Pixel8r

For the record here:

 

Pix,

I am already moving back into Silver and SLV in the Beating B&H portfolios.

 

I see the risks, but want to sidestep some of the price risks in precious, when it shoots up too fast.

 

In fact, with one brief exception, I have stayed long 10,000 ounces or shares (either thru Physicals,

SLV, or SLV calls) through almost the whole period since I started putting the cash from the Silver

top back to work - That's in the Beating B&H portfolios, at least.

You have chosen still to ignore what I am talking about, so I will lay it out for you again as clearly as I possibly can.

There is a massive financial crisis going on, the banks are all actually bankrupt and money is being printed all over the place to stop the meltdown. Just say Greece goes into default and the EFSF does not get their new 2 trillion dollar rescue together, the contagion would quickly spread on to Italian and Spanish debt. This would lead to a derivative induced nightmare with banks going bust all over the place. Holding paper instruments on precious metals would leave you in a very risky position, you would have massive counter part risk. That is what owning physical precious metals gets around, they are no one else's liability.

So in short while the financial system is at a point of maximum risk holding paper PM (shares or options in unallocated metal) opens you up to the risk of the thing you should be buying physical metal to protect you from. Yes sure you will be able to make more fiat money, until it all breaks at which point you will lose everything.

Unallocated paper PM's are subject to massive counter party risk, especially in the largest financial crisis the world has ever seen. I have no idea as to why you continue to ignore this fact, is it purely greed?

This is the last time I am going to talk about this on here as I have said it many many times before.

I have taken the opportunity to swap some gold to silver today via GM, It seems a good way to handle the swings in the market to me. I have done 3 swaps now and each time it has worked out well for me, hopefully this time will as well.

By the long term trend, a consolidation over the next few months to 1650 isn't out of the question:

 

 

Wouldn't take much to then see it spike to 2000 bit later.

That should mean we get an explosion upwards in price over the next week then, if your last call is anything to go by.

 

Comments on Beating B&H thread

The Paragon Report: Silver Demand Declines

 

Friday September 9, 2011 12:26 PM

 

The Paragon Report, a New York based independent research portal, notes that there is a marked drop in demand for silver due to slowing in global production. More than half of the demand in silver is generated through industrial applications. According to the report, Silver Wheaton (NYSE: SLW.TO) amended their 2011 production tally in response to a slower than anticipated production ramp-up at their Panasquito mine located in Mexico. Silver production declined from 28 million to 25 million silver equivalent ounces, including 15,000 ounces of gold. Meanwhile Silvercorp Metals (NYSE: SVM, TSX: SVM) saw a 31 percent increase in silver production costs during its most recent quarter. The company posted record fiscal revenues of US$69.7 million corresponding to a 90 percent increase from the last quarter.

 

http://www.kitco.com...0110909_MM.html

Increasing Demand for Silver by the Solar Energy Industry

Posted on August 16, 2011 by SilverPrices.com Editorial Team

The US debt crisis and European economic woes has sent the silver trading industry into a turmoil as prices kept on declining through much of August. Traders and investors are grappled with fear since the current crisis could cause a decline in demand for industrial silver. Another interesting point that has come forward is the growing inflation rate in China, hindering a country's growth that along with Brazil and other developing countries has until now ceased further recession dips.

 

Across global markets, Friday and Monday have shown renewed improvement suggesting investors nature to risk probabilities. Silver as an industrial metal is demonstrating a reestablished interest, helping to stabilize prices.

 

Silver's role to buoy prices and act as a safe haven asset depends much on its role as an industrial metal. Silver investors need to look deep into this factor of the need of silver as a commodity in the industrial sector.

 

Despite anticipation of another recession, optimism still rules in favor of silver that there would be increasing demand from developing countries for silver intended for agricultural, industrial and energy-based goods.

 

In spite of the fact that investment markets eat a major part of pie share in silver demand, industrial use of silver is still the largest market, advancing from 349.7 million ounces in 2001 to 487.4 million ounces in 2010.

 

Presently, industrial demand for silver is 50% but is expected to increase to 70% by the next decade...

Gold, Silver Down Sharply on News of Jobs, Stimulus Package

Trusts, mining ETFs and miners also broadly falling

Why do you always post negative stuff? Gold, Silver and the miners have been doing just fine better than almost all other assets yet you only ever post negativity.

