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It's probably BS but I spoke to a fund manager yesterday who has contacts in the London futures markets. He says there is a deliberate tactic by Chinese entities to buy silver and try to break JP Morgan, because they are so furious at what the US is doing to the dollar.

Someone deliberatley ran it up as Bernanke spoke.

 

Its Americas Dollar but its eveyone elses problem.

 

China can be as bothered as they like but Ben won't stop to allow the mercantilist dollar peggers to get even close to the real value for their labours.

 

Its checkmate and silver and gold are screaming as the true vigilante of the paper printers as the bond vigilante have been taken out by the mercantilist central banks.

 

China can winge all she likes about currency manipulation but when you are sitting on $2-3 trillion in USD reserves I am afraid that is the smoking gun of currency manipulation right there.

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Sold a small amount of silver eagles and philharmonics via ebay over the last few days just to see what the retail market was like out there. Those coins sold for £38+ almost immediately and i now have a growing list of emails from others who missed out asking if I have more for sale. The appetite for physical silver seems insatiable for now anyway.

 

Does this mark a top? Or just the beginning of an epic public mania?

 

Who knows.... with almost all the main pundits calling for a big correction maybe we won't get one as they are all on the same side of the boat?

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coininvestdirect selling Koala 2011, 1/10oz Silver - first time I have seen such a small silver bullion coin - £9.56 each! Full ounce

ounce coins getting too expensive...

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coininvestdirect selling Koala 2011, 1/10oz Silver - first time I have seen such a small silver bullion coin - £9.56 each! Full ounce

ounce coins getting too expensive...

Buahahaha. My guess is that's much more than what most on here paid for their bullion per ounce.

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coininvestdirect selling Koala 2011, 1/10oz Silver - first time I have seen such a small silver bullion coin - £9.56 each! Full ounce

ounce coins getting too expensive...

 

and a buy back at £3.93

thats £95 to buy an oz with a £39 resale

total rip off

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and a buy back at £3.93

thats £95 to buy an oz with a £39 resale

total rip off

 

Yes, ridiculous spread on price - perhaps hoping it will be overlooked on such a small amount and maybe the novelty factor will play a part but even so!

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But

''Silver is in a bubble, but I'm not predicting an imminent fall in its price. With silver at $50, who is to say it can't reach $100? I can certainly imagine that scenario. Once irrationality and speculative mania take hold of a market, there is no measuring how far the excess will run (except post-facto). It's impossible to time the bursting of a bubble; it could happen several months from now, just as it could take several years. My best guess is that silver prices will decline significantly by the end of 2012, with multiple interest rate hikes by the Fed as the catalyst. But that is nothing more than guesswork; the only thing I am reasonably confident of is that the price will ultimately decline by roughly two-thirds.''

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Alex D. had a couple nice charts, but his reasoning is about real prices. He's totally failing to account for the fact a 2012 USD likely won't buy what a 2011 USD will.

 

The financial markets are forward-looking and anticipate. Hence, I expect gold and silver to lead and outpace price inflation as people anticipate monetary debasement. The metals will become overvalued at some point. But while the debasement continues (without an end in sight) there is little reason to get out of PMs.

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His misconception is here.

 

'here is no reason for investors to expect anything more from silver: Why would a metal -- a commodity with no yield -- accrete value?'

 

Silver is a commodity, not a company. Its price responds to supply and demand. Increased demand from China, India et al industrialising pushes up the price of all industrial commodities, like silver and oil. Do you see the price of oil falling anytime soon?

 

But silver is better than oil. Why? Because silver is a store of value. As money is printed increased investment demand pushes up the silver price.

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But

''Silver is in a bubble, but I'm not predicting an imminent fall in its price. With silver at $50, who is to say it can't reach $100? I can certainly imagine that scenario. Once irrationality and speculative mania take hold of a market, there is no measuring how far the excess will run (except post-facto). It's impossible to time the bursting of a bubble; it could happen several months from now, just as it could take several years. My best guess is that silver prices will decline significantly by the end of 2012, with multiple interest rate hikes by the Fed as the catalyst. But that is nothing more than guesswork; the only thing I am reasonably confident of is that the price will ultimately decline by roughly two-thirds.''

