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Revisiting Silver

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By iwog   2012 Jul 2, 4:12am   ↑ like (3)   ↓ dislike (2)   60,355 views   266 comments   watch (0)   quote  

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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107   yup1     2012 Dec 1, 5:23am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

108   yup1     2012 Dec 1, 5:31am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

109   yup1     2012 Dec 1, 5:47am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

110   yup1     2012 Dec 1, 5:54am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

111   yup1     2012 Dec 1, 5:58am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

112   yup1     2012 Dec 1, 6:02am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

113   yup1     2012 Dec 1, 6:38am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

114   yup1     2012 Dec 1, 6:42am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

115   yup1     2012 Dec 1, 8:20am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

116   yup1     2012 Dec 1, 8:27am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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?

117   yup1     2012 Dec 1, 8:35am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

118   yup1     2012 Dec 2, 3:32am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

119   iwog   548/548 = 100% civil   2012 Dec 2, 8:03am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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

120   iwog   548/548 = 100% civil   2012 Dec 4, 4:06am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

121   Peter P   4/4 = 100% civil   2012 Dec 4, 9:17am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

My friend (much better trader) told me that silver and cotton are pretty much the most difficult things to trade.

Perhaps gold is easier.

122   Peter P   4/4 = 100% civil   2012 Dec 4, 9:31am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Did you do SLV Options or Options on Silver Futures? Or did you do OTC stuff?

123   Peter P   4/4 = 100% civil   2012 Dec 4, 12:59pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

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.

124   Dan8267   1101/1120 = 98% civil   2012 Dec 5, 12:24am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Iwog, are you turning into a phoenix?

125   iwog   548/548 = 100% civil   2012 Dec 5, 1:51am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Dan8267 says

Iwog, are you turning into a phoenix?

I'm not really sure. I woke up one morning and my wings were on fire.

126   iwog   548/548 = 100% civil   2012 Dec 5, 2:52am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

When I win the lottery today, I will certainly devote 10% of the net winnings to buying more silver and gold.

127   iwog   548/548 = 100% civil   2012 Dec 6, 9:33am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

underwaterman says

One day of trading loss for apple could buy all the worlds above ground supply of silver at 34 billion:

Or sell it.

128   Bellingham Bill   23/23 = 100% civil   2012 Dec 7, 5:01am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

underwaterman says

Investment demand increased 82 million ounces in 2012

just more future sellers, LOL

129   Bellingham Bill   23/23 = 100% civil   2012 Dec 7, 5:16am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

underwaterman says

Based on what evidence? All the evidence is that these are strong hands now holding silver and gold.

They can hold it in their strong hands all they want. Not worth a penny until they SELL it on, though.

130   Peter P   4/4 = 100% civil   2012 Dec 8, 7:01am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

But there is much paper gold and derivatives.

131   Peter P   4/4 = 100% civil   2012 Dec 8, 7:26am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Isn't it better to trade the current price actions then to predict?

132   Peter P   4/4 = 100% civil   2012 Dec 8, 7:45am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Still, gold prices can be manipulated easily because of the notional value of such derivative.

Especially if China and India own a lot of physical, don't you think there will be much interest in depressing gold price?

133   woppa     2012 Dec 8, 8:20am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

If I have the choice of investing in my tax deductible IRA or precious metals what do you think is best? Should I do both, should I put as much as I can in silver?

134   iwog   548/548 = 100% civil   2012 Dec 8, 8:24am  ↑ like (1)   ↓ dislike   quote   top   bottom   home   share  

Ask the hunt brothers.

135   Peter P   4/4 = 100% civil   2012 Dec 8, 8:33am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

underwaterman says

It doesn't matter what the short term manipulation is as long as you hold
physical and wait. China's buying alone sets a floor on the low price as well as
the $1700 cost to pull out of the ground.

Problem is, a bet is meaningful only if it is leveraged. But if it is leveraged than short-term volatility matters.

136   Peter P   4/4 = 100% civil   2012 Dec 8, 11:55am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Leverage was not the problem. The lesson was that you need to be careful if you become too successful. If you piss off the wrong people they will change the rules against you.

137   Peter P   4/4 = 100% civil   2012 Dec 8, 12:07pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

If they had stayed home they would have been fine too.

