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Revisiting Silver

By iwog   2012 Jul 2, 4:12am   68,265 views   253 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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94   woppa     2012 Nov 29, 6:08am  ↑ like   ↓ dislike   quote    

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.

95   NuttBoxer   397/401 = 99% civil   2012 Nov 29, 7:04am  ↑ like   ↓ dislike   quote    

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.

96   iwog   1942/1944 = 99% civil   2012 Nov 29, 9:27am  ↑ like   ↓ dislike   quote    

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.

97   Bellingham Bill   98/98 = 100% civil   2012 Nov 29, 10:05am  ↑ like   ↓ dislike   quote    

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

98   woppa     2012 Nov 29, 10:36am  ↑ like   ↓ dislike   quote    

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.

99   woppa     2012 Nov 29, 10:49am  ↑ like   ↓ dislike   quote    

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.

100   Bellingham Bill   98/98 = 100% civil   2012 Nov 29, 10:54am  ↑ like   ↓ dislike   quote    

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.

101   Bellingham Bill   98/98 = 100% civil   2012 Nov 29, 12:51pm  ↑ like   ↓ dislike   quote    

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?

102   B.A.C.A.H.     2012 Nov 29, 1:33pm  ↑ like   ↓ dislike   quote    

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.

103   iwog   1942/1944 = 99% civil   2012 Dec 1, 4:14am  ↑ like   ↓ dislike   quote    

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? ; )

104   yup1     2012 Dec 1, 4:52am  ↑ like   ↓ dislike   quote    

105   yup1     2012 Dec 1, 4:52am  ↑ like   ↓ dislike   quote    

106   yup1     2012 Dec 1, 5:09am  ↑ like   ↓ dislike   quote    

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.

107   yup1     2012 Dec 1, 5:23am  ↑ like   ↓ dislike   quote    

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    

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    

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    

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    

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    

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    

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    

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    

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    

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    

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    

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   1942/1944 = 99% civil   2012 Dec 2, 8:03am  ↑ like   ↓ dislike   quote    

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   1942/1944 = 99% civil   2012 Dec 4, 4:06am  ↑ like   ↓ dislike   quote    

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   78/78 = 100% civil   2012 Dec 4, 9:17am  ↑ like   ↓ dislike   quote    

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   78/78 = 100% civil   2012 Dec 4, 9:31am  ↑ like   ↓ dislike   quote    

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

123   Peter P   78/78 = 100% civil   2012 Dec 4, 12:59pm  ↑ like   ↓ dislike   quote    

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   3254/3298 = 98% civil   2012 Dec 5, 12:24am  ↑ like   ↓ dislike   quote    

Iwog, are you turning into a phoenix?

125   iwog   1942/1944 = 99% civil   2012 Dec 5, 1:51am  ↑ like   ↓ dislike   quote    

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   1942/1944 = 99% civil   2012 Dec 5, 2:52am  ↑ like   ↓ dislike   quote    

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

127   iwog   1942/1944 = 99% civil   2012 Dec 6, 9:33am  ↑ like   ↓ dislike   quote    

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   98/98 = 100% civil   2012 Dec 7, 5:01am  ↑ like   ↓ dislike   quote    

underwaterman says

Investment demand increased 82 million ounces in 2012

just more future sellers, LOL

129   Bellingham Bill   98/98 = 100% civil   2012 Dec 7, 5:16am  ↑ like   ↓ dislike   quote    

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   78/78 = 100% civil   2012 Dec 8, 7:01am  ↑ like   ↓ dislike   quote    

But there is much paper gold and derivatives.

131   Peter P   78/78 = 100% civil   2012 Dec 8, 7:26am  ↑ like   ↓ dislike   quote    

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

132   Peter P   78/78 = 100% civil   2012 Dec 8, 7:45am  ↑ like   ↓ dislike   quote    

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    

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?

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