Volatile silver up 18% in 12 months lagging gold’s 25% gain, can silver catch up?
Posted on 29 November 2011 with 7 comments from readers
Precious metal investors have little to complain about with gold up 25 per cent and silver by 18 per cent in the past 12 months. By comparison many equity investors have lost money. But behind this gain has been some pretty staggering volatility.
The price of silver over this timeframe has fluctuated wildly from a high of $49.79 in April to a low of $26.05, rebounding to $32 at the time of writing. Gold topped out at $1,923 in September and has been as low as $1,308.
Silver risk on?
If Wall Street was to stage a Santa Claus rally before Christmas then a switch back to riskier assets could well bring the annualized gain for silver above gold and perhaps even above gasoil to become the number one best performing commodity again in 2011.
Silver will most likely not be far off that anyhow, just as ArabianMoney predicted this time last year (click here). However, we remain far from convinced that the ongoing eurozone sovereign debt crisis will allow a Santa Claus rally to lift-off and it could be that a Greek default trips up precious metal prices and temporarily derails our 2011 tip for top performance.
However, you need to take a look at total return over time and make your own assessment on the performance of precious metals. What if the volatility occasionally means you have to show a few months of patience? The important thing is that the performance is still there!
$50 silver
That is one reason for being very confident that $50 silver cannot be far away. We have already come within a few cents of that old 1980-high in 2011. How long before silver stops being the only commodity to trade at a lower price than it did 31 years ago?
This is not really asking very much is it? The conditions of monetary inflation that have inflated the prices of the monetary metals have not gone away. Most forex traders expect the US to unleash QE3 money printing early next year, probably in response to a default in the eurozone by Greece.
Staying long in precious metals may require a strong stomach for volatility but it certain pays in total returns.
7 Comments posted by readers:
The thing you need to remember is watch what happened yesterday; as the stock market went up, so did the metals. There was no valid reason for the two to go up together. The DOW should be many thousands below where it is today based on fundamentals (PPT interference), and gold/silver should be much higher (but is not because of gov’t and CFTC/SEC/CME/financial criminal organization involvement).
The other thing you need to remember is, people have not drastically changed whether they view gold/silver as money or merely an asset for times like 2008. Me thinks that we’ll see another 2008, but on a larger scale some day. It would not surprise me to see silver hit $15-20 in the near future or fall from $50-55 back down to about $30-35.
Just watch.
Ed Note: Volatility yes but the long trend is still up, and up by more than anything else – that is why silver is such an outstanding investment.
It seems that there are still way too many people getting hung up on the price of paper silver, which is priced in devaluing fiat currencies, in the midst of a global economic collapse. Physical Silver whilst still priced against paper silver in this collapsing paper house of cards is a steal even at $100 per t/oz.
Paper Silver may actually go down to $20 per t/oz, but dont expect anyone with even a small brain to sell physical at that price!
The fiat US Dollar and Euro (and UK Pound plus others) are sinking fast so Silver (physical only) needs to be bought whatever the price – the cost of being left holding pieces of devalued fiat instead of tangible assets will soon be revealed.
Time to look 2 years out from now – Gold and Silver will be priced in a different currency, or if the Dollar is still with us, the figure in Dollars will be astronomical, but as worthless as the Zimbabwe Dollar.
Think about the big picture – long term and global. These are changing times.
Everyone now knows the ’spot price’ is a rigged game – so if you now know the rules of the game that the PTB use then play the PTB at their own game and buy as much physical as you can whilst you still can.
Time is running out to get hold of physical. Anyone still in paper will get burnt in the next few months.
I think that Stephanie is implying that there can be, indeed, will be “a drastic change” in how people view gold and silver. If she is saying this, then I am in full agreement.
At the moment, people are entrenched in the old way of investing since the last war and before. However, the sovereign debt crises, the global level of debt and the prospect of oil production not matching demand within the next two years, is going to cause that “drastic change”.
That drastic change has not occurred yet, at least in the minds of professional investors, although hundreds of ordinary people all over the world are beginning to think differently to these experts.
Because that “drastic change” has not occurred, during which there will be a massive transfer of wealth into money (ie gold and silver) from currency-based assets, the Editor here and other experts keep warning us that there will be a fall in the price of g & s because of margin calls.
