Ed, you say, on the one hand, that “only when investors have pushed up their share prices can there really be said to be an out of control bull market in precious metals and a bubble. But that day will come, and soon”,

and on the other hand, you also say “as global inflation has only just begun to lift off…and central banks are committed to low interest rates, clearly the rise in silver prices has a long way to go. Actually a very long way to go.”

There is an apparent contradiction between “…and a bubble, But that day will come, and soon” and “the rise in silver prices has a long way to go. Actually a very long way to go”.

I can see a couple of solutions to this apparent contradiction in what you have written, but I’ll leave it to you to make all things totally clear, at least to me if not to others.

Ed Note: No contradiction here – prices have a very long way to go up and that is going to happen soon. The bubble phase for prices is just starting but will blow up relatively quickly – say within 18 months.

Ed, I have been reading here and elsewhere that silver prices are predicted to go on rising for the next 2-3 years. If 2-3 years is the “very long time” you refer to for prices, then the bubble is going to blow up before that “very long time” comes into being.

Since the blowing up of a bubble means a big fall in prices, as I understand a bubble, and since this is going to occur soon, within 18 months, how can it be said that prices are going to go on rising for a very long time ie. more than 18 months?

I’m still missing the point somewhere!

Ed Note: prices have to get into a bubble first – and then they fall. That might only be in 18 months time… OK?

Thanks, Ed! It’s not OK, I’m afraid! I don’t understand, but I won’t take up any more airspace on it. Maybe others will join in the discussion. Thanks!

I just read an excellent commentary on the likely “breakout” of gold and silver spot prices. Go here:

http://www.zerohedge.com/article/silver-set-all-time-record-quarterly-close-gold-silver-ratio-way-17-1-1980

@ John Mark:
Go there to read it; it will help you to stop worrying about your precious metals investments!

Obewon, thanks for the link! Very encouraging, as you say!

However, I could find nothing in the article suggestive of a bubble. Certainly, the word “bubble” wasn’t used and the writer was talking about silver investors looking at $40 and $50 and even the inflation adjusted level of $150.

There was what seemed like a reference to a correction but this was a correction on some unstoppable rise in silver price. But a correction is not a bubble.

A bubble seems to me like a battle or a war. You can’t be sure of what will happen after the war nor can you after the bubble. A bubble, like a battle, is a chaos, is it not, which makes predictions thereafter difficult.

A bubble is a collapse not a correction. A collapse occurs randomly, chaotically, so that you don’t know how low the price will go or how long it will stay at that bottom-out price nor whether it will ever rise up again.

So, if Ed. is talking about a severe correction on the upward march of the silver price, then I have no problem with what he wrote. If he really is talking about a bubble, then my problem, not my worry, remains.

@John Mark:
Ugh! My observation in reading your multiple remarks is that you easily mis-interpret what others (including Peter, the Editor) are saying. As you read, rather than count every leaf on every tree, try to look at the big forest, and appreciate these commentaries for the main points that the authors are trying to drive home. What may constitute a “bubble” to some people will not constitute a “bubble” to others. I explain below.

You are taking the word “bubble” much too seriously and much too literally at this point in the on-going movie. In my remarks above, I never said or even implied that the referenced link was suggesting a bubble. Just remember that the big banks will continue to make disparaging remarks about gold and silver (i.e. being in a bubble) because it’s real money and they fear that if the population knows this truth, the result on the banking industry would be a total loss of confidence.

It may well be that at some point in the distant future, the price of gold and silver will stabilize, rather than drop back down 20% or so; but again, that is in the far distant future, at a point in time when gold may be at $5,000 per oz. or higher as Jim Sinclair has predicted.

So if gold does indeed drop back by 20%, then the new price might be $5,000 – .20(5000)= $4,000. So if investors today pay $1400, it doesn’t matter to them that the new price is “only” $4,000. The only people that would be adversely affected would be those who got to the party rather late, and paid $5,000 per oz. That would be their “bubble”, but it’s certainly not a “bubble” for you.

If that happens, has the bubble burst? Some would say yes, while others would say no, but noone knows for sure. So try to relax and be content in the knowledge that you have already invested in “real money”, while the vast majority of people in your country have not. They are the ones who should worry, not you.

I can see I’m not popular with you at the moment, Obewon! So, here’s how to make myself even more unpopular with you. Did you write your last post before midday on April Fool’s Day?

You try to encourage me to look at the forest rather than the leaves, yet tell me that “what may constitute a bubble to some people will not constitute a bubble to other people”. How do we know that “what may constitute a leaf to some people will not constitute a leaf to other people?”

When I had a heart-attack some years ago, the doctors told me, and both sides of the conversation knew what a heart-attack involved and what had happened inside my chest. That aids communication.

Why do we have dictionaries if not to assist communication?

Ed Note: Yes you will spot a bubble in a Tesco queue – it easy but few actually then sell, remember to do so! You should subscribe to our newsletter and get this warning sent will in advance.

Ed Note: Yes one advantage of bubbles is that anybody can spot them in the Tesco queue! But don’t ignore that warning…

Do I understand a “bubble” as being the time when the Tesco check-out person is investing in silver and happily talking about this to the customers who pass through or do I understand it as a severe correction on an otherwise ongoing upward movement?

I guess we won’t resolve this matter of whether words mean what a person wants them to mean when they use them or whether what they mean is consistent with some standard use. I’m not even sure that I’m using the word “bubble” according to this standard usage or not.

Was the South Sea Bubble some historical standard for the word “bubble”? If so, the majority of investors were ruined in an enterprise which never rose from the ashes, as I understand it.