HPCsoYESTERDAY

I can see the obvious problems for silver price re. trade in 'paper' silver (which only has a limited connection with actual amounts of physical silver) and it's effect on the price of physical silver.

 

What I don't get though, and I'm repeating myself because not many seem to be commenting on this here, is why people keep going on about the divergence between 'paper' and 'real' silver prices - when the 'real' prices they're referring to are only those for small, retail investor market amounts (coins, small bars).

 

The vast majority of physical silver is apparently still being sold at spot - eg. 1000oz bars. When the majority of the physical silver trade market starts using prices that are different to 'paper' spot prices - then that's a proper divergence. I don't see how what's going on just in the retail investment trade can be held up as evidence for anything other then the state of play in that small(?) sector of the silver market.

 

Does anyone have figures for commercial and larger size/quantity physical silver trade that can prove genuine divergence between 'real' and 'paper' prices for the physical silver trade as a whole? Do people think this difference in only retail prices to spot will spread somehow to a true divergence throughout the complete physical market?

The way I see it: the retail coin market / small bullion (+demand) is going to meet the paper market (- demand) and something will have to give

For anyone with any doubts about all this talk of manipulation, physical shortages, etc... take time out to listen to "3a" (the first part of the third hour) with Ian MacDonald. I defy you to listen to him and think "this guy's an Internet crackpot who has no idea" - and yet he explains how interest in physical gold has never been higher, and how central banks are beginning to reconsider their policy of selling gold.

13 mins in:

'one refiner I talked to could not get blanks (for rounds / small bars) he is having to buy 1000oz bars instead (with delays) just to make the rounds / small bars'

I notice that kitco are now out of stock on maples (as well as eagles). Somethings gotta give.

I have already given my take on this several times. Physical demand is up, because of hugely lower prices. That is normal. It is only in bubbles that higher prices increase demand, rather than reduce it, IMHO. However, these huge drops would ruin any dealer who stocked up at $18 then had to sell at $11. So retail products are in short supply, and I predict they will remain in short supply until some price stability returns and they can safely restock.

 

If there is still divergence once we see price stability, then I will admit I was wrong. But until then, this shortage of retail products looks entirely predictable and straightforward to me. And it seems that some dealers are managing to maintain normal premiums, even now.

but did you listen to the link? This is new information about the jump in short selling between July and August. Please listen to it with an open mind.

btw, I checked some of my old orders - maples were selling for £10.21 (ex vat) at the end of June on coininvest. Today they are £9.23 (ex VAT).

I wish some of the silver bashers on this thread would seriously look at what is being said about physical price vs. paper price.

Yesterday, Magpie told me she/he had 'heard all the arguments' before etc. in response to a post I made; however, this post was bumping laymans link to the FFS broadcast where new data had come to light about a massive short position being taken on Comex by investment banks. Hence, this information was new and none of us knew about it till recently.

Also, wrongmove, start looking at the price of physical vs. paper please. I am not in denial, I realize that ag price has taken a massive downturn since July - but not as bad as you might think looking at physical prices.

Magpie/ Wrongmove. Please listen to laymans link - I would be interested to hear your take on it.

OK, guilty.

 

But I see people above justifying cg's prediction on the basis it happened "from memory".

 

Actually Silver went from $17.50 to $18.50. Then to a high of $19.30 later in the month. Bit of a hike, bu hardly an explosion, is it? Especially as it was followed by a long decline. My point is about the cognitive dissonance, whereby , rather than believe the guru was wrong, people imagine that he was right and construct a story to fit that act.

I'm not defending cg's position (I'm sure he can do that himself).

My 1st post to you was to try and enlighten you on what's hapenning in the silver market at the moment, namely, paper price manipulation down vs real physical demand up.

Again, I don't see anything new coming from you Magpie - just baiting whilst G&S are having a bad week. Have I missed something?

True - less generous posters might call it trolling

So how's the upward explosion going so far.

 

I ask merely for information.

Magpie - have a listen to this:

For anyone with any doubts about all this talk of manipulation, physical shortages, etc... take time out to listen to "3a" (the first part of the third hour) with Ian MacDonald. I defy you to listen to him and think "this guy's an Internet crackpot who has no idea" - and yet he explains how interest in physical gold has never been higher, and how central banks are beginning to reconsider their policy of selling gold.

Here's some pointers for you:

Listen from 8 Mins in:

Between July and August:

10 x increase in short position from inv. banks.....

