Silver Correction Over and Gearing Up for Explosive Rally

[MalteseFalcon]

Found this nifty article that was posted on the net just yesterday:

http://www.marketoracle.co.uk/Article4673.html

 

[jim4silver]

I don't think that the correction is going to be over for a while. If things remain as they are currently in the world, then the correction may continue for a bit. If any new tensions break out in the mid east (Iran, etc.), then the correction will end abruptly I believe. I actually hope silver goes lower so I can buy more. Within a couple of years (or maybe less), I believe that silver will be double where it is now.

As long as the fed keeps adding "liquidity" as they have been, I see no way around inflation, hyperinflation or maybe stagflation. If for some reason we wind up with deflation, then I think silver and all commodities will drop.

Jim

 

[MalteseFalcon]

I saw an article last fall that showed the yearly silver prices for the past 4 years or so. Each year, silver spiked in price in February to April, and then bottomed out in June-July.
So I timed my last silver sale accordingly, and in February when it was up at around 20 an ounce I sold.
Made out rather well.

 

[jersey devl]

Let it drop...we will reach $28-30 by next march. Fundamentals long term are still obvious. Sell in may and go away...not for long!

 

[jim4silver]

Let it drop...we will reach $28-30 by next march. Fundamentals long term are still obvious. Sell in may and go away...not for long!

Jersey Devl,

I hope you are right. I think that the next big movement in silver and gold will surprise many (not people on this board, but the general public and the business TV talking heads). I don't know when it is going to happen or what will specifically cause it to happen (other than of course the many reasons that exist so far), but I think there is a better chance of there being peace in the world than of having silver and gold go down and never rise again (to new super highs).

Jim

 

[jim4silver]

I saw an article last fall that showed the yearly silver prices for the past 4 years or so. Each year, silver spiked in price in February to April, and then bottomed out in June-July.
So I timed my last silver sale accordingly, and in February when it was up at around 20 an ounce I sold.
Made out rather well.

MalteseFalcon,

Sounds like you picked a good exit point for now. But the question is, if you plan to get back in, when do you buy? Will we hit 15, 14 or lower?

If there is some type of bs dollar rally, how low will we go?

Jim

 

[Immy]

I remember going to a coin show in late March and seeing a dealer selling silver rounds for $18 each which was just about spot back then. I debated buying about 10 of them for the heck of it but decided instead to get a 1932-S quarter so I'd be one coin away from finishing my Washington set (the 1932-D is next at the next show in a couple weeks). Since that show silver hasn't approached $18 again.

 

[jim4silver]

I remember going to a coin show in late March and seeing a dealer selling silver rounds for $18 each which was just about spot back then. I debated buying about 10 of them for the heck of it but decided instead to get a 1932-S quarter so I'd be one coin away from finishing my Washington set (the 1932-D is next at the next show in a couple weeks). Since that show silver hasn't approached $18 again.

It may take a while before it goes up again. If you look at 2006, silver went from around 15 or so down to 10 or so in a few months. From there it climbed to over 20 this year. The corrections are said to shake out the "weak hands". I don't know if that is true, but in the past commodity bull markets have lasted longer than the one we are in now, when the fundamentals then are not as positive as they are now in my opinion. So I would bet that we have more bull market left, by a couple of years or more.

Jim

 

[jim4silver]

I keep hearing and reading that China needs lots of silver for technology and it can't produce enough of its own to satisfy the need. I also think the world economy is going to get worse because of the food shortages and rising food costs. With this information, presuming there is even a small percentage of it to come true in the next 12-24 months, I think silver will climb over $20/troy ounce. I hope so, I just bought a few 90% US coins from a friend at 14x face. If it doesn't climb, I'll have a safety deposit box that costs more to rent than it's worth. LOL

Oh, these same sources of information said gold doesn't have the same demand as silver because it is mostly used for jewelry now, and some dental work. If the world economy remains shaky, the demand for jewelry declines. Silver, on the other hand, is used for technology and jewelry. What do you think? Do you think this information is being spread by precious metals brokerages in order to sell more product, or is it based on sound predictions?

Treasure Tales,

Metals dealers I am sure will use such info in an effort to sell more metals, but I still believe the info to be accurate. Silver is being used in more and more items, especially new technologies.

