SILVER

[wrongmove]

Erm... Derrrr... Haven't we all been saying that for a LONG while?

 

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?

 

With all respect, what is new from the bulls? They are still chanting the same mantra, but no-one complains. G&S are not just having a bad week. Silver has halved, ffs.

 

 

[HPCsoYESTERDAY]

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.

 

 

[wrongmove]

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

 

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.

 

 

 

 

 

[HPCsoYESTERDAY]

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).

 

 

[wrongmove]

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).

 

One explanation. Punters saw an opportunity and went for the throat. They will have profited handsomely. This can only happen in bubbles, when there is lots of hot paper flying around. Try massively shorting a market based on solid fundamentals, i.e. physical demand. There was a disconnect between physical demand and price. Some spotted it and did well. Others ignored it, and did less well.

 

I accept that G&S could be manipulated. Oil, copper, aluminium etc would much less easy, yet they have tanked too. G&S are tiny - a bumper sticker on the vehicle of commodities. I'm not sure that they are as crucial to the world at large as some here think.

 

 

 

 

 

[HPCsoYESTERDAY]

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

 

 

[Magpie]

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).

 

There's two issues here:

 

Shorting/manipulation: Yes, the market has possibly been manipulated downwards (and if you own I hope that means it will bounce back). As I said, silver is a fairly small market, historically vulnerable to short-term manipulations. That's not a good thing, makes it a risky market. But 1) I think one can accept that there are short term manipulations but say that long term the price can't be manipulated - in other words the price will on average be where the market would leave it, even if manipulations push it above or below that point temporarily. So I can accept that silver has been pushed below its natural price right now, but I don't think that means that its natural price is massively higher than the current level. I also think it might have previously been pushed over its natural price during the boom period.

 

Physical/paper - this seems to be the latest bit of denial to me with everyone in g&s pointing to it as proof of distortion. But in any market that fluctuates rapidly you are likely to see liquidity problems in physical. If you're a dealer, you may have paid July wholesale (or however they buy) prices for silver and now have the problem that if you sell at today's prices you lose money. The two solutions will be to try and sell at above the paper price to avoid the loss and to limit how much physical stock you hold until the correction appears to be over. That seems pretty obvious to me and would happen in most markets where there is a paper price and a price for stuff currently in stock. If the paper price stays low they may eventualy be forced to discount existing stock, or the paper price may drift back up again in which case no need.

 

Incidentally, not meaning to bash silver. Only to take issue with dubious arguments about its probable price increase.

[Magpie]

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.

 

Exactly - no conspiracy, just the market reacting to a rapid price drop.

 

[Mr Pipples]

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?

[Magpie]

Does anyone have figures for commercial and larger 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?

 

Surely that would be pretty much impossible over the longer term. Perfectly possible as a short term reaction to a price change but the market would smooth out the difference one way or the other medium term.

[hotairmail]

But 1) I think one can accept that there are short term manipulations but say that long term the price can't be manipulated - in other words the price will on average be where the market would leave it, even if manipulations push it above or below that point temporarily. So I can accept that silver has been pushed below its natural price right now, but I don't think that means that its natural price is massively higher than the current level. I also think it might have previously been pushed over its natural price during the boom period.

 

The biggest influence on future price is expectations driven by current prices. Prices do have a certain amount of inertia (some markets more than others) and require changes in supply/demand to effect price changes. Consequently a short term manipulation can have effects over and above an alteration of the supply/demand equation. It can effect long term expectations of price levels.

 

[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'

[Magpie]

The biggest influence on future price is expectations driven by current prices. Prices do have a certain amount of inertia (some markets more than others) and require changes in supply/demand to effect price changes. Consequently a short term manipulation can have effects over and above an alteration of the supply/demand equation. It can effect long term expectations of price levels.

 

 

That looks like bubble logic to me.

 

Going on classical economics, I'd say the biggest influence on future price is future supply and demand. Demand is only driven by expectations when it is speculative demand, which is a far higher proportion during periods of volatility. But speculative demand shouldn't be taken to be synonymous with demand per se.

 

I agree a short term downwards manipulation might knock down the level of speculative demand. I'd expect that could restrain the height a speculative bubble/spike reaches before it collapses, but I wouldn't expect it to affect the long term average price that is reached as a result of supply and demand in normal circumstances.

 

To me this argument looks like a different type of denial, an attempt to rationlise the idea that gold and silver "ought" to be at higher prices, and only aren't because of the evil cartel. It seems obvious enough that no-one can manipulate a market long term, so the only remaining explanation can be that the short-term manipulations somehow have a long term effect at depressing the market. Doesn't hold water for me.

 

 

[Mr Pipples]

Surely that would be pretty much impossible over the longer term. Perfectly possible as a short term reaction to a price change but the market would smooth out the difference one way or the other medium term.

 

I don't necessarily mean a direct, causal effect of retail price differences on all physical prices. I mean do people really think the factors (costs/returns, stock levels, availability, opinion, etc) that have caused this difference in retail price and spot price will have the same effect on the rest (majority) of the physical silver market?

[Magpie]

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

 

Agreed. Once the volatility settles the two will converge. This may be at current prices, once the correction works its way through and dealers aren't having to deal with problems of stock bought at higher prices, or the uncertainty of holding stock in a falling market. Or it may be at a higher price if the paper price rises enough in the interim.

