romans holiday

Could silver drop to $25 an ounce and then rebound to $60?

By: Peter Cooper

http://news.silverseek.com/SilverSeek/1309353964.php

The ArabianMoney newsletter this month (subscribe here) points to the end of July as looking like a low-point for silver, and has some interesting ideas for subscribers on how to best profit from the price hike to come. That low may be close to the current price of $34 an ounce or the $25 cited by some keen chartists and followers of the fibonacci series.

 

At a more fundamental level the silver price probably comes down to what happens in Greece and the eurozone over the debt crisis like everything else. If financial markets rally on another temporary solution then silver will stay up. If financial markets turn down sharply silver will probably fall harder than most, unless we have a crisis of confidence in money and that is why you should still hold silver.

Gold predictably continuing to consolidate around 1500 on the long term trend line. Should bounce on the blue line soon. This chart from a couple of months back.

I am one of them. I recently changed tactics and are bying gold every week, regardless of price,

instead of restricting purchaces during the slow summer period.

 

No queues, however, or lack of physical. The article is exaggerating.

Makes sense if one is building a core in bullion. But then I wonder, if the trend is clear, why not just pile in 50% or your liquid worth or so... and hold back with some funds if concerned about a large correction, or if concerned you might be being deceived by some evil genius.

Same conversation we have had before, but needs to be had again by the looks of things.

 

The trend in gold prices will and is accelerating as time goes on, each amount of printed money has less effect therefore causing more to be printed and leading to higher prices. The trend line since October 2008 is at more at a 42% rate of increase, until that line breaks why call it 20% when it has been in place for over 2 years?

 

There seems little point to keep reposting the flawed analysis.

 

Time will tell. The longer term trend is more significant imo... it also gives you more room to the downside if another correction comes. If you take the latest short/ medium term trend of "42%" as your guide [from the heavy correcting spike down in 2008, which seems an odd point to take as bullion always over-corrects], that would put gold at over 2100 this time next year. Could be, but more likely the price will be around 1700/ 1800 based on the long trend. Why not be a bit less patronizing to other views....a definitive answer could only be found by re-visiting it in a year or so's time. Or again, look at what has been predicted a year or so ago. I've been predicting a slow and steady increase in POG for quite some time... in contrast to the moon rockets, a rare sight these days.

Gold price trend is pretty clear, 20% odd appreciation annually against the reserve currency. Factoring in also the depreciation of assets [against the dollar], and you have an even greater relative appreciation of gold in real terms.

Gold is bigger than just [hyper] inflation concerns. As opposed to an inflation hedge, the article mentions gold as an alternative currency.

http://www.bloomberg.com/news/2011-06-16/gold-climbs-for-third-day-in-new-york-on-demand-for-currency-alternative.html

Gold rose for the third straight day as volatility in the currency markets boosted demand for the precious metal as an alternative investment.

 

The euro fell to a three-week low against the dollar on speculation that Greece’s sovereign-debt crisis will worsen as talks over another aid package stalled. The greenback has dropped 12 percent in the past year against a basket of major currencies. Gold priced in British pounds rose to a record today.

 

“Gold is now a currency,” said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. “Gold is strong and growing stronger.”

 

On the Comex in New York, gold futures for August delivery rose $3.70, or 0.2 percent, to settle at $1,529.90 an ounce at 1:46 p.m.. The price gained 0.7 percent in the previous two sessions. The metal has advanced 24 percent in the past 12 months.

 

Implied volatility for one-week Eurodollar options surged to the highest since November. The measure signals the expected pace of swings in the underlying currency.

 

Gold rose to a record $1,577.40 on May 2 as escalating sovereign-debt woes and record-low U.S. borrowing costs increased the appeal of the metal as an alternative to currencies. The price denominated in euros reached an all-time high on May 25.

 

‘Roll the Dice’

“Investors don’t want to roll the dice on being caught in one particular currency or the other,” said Adam Klopfenstein, a senior strategist at Lind-Waldock, a broker in Chicago. “There is gravitation toward the gold market to diversify away from paper currencies.”

First of, long term bullish on silver.

That said, a very good chance she's going to remain volatile.... and that in the aggregate may appreciate at a similiar rate to gold... being around 20% a year [in 2006, silver was 13 dollars]. 20% appreciation a year would put silver around 32/33... but could well over-correct.

A long term log chart could be crucial to seeing where silver may go in the short/ medium term here.

The thin blue line is presently around 25.

Hi RH,

How are things going ?

 

I am not a well educated man, but how can we have deflationary pressure when we have millions of new people moving from poverty in China and across Asia all spending billions of QE dollars printed by the Fed and pumped into the emerging world markets for goods and commodities?

 

Surely increased demand, and increased buying power created by un-backed delusionary fiat money, chasing a limited supply of oil especially, not create strong worldwide high inflation!