While gold does not have near the industrial use as silver, I think gold is preferred by the "big money" folks as a store of value, or what is called "real money". Silver is also thought of as "real money" in some countries, but gold has always been dominant in this regard I believe. I think silver has a better chance percentage wise of making gains though, due to industrial demand and its low price relative to gold. And if/when precious metals really catch on with average folks, I think they will buy more silver than gold simply because its lower price seems to make it a better deal, whether or not this is in fact true.

I think the real upswing in price will happen when these average folks decide to buy silver because they want an investment, way to protect their wealth, etc. There are conflicting reports on whether or not there is enough supply to handle industrial demand. With the higher prices in recent years, it seems that more mining operations are gearing up.

Thus, I think that investor demand, coupled with industrial demand and what could possibly be insufficient or tight supply could cause silver to climb in a big way. Also, there are allegations of manipulation going on in the futures markets via short selling by a few big players. I dont know if this is true or not, but if it is, this could also be holding silver back right now.

Jim

 

[Immy]

I have a friend in the jewelry biz (everything from design and manufacture to sales) and she says the sharp fluctuations are giving them fits. The main problem is, some of their bigger buyers want contracts that lock in the metal price for a whole year! How can you do business like that?

 

[jim4silver]

I have a friend in the jewelry biz (everything from design and manufacture to sales) and she says the sharp fluctuations are giving them fits. The main problem is, some of their bigger buyers want contracts that lock in the metal price for a whole year! How can you do business like that?

He would probably have to get long futures contracts and demand delivery, however he risks downside movements with this. I guess he could go long and demand delivery, and get put options as "insurance" if the prices go south.

It would be hard to guarantee a price though in any event with markets the way they are.

Jim

 

[jersey devl]

A historical average measure is 16:1 silver to gold ratio (16 oz of AG to 1 oz AU), it is currently around 50:1...when this gap closes ,say even to 25:1 patience will have then paid off (literally). There have been historical instances when silver was worth more than gold...this is before the comstock load, and above ground supplies are dwindling. The US geological survey addressess the fact that there are only 11 years left of surface crust AG left at current mining standards. All this and that doesnt even take into account the madness of what our GUV has done to the economy!
Look at a 10 year chart for say Platinum and you'll get the idea (although Id rather it be more like a rhodium chart)

 

[MalteseFalcon]

MalteseFalcon,

Sounds like you picked a good exit point for now. But the question is, if you plan to get back in, when do you buy? Will we hit 15, 14 or lower?

If there is some type of bs dollar rally, how low will we go?

Jim

Not too sure about the dollar. Considering that a) we are at war, b) the Ring Of Fire is blowing up around the Pacific Rim (China and Chile), c) Cyclones are destroying other parts of SouthEast Asia, d) we are in an election year, and e) we are in a recession (sure seems that way to me, regardless of the experts being afraid to use the 'R' word publicly)
there truly is a lot of uncertainty in this world right now that can affect the economy.

As for when I buy silver, well I buy it every week when I go to my bank and get a box of halves.

I think if the price drops below 12-13 again, I might actually buy some bulk.

But right now I simply cannot beat getting anywhere from 2-7 dollars for a half I spent 50 cents for lol.

 

[50centman]

Whatever silver goes to(and I think it will go up) we get it for 50cents. We all need to save, how can we go wrong? On top of that, we get to build collections, meet new people, and treasure hunt at the same time. Sounds like an all around good deal to me.

 

[jim4silver]

I have noticed in the last day or so lots of gold and silver pundits are stating in their blogs and articles that the correction is over, and that in the next few weeks the bull will be back in force. I don't know if I believe the correction is over for good (for the whole spring and summer), but I hope they are right.

Jim

 

[TxTim]

I'm not a bear but I look at silver prices to stay around $15- $17 for a while.
Silver is not scarce. It is not mined as the primary ore like gold. It is mainly a byproduct of gold and lead mining and silver concentrate is sold to cover costs. More mines are starting to concentrate on it specifically with the higher prices.
The price of silver is tied to the dollar. When the dollar is weak, investors tend to shift investment to hard assets. The dollar is hurt by low interest rates. Foreign investors look to other counties for higher yielding bonds - hence the strong Euro.
Despite all that, the US still has the hottest economy in the world.
Industrial demand was strongest when it was used to make film. New industrial uses for silver have a long way to go before they reach the quantities once used by Kodak and Fuji. Higher silver prices won't help those markets. Alternatives to silver will be explored.
Two consistent themes for causing the rise and fall of silver prices by the experts are the strength of the US dollar and the demand of Asian jewelers.
The dollar seems to have reached rock bottom. Any upward trend on dollar value will keep the lid on higher silver prices.
That being said - where else can you buy an ounce of silver for $1.50 except in a box of halves? It's the best way to buy silver in the world!!
I can't seem to pass up the copper opportunity either. Copper pennies are worth 2 1/2 times face. Although small, it's a hell of a profit!