Leverage has its place. Just handle with care.

138   Peter P   4/4 = 100% civil   2012 Dec 8, 5:50pm  ↑ like (1)   ↓ dislike   quote   top   bottom   home   share  

I have a feeling currency collapses will occur elsewhere first. USD may temporarily spike.

Isn't it also important to understand the psychology behind silver traders? When you trade (or invest), you are really trading other traders.

139   B.A.C.A.H.     2012 Dec 9, 1:50am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

underwaterman says

Here is a reason not to listen to the idiot "respected" financial journals and their puppets

If someone is an "expert", I'd be inclined to do the opposite of what s/he suggests. Not just in finance. In almost everything.

140   woppa     2012 Dec 9, 1:33pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

I decided to watch the 20000$ gold video. I find it funny that while the video was starting I felt like I was watching one of those corny infomercials (i.e. Kiyosaki and the other douche, I cant remember his name). Just then he says he wrote a book for Kiyosaki...kinda erked me.

141   everything     2012 Dec 10, 11:41am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Wow, is gold ever going to crash hard when these big hoarders (these days everyone's a gold bug) finally stop what they are doing, though probably not for a few years yet. That is such artificial demand when a country can use a printing press to buy gold, then what good is all that gold? At least some countries know enough, or allow the public to use it in trade (Dinar). It's sad to make the little countries suffer as the big countries play their game of who can create the most inflation and in the case of the China, then hope to establish the dominate currency by trying to ultimately establish or simulate a gold standard. (never happening) Everywhere I turn, people are saying gold and silver is where it's at, the only real reason being is because the jig is up that world governments are the biggest baddest gold hoarders/stackers out of them all. This has ended up creating a PM commodity bubble of proportions never seen or heard of, especially with interest rates this low. I'm just glad I figured this out before all my cash eventually flowed into physical PM. As long as the dollar is the reserve currency the dollar will remain strong. If I lived in some of these smaller countries that have such terrible inflation things would be different and I would have significant PM holdings. For now, I'm keeping my PM holdings at about 10% of my investment portfolio. Still, am still a PM investor, when silver drops below $30 I add to the stack, averaging in about 100 oz. physical yearly.

142   everything     2012 Dec 12, 11:19pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Central banks are leasing gold into the market? When you lease the gold it disappears? I think that gold is long gone? I don't think their is any left in the system? All answers from Sprott answered in the form of questions! Sprott did not look into his camera more than a couple of times during the whole interview, also his arms are crossed much of the time. He says silver is going to be $200 and gold $3000 within two years, sure maybe if the interest rates keep going down. Since interest rates are bottomed so has silver and gold topped, neither are going anywhere the last two years.

It's probably more likely the central banks or governments will use the gold reserves to buy back the over printed currencies like a stock buyback program corporations do when they become to diluted. If they sold it once, they'll sell it again.

Truth is the gold has gone nowhere, it's only exchanged hands, we don't use hardly any in production, it's all sitting in vaults, safe boxes, safes, hoarded, jewelery, and even buried.
Also, if it's leased that just means it's sitting in someone else's vault so someone can use it as an ETF. IF interest rates go back up those investors will to some exent flee the commodity bubble for the safety of CD's for instance.

I buy silver because I believe that one day we will have a green revolution and then it will shine, and secondly a store of value to exchange for the devaluing dollars. I'm on board, I just bought 30 oz. of silver but I'm still saving a shitpile of dollars for any pullback and buying opportunities.

143   woppa     2012 Dec 15, 9:36am  ↑ like   ↓ dislike   quote   top   bottom   home   share  

Can you explain why buying eagles is better than bars and rounds?

144   woppa     2012 Dec 15, 11:19am  ↑ like   ↓ dislike (1)   quote   top   bottom   home   share  

All the same goes for gold as well I assume?

145   Peter P   4/4 = 100% civil   2012 Dec 15, 12:19pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

I like gold more than silver. The storage cost for physical silver is way too high.

146   Peter P   4/4 = 100% civil   2012 Dec 15, 12:33pm  ↑ like   ↓ dislike   quote   top   bottom   home   share  

What about a combination of physical gold, paper gold, and silver derivatives? This way, you can have the safety of the metal and the potential growth of the silver/gold ratio.

Not investment advice.

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