 

The west is like a heroin addict who has a dollar printing press to pay for his bad habit?

 

The dealer cranks the price due to shortage of goods due to increase demand from other new users, the addict prints the Dollars vicious circle till the dealer realizes the dollars are nothing but paper, the oil and goods supplied have been consumed too late.

 

Solution let's rebase and start again with a pre Nixon floated Dollar ?

 

I know I am punching way above my weight here with you intellectual guys, but in simple terms if I owed a dealer a sh*t load of money and I thought I could engineer a hyper inflated solution to my debt problems over a number of years, and I HAD THE KEYS FOR THE PRINT ROOM I would print as much as I could for as long as I could?

 

That’s how I see the west debt addicts and oil addicts, who have gone past the point of redemption, their spending is now out of control?

 

Regards

 

ML.

Hi ML, I'm good at the mo enjoying a life of leisure.... though will start manual labouring myself on a long time acquaintance's orchard next week for a month or so. Funds earned will go into a pretty flash metal [gold] detector, which will be put to work in the Central Otago/ Queenstown area this summer. Bring it on.

All you say in regard to "printing" I see as part of the equation. Other aspects such as the deflation of asset prices, and then currencies against gold, bring me to a novel view of things which seeks to accomodate both inflationary and deflationary aspects. The crucial point is that "money printing" will not lead simply to more money chasing goods and assets, and hence conventional inflation. Rather, QE adds to the debt burden on currencies/ economies, this in turn weakens currencies against gold [now being effectively monetized]. This at the international level. At the national level, continued debt deflation leads to the possiblity of fiat currencies appreciating against local assets [even as both depreciate against gold... assets doubly so]. Within this context, commodity prices could remain volatile, where they first spike on speculation [inflation expectations], and come off again with moments of deleveraging/ short-covering [deflation expectations].

The solution could be a matter of gold slowly and steadily rising to a market price where it effectively "recapitalizes" economies... and where it also becomes more economical to mine.

It's all relative, and depends on your perpective. I could [and do] say everything deflates against gold. Or, you could say the price of gold must inflate. But I think it's problematic to say that the price of everything must inflate [hyper-inflation]. This would involve saying asset prices [property/ stocks] etc will "go to the moon" [along with gold] which I think is highly dubious.

I think the current trend of these past few years will continue into the future, which makes gold even a good buy here for those that haven't yet bought.

Gold bullion remains owned by a tiny percentage of retail and institutional investors and there has not been any piling into gold yet - contrary to some sensationalist reporting. The risks posed to all fiat currencies and the real risk of an international monetary crisis will likely lead to a gold mania phase when investors and savers do actually pile into gold.

 

This is when gold will likely go parabolic in price as it did in the 1970s when it rose 24 times in 9 years.

 

Golds gradual rise in recent years is in stark contrast to its parabolic rise in the 1970s particularly in 1972, 1973, 1974 and 1979.

 

 

Gold surged by 49.7% in 1972, 73.5% in 1973 and by 60.1% in 1974. In the final phase of the bull market in 1979, gold surged 140% in one year. Golds recent rise has been tame in comparison with the animal spirits remaining subdued and media coverage remaining very limited and skeptical especially in the UK and Ireland.

It's possible that gold could explode out of its long term trend. But today could be quite different to the 70s, where there were not so many deflationary pressures. If the trend continues at its present rate of around 20% appreciation anually, then the gold price, in US dollars will be around 1800 next year.... and then around 2160 the following year.

Pretty good, don't you think?

Indians certainly love their gold. Picked up a bit of casual work picking kiwifruit with an Indian gang for the past few weeks. On the last day, the topic turned to gold. After pulling out all the gold chain necklaces and flashing the gold rings, they stared at me as if to say "well, show us what you got". I pulled out my vial full of gold flakes from the South Island rivers. Expression, priceless.

King World News has been hacked for two days now.

Calm down man.

Major purchase of gold ETF's. Had to, despite the expected summer correction, which I do not expect to be significant. The reason, is that cash in banks in Greece does not seem safe, after political leaders failed to come to agreement. I only wish I did that a little bit earlier at the 1470$ level.

Sweet. The trend is pretty clear. Steady as she goes.... year on year.

http://www.financialsense.com/contributors/christopher-laird/is-stagflation-the-long-term-trend

But, interestingly, gold held rather steady compared to silver, which, come on guys, had reached double the recent price ranges from a former peak of about $20 for the last few years, then reaching 2.5 times that when silver touched or tried to touch $50 this last year. That was a speculation bubble which was going to correct regardless.