In fact, I am ready to sell my silver if it falls to between $15-20 per ounce and buy it again at around this level because my earlier purchases have been in the $35-40 per ounce. At the same time, I will use cash that I have positioned to purchase bullion to buy more silver if the price falls to the sort of levels that Stephanie rightly predicts could happen.
What seems to be missing from her watchful post is what will happen to g & s AFTER the stock and bond markets have crashed. It is then, surely, that the “drastic change” will occur. It is then that there will begin a massive move away from currency-based assets.
I am not only watching for the price of silver to fall, as Stephanie advises, but I am also watching for silver to rise massively a little bit further down the line.
Ed Note: Just had a look back at what AM said in May 2008 (click here) then gold was $860… it rose and fell and rose again!
John Mark and Andy,
Yes, you are both right. I am speaking of both the mindset of the investor and the invalidity of the fiat currency in terms of its relationship to something that cannot be created from nothing at will.
If you look at the fact that the prices of the metals are manipulated and not reflective of the “true value” in various currencies, then you might see that we may not clear $50 until sometime in 2013. I saw on a forum somewhere that some guy was saying that it would not happen until around May 2013, because it would repeat a pattern of “rinse and repeat” every two years in the silver market. Load up your silver closing data from the last 11 years into a chart, and you’ll see what I mean. Because silver is manipulated on a time table, I can pretty much expect that guy’s prediction to come true. So, let’s see if it will be until May 2013 give or take a few months before it happens.
We can have ex-solar-system aliens and Terminators on the ground, and silver will still be around $30, because those bungholes still have control over the price through the paper markets.
We need to take all metals out of COMEX and the LBMA and make it unavailable at any price to these markets. The fact that COMEX inventory numbers are rising indicates that no one has any idea what’s going on.
I listened to a picture of paper bullion and its relationship to the real metal as a dog having its tail wagged. The paper market wags the whole dog, which is the physical metal market, by its tail.
At the moment, the dog is docile and doesn’t mind being wagged by someone holding its tail and pulling it around. This is probably because the body of the dog is owned by the same people who are gripping its tail and determining its movements (through the paper market).
However, by the end of this year or early next year, there is going to be another dog, a change of dog, in which people can invest their bullion. It will not be docile and it will not have a tail. It cannot be waggled by the paper market.
In other words, the price of physical silver and gold will not be nor can it be manipulated by the paper market. This dog, representing the physical bullion market, will have its price come from supply and demand and not from the paper bullion tail waggers.
This new bullion market is called the Pan Asia Gold Exchange ie PAGE. It will not allow an owner of bullion to lease or loan and go on keeping the title of ownership. As a result, there will not be multiple owners of gold and silver because, if you loan or lease your gold to someone else in PAGE, you lose ownership of it immediately.
It will attract bullion retailers and brokers because the prices of gold and silver will be higher than in the LBMA system as a result of a pure reflection of supply and demand without the paper bullion manipulation downwards the whole time.
It is run by the Chinese and fully backed by their government.
So, whilst I agree with Stephanie that silver might possibly remain below $50 for some years under the present paper/physical mixed market (though I think even this will be overwhelmed by the “drastic change” that is coming), I don’t think this will happen with PAGE, where, as I understand it, paper bullion will be absent and disapproved of.
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“… some guy was saying that it would not happen until around May 2013
because it would repeat a pattern of “rinse and repeat” every two years in
the silver market. Load up your silver closing data from the last 11 years
into a chart, and you’ll see what I mean….”
Exactly. I have been watching the silver and gold pricing manipulations
for the past decade and can confirm the Pump & Dump action revealed
by a ten-year semi-log graph.
http://crowlee.proboards.com/index.cgi?action=gotopost&board=dailydenarius&thread=329&post=10166
The margin call plunge in mid-2008 seems to have upset the timing by
a year, so now the silver peaks will most likely occur in odd-numbered
years. By this reasoning, the price peak in 2011 will be repeated in 2013
>>> IF <<< the PTB and PPT remain in control of the pricing mechanism.
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And the question to you, Denarius, is “How do we take away that control?”