3 investment banks (responsible for) 25% of open interest contracts (silver) on the Comex.....

(same as) 170 million oz silver / 20% Annual output of mines of silver in a year....

Now ask yourself, what happens when the physical market disconnects completely from the paper market?

link plays video - http://finance.yahoo.com/tech-ticker/artic...DJI,XLF,USO,XLE

Washington Wants Oil Down, Stocks Up Before Election, Harrison Says

Posted Sep 09, 2008 01:03pm EDT by Aaron Task in Investing, Commodities, Banking

With the nationalization of Fannie Mae and Freddie Mac, it's impossible to argue the Federal government isn't playing a crucial and growing role in the financial markets.

"Call it socialism, manipulation, intervention, [or] desperation. Call it what you will but don't underestimate the mandate," says Todd Harrison, CEO of Minyanville.com.

"The agenda [of policymakers] is very clear," he continues. "They need to stabilize the system [to] avoid the unthinkable -- a crash that's going to suck global capital markets in the abyss."

Certainly there's an economic benefit to avoiding a global financial market collapse. But Harrison has long argued policymakers had two major goals ahead of the election they are still pursuing: lower oil prices to $100 or below, and get equity prices higher.

Given all that's transpired in the past year, from the bailout of Bear Stearns to the Fed's special financial vehicles for Wall Street to this weekend's intervention, one thing is clear: The "invisible hand" in the markets these days belongs to Uncle Sam

Silver was badly affected by platinum (-6.2%) and palladium today (-7.72%)

If silver goes down anymore they will be doing 2 for 1's at Tesco's soon

Euro approaching $1.4 level again. Whilst the $ smacks the euro, gold will fall it seems.

Gold still well above £400/oz

and look what a 1ozcoin gets on ebay: http://cgi.ebay.co.uk/1oz-Fine-Gold-Kruger...1QQcmdZViewItem

why worry?

It really depends what you would do with the cash if you sold - go into shares or property? Both are going down.

 

If you go all into cash/bonds, you are effectively supporting the goverment and the bailouts on wallstreet [in my mind anyway].

 

Part cash, part PM non-margined is the way to go, unless anyone can see a better asset class.

perhaps ag. land if you are prepared to work it and can get it at the right price

and you're definitely right about non-margined pm's, holding (+buying/selling) physical has shown me what a ridiculous setup we have with pm trading (on paper) compared to the real thing

edit - that's ag as in agricultural and not the metal , though some ag mining fields would be nice!

We all know where gold is going medium to long term, don't worry, this is actually good news. We're at least going to see $680 again IMO, but I would prefer to see $620, fingers crossed. I hope it gets whacked to death, then I am all/mostly in with my STR fund.

If James Turk is right about the dollar bear market rally ending, then I would be very surprised to see pog fall below 770 ish

Not sure how reliable this information is. Still interesting.

 

https://www.blogger.com/comment.g?blogID=24...164371126975602

Interesting.

Not quite the same thing, but I ordered from an international dealer (non-eurozone) a while ago, went through the motions, clearly stated where the del. address was and got the shipping charges up and processed the order............

3 hours later I got a revised invoice with an additional £100 added because the shipping charges were wrong

I ordered 100 ounce silver coins over the weekend. I will wait until the end of the week before I pay for them in case the price drops, in which case I will reorder and cancel existing order That way I wont be too disappointed if it does fall further!

pardon my ignorance, but wtf!!

I was 1 day late with payment on a brits order and I got a shirty (automated in fairness) e-mail asking where the funds were, so I think they have taken a shine to you azazel, cos I cannae get away with canceling an existing order.

I do take your points Zitnik, and the fact that it is you making the points (rather than some [funda]mentalist VI who is incapable of seeing the other side of the argument) makes me take them seriously. I think it is best to just wait and see what happens as the price evolves from here. If the situation persists after a few weeks of stable prices, then I will definitely come round. but in the meantime, in the absence of any evidence either way, I will trust Occam's razor (and maybe buy a few silver coins from azazel's link, just in case. I am spending too much time here - those silver coins look a bargain at £10 just as an object, never mind an investment! )

Time to buy silver, when wrongmove is tempted to buy, the silver bottom must be in!

apologies if already posted:

http://www.bloomberg.com/apps/news?pid=206...emergingmarkets

Gold May Extend Rebound on Demand for Alternative to the Dollar

By Pham-Duy Nguyen

Aug. 25 (Bloomberg) -- Gold may rise for a second straight week on speculation the dollar's rally against the euro will stall, boosting the precious metal's appeal as an alternative investment.

