Warning Fools! Silver Will Fall by 66%

[outspoken]

On a side note, I purchased silver via a wire transaction through apmex the other day and it got deposited in their JP MORGAN account. It seemed more than a little ironic given all the talk about this bank in particular manipulating the paper silver.

 

[bobbyw24]

On a side note, I purchased silver via a wire transaction through apmex the other day and it got deposited in their JP MORGAN account. It seemed more than a little ironic given all the talk about this bank in particular manipulating the paper silver.

APMEX: In bed with the Govt?

Last summer APMEX changed their bank to JP Morgan Chase and yesterday I received a letter from APMEX stating they're moving into the Federal Reserve building in OK. Does this smell funny to anyone else?

http://www.ronpaulforums.com/showthread.php?238701-APMEX-In-bed-with-the-Govt

 

[Freedom 4 all]

I would argue that the author is not ignorant, but seeking to deceive and prepare ETF investors to exit the market at the first sign of weakness.

Ironically, a decent downward correction in the FRN price of Ag would be great for the many folks who are waiting for an opportunity to buy, so that when a significant price correction does occur, we will experience a phenomenal rush into physical PM purchases.

I hate to patronize this tool for more than he is worth, but keep in mind that it is not the price of silver, gold, fuel and food which are rising.

Rather, it is faith in the FRN which is waning on a global scale, and therefore we can expect rampant fiat devaluation to further drive demand for physical metals and other tangible commodities.

The FRN is fr*ckin doomed!

Exactly It's like betting on horses. For the sake of argument, there are two horses in the race. One is of so-so breeding and overall rather slower than average with an inconsistent history, the other is extremely sick with ever increasing numbers of parasites and malignant tumors and will in all likelihood collapse and die before the race is over. Despite the faults with the first horse, he is still the obvious choice given who he is competing against.

 

[UK4Paul]

This entire bull market is not about silver going up. It is about the dollar going to its intrinsic value: Zero. Based upon current trends and commitments we are too far gone. The dollar will be worthless, the only issue is when. See: Weimar Germany 1923. An ounce of silver was worth billions of marks.

OK, then at 1 oz = $35, we're not quite at Weimar 1923 yet.

I just finished listening to an audio version of When Money Dies, all about the Weimar republic. I don't think we're anywhere near CLOSE to that situation just now, although I appreciate things can change.

I know a lot of people envision a collapse of the dollar, but is it possible "they" (the powers that be) could engineer a different scenario? For example, one of the biggest problems facing the US in the near future is the growing debt mountain, and the growing interest payments on this.

To deal with this, they COULD engineer a decade of 1970's style moderately "high" inflation... say 10%-15% a year... which would push up the nominal tax receipts received by government, while reducing the overall interest burden. Sure, this would probably mean high interest rates, and perhaps cripple the economy...

...but it may make the debt problem less of a problem for them... and I can see them doing this rather than them allowing the dollar to collapse.

I personally see this as more plausible than hyperinflation.

Still, I don't know for sure... which is why I can see it makes SENSE to invest in a store of value like sliver and gold.

If they merely use 1970's style inflation... then you're holding a store of value against a dollar that is decreasing in value.

If they get hyperinflation... then you're holding an even better store of value!

I guess it's win / win for holding silver and gold.

 

[bobbyw24]

Dillon Gage sees Support for Silver at $32/oz.

Slide in silver prices could be short-lived - Dillon Gage

World demand for silver in coins, industrial uses and jewelry remains strong and support is seen at the $32 an ounce level suggesting the recent drop in prices could be a brief hiatus.
Posted: Friday , 13 May 2011

ADDISON, TX - -

Silver's drop could be only temporary after prices retreated from a 31-year high reached in late April as traders watched crude oil values decline. Prior to that, silver was a sizzling hot commodity favored by small investors and money managers, and Dillon Gage experts say not to write it off now.

Terry Hanlon, president of Dillon Gage Metals, the Dallas-based, precious-metals trading firm, said, "This year, silver had its biggest run in the shortest period of time in recent memory. Profit-taking corrections are to be expected when markets rally."

http://rp12.us/aIUiF

 

[cubical]

OK, then at 1 oz = $35, we're not quite at Weimar 1923 yet.

I just finished listening to an audio version of When Money Dies, all about the Weimar republic. I don't think we're anywhere near CLOSE to that situation just now, although I appreciate things can change.

