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Silver’s New Trading Range – SilverSeek.com

Silver’s New Trading Range – SilverSeek.com.

 
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Posted by on May 13, 2011 in Uncategorized

 

A 1980 copy of Playboy Predicts the Future for Silver – SilverSeek.com

A 1980 copy of Playboy Predicts the Future for Silver – SilverSeek.com.

 
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Posted by on May 13, 2011 in Uncategorized

 

Sidelines

I havent posted for a few days, and from what I’ve been looking at, it looks as though we will be going through consolidation until mid-late July-Early Aug.  That would go with seasonality and QE3 announcements.  I will be watching, I believe the trading range will be between $30-$40 for silver, and $1450-$1600 for gold.  On silver, trading throughout the summer may set up for a cup and handle or reverse head and shoulders patterns.  That’s pure speculation, but both of those go with the timeline, and estimates of $55-$65 for highs on the year.  I’ll be sitting on the sidelines until the end of summer, unless something major changes.  I do think trying to go long at the $30-$35 level is the target.  Trading in the range in the short term may be good, but Ive noticed that getting in near the lower $30’s is tough as most of the time that occurs and rebounds in the overseas markets.  You can try at the close of the NY session after a takedown.  I will not be doing that, unless I happen to fall upon $30, and I’ll go long on some call options for dec ’11/jan ’12.

 
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Posted by on May 12, 2011 in Uncategorized

 

YouTube – The Vulcan Report – (211) – Silver Futures margin hikes lifted.mp4

YouTube – The Vulcan Report – (211) – Silver Futures margin hikes lifted.mp4.

Another take on support levels

and the end of Thursday

 
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Posted by on May 5, 2011 in Uncategorized

 

Dip Buying

I think it’s time to start re-upping.  Im probably buying today or tomorrow, I dont think I want to for the weekend.  You could wait for an up day in the market, but Im thinking anywhere $38 and under is a good spot.  You can wait for an up day before jumping back in, but I think that is coming anyday now.  Looking at gold as an indicator, it still has some way to go, if gold doesnt hold about 1500, next support is 1475-1480.  Silver and gold ratio is right around 40,
Ths USD is coming up to 74, which is has resistance at 75. bin Laden thing. Portugal just got bailed out (remember greece)

APMEX is pushing high premiums, so Im going the bulliondirect.com route this time.  I think the dip is due to those margin requirements, and I think it could be over now.  Asia hasnt done too much lately in the overnight, but they can come back with avengence.

happy dip buying!  Good news is that if you cant get some right away, we will probably consolidate between the bottom 34-36?and top 42-48 until the end of summer… seasonality… then we move up again in the fall, just thoughts

This guy thinks the turn around will be quick.
http://news.silverseek.com/GoldIsMoney/1304613633.php

may 4 Potential support lines
http://www.kitco.com/ind/Hamlin/may042011.html
may 4 analysts say still lower – most re saying the same as me, mid 30s
http://www.kitco.com/reports/KitcoNews20110504AS_silver_update.html
may 5 Thursday charts
http://www.kitco.com/reports/template_jimw.htm

Audio
Kiyosaki -predicts a terrorist attack, 2016-2017 stock market bottom; also kevin kerr
http://radio.goldseek.com/nuggets.php
Ben Davies, very good interview worth checking out, also his investor letter linked on the page.  using his deviation graph, it shows a 50% decrease from top to bottom, which is right at the 50 day moving avg. which is right around that $34-$38 level
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/5/5_Ben_Davies.html

 
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Posted by on May 5, 2011 in Gold And Silver

 

Apmex Starts Reverse Inquiry: Seeks To Buy “Any Quantity” Of Silver From Clients At $3 Over Spot | zero hedge

Apmex Starts Reverse Inquiry: Seeks To Buy “Any Quantity” Of Silver From Clients At $3 Over Spot | zero hedge.

This article was posted on Apr. 25th and definitely caught my eye.  Today May 3, the day after an extremely volitile yesterday, I began looking at premiums.  I of course didn’t sell, but it shows the lack of silver, at least in these products.  I’ve looked at gainsvillecoins.com, apmex.com, bulliondirect.com, and mjpm.com.

Gainsville seems to have the most quantity of ASEs, Maples.

Apmex, BD, MJPM, all are either sold out, or delayed on ASEs and Maples

On MJPM, they are offering higher than spot for these products, and close to spot on the generic bars/rounds.

 
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Posted by on May 3, 2011 in Gold And Silver

 

Debunking Silver Propaganda

Physical Silver Investors Are Being Hoodwinked by the Futures Market

