One last sell-off for silver before we head back to $50?
Posted on 16 October 2011 with 14 comments from readers
After seven years of investing in precious metals you become something of an old-hand, not that this would impress the true veterans who recall the late 1970s. They are getting a bit old themselves now.
A sprightly 87-year old President Carter was on the BBC last night for a long interview, and sounded very impressive unless you are old enough to remember his abysmal presidency.
The man himself comes across as a bit of a 60s dreamer with flowers in his hair and peace and love stamped on his face. He is very genuine and has not made a cent out of being an ex-president. But he was a disaster, hopelessly out of his depth in Washington during a period when the world needed leadership.
Hunt Brothers
Goodness knows how much his goodly nature cost the world! He was also US president in the last silver boom. Inflation got completely out of control. The Hunt Brothers cornered the silver market and sent prices sky high. Only President Reagan and Fed chairman Paul Volcker saved the world from a hyper-inflation with their monetarist clampdown.
So where are we today for the tiny global silver market? We still seem to be in the early days of an inflation, and could even have another deflation of asset prices on our hands if the eurozone messes up its bailout package or a rapid inflation if they double-up on money printing as most seem to expect.
It is never that easy to judge is it? And markets are so confused they are not giving us much guidance. Technical analysis is only right until it it wrong as fundamentals tend to repeat but never exactly.
But the silver charts are predicting another backtracking in prices, according to the singularly precient CliveMaund.com. At a fundamental level that could come from another nasty twist in the eurozone saga sending markets into a dive and a flight to the US dollar and out of silver and gold: 2008 revisited!
However, trying to market time anything these days is very difficult. The good news about silver is that when this sell-down is complete the next target is very obviously the April high of $50, also the 1980 high for the metal.
1980 all-time high
One of the most remarkable things about silver and the biggest and undeniable truth about its undervaluation is that 1980 price. What else in the entire world costs as much as it did when Jimmy Carter was in Washington making America a laughing stock?
If you wanted a surefire bet the idea that any commodity could stay below its 1980 all-time high forever just has to be a nonsense. Reason then to hold your silver just in case the market turns up without this expected sell-off, and it did just that a year ago. Perhaps the eurozone officials have it sussed after all. Then again even dear old Jimmy Carter could manage to up inflation.
So if the chance to buy some silver on the cheap around $25-28 an ounce comes do seize the opportunity as CliveMaund.com suggests. But be weary of trying to trade volatility in such a capricious performer as silver where physical sales and spot-prices already point to an imminent price break out (click here).
To capture all the upside in the coming price boom you are more than likely going to do much better by staying fully invested or you might miss one or two of the best phases.
Where should silver prices be and how high will they go? Who knows, silver might be worth more than gold (click here) but prices will be very, very much higher. But taking a series of leveraged punts on silver is far more likely to leave you penniless than rich as your timing will be wrong more than it is right.
14 Comments posted by readers:
Hopefully you’re right about one last sell-off before the silver price rises!
I have been laying aside cash to invest in silver but am waiting for all this downside to finish.
I wonder how you predict just one sell-off ahead. I don’t see why it won’t be three or four until the stock markets have collapsed sufficiently to stop people selling their bullion to pay for their selling of stock.
I read yesterday for the first time that people are beginning to sell US Treasuries instead of piling into them as they did in September. Where will they go with their cash?
With the heavy manipulating hand of the gold (& silver) cartel, led by JPM, it’s tough to accurately identify the timing for the next upswing in gold and silver.
But the Ed.’s advice is sound; buy more physical silver if it drops further. But if you don’t have any physical silver at this point in the movie, your best bet would be to buy some now at around $30-$31, while the spot prices are being suppressed. You don’t want to miss out on the next leg up in the silver market.
I suspect the bottom is already is in for silver, whilst there is no sure thing in this world I think most of the downside risk in silver has come off and I believe we will retest the $50/oz mark within the next 6 months.
