestic debt holders is just basically giving them a tax break, dig?

14. B.A.C.A.H. Follow Befriend (6) 5 threads 2,359 comments

    106   9:33pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says Some say gold will be used for international settlement and silver for domestic. That's how it was for thirty years, 1934 - 1964.

15. E-man Follow Befriend (31) 34 threads 2,545 comments San Jose, CA Premium

    107   11:22pm Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike   Bellingham Bill says interest paid to ourselves does not leave our economy. Underwaterman, Thanks for your posts and links. For the reasons Bill & iwog pointed out above, it's so hard for me to put any of my money into buying PMs. If I were to buy, it would be just a hedge. The solution to our problem is what Bill wrote above. I don't see hyperinflation in the near future.

16. iwog Follow Befriend (48) 273 threads 12,494 comments 47 male Lafayette, CA Premium

    108   12:14pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   You realize that "very close" to an all time (2008) high means 0% inflation over 4 years right? Commodities are very volatile but rarely affect the end product price by more than a few cents. That is because in our economy, the cost of the food in a cereal box is actually a very minor component. You can see this the most in Coke and other soft drinks. Do you really think sugar water costs a buck? ; )

17. yup1 Follow Befriend 10 threads 379 comments

    109   12:52pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   Metal commodities are in a bubble. http://www.indexmundi.com/commodities/?commodity=metals-price-index&months=360

18. yup1 Follow Befriend 10 threads 379 comments

    110   12:52pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   Silver is actually worse http://www.indexmundi.com/commodities/?commodity=silver&months=360

19. yup1 Follow Befriend 10 threads 379 comments

    111   1:09pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says Yup, how do these links prove metals or silver is in a "bubble"? I am sorry they don't "prove" anything. But your chart does not "prove " anything either.

20. yup1 Follow Befriend 10 threads 379 comments

    112   1:23pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   Silver peaked in April 2011 and has been falling ever since. The chart for silver from April 2011 until now is terrible if you are bullish. Lower highs and lower lows. The chart I linked, a 30 year chart, shows the characterists of a bubble. You can be in denial if you want to. Silver and gold as money. As soon as I start to see it being easily carried, easily exchanged for goods and services, and not easily counterfeited, it will be money. None of those things are going to happen in the near future. There is not enough of it to go back to coining it. It is completely unrealistic to believe that we are going to go from a fiat currency/credit based system to one backed by precious or in the case of silver semi precious metals. If we tried to go back to a gold and silver backed monetary system asset prices would plummet, because they are all based on the amount of credit money available in the system.

21. yup1 Follow Befriend 10 threads 379 comments

    113   1:31pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   http://www.indexmundi.com/commodities/?commodity=silver&months=120 A 10 year chart for silver 631% return, that my friend is a bubble. Notice the distinct down trend from April 2011, that my friend is a bubble bursting.

22. yup1 Follow Befriend 10 threads 379 comments

    114   1:47pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says Yes. That is exactly what what I'm saying. You got it. Without money printing and QEs assets go back to their non-inflated value determined by the market with out price inflation. Including Gold and Silver.

23. yup1 Follow Befriend 10 threads 379 comments

    115   1:54pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   What I think has been missed by some is that average Joe has seen wages drop, and prices for things he needs every day go up, his 401k is a 201k and his biggest investment, housing, is also a bust. In my view inflation cannot stick without wage inflation. We now have a surplus in labor and there will be no wage inflation. In fact there has been wage deflation. As the credit cycle bust continues ALL asset prices (accept for treasuries) will be heading lower. Cash will be king. Deflation will take hold. We will be just like Japan. Bernanke's attempts at reflating the system have failed because he failed to reflate jobs, wages, housing.

24. yup1 Follow Befriend 10 threads 379 comments

    116   1:58pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says Not from what I've read and the way deflation works. Gold and silver are the money, not commodities. They preserve your value in a deflation. When you set the new currency to ounces of gold based on the old money supply gold and silver have preserved their value. They are priced in credit money are they not. If the credit money is contracting their prices will contract. You are hoping that we go from a fiat system to a gold/silver backed system, but you do not consider that the very system will be destroyed. Mass bankruptcies. Everyone with any borrowed money wiped out. Gold and silver will be bought with cold hard cash for much cheaper. Cash is king in deflation.

25. yup1 Follow Befriend 10 threads 379 comments

    117   2:02pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   One caveat, the treasury does not go all Zimbabwe and actually start printing the money. If they start printing, and I mean they are printing 1000 bills and 10000 bills and releasing the currency to the public than higher inflation will happen, but wage inflation will happen too.

26. yup1 Follow Befriend 10 threads 379 comments

    118   2:38pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says I'll explain it to you from a simplified example. You buy 100k of gold today or you buy 100k worth of Apple stock. The currency collapses and resets to gold and now like the great depression apple stock is worth 10k (90% deflation) but you still have 100k in gold if gold is reset to the new currency at 100%. Most other assets have decreased in value relative and priced in terms of gold. If you believe that anyone will accept $1 for each $10 of cold hard cash that they currently hold. I do not believe that would happen. Cash will be exchanged one for one. If gold is backing the "new currency" you will still have the same amount of cash to buy the same amount of gold. Ah but during the collapse, gold will get crushed along with all other assets, but cash it will maintain its value. There are only 1.2 Trillion of printed US Dollars in circulation. That is an item that is actually scarce.

27. yup1 Follow Befriend 10 threads 379 comments

    119   2:42pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   yup1 says but cash it will maintain its value. Actually cash will increase in value as it can buy more of the same items for less.

28. yup1 Follow Befriend 10 threads 379 comments

    120   4:20pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says Is AAPL (apple) in a bubble. Apple has increasing earnings and increasing profits. Maasively increasing no less. What has silver done to increase its earnings? Nothing it has a bunch of speculative buyers driving up the price and bailing when it starts to turn. Apple of course has some of the same but at least it pays a dividend, has earnings, and is very profitable.