 

So, in a way, I would not use the major silver correction as a measure to take any credibility from gold’s steady rise to the $1500 range over the years. So, I discount the silver rally/crash as being a total negative on gold prices. Silver is another matter and can correct a good deal here too, if the USD continues rallying, which today the USD is at 75.47 on the USDX, which is heavily Euro weighted.

We also indicated to subscribers the TSX had peaked around 14000 that after the USD bottom alert, and that the Euro was turning down two weeks ago. The Dow is stalled at 12500.

http://www.positivemoney.org.uk/2011/05/positive-money-podcast-episode-2-professor-mary-mellor/

 

GF's remark of 'you can't tax deflation' certainly rings true.

 

The prof above says that the currency is the reflection of the ability to tax and if this is true, the hoarding of gold by a populace in times of currency devaluation must be a complete nightmare for TPTB. It all starts to make logical sense to keep pm prices suppressed. But how will this end now that Au is being remonetized. I can see trouble ahead but not the end game or what TPTB will do. I can't see that confiscation would work but punitive taxes on PM sales would be possible and a Black market to follow. This may make an exit from PM's tougher than we think.

Numont and Glass Earth are looking at opening some more mines here in NZ. This is part of a natural process; gold rises in price until it becomes economically viable to mine/ produce more of it. imo the re-monetization of gold also co-incides with the re-capitalization of economies. Why would governments want to interfer with this process, or supress the price of gold. As it is, the price of gold is moving up at a slow enough pace not too get people too excited about it... but at a pace where many wrongly suspect it's in a bubble.

Bit quite on the gold thread these days. Boring old gold plodding along,,,, 20% odd appreciation annually.

Comparing apples and oranges.

Is gold a "major asset class", or a major currency? This is the major question.

If a currency, you'd expect it to appreciate [in a deflation] as asset prices decline. The chart is a little troubling if you see gold as merely an inflation hedge", and then see that other supposed inflation hedges [assets] have declined in price.

Assume markets will be volatile and uncertain.... and assume this will be good for gold in the aggregate.

Take a pragmatic approach, and draw a distinction between gold and more volatile silver.

Buy and hold gold [and a bit of a silver if you want].

Then [attempt to] hedge gold by trading the volatility of silver against the currency of your choice. I think either Yen or US dollar are the best for this as they move "contrary" to silver/ gold.

Relax and chill.

I have just swapped a smaller amount of gold for silver. That way I have converted silver bullion into more silver bullion over the past days, while staying fully invested in the precious metals bull and in non-paper assets.

Then Silverfinger you really must be!

Gold looking due to consolidate towards the long term trend line.

 

Gold had looked due a correction. Could go as low as 1430.

'Out at 17.90'

 

(just pulling your leg)No doubt mine will be pulled, too.

 

Nice to see you back btw. Not missing your kimchee with becquerrels, then? I could send you some?

And mostly into gold, which has also performed well since then, and I half expect the price to be "stickier". A trade missed with silver/ gold, or silver/ dollar but there's always another. I'll continue to play the devils advocate [against myself] with the volatility in silver.... in order to hedge gold.

Back to the old ugly days.

 

I recommend selling silver at every high. It is heading to the 200DMA (28$).

Could well do. Mid 20s, perhaps lower, could possibly be a good buying/ trading opportunity. Given the recent explosive move upwards, this has to be considered possible.

from Zerohedge

Sprott Sells $35 Million Worth Of PSLV Across Different Funds In Week Between April 18 And April 25

Hang on a sec. Isn't Eric Sprott, an uber silver bug/bull in the media? And if the above is true, wouldn't that leave him open to charges of "ramping" in order to profit form it?

This is it, we've entered the period of high volatility, as Sinclair has predicted a long time ago.

 

And, as usual, posting a rocket has stopped the ascent.

If you look at the previous chart I posted, the volatility [in real terms] is remarkably reduced with gold appreciating at a much more ordered and steady rate, which has been my prediction for quite some time. Nowhere in the past couple of years have we seen the huge moves to the upside, and then the large corrections that were typical earlier.

The reason for this, imo, is the monetization of gold, where CBs/ investors buy gold increasingly as an alternative currency.

Gold looking due to consolidate towards the long term trend line.

Sure, but do the 'masses' have masses of currency to swap? Not many people have 50K for 50 or so ounces. 50 or so ounces of silver on the other hand...

I agree, money is getting scarce for many. Yet, central bank have masses of reserves which are being divesified into gold. This effectively puts a floor of sorts under the gold price. Have you heard of any central banks diversifying into silver? Speculators on the other hand can go into silver, bid the price up, and then just as quickly jump out again. The same kind of floor is not there.

Central banks monetize gold. Speculators/ investors speculate in silver as an inflation hedge. It then makes sense to invest in gold, speculate in silver. Recognizing the primacy of gold, many who have speculated well in silver are now moving some of those gains into the safer harbour of gold.