Whilst on the subject of silver I went to the Occupy Sydney protest today, spoke to one guy giving a speech and he agreed with me about silver being undervalued and manipulated.
http://ausbullion.blogspot.com/2011/10/occupy-sydney.html
carter and obozo……quite a pair.
obozo is alot more devious.
Another proof that the bubble in PM’s has not yet arrived. An article that is pure drivel yet was published on a respectable financial site:
http://www.fool.co.uk/news/investing/2011/10/18/we-just-sold-our-gold.aspx?source=uhpsithla0000001
Enjoyed your article. the statement: “Only President Reagan and Fed chairman Paul Volcker saved the world from a hyper-inflation with their monetarist clampdown” Sounds like it came right out of Faux news.
Lets not forget that :
-Carter inheirted inflation from nixon / Ford. Remenber WIP –whip inflation Now bottons
_Carter Appointed Volker
-the Repubs totally sandbagged Carter at every turn and sabatodged every bill t omake carter look bad
-the oil embargos were the result of the blowback of failed mdeast policy..look at the price of oil and inflation and they are the same chart
-much of that inflation was the result of the debt encountered during the vietman war
-much of Carter policies were startng to work as reagan stole the election with the, behind the scenes , arms for hostage deal with the enemy
–all reagan did was increase military spending on the arms race/cold war to make to economy after inflaton was undre control
although regan has been cannonized by the tea party, his administration was extreeemly corrupt where Carter played by the rules
That Motley FOOL article about the couple who sold their tiny amount of gold and “made a killing” was so comical I could laugh myself into tears. But I could not because its so tragic. How incredibly stupid. He revealed just what an investing novice he was when he said 21% compounded return is the best investment he ever made. What a goober. Didn’t he buy Apple a few years ago? LOLOLOL The only reason to sell gold is to switch to one of the white metals imo. We won’t have to sell our gold; when it is REMONETIZED at a price far above today’s quote it will BE THE CURRENCY OF THE REALM.
Bashing Jimmy Carter really shows your ignorance which brings into question your knowledge of silver by comparison. Let’s see you accomplish 1/100th of what this man has accomplished in his life, politically, spiritually, economically, etc. If you want to bash a president, bash Ronald Reagan for removing the progressive income tax after Carter that started the wealth transfer and self-destruction of the US and then the world over the past 40 years.
As for your silver comments, if you have been investing for 7 years, you should no better to try and time the market and give suggestions of price and time. Technical analysis is correct only 50% of the time at best. Silver will be ultimately driven by it’s fundamentals both as a monetary metal and industrial metal upwards over time but giving estimates on when is a fool’s game. The most recent significant information is the CFTC position limits and how this means that JP Morgan is going to try and take down silver again to get rid of its short positions of 20000. For those like me who have really been following the market for 20 years, the manipulation in silver will continue until the physical demand overwhelms it. JP Morgan has to exit these positions by summer 2012 and I expect the price to drop as they do this.
The advice you should be giving is the same as James Turk, Mike Mahoney, and David Morgan: you should use the dips to buy by dollar cost averaging in over time and hold for the long term 2-10years for silver.
inflation when carter took office: 5.22%…when left 11.83%
you get your figures from the Communist News Network, Edwin?
http://inflationdata.com/inflation/inflation_rate/historicalinflation.aspx
i voted for carter…he was a fool and still is….
FOOL FOOL FOOL.
I wish no criticism against the views here but to consider how efficient the manipulation of silver prices has been. Shadowstats.com assumes a fall in purchasing power of the US dollar since 1980 as ten fold. The price of silver has averaged between $5 and $6 for twenty two years of this time span before silver began to rise – as a paper asset price.
But as the currency debasement has been ten fold then that recent high of near $50 equates to only $5 in 1980. Oh, yes, the manipulation has been successful!
We do know what the paper price of silver is….but we do not know what the real value in those dollars is… My advice is to ignore the so called spot price and buy it on those dips if you can find it…
FWIW,
L.
Glad to see PM’s making a move, it spices up the conversation. Agree with Obewan, who agrees with our host.