Ha ha, that's a point. Why is there no-one shouting "fiat is in a bubble! get out now!"

Some of us have for ages.

i cannot see the momentum for the move in silver just yet

Can you see it yet? Start of september and up 4% today.

Here's a few must read paragraphs from Ted Butler's latest report;

"Restating what I feel is the obvious; the dramatic gold rally was caused by aggressive buying by the group of speculative traders which are classified as commercials by the CFTC. Many make the mistake of assuming that just because these traders are classified as commercials that means their trading is purely for legitimate hedging purposes. Nothing could be further from the truth, as the bulk of their trading is speculative in nature. Therefore, while it would be technically correct to say that the gold rally has been caused by speculative buying, most would assume that meant new buying of long positions by easily-identified speculators such as hedge funds and momentum traders. That is definitely not what has transpired in gold recently, as the “normal” hedge fund and technical fund speculators have been selling COMEX gold contracts, not buying them. Instead, the big COMEX gold speculative buyers have been the commercials who were previously heavily short. Correctly identifying the true speculators driving a market is a distinction that makes all the difference in the world. That so few see it is amazing to me."

 

"There is little doubt that the commercial gold shorts have taken a horrific beating in buying back their short contracts. My guess is that the collective loss on the covered gold contracts so far [since early August - Ed] is on the order of $1.5 billion. Such a loss, even when spread equally among the roughly 40 traders classified as COMEX commercial gold shorts, amounts to a hefty per entity average loss of $37.5 million each. And I’m speaking of closed out losses only; there is still a large number of open gold shorts that the commercials are holding whose resolution remains to be seen. Those “open” losses run to an additional $8 billion at current gold prices. It is imperative to recognize the unprecedented magnitude of these closed out and open gold losses. It’s not enough to say that these commercials lost big-time; having never lost before on such a scale, the turnabout for these commercials must be shocking to them."

Still think we are going sub $1500 DrBubb?

http://www.youtube.com/watch?v=yCpaxZuw8H0

Reminds me of this old classic;

http://www.youtube.com/watch?v=tLxDRePUwEY

historically speaking, the summer move in gold was not the norm, hence i wonder how valid these seasonal trends are this late into the bull

 

with gold coming off its recent highs, i cannot see the momentum for the move in silver just yet

Well I think the move this summer was due to the continuing worsening of the situation, I am expecting this September to be even more dramatic than usual. The paper price of Silver has been beaten up from the 5 margin hikes, but all that has done really is increase the demand for the physical metal. In the end the physical demand will over power the paper games.

Did you see this snippet from Ted Butler's subscription service, which was published by Ed Steer today? It looks like this could be the start of the commercial signal failure which has long been talked about. The commercials buying in a rising market certainly talks of pent up momentum to me.

"From the COT report of August 2nd to the current report, the total commercial net short position [in gold] has been reduced by more than 57,000 contracts (5.7 million oz), as all three commercial categories bought short positions back aggressively. There should be no question that this commercial buying was the prime force behind the $300 surge in gold from August 1st thru the peak above $1,900. There should also be no question that the commercials uniformly panicked and took massive losses on their buybacks, as the technical funds and other longs cashed out at massive profits. This had never before happened in gold market history. The bottom line is that the buying back of commercial short COMEX gold contracts caused the price to explode. I believe the commer cials also bought back another large chunk of short positions on the big gold price decline after the Tuesday cut-off. Make no mistake – whether the commercials are buying back on price rallies or declines, they are booking massive losses on the buyback. That has never occurred before."

why next month in particular?

Because September & May are usually the best months historically for gold and silver price appreciation.

Silver (CMX): (High: May or Sep//Low: Jun or Dec) The effects of the normal contango price structure are especially pronounced. With each successive contract priced at a premium to reflect carrying charges, rollover produces a deceptive "rally."

so far so good - h&s being avoided, $50 on the cards for XMAS

I think that $50 is on the cards for September and once we are through it it will act as support, bit like the $1000 level for gold.

For any gold bugs on an apple mac, check this post out on 24knews - http://www.24knews.c...&p=14595#p14595

It's a cool way of adding the kitco gold and silver charts onto your desktop and having them auto update (you get to specify how often they are updated), you can also control size and opacity. My desktop now looks like this;

Longterm Logarithmic Gold USD Chart. The big question for me is, are we going to break on through to the other side?