 

[jim4silver]

Despite all that, the US still has the hottest economy in the world.

I would have to disagree with your statement that the US has the hottest economy. If it weren't for the fed reserve pumping out liquidity like there was no tomorrow we would probably have a depression here. Watch and see how many more banks and other financial institutions they bail out in the coming months/years. I would say that our economy is somewhat like a house of cards now. I wish it weren't that way, but I have to call it like I see it.

If things were so great here with our economy, why would the government be sending $600 to everyone to go and spend? Most of the manufacturing jobs that once made our economy strong are overseas or otherwise gone.

At some point all the "stimulus" packages and fed liquidity are no longer going to work. At that time, and now, precious metals with hold their value I believe. Inflation is costing Americans greatly with higher fuel, food and energy costs. I bet their incomes are not increasing at the same rate as inflation.

P.S. China's economy is much stronger than ours right now, if you use economic growth as a measure.

Jim

 

[coinmojo]

but I have to call it like I see it.

If things were so great here with our economy, why would the government be sending $600 to everyone to go and spend? Most of the manufacturing jobs that once made our economy strong are overseas or otherwise gone.
At some point all the "stimulus" packages and fed liquidity are no longer going to work. At that time, and now, precious metals with hold their value I believe. Inflation is costing Americans greatly with higher fuel, food and energy costs. I bet their incomes are not increasing at the same rate as inflation.

P.S. China's economy is much stronger than ours right now, if you use economic growth as a measure.

Jim

Shop at Wal Mart or drive a Foreign car?

Have you bought anything made in America lately?

Do you even think about buying made in America?

Look around your house. What do you have that was "MADE IN AMERICA" ?

To make matters worse we just saw a 25% increase in gasoline prices this year already.

How much gas is $600 gonna get you? ... what is that gonna stimulate?

Are you gonna spend your stimulus check on things "MADE IN AMERICA" ?


Mojo.

 

[jersey devl]

THE FACTS By: Bix Weir



The following is a list of facts and reasons to switch all your investments into Physical Silver:



1) The Gold Banking Cabal is heavily involved in the suppression of the price of Silver and would be mortally wounded when Silver breaks the bonds of manipulation. Due to the tiny size of the market and the lack of physical Silver available to the manipulators, the Silver battle is much easier to win than Gold.



2) Central banks have NO physical Silver to assist in the manipulation of the Silver market but they still have a lot of physical Gold (although much less than they claim).



3) The majority of Silver mined every year is consumed as an industrial metal in very small amounts and will never return to the market whereas the amount of above ground Gold grows year after year.



4) Silver has developed, due to its low price and superior physical properties, into a vital and necessary industrial commodity that makes it mandatory for modern life. If we woke up tomorrow and gold vanished from the face of the earth, life would continue pretty much as it was the day before. Without silver, modern life would change.



5) Due to the relative very low price of silver and very high price of gold, the man in the street, around the world, is in a position to buy silver in much greater quantities than gold.



6) In various forms there is an estimated 5B oz of above ground Gold and 5B oz of above ground Silver but Gold trades at $880/oz and Silver trades for only $17/oz. Both metal prices are obviously manipulated but Silver appears to be manipulated more. As for Silver bullion that is “in play” for the manipulators, I estimate that less than 300M oz remain (COMEX Inventories + SLV Inventories) with a current market value less than $5B.



7) Silver has been in a supply deficit for over 50 years! Governments held approximately 10B oz of silver in 1950 and have been supplying that physical stock steadily into the market. Today there is no more of that surplus silver left to sell.



8) At current Silver consumption rates there are only 18 years of known Silver reserves remaining in the world. AFTER THAT SILVER WILL BE GONE FOREVER! Think about it.



9) Demand for Silver is “inelastic” in its industrial applications because it is used in such small quantities per application. An increase in price does not translate into a decrease in consumption.



10) The COMEX Silver short position is the largest concentrated short position of any commodity, on any exchange in the history of financial markets.



11) Throughout human monetary history the Silver to Gold ratio hovered in the 10-1 range until the invention of futures and options trading in metals. Since that time the ratio has risen to where it now stands at over 50-1.