29. yup1 Follow Befriend 10 threads 379 comments

    121   4:27pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000 I believe that this legislation is one of the primary drivers to the commodities bubbles. I believe under deflation all asset prices deflate with the exception of treasuries. I believe the commodity bubble will eventually deflate/burst and that it has already begun. Wages flat to lower means demand destruction as commodity prices went up. I see no compelling reason for wage gains in the near to medium term. I see deflation. http://www.indexmundi.com/commodities/?commodity=iron-ore&months=120 So is this one a bubble?

30. yup1 Follow Befriend 10 threads 379 comments

    122   4:35pm Sat 1 Dec 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says Notice the 26% increase in the last 5 months in the 10 year silver chart. That my friend is an uptrend continuing not a bubble bursting. We can both cherry pick charts. Put up a chart from the silver top to today. It is ugly, and you know it is ugly.

31. yup1 Follow Befriend 10 threads 379 comments

    123   11:32am Sun 2 Dec 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says When it breaks thru 37.50 resistence, we will start to see the 3rd phase of the silver bull market begin hopefully. If. And IF it breaks through 26.50 we will continue the 18 month bear market trend. 32% off its high and 26% off its low. Could go either way. If there is a recession, which is already underway in Europe, in my opinion it will break down below 26.50.

32. iwog Follow Befriend (48) 273 threads 12,494 comments 47 male Lafayette, CA Premium

    124   4:03pm Sun 2 Dec 2012   Share   Quote   Permalink   Like   Dislike   I hate to tell you this, but governments have a VERY bad habit of selling at the bottom and buying at the top. The United States liquidated the bulk of its strategic sliver stockpile at $4 an ounce. Britain sold most of its gold stockpile in 1999. http://www.dailymail.co.uk/news/article-2118319/Budget-2012-How-lost-9BILLION-Gordon-Brown-selling-gold-cheap.html

33. E-man Follow Befriend (31) 34 threads 2,545 comments San Jose, CA Premium

    125   11:02am Tue 4 Dec 2012   Share   Quote   Permalink   Like   Dislike   Underwaterman, Fair point that silver has broken above the down trend line and has been trading in a bounded range. Here is my question for you. Will you sell your silver and get out if silver breaks below $26/oz? How about adding to your position if it gets above $37.50?

34. iwog Follow Befriend (48) 273 threads 12,494 comments 47 male Lafayette, CA Premium

    126   12:06pm Tue 4 Dec 2012   Share   Quote   Permalink   Like   Dislike   Every year the world above ground supply of mined silver increases. It is growing faster than the population. Regardless of stable monetary policy, (or lack of it) there will be a point where there is too much silver and not enough buyers at current prices. In 2000 when the net world silver supply was decreasing every year, time was on the side of the silver investor. Time is not on your side anymore, time is on the side of the silver shorts.

35. E-man Follow Befriend (31) 34 threads 2,545 comments San Jose, CA Premium

    127   4:52pm Tue 4 Dec 2012   Share   Quote   Permalink   Like   Dislike   Underwaterman, The reason I asked because you posted that chart, but apparently that wasn't the case. I still cannot convince myself to buy precious metals based on my research so I'll stick with the USD and real estate. I know I might get wiped out holding these two items, but that's my bet. Looks like you did tons of research and are comfortable with your silver position. I wish you the best of luck and hope it will work out for you. Cheers.

36. E-man Follow Befriend (31) 34 threads 2,545 comments San Jose, CA Premium

    128   4:59pm Tue 4 Dec 2012   Share   Quote   Permalink   Like   Dislike   Let me add another point. The timing of buying and selling these are very critical. If you bought precious metals (PM) 12 years ago and cashed out 2 years ago to buy real estate, you're freaking golden. PM has been consolidating for 1.5 years while my real estate holdings have appreciated 30% in the last year. That's a lot of PM that I can buy with my real estate gain. However, had I sold my real estate in 2006 and bought PM then, now buy back real estate, I would be golden. My point is, timing is very very important. :)

37. Peter P Follow Befriend (4) 117 threads 17,655 comments Premium

    129   5:17pm Tue 4 Dec 2012   Share   Quote   Permalink   Like   Dislike   My friend (much better trader) told me that silver and cotton are pretty much the most difficult things to trade. Perhaps gold is easier.

38. Peter P Follow Befriend (4) 117 threads 17,655 comments Premium

    130   5:31pm Tue 4 Dec 2012   Share   Quote   Permalink   Like   Dislike   Did you do SLV Options or Options on Silver Futures? Or did you do OTC stuff?

39. Peter P Follow Befriend (4) 117 threads 17,655 comments Premium

    131   8:59pm Tue 4 Dec 2012   Share   Quote   Permalink   Like   Dislike   underwaterman says For investing with a longer term horizon, dollar cost averaging in over years reduces the risk considerably. Only if you are CERTAIN that the time-series will end higher. I am not sure about that. Not for stock indices over a 30-year horizon. I absolutely do not use any martingale-style money management system. underwaterman says I saw a chart awhile ago that someone put together that invested via the gold:silver ratio. When the ratio hit 30 go all gold, when it reached 50 go all silver. The chart outperformed everything including gold and silver individually. Yes. Spreading can work sometime. But co-integration does fail occasionally. With leverage, it can produce bad drawdowns and you may have to stop at the worse moment.

40. Dan8267 Follow Befriend (16) 761 threads 7,688 comments Boca Raton, FL Premium

    132   8:24am Wed 5 Dec 2012   Share   Quote   Permalink   Like   Dislike   Iwog, are you turning into a phoenix?

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