jim4silver
Silver Member
- Apr 15, 2008
- 3,662
- 495
Sorry to steal that quote from Yogi Berra. What I am seeing in the media and online seems reminiscent of what happened to silver this past spring. The financial cable channels are talking about gold quite a bit, the internet news sites have big headlines showing gold is up, etc. The same thing was happening to silver as it climbed up to near $50.
There appear to be different reasons for gold's current rapid rise compared to that of silver from earlier in the year. The gold buying seems to be happening world wide and is not just from the US and is based on fear and uncertainty as opposed to simply speculators jumping in for a quick buck or two (although there certainly must be some of them getting into it by now due to all the attention). In fact, gold's value is hitting records in virtually every currency these days, not just the dollar. Many in Europe are buying because of the fear over there with the banks, etc. Here in the US the predominant gold activity is still selling by the general public, as the "gold for cash" stores are thriving. I am hearing from my coin dealer friends that selling gold is more prevalent than buying gold by the "average joes" who are bringing in their jewelry, etc. From what I have read online, in many European countries many "average joes" there are buying gold bullion hand over fist. Over in many of these countries a person can buy gold bullion from their bank which I find interesting.
When I see so much acclaim for gold in all forms of the media though something tells me the rug is going to be pulled out soon (at least for the very short term). Just like many were singing the praises of silver right as it was at its breaking point, the same could happen to gold. However, if there is a sell-off I would bet gold will not fall that much, maybe to the $1400-$1500 range at most simply because the world problems causing its rise have not gone away. If there is such a sell off I believe silver will fall in tandem and might bring us to the low 30s or if we're lucky even less. That in my opinion will be the time to load up. There may only be a short window of opportunity if any corrections are short-lived. It may not be easy finding physical locally if a sudden drop happens, but maybe as it drops there will be lots of press saying "the bubble has finally burst", etc., which could keep some from wanting to buy. I remember having no problem finding silver locally when it went from 50 to 33 almost overnight, although the premiums were a bit high for a short time as the coin dealers did not have time to bring in new inventory at the new lower prices to replace what they were selling.
What is different so far now from 2008 is that while stocks are dropping, PMs are not. In 2008 PMs got clobbered as the stock market tanked. So maybe any comparisons to 2008 are moot this time, or maybe stocks will need to fall more and create more of a general sense of "blood in the streets" for all investments before PMs decline? I feel that if stocks fall further, there will be a time that mutual funds and other such institutional investors will have to decide if PMs are going to keep going up or perhaps peaking. If they decide on the peaking theory, they will need to take profits (sell) in PMs to offset the losses in their stocks. They have to be concerned with their funds' annual percentage gains/losses and if their profitable assets (PMs) are not rising fast enough to out pace or at least off-set their stock losses, they will need to unload PMs to stop the bleeding in their funds' performance. Perhaps this could cause the PM correction (like it did in 2008) if any of this were to take place?
Another point is that so far the margin rates have only been raised one time in this latest gold rise. They will probably raise them again, but I wonder why they have waited this long in light of the rapid gains?
I am going to sit on the sidelines and wait for now. I still think silver is going to be the buy of a lifetime if/when it drops one last time before the "big takeoff" to crazy high levels. I will hopefully have a nice stash of "dry powder" available if/when that happens. But as always, there is a good chance everything I just wrote turns out to be wrong and PMs don't correct until gold is $3000 or more and silver is $100 or more.
What do you all think about any of this stuff happening?
Jim
There appear to be different reasons for gold's current rapid rise compared to that of silver from earlier in the year. The gold buying seems to be happening world wide and is not just from the US and is based on fear and uncertainty as opposed to simply speculators jumping in for a quick buck or two (although there certainly must be some of them getting into it by now due to all the attention). In fact, gold's value is hitting records in virtually every currency these days, not just the dollar. Many in Europe are buying because of the fear over there with the banks, etc. Here in the US the predominant gold activity is still selling by the general public, as the "gold for cash" stores are thriving. I am hearing from my coin dealer friends that selling gold is more prevalent than buying gold by the "average joes" who are bringing in their jewelry, etc. From what I have read online, in many European countries many "average joes" there are buying gold bullion hand over fist. Over in many of these countries a person can buy gold bullion from their bank which I find interesting.
When I see so much acclaim for gold in all forms of the media though something tells me the rug is going to be pulled out soon (at least for the very short term). Just like many were singing the praises of silver right as it was at its breaking point, the same could happen to gold. However, if there is a sell-off I would bet gold will not fall that much, maybe to the $1400-$1500 range at most simply because the world problems causing its rise have not gone away. If there is such a sell off I believe silver will fall in tandem and might bring us to the low 30s or if we're lucky even less. That in my opinion will be the time to load up. There may only be a short window of opportunity if any corrections are short-lived. It may not be easy finding physical locally if a sudden drop happens, but maybe as it drops there will be lots of press saying "the bubble has finally burst", etc., which could keep some from wanting to buy. I remember having no problem finding silver locally when it went from 50 to 33 almost overnight, although the premiums were a bit high for a short time as the coin dealers did not have time to bring in new inventory at the new lower prices to replace what they were selling.
What is different so far now from 2008 is that while stocks are dropping, PMs are not. In 2008 PMs got clobbered as the stock market tanked. So maybe any comparisons to 2008 are moot this time, or maybe stocks will need to fall more and create more of a general sense of "blood in the streets" for all investments before PMs decline? I feel that if stocks fall further, there will be a time that mutual funds and other such institutional investors will have to decide if PMs are going to keep going up or perhaps peaking. If they decide on the peaking theory, they will need to take profits (sell) in PMs to offset the losses in their stocks. They have to be concerned with their funds' annual percentage gains/losses and if their profitable assets (PMs) are not rising fast enough to out pace or at least off-set their stock losses, they will need to unload PMs to stop the bleeding in their funds' performance. Perhaps this could cause the PM correction (like it did in 2008) if any of this were to take place?
Another point is that so far the margin rates have only been raised one time in this latest gold rise. They will probably raise them again, but I wonder why they have waited this long in light of the rapid gains?
I am going to sit on the sidelines and wait for now. I still think silver is going to be the buy of a lifetime if/when it drops one last time before the "big takeoff" to crazy high levels. I will hopefully have a nice stash of "dry powder" available if/when that happens. But as always, there is a good chance everything I just wrote turns out to be wrong and PMs don't correct until gold is $3000 or more and silver is $100 or more.
What do you all think about any of this stuff happening?
Jim