12) The US Dollar as defined in the Coinage Act of 1792 is Silver, not Gold, and contains “three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver.”



13) Silver is massively under reported in the media vs. Gold. Even Jim Rogers, the commodity guru, purposefully ignores Silver entirely in his best selling book “Hot Commodities” even though Silver exceeds all other commodities using his metrics on what makes a strong commodity.



14) Very few investors have physical Silver in their possession. Reasoning: because they claim it is “too hard to store”. Does that mean when Silver trades at over $1,000 oz people will be more willing to buy and store physical Silver? It is difficult to make up a more bullish reason to take delivery and store physical Silver TODAY…when the Cabal price rigging scam finally fails you can always buy your own Fort Knox to store all that pesky Silver you bought!



15) Gold’s strong fundamentals are only exceeded by Silver’s so when the gold manipulation stops and the Gold price takes off investors will be looking for the next under-priced investment with similar characteristics.



16) 470M oz of Silver owned by the US Treasury and used in the Manhattan Project for the construction of the atom bomb have all been melted down and sold into the physical market to support the “Strong Dollar Policy” http://www.silverbearcafe.com/private/silvermystery.html



17) Silver mineral deposits, as opposed to Gold, are usually very shallow in the earth’s crust due to the nature of the geology so most of the large deposits of Silver have probably already been found and/or already mined limiting future discoveries.



18) There is a significant problem with counterfeit Gold bullion because of its high price. Silver bullion has not, to date, had as much of a counterfeiting issue because its price did not justify the effort. (although there is a problem with counterfeit Silver jewelry which may significantly suppress Silver scrap recovery in the future…oddly bullish by-product of counterfeiting Silver!)



19) The total dollar value of the Silver market is a fraction of the total dollar value of the Gold market.



20) Most flat screen televisions use Silver in their internal electronics/screens and the US transfer from analog to digital signals in February 17, 2009 should temporarily increase the demand for new TV’s when the switch is made. http://www.dtv.gov/consumercorner.html#faq3



21) Retail physical shortages of Silver are already beginning to appear around the world.



22) Hedge funds are bleeding from the credit crunch and they are looking for ways to save themselves. A single hedge fund can scoop up the remaining physical Silver and blow the price sky high.



23) In the US, Gold confiscation laws are still on the books but there are currently no silver confiscation laws.



24) In March 2008 the Gold price breached $1,000 or 120% of its historical high. Silver, on the other hand, only approached $21 or 40% of it’s historical high suggesting that Silver has a long way still to go.



25) Un-backed paper Silver programs such as silver certificates and unallocated pooled accounts are the “industry standard” these days and will be scrambling for metal when redemptions are called in by the investors.



Hopefully, that’s enough pro-Silver data to convince you to make the switch.

 

[jim4silver]

THE FACTS By: Bix Weir

23) In the US, Gold confiscation laws are still on the books but there are currently no silver confiscation laws.

Jersey Devl,

I am all with you on the pro silver vibe. However, the confiscation law enacted by Roosevelt is no longer in effect (if that is the one you were talking about). When President Ford came into office he signed a law, or made an executive order, that once again allowed US citizens to own gold bullion, etc.

The reasons for the "confiscation" laws signed by Roosevelt are too diverse and many to go into here, but simply put gold was circulating money then (various denominations of gold eagles and the $20 st. gaudens), and the government needed to get its hands on it for various reasons that do not exist today.

I have heard via the internet that there are some "emergency" provisions in one of the various parts of the patriot act that gives the government the power to seize items in safe deposit boxes if they declare that some type of special "emergency" exists, but I have never seen actual proof of that rule in writing, and this may just be an urban legend.

I am not saying that there could not come a day that the government wants its citizens to turn in their gold again, but if they do it will be for different reasons. If things get so bad that they want your gold again, they will probably want your silver and perhaps other tangible goods as well. They can make any law they want if things get bad enough here. I personally don't think they will ever confiscate gold or silver because not enough people (US citizens) hold enough of it to make any difference. If they really want it (physical metals) bad enough they could take the ETFs' holdings and give them fiat currency to replace it perhaps.

Watch out for coin dealers that want to sell you marked up certified gold coins on the grounds they are non-confiscatible because it is a coin of "high numismatic value", or some language to that effect, which was language that was in Roosevelt's order. Truth is, that order never defined what types of coins were exempt, and the coins they were "confiscating" are the ones people are buying today which are certified, St. Gaudens, Liberty coins, etc.

Jim