Looking a little toppy here. Wouldn't be surprised to see it consolidate around these levels for a bit.

 

RH is turning into GEI's very own contra indicator, call a top again please.

I was pondering the idea that the only way the authorities can instill confidence in their own monetary systems and currencies, is to allow interest rates to increase, albeit marginally. A very minor increase will surely induce a short to medium correction in POG.

The trouble is that they can't due to the amount of debt and mortgages they now have on their books. Ben Bernanke has just promised to keep rates at zero until at least 2013.

I thought I better post this update here as well. I have been creating this graph since 2008 which many of you will have seen, I am amazed that it is still working.

It is a log chart of gold in UK pounds, the curve has proved as it has been tested and the reaction from it has been dramatic.

If this continues to hold we should be seeing at least £1800 an ounce by this time next year.

Just a quickie...

 

How would POG respond to an increase in interest rates (however unlikely)?

 

Thx

I don't think it would have any effect after maybe a small correction. The graph below shows the response of gold to real rates since 1970, which you can see is positive till rates are 3% over the inflation rate. So really for gold to start turning negative we would need rates to be around 8% currently, which is miles away from the current rates.

I also added to my EDV holding recently.

Have you see the thread in the mining section

Yes but don't post there much, have added an interesting link recently.

I am very intrigued by gold miners/explorers that are still plumbing (nominal!) 2008 depths, such as Axmin Inc. and Endeavour Mining, to mention two that John Embry had looked at 2-3 years ago. Do we have a thread that actually discusses why some of these companies are still dirt cheap while others have recovered? I am usually less into the stocks, so I am possibly not quite aware of corresponding discussions on here.

 

Related to this, I will put some money into larger producers sometime soon. Does anyone see a good reason why I should not buy Goldcorp or Yamana? Note that I am talking of larger companies here, so I know there is also less upside potential when compared with juniors.

Do you mean Endeavour Mining EDV thats used to be Endeavour financial?

Here's a chart of EDV which shows they aren't 'plumbing 2008 depths', although not a stella return they have been steadily climbing ( i am up around 40% in the 2 years I have owned them). Once you now a bit about EDV you can start to understand what the last to years have seen. They where a financial company providing merchant banking services to the resources sector, over the last couple of years they have transformed themselves into a producing gold miner by the purchase and optimisation of Etruscan. They also made a hefty profit out of buying and later selling a large portion of Crew.

I own some Endeavour mining and am actually excited about their prospects (have recently doubled my holding in them), their management seems top quality to me. They have one operating mine and a load of sites in the exploration and feasibility stages. They also have a large amount of cash on hand (around $200 million) which they are looking to acquire another miner which to combine into their outfit and move them from junior to mid-tier.

Just from their one current producing mine, they are on track to reach a P/E ratio of 2 in 2012, which means to me they are currently very cheap and have plenty of upside to come. I don't like buying miners that have already had big moves, prefer to try and find ones that have that to come.

thanks

 

Does this not show that the price of commodities has broken out (down) against gold. The last this happened was at the major low for gold stocks in 2009, the move from there was pretty strong.

 

Thoughts?

My thoughts on this graph are that gold and silver miners are unbelievably cheap at the moment. Their main mining expense (Oil) have fallen substantially against gold, while the shares have not been rising at the rate of gold's price rise. When there next quarters reports come out they are going to be showing amazing profits.

I think you are right and we are going to see a bull run for the mining stocks start very soon.

Does anyone have an up to date chart of the Commodities Index:Gold - i.e. Bob Hoye's real price of Gold. I remember him talking about a high real proce of Gold being a bullish driver for miners (as they're costs are lower in relation to gold).

 

Thanks

http://stockcharts.com/h-sc/ui?s=$CRB:$GOLD&p=D&yr=3&mn=0&dy=0&id=p79568295049

My feeling FWIW is that silver is about to go ballistic, once we close above $42.50 I think we will quickly go to and through $50. I am expecting to be approaching $60 by the end of September,

I believe it's based on a price pattern called the "Sum of Squares" that Livermore used to forecast moves in new stock issues. Sinclair has often stated that he believes this applies to gold. It's a bit mystical and enigmatic but hey, that's Jim Sinclair. I believe $1764 is a 7-fold move from the bottom, which is supposedly a threshold that once broken will usher in the parabolic phase.

Sometimes things appear that they act as resistance because he has said so in advance.