One thing for sure is that the DOW in the US is closing near the high of the year while Silver is closing roughly 50% of the high it hit this year which is quite bad. No one hear called a 50% retreat when it was at $50 earlier on this year and if I am not mistaken that is 50% off the price within roughly 4 months only which is a pretty nasty haircut or pullback. So the EURO is dropping and and so is Silver.

I have read a few articles recently about serious potential problems in the Indian economy in the future. Same with China. The entire world economy is a mess, with record debt, government intervention in economies, massive low return investment, pathetic political leadership, and a looming oil shortage within a few years.
I like to look at the long term Kitco graphs of precious metal prices to get an idea of the base price of them all. Could platinum go back down to $800 an ounce? You damn right it could. It probably won’t go back down that much, but it COULD. That is why just about all the investment experts advise people not to invest more than 10% of their wealth in precious metals. More than that and you are a speculator, which is fine, as long as you recognize the risk that you are taking. Gold could be $2,200 an ounce next December, or it could be $1,200 an ounce. Some of the smartest investors have just lost a lot of money thinking that they could predict the price of gold. We go into a depression and precious metals can go WAY down. Silver could get absolutely killed. Look at the Kitco long term graphs.
HAPPY NEW YEAR EVERYBODY !!!

Hi Andy

I fully agree with your facts, I myself am in silver and have faith for a return on silver. Although what you mention is true, many silver buffs predicted a further dip due to the European and other bonds coming on auction during this period. That being said the basic fundamentals for silver and gold still holds, with regards to supply and demand – and with regards to the effects of money printing which has been happening while everyone else in the market has their eyes on other issues. The inflationary effects of money printing should be prevalent within the first quarter, and currency devaluation is the lt card most countries in debt have to play. As I mentioned, I’m keeping faith for a resurge, if not in 2012/2013 maybe in 2050

Gotta agree with the Ed. here on predictions for silver in 2012. I’ve “backed up the truck” already!

It’s likely that we’ve seen the low in silver for the next 12 months, though all commodities will come under increasing pressure as Europe and the US go back into recession.

The most interesting aspect of the PM market, is that the ‘paper’ representation of the physical asset is currently setting/controlling the price.

I think we will see a clear cut separation between the physical ownership price and the paper price — granted, this separation will mean the ‘end’ to the currently structured paper (naked) markets.

My Dear Friends,

Today was the first day that we got some good action in the gold price. It will be very interesting to see if sellers appear as they have been during Asian hours. Just because the manipulators use the illiquid Asian hours to paint gold do not assume it reveals the nationality of the selling. The gold market as we all know on a day to day basis is totally rigged. In fact, find a market anywhere that is not bullied by some young buck who considers himself the Master of the Universe.

Gold is coming up on a tight group of four very major support areas that will hold the price from which the next advance is to take place. We have reached a point in terms of the depth of despair in the gold community that was never reached in the 1968 to 1980 reactions.

That is all this is. Just another reaction in a Gold price headed for Alf’s $4500.

I imagine when gold reacts off $2100 the stampede to the bath tub with their razor blades will be on again. Gold has in no way topped. The gold reaction per day in terms of percentage was nothing whatsoever. We have in no way reached the level called “thrilling with bullish bliss” common of a top. Every dollar we have won has been paid for in blood. All the short of gold wunderkin Masters of the Universe will have to be destroyed before gold is fully priced. The community, if you can still call it that, is in a psychotic episode that is soon to end.

Regards,
Jim

Hi all
I agree with everyone’s comments, but I still remain positive on the outlook for pm in 2012. There are just so many factors which could affect pms, but the majority seem to point to a positive outlook.

All that needs to happen is another large holder of gold/silver to call upon their options, and if Comex and other pm markets don’t have enough to deliver; all hell will break lose in the etf market. Not sure where I read it and how factual this is, but I read that pm markets like London pm and Comex operate with something like 10% reserves (physical) on all their trades. When I ponder on this, I get slight hints of the 2008 housing bubble of paper trades on AAA assets, that were actually junk.

The only reason we got a little bit of action with Gold and Silver on Friday was for 2 reasons. 1) End of the month/Year 2) People covering weekly calls propped up the price to cover their weekly calls that expire on Friday. Noticed how after they covered Silver dropped again pretty quickly on Friday. I say we retest $25.65 soon

I see no harm in either silver or gold ETFs if you are trading. You can make a lot of money trading such ETFs. Of course, you can lose a lot of money trading also.

The nonsense about ETFs versus physical is fine to believe if you think the world is about to turn into some Mad Max World. At which point, tinned food will be worth more than gold or silver and a man with a gun will have all 3.

I often wonder if the same people who sprout all the nonsense about gold and silver conspiracies are the same people who believe in ‘black helicopters, and that a shadow government of lizard people rule the planet from deep beneath the Earth’s core.

As for 2012.