 

But a divergence in paper and physical prices isn't proof of anything other than the fact that a rapid fall in prices will cause problems for dealers of physical.

 

[wrongmove]

'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'

 

This is consistent with my theory. 1 oz silver coins are a tiny market. The silver price is not driven by 1 oz silver coins.

 

If the refiner buys the 1000oz bars, with delays, then has to incur cost by melting and recasting, then has to sell at a reduced price, is it any wonder that they are hard to come by at the moment? And this is happening when greatly lower prices for silver have finally attracted physical demand, exacerbating the supply problem (for teeny weeny £10 silver coins)

 

 

[HPCsoYESTERDAY]

9 hrs to go on ebay / 2008 silver eagle at £11.12

 

http://cgi.ebay.co.uk/1-Oz-Troy-999-2008-B...id=p3286.c0.m14

 

so at the moment before the auction closes that's nearly double £ spot price (£6.06)

 

Perhaps, I would take more note of what some here are saying if I only traded on paper - but I don't (thank f***!)

[HPCsoYESTERDAY]

This is consistent with my theory. 1 oz silver coins are a tiny market. The silver price is not driven by 1 oz silver coins.

 

If the refiner buys the 1000oz bars, with delays, then has to incur cost by melting and recasting, then has to sell at a reduced price, is it any wonder that they are hard to come by at the moment? And this is happening when greatly lower prices for silver have finally attracted physical demand, exacerbating the supply problem (for teeny weeny £10 silver coins)

 

yes but a lot of us here deal / invest in them teeny weeny coins

[Mr Pipples]

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

 

Why will anything much have to give if the vast majority of physical silver trade is not in the retail sector and is still trading at spot/same as paper?

 

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'

 

 

That's only evidence of a shortage of supply in the retail sector.

[wrongmove]

yes but a lot of us here deal / invest in them teeny weeny coins

 

That's fine - they are rather attractive (silver ones). But looking for insights in the coin market seems a bit like judging the housing market from the price of bricks.

 

 

[HPCsoYESTERDAY]

Why will anything much have to give if the vast majority of physical silver trade is not in the retail sector and is still trading at spot/same as paper?

 

Please understand where I am coming from here: I buy coins, I sell coins. I know what prices I can buy at, I know what prices I can sell at.

 

'something will have to give' if the 'true' value of silver is the paper price at present- hence the coins are very over-valued.

 

conversely, if like kitco is showing, the demand for small bars / coins is outstripping supply, then the price will hold.

 

 

That's only evidence of a shortage of supply in the retail sector.

 

that's where I deal my silver

 

[Mr Pipples]

yes but a lot of us here deal / invest in them teeny weeny coins

 

True. But if there is no real 'divergence' throughout the whole physical silver market, and only a 'difference' in the small, retail sector, the price gap on coins is unlikely to last long as all that's holding it up are things like temporary hold-ups in the distribution and refining process.

 

By the way, I'm 100% physical - up to my eyeballs. I do not question the 'unfair' effect of paper silver trade on real silver trade. I do question this use of retail price difference to spot as evidence of an emerging divergence.

[HPCsoYESTERDAY]

I do question this use of retail price difference to spot as evidence of an emerging divergence.

 

Fair point - for me, the value of silver (at present) is what I can get for selling a coin. Not a great economic theory I grant you, but it keeps me sane!!!!!

 

hence, I continue to watch the retail market like a hawk

[Mr Pipples]

Fair point - for me, the value of silver (at present) is what I can get for selling a coin. Not a great economic theory I grant you, but it keeps me sane!!!!!

 

hence, I continue to watch the retail market like a hawk

Fair play. Bar a few SHTF coins I'm all at GM so... Wish something could make me feel sane! I'm just waking up to false confidence/over optimism - which has partly lead to me being uncomfortably over-heavy PM bullion. Away again for a few weeks tomorrow - wonder how things'll look when I get back. Sheeshhh.

[ziknik]

I mean it was either a bad prediction or a misleading one.

 

If by 'explode' he meant spike up by up to 10% before fallnig massively, then it was a bad use of words.

 

If he meant 'go up massively' then I'd argue that a 5-10% spike followed by falls makes it a bad prediction.

 

It’s a bit unfair that you are picking on a 10 week old prediction. If silver goes up 200% (from today) would you then say it was a good prediction? What if it goes on to fall 50% (after the 200% increase). Would it then be a bad prediction again?

 

I said earlier in this thread that I thought it was a good prediction at the time and nothing has changed. At the time it was a good prediction.

 

I’d consider this Cgnao post to be current. Do you think it is a good one or a bad one?

 

http://www.greenenergyinvestors.com/index....ost&p=56855

 

So had I predicted this morning that Croatia were going to "stuff" England, you would be happy to proclaim me right because the Croatians had the most possession in the first 20 minutes?

 

I think you have picked a bad example. If Croatia had scored first (I don’t know if they did or not) I may* say that you were right at the time if asked.

 

I find it interesting that you seem fascinated by my earlier conclusion. Have we met before?

 

* I don’t really give a **** about football, so I probably wouldn’t have listened to your prediction if this was a real situation