 

I love it when HG starts posting these articles :)

 

No time frame, no price targets, completely unactionable "advice". Sell everything now because at an unspecified time in the future the price may decline from an unspecified price to some lower price. I mean please!

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This is the biggest spike down in the gold:silver ratio since the Hunt spike in 1979.

 

2011:

 

68:1 down to 31.44. A drop of 53.82% in approx. 8 months time.

 

1979:

 

33:1 down to 13.99. A drop of 56.61% in approx. 5 months time.

 

What do you do as someone who trades the ratio every now and then? From the OI, this is no real short squeeze yet. Also, look at the 2.33 years chart in the middle below (since 2009) -- this is much more sustained than in 1979-80 (last chart below).

 

I am somewhat tempted to swap even more silver now that I have made this comparison. But of course we're still way off the 1979 low in gold:silver.

 

Interesting times.

 

EDIT: In all fairness, this could become the JPMorgue spike: the biggest spike down ever. :)

 

goldsilverratiolog28041.png

http://gold.approximity.com/since2009/Gold-Silver-Ratio_LOG.html

Gold-Silver-Ratio_LOG.png

http://gold.approximity.com/1979-1980/Gold-Silver-Ratio_LOG.html

Gold-Silver-Ratio_LOG.png

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This is the biggest spike down in the gold:silver ratio since the Hunt spike in 1979.

 

2011:

 

68:1 down to 31.44. A drop of 53.82% in approx. 8 months time.

 

1979:

 

33:1 down to 13.99. A drop of 56.61% in approx. 5 months time.

 

What do you do as someone who trades the ratio every now and then? From the OI, this is no real short squeeze yet. Also, look at the 2.33 years chart in the middle below (since 2009) -- this is much more sustained than in 1979-80 (last chart below).

 

I am somewhat tempted to swap even more silver now that I have made this comparison. But of course we're still way off the 1979 low in gold:silver.

 

Interesting times.

 

EDIT: In all fairness, this could become the JPMorgue spike: the biggest spike down ever. :)

 

 

 

I think that silver is now over valued in relation to gold - but way under valued in fiat. I will retain some silver as a hedge against being wrong but will continue to swap as the ratio comes down. 10:1 would be good!

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I think that silver is now over valued in relation to gold - but way under valued in fiat. I will retain some silver as a hedge against being wrong but will continue to swap as the ratio comes down. 10:1 would be good!

The average ratio since 1885 is 45:1, or so. Maybe we're going to see some kind of inverse of the early 1980s: first back to 60:1, then down to 14:1. Then back up.

goldsilverratiolog28041.png

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If someone traded now at 32:1, swapped again at 60:1, and then again at 14:1, if he/she got that lucky and would have the stomach to do this, that'd be one of the trades of the century. :) And I am not a trader...

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I find this especially disconcerting as it tells me that there is the potential for a lot of froth forming in the market.

 

Thanks GF. The amount of interest my obscure silver bullion is/was generating on eBay is/was mind boggling. Certainly seems to indicate the froth forming as Norcini indicates. But who knows. With nearly all the big pundits calling for a correction it looks like there are too many of them on that side of the boat too. Hmmm going to be an interesting few weeks for sure.

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If someone traded now at 32:1, swapped again at 60:1, and then again at 14:1, if he/she got that lucky and would have the stomach to do this, that'd be one of the trades of the century. :) And I am not a trader...

OK. You got me. I will try this with 10%-20% of my physical. Nothing ventured...

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Headed for a Silver Correction: Take Profits or Go Short

 

In the classic investors chase for performance, investors may be getting ahead of themselves. Through last Thursday’s close, silver as measured by SLV was up 25% in the last month. Over the past 60 trading days, silver prices have jumped nearly 60% and now stand at almost at four standard deviations above the average price move (see chart below). As a trend follower, I recognize the likelihood of mean regression, and the further the standard deviation above the mean, the more dangerous the trade becomes. This is not an exact science, and the price could move higher before correcting, but simply put, the risk to be invested in silver today is too high to justify the reward.

 

http://seekingalpha.com/article/265377-headed-for-a-silver-correction-take-profits-or-go-short

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