A friend called me yesterday wanting my vote of confidence on his decision to buy silver (or not).’Don’t wait another minute’ i told him. He was full of questions, taking me to task on my belief in silver’s upward bound future, testing my reasoning (again) for 20 min at least. I explained again (don’t worry) the metal will monetize along with gold. I forgot to remind him how it was in 79, in fact it was on his kitchen table that his wily E. European immigrant buddies were dumping coins from the cola and cig (remember those?) vending machines they had recently bought in large numbers, in the mad silver rush of that year.
I don’t think this is time to be price shopping for silver. And no, i don’t think this time will be any different, PM’s will deflate with the other asset classes, if there is a sudden equities down draft, or severe melt down. However, when that melt down involves the global banking system cracking, PM’s will soar. There will be a moment in time when markets plummet, and both the USD and gold climb in a spike together, when that happens, and gold begins to fully monetize as the preeminent safe holding in the global flight to safety, the genie is out of the bottle. Its coming, but when? 18 mo? 24 mo? your guess is as good as mine. But i hear the train a-comin’, its rolling round the bend.. (Johnny Cash)
French banks are screwed, unlike German banks, who have (at least) an economically sound base to work with. France will go along with whatever the Germans dictate, and the Germans have no choice but to prop up their 500 million person trading block empire, their dominion the EEC.
In my view the wild card is China. They are one big factory supplying the world. What happens when the western world fully impacts the wall. We all know the train has left the tracks for the global banking system, and that the fed is going to end up supplying the dough to keep Europe afloat until the bitter end of fiat currency, but things are not looking good for China right now. I’m getting reports from friends who are there, and supposedly in the know. They are saying its not good, and that bad stuff is coming. The current popular outlook for a soft landing might not play out. How does that impact gold? But i guess the Chinese will end up printing as well. Won’t they?
For the record, I stopped trading silver this summer, and bought rounds. Its all in the safety deposit box now, where my trading impulses cannot harm it. lol
I told my friend to expect 62.50 as the next big line of resistance, after silver barrels through $50 expected by Feb. Clive Maund Nailed the short last time, and the time before that. On the last one, i think he correctly anticipated that the fund managers would dump to protect their period end reports. I still see him as a chartist whose right when he’s right, and wrong the other 50% of the time.
Buy silver now – tonight if possible.
Over..
@larry,
it takes Public Demand………and the sleeping lion is out of the cage now—by way of the debt crisis coming to the forefront.
10 years ago it was–’what debt crisis?’ even tho we were 30 YEARS into it.
in ‘76 i laughed at my buddy buying gold.
i woke up in ‘08, 100% in now……
Silver rises 10.5% over 3 days
http://ausbullion.blogspot.com/2011/10/silver-rises-105-over-3-days.html
@ James M.:
Enjoyed your timely, albeit lengthy remarks. You gave good advice to your friend about buying silver; I hope he took your advice seriously.
Throughout most of October, I started accumulating gold and silver mining stocks on the dips ( . . . and some were BIG dips!); I also bot 3 or 4 explorers which have started to soar (several of these were up over 10% today!).
A Message to Those Who Doubt Silver’s True Value:
It should be obvious to the “Doubting Thomases” by now that both silver and gold (but esp. silver) have been severely suppressed; one can observe this fact by simply analyzing the price action in the PMs and in the mining stocks.
Where to from Here:
I believe that by next fall, gold will exceed $2250 and silver will be well over $60; when that price point is reached, if have silver mining stocks, it would then be time to sell off a good chunk and take profits, then wait for the next correction.
Continued Silver Manipulation?
Over the course of the next 12 to 15 months, expect several sharp upward trends in silver, followed by price manipulation by the JPM cartel, to bring the spot price down. As one reader above has said, it’s best to NOT focus on the spot price too much. Although the new CFTC “position limits” are a joke, the cartel will not be able to hold insanely large short positions, as they had been doing. However, they can still secretly coordinate their short holdings, in order to control the price and move it in the direction they want.