The US Fed, the UK BOE and other central banks have printed money like no tomorrow in an attempt to save their banks and their economies. They hoped it would create inflation but it has not.

It is now clear that we are in the midst of a deflationary depression – whether we are at the start, in the middle or… Well, sadly it does not look as if we are near the end.

By printing so much paper money all the central banks have done is drive up the price of PMs but it has not saved the global economy. None – NONE – of the original problems that existed in 2008 have been corrected. If anything, they have been made much much worse. You do not solve a debt problem by creating more debt.

So 2012 will be a year of 2 choices – either more printy printy… which most likely will not work… or you go into a deflationary spiral, deleverage and let the mistakes sort themselves out. This means banks going bust and some countries going bust.

Those who, in 2009, said that we would enter such a deflationary period are now being prooved right.

What this means for gold and silver is a sharp fall in price.

I expect big falls to come in both gold and silver with silver going down into the teens, perhaps lower.

Now, the good news.

I believe that once gold and silver have crashed in 2012 there will be a sharp rebound within 6 to 12 months.

Hi Bob

Thanks for your insight, unfortunately we are at a precipus were all of what you said is a possibility.

My only disagreement is with physical vs etfs. My view is that etfs are another version of leveraged funds, very similar to CDOs traded in 2008. I be read that in 2009 there were some issues with the delivery of physical gold from COMEX, there were big delays which they blamed on warehouse issues and some customers received gold with different registration numbers to that of their contracts.

Now there are many conspiracies based around this and how COMEX resolved its problem, but the fundamentals remain that COMEX didn’t have enough physical in their vaults to cover their contracts. Simply check stats on what they currently hold and currently trade and you will see an underlying problem.

@Andy

26 bucks is a key support for silver. If it breaks that then high teens could well be the next stop.

I still think that we will see major DOW stock correction in the first 2 months of 2012 taking global markets, PMs down with it. Gold and silver will go down like in 2008/09 IMPO.

That may be a good buying opportunity then.

@Aaron

You make a good point Aaron. I was thinking more of using SLV for trading – i.e if silver plunges you buy SLV but you have a short window of getting out of 3 months top, perhaps even 6 months top.

Obviously this assume that you believe that silver will recover in price within X months of it crashing. In other words, you trade SLV to make money from a substantial fall to any recovery.

Unfortunately, lots of people who seem to be into gold or silver seem to want to buy it and hold it forever believing it will forever rise. Isn’t the secret to trade it?

If those who had bought 2 or 3 years ago had got out within 12 or 24 months of buying they would have made a big profit. But then April 2011 came and – BANG!

Get in, have a plan to get out and get out.

Otherwise, there are physical silver ETFs to consider and, I openly admit, I think I would opt for those for a longer-term hold.

But I think that we are seeing a big topping out in the US markets, a rush to the dollar, the global economy contracting and Europe in a huge mess. It is a perfect storm that has been forming for 3 or 4 years now.

If the US markets go down I can only see gold and silver plunging with them – everything will plunge IMPO. But hey, what do I know – I ain’t a billionaire or even a millionaire.

@Bob

Well lets hope that 2012 will provide opportunities for us all to become million/billionaires!

I fully agree with what you said about silver/gold bugs that buy in and just keep stacking – and have been stacking all their life. Every great investment has to have an exit point!

In John Mauldins book Endgame – on the right – he also discusses gold bugs and how they believe that inflation (through money printing) will drive the price of gold/silver up – heck I believed this to a point. But he discusses a thing called the velocity of money which is the rate at which is it being spent. Basically it is like cashflow for economies.

He points out that if the money being printed is not being spent at a certain rate, then we will just see deflation – and as you point out I think this is why we have seen QE 1 2 3 …… but still we are at a stagnant phase in the global economy. People are using the extra money to pay off debt and thus the money is just being evaporated and not being pumped back into the economy.

Anyway, heres to 2012 being the year of new millionaires. Most large companies were founded in recessions!!!

That’s very interesting Aaron – I haven’t read the book but what John describes is exactly what has happened in the past year. A bit like trying to drive a car up an ice-covered hill – you keep applied power and burning up petrol but the car goes no-where.

@Andy, Bob, Aaron, & Jim:
Interesting dialogue here! I’ve been in the “deflation” camp for the past 2 years now, and while it’s quite possible for gold and silver to fall further (aided, of course, by central banks!), I believe this scenario could unfold if the world’s equity markets fall apart, as they did in 2008. For those interested in more info on this topic, read Mauldin’s new book (“End Game”), which is absolutely fascinating.

And let’s not forget that the central banks, notably western central banks, are the key global figures who continually rig the gold market. Jim stated it clearly and succinctly in his remarks above, namely:

“Just because the manipulators use the illiquid Asian hours to paint gold do not assume it reveals the nationality of the selling. The gold market as we all know on a day to day basis is totally rigged.”

http://traderdannorcini.blogspot.com/2011/09/central-banks-waging-war-on-gold-at.html