I know a lot of people envision a collapse of the dollar, but is it possible "they" (the powers that be) could engineer a different scenario? For example, one of the biggest problems facing the US in the near future is the growing debt mountain, and the growing interest payments on this.

To deal with this, they COULD engineer a decade of 1970's style moderately "high" inflation... say 10%-15% a year... which would push up the nominal tax receipts received by government, while reducing the overall interest burden. Sure, this would probably mean high interest rates, and perhaps cripple the economy...

...but it may make the debt problem less of a problem for them... and I can see them doing this rather than them allowing the dollar to collapse.

I personally see this as more plausible than hyperinflation.

Still, I don't know for sure... which is why I can see it makes SENSE to invest in a store of value like sliver and gold.

If they merely use 1970's style inflation... then you're holding a store of value against a dollar that is decreasing in value.

If they get hyperinflation... then you're holding an even better store of value!

I guess it's win / win for holding silver and gold.

How would they create this inflation? In a world where our monetary policy is already under scrutiny, if the fed went into a QE3, QE4 to get such high inflation numbers, then dollars from foreign holders would flood the US as people will want to get out of their depreciating asset. Yes, this would cause inflation and make debt cheaper, but it would cause inflation that is higher than 10%. It would also cause our bond market to implode because most foreign holdings are in treasuries. And assuming the government is still borrowing, they would not be able to roll over debt at such high rates, so the fed would step in and buy their debt causing even further inflation.

Remember back in the 70s, the US was filled with savers. Now we live off credit. The high rates that would eventually come from higher inflation would absolutely crush the economy. The fed is really in a no win situation unless the government started spending what it takes in immediately.

 

[bobbyw24]

Silver's wild ride: Just how it rolls

The recent speculation-driven ups and downs in silver are par for the course with this manic metal. Also: Why gold and Microsoft get no respect.

Bill Fleckenstein

Sometimes financial markets can be mind-numbingly boring. The past week or so has not been one of those times.

The massacre in commodities a week ago yesterday (with more bloodletting this week), led by silver, has given us an example of how volatile the world can be, thanks to the insidious effects of money printing.

Regarding the action on May 5, the commodities and foreign exchange markets were total chaos. While many explanations were offered, it was really just an example of the flip side of frothy, momentum-based speculation.

http://money.msn.com/currency/silvers-wild-ride-just-how-it-rolls-fleckenstein.aspx

 

[Blueskies]

To deal with this, they COULD engineer a decade of 1970's style moderately "high" inflation... say 10%-15% a year... which would push up the nominal tax receipts received by government, while reducing the overall interest burden. Sure, this would probably mean high interest rates, and perhaps cripple the economy...

This is exactly what "they" are trying to do.

Of course things could get out of hand. The market is inherently unstable..

 

[Anti Federalist]

This is exactly what "they" are trying to do.

Of course things could get out of hand. The market is inherently unstable..

Engineering an economic condition that is only possible with fiat currency and defies any economic "law" you care to name.

Stagflation...decreasing demand and increasing prices.

 

[vita3]

"APMEX: In bed with the Govt?

Last summer APMEX changed their bank to JP Morgan Chase and yesterday I received a letter from APMEX stating they're moving into the Federal Reserve building in OK. Does this smell funny to anyone else?"

good info thanks-

 

[UK4Paul]

Here's an interesting article... the guy uses a metric he calls rSilver (that is, silver price divided by its 200 day moving average), and has been able to predict the 30% or so price drops in silver in April 2004, May 2006, March 2008 and this time around. He says that whenever rSilver reaches 1.4x or higher, it's almost inevitable that a 30% or so correction occurs.

It also contains some interesting comments on the psychology of the silver market.
http://news.silverseek.com/Zealllc/1305305477.php

Yes, silver may be destined to go to gazillions of dollars an ounce, as the dollar falls to zero... but I think it's useful to know what path it will take in the short to medium term.

 

[swissaustrian]

Here's an interesting article... the guy uses a metric he calls rSilver (that is, silver price divided by its 200 day moving average), and has been able to predict the 30% or so price drops in silver in April 2004, May 2006, March 2008 and this time around. He says that whenever rSilver reaches 1.4x or higher, it's almost inevitable that a 30% or so correction occurs.

It also contains some interesting comments on the psychology of the silver market.
http://news.silverseek.com/Zealllc/1305305477.php

Yes, silver may be destined to go to gazillions of dollars an ounce, as the dollar falls to zero... but I think it's useful to know what path it will take in the short to medium term.

The rS indicator is indeed interesting. RSI ( http://en.wikipedia.org/wiki/Relative_Strength_Index#Calculation ) and MACD deliver similar results.
The problem with rS is that might indicate that it is still overvalued although the price stopped declining. This comes from the construction of the rS: After a sharp decline that was way faster then the rise the Silverprice/200dma ratio will even fall when the price itself settles at a trading range (like it seems to do now) IF dma200 > actual price. Therefore i think that rS works better to identify overBOUGHT markets than overSOLD markets using. I would use RSI to identify oversold markets instead.

 

[bobbyw24]

Silver Market Defined By Lack of Supply

Readers often inquire about problems that could arise with a gold and silver currency. I don’t want to touch on all the issues, but I do want to discuss one in particular: the volatility of the two commodities. These past few weeks are a perfect example of a good reason for concern. Would precious metals currencies act in a similar way? If silver is $50 one week and $35 the next, the problem is obvious.

Though no one can know the future for certain, we can speculate on the outcome. First of all, if gold and silver became major currencies, I would no longer expect either to trade like a commodity. Instead, gold and silver would trade like any other currency.

The demand for gold would jump through the roof simply from the transactions demand. On top of that, gold and silver markets would receive huge influxes of hedgers. The market would no longer be filled with investors betting on inflation or the state of the world economy. Instead, companies hedging against uneven cash flows would dominate the market. This change in the major players would make the market far more stable and akin to currency trading.

http://www.caseyresearch.com/cdd/silver-market-defined-lack-supply

 

[swissaustrian]

With regards to silver, the analysis is incomplete: The largest part of silver demand is industrial, NOT investment/fiat currency hedging:

This connection to the business cycle obviously contributes to the volatility.
On the supply side, i totally agree.
The backwardation still exists: http://www.cmegroup.com/trading/metals/precious/silver.html

 

[pmbug]

With regards to silver, the analysis is incomplete: The largest part of silver demand is industrial, NOT investment/fiat currency hedging...

... right now. This could change dramatically once the world wakes up to re-monetized silver.

...
Hugo Salinas Price continues:

“I think our central bank has done something prudent. It signals a difference of opinion with the Fed, and that is strange for our central bank that has always been in great cooperation with the US central bank. Most of our reserves, which are at the highest level they have ever been, are in dollars.

Some have commented, ‘Well where is the gold? Is it in a central bank receipt or is it in a central bank vault?’ It should be in the central bank vault. Is it a paper certificate or is it actual physical gold and if so where is it?

I wrote a letter and told him (Mexican central bank Governor Carstens) that I thought it was a good move in view of the chaos presently prevailing in the United States fiscal situation. I told him also that perhaps the central bank would take another look to monetize a silver ounce as a means of preserving popular savings from devaluation...That is what we are trying to do is to try to have the Mexican people have a lifeboat available in case of a severe crisis. It looks like it will happen.”

When asked about how this central bank purchase might influence his proposal to monetize silver Mr. Price remarked, “I think that maybe the central bank would not look upon our proposal with such a jaundiced eye. I mean if they bought gold maybe it would not be unreasonable to hope that they would see the monetization of a silver ounce as a good thing for the country.

I can’t help telling you that we have very strong support in the Congress for the monetization of silver, very strong support. Congress is not in session now and will not be back in session until September, but I have high hopes that when both the upper and the lower Houses reconvene in September that we will see something very good happen.”

When asked if the monetization of silver in Mexico could happen in one, two or three years Hugo Salinas Price replied, “I think it could happen sooner than that, I think that it might happen this year. Things are looking good. Of course I have been saying this for some time, but now I am saying it with more emphasis...The idea is now firmly entrenched and it’s only a matter of time before we see some action.”
...

http://kingworldnews.com/kingworldn..._QE_in_US_Will_Lead_to_Utter_Destruction.html

 

[JasonC]

OK, then at 1 oz = $35, we're not quite at Weimar 1923 yet.

To deal with this, they COULD engineer a decade of 1970's style moderately "high" inflation... say 10%-15% a year... which would push up the nominal tax receipts received by government, while reducing the overall interest burden. Sure, this would probably mean high interest rates, and perhaps cripple the economy...

How would the interest burden be reduced by raising the interest rates? If the rates were raised to 15%--I am not sure what the number would be--the interest payments on our debt alone would be extremely high. The principle on our debt would be reduced through inflation, but the interest rate hikes would mitigate much of that if not all. My understanding is that right now we are stuck between a rock and a hard place; between letting our economy tank by tightening monetary policy in order to reign in inflation or keeping the current monetary policy and hope we dont piss the world off too much, causing them to shun the dollar.

Edit: Ahhh, I misread your post. You mentioned a 15% inflation rate not interest.... Urrrdurrr

 

[Jordan]

With regards to silver, the analysis is incomplete: The largest part of silver demand is industrial, NOT investment/fiat currency hedging:

This connection to the business cycle obviously contributes to the volatility.
On the supply side, i totally agree.
The backwardation still exists: http://www.cmegroup.com/trading/metals/precious/silver.html

Economics is all about the margin.

The majority of silver demand does come from industrial demand, but at the margin all demand above 870 Moz is mostly investment demand. I think we can safely say also that the "coins" portion of that chart is implied investment, since there aren't any silver coins minted at a face value greater than their bullion value. Also, note the dehedging demand in the early 2000s, which is markedly bullish speculation on future silver prices.

At any rate, we have to wonder why investors have greatly increased their demand for silver. The bulk of it, I suggest, is from a change in interest-rate policy which makes negative-carry assets more enticing.

If you invest with the idea that you will not invest in assets that provide for opportunity cost losses of 1% or greater on the carry trade, silver is mostly untouchable through much of history. Recently, however, with the cost of carry so low, and inflation relatively high compared to interest rates, silver is now on the radar for investors who once shied away from it's negative-carry qualities.

 

[swissaustrian]

Economics is all about the margin.

The majority of silver demand does come from industrial demand, but at the margin all demand above 870 Moz is mostly investment demand. I think we can safely say also that the "coins" portion of that chart is implied investment, since there aren't any silver coins minted at a face value greater than their bullion value. Also, note the dehedging demand in the early 2000s, which is markedly bullish speculation on future silver prices.

At any rate, we have to wonder why investors have greatly increased their demand for silver. The bulk of it, I suggest, is from a change in interest-rate policy which makes negative-carry assets more enticing.

If you invest with the idea that you will not invest in assets that provide for opportunity cost losses of 1% or greater on the carry trade, silver is mostly untouchable through much of history. Recently, however, with the cost of carry so low, and inflation relatively high compared to interest rates, silver is now on the radar for investors who once shied away from it's negative-carry qualities.

Totally agree.
The point i wanted to make, is showing the difference between gold and silver demand.
See Gold here (sorry, could´nt find a better source quickly):

But the trend you pointed out in investment demand for gold is also very strong.

 

[Deft9]

There is no fixed measure of value. Values are imputed by people and are constantly changing. The guy made a good short-term call on silver. Silver was getting over-heated; CME group hiked margin requirements on silver contracts and crashed the price. But I'm still betting that over the next several years, more and more people will be choosing hard assets over paper currency. I think it's easier to see where we're headed than to spot the bumps in the road along the way.

 

[bobbyw24]

“Silver Price: The Least You Should Worry About”

By Jeff Clark, BIG GOLD

I heard some disturbing reports about silver supply last month that I felt every investor should know. And while precious metals are currently in correction mode, the long-term concerns with supply won’t disappear anytime soon. In attempt to get a handle on the bullion market, I spoke to Andy Schectman of Miles Franklin, who has contacts that run deep in the industry. What he sees everyday might just compel you to count how many ounces you own…



Jeff Clark: Andy, tell us about your industry contacts and how you get the information you're privy to.

Andy Schectman: We source our product from three of the largest six primary U.S. mint distributors. Having 20 years of experience with these sources, as well as the dealers in the secondary market, we're as tied into the industry as anyone.



Jeff: You made some interesting comments to me about supply and premiums. Tell us what you’re hearing and seeing in the bullion market right now.

http://www.caseyresearch.com/editor...st-you-should-worry-about&ppref=DLC404ED0511C