Twenty-two of 28 traders, investors and analysts surveyed from Mumbai to Chicago on Aug. 21 and Aug. 22 advised buying gold, which rose 5.2 percent last week to $833.50 an ounce in New York, the first gain in a month. Five respondents said to sell, and one was neutral.

Gold, priced in dollars, generally moves in the opposite direction of the U.S. currency. The metal snapped a five-week slump, rising the most since July 2006 as the euro rebounded. Gold's gain last week surprised a majority of analysts surveyed Aug. 14 and Aug. 15. The survey has forecast prices accurately in 135 of 225 weeks, or 60 percent of the time.

This week's survey results: Bullish: 22 Bearish: 5 Neutral: 1

check this out:

http://cgi.ebay.co.uk/ws/eBayISAPI.dll?Vie...0863%26_fvi%3D1

This looks like an interesting graph:

From the following article:

http://www.kitco.com/ind/Radomski/aug152008.html

From Dow Jones Newswire:

 

"Adding to the buying today were reports that central banks are apparently choosing to hold on to their gold and could bring the lowest amount of gold disposals to the market since 1999," Nadler said.

wow!

edit - this must be bullish news!

If this is true the winners here are the mints, since they have increased their margin from spot to resale. My advice is purchase from BV and stay close to spot.

I agree with this, not so much on the BV side of things (personal choice that's all) but staying as close to spot as possible buying physical at the moment.

I have been tracing the price of silver (coins and bars) between many dealers extensively since Friday AM and it seems to me that once the refiners and mints cope with the backlog, the price of bullion coins will slowly come down (given a backdrop of steady silver spot price).

Staying close to spot seems obvious, but hard to do at the moment (physical), just be inventive! or play the waiting game hoping that pos will not rise dramatically in the short term

I just spoke to a jeweler , friend of mine that lives in Taxco, the Silver capital of Mexico, he said this is a good time to buy and they sell at (day_high+day_low) / 2 of NY spot price. This problem of delivery happens only in US I guess.

I read another blog from that link (8th Aug), here's a bit that caught my eye:

'These are my observations after 40 years. No need to push a point. I CHANGE my views as the market changes them. Much like the gofer in so many organized crime movies, when I need an opinion, the market tells me what my opinion is.........

For that reason, I can be bullish this week and bearish next.... no agenda, just trying to profit......OBJECTIVITY....my goal. We all have the same end, I just dont have the time to read everyone anymore, so I trust the markets data, not just one market and not just one kind of data.'

Sort of a 'which way the wind blows' approach if you ask me.

a prediction of silver to 6 bucks:

http://4.bp.blogspot.com/_R55OJ80AZ4U/SKlw...BADgoodNews.png

source: http://denaliguidesummit.blogspot.com/

if oil goes to 80, gold hits 600 and gold/silver ratio goes to 100 at that moment, this is price is possible.

Try buying physical silver for anything near spot at the moment.

In other news, Freddie mac ends up 25% down on the day.

A paper price of $6 for silver is exactly that, a paper price.

But having said that, your buy and sell examples aren't very comparable.

How so?

The only product difference is the year of the coins

The point I'm trying to make (perhaps not very well) is that if I hypothetically bought today using a dealer and sold today using ebay, the difference the VAT makes is neglible

More importantly, why would anyone buy a product which has 17.5% VAT slapped on it? That seems like quite a dent in the investment.

 

Andrew McP

Is that on top of the 10% spread? That's an instant crash in value the second you purchase!

 

 

I guess the motivation for holding physical is more as an extreme insurance policy than as a way to make money.

please see above example

But the VAT you payed is money lost to you (and gone to the tax man). The dealer when buying back does not pay you back the VAT.

This issue about VAT on silver is a red-herring imo. OK, if you can save a bit by getting the coins delivered to a non-uk address, then there is definitely a saving. But, this is why I think it's a red hering:

Both examples apply to today

PURCHASE - 20 x 2008 eagles @ 10.36 = 207.20

http://www.coininvestdirect.com/main.php?a=11&id=229

SELL - 20 x 2002 eagles @ £230.02

http://cgi.ebay.co.uk/ws/eBayISAPI.dll?Vie...6795%26_fvi%3D1

OK not exactly like for like (diff. years) but you get the picture (p&p costs cancel each other out)

update - knock off 5% SALE VALUE for ebay fees + another 5% for paypal, but this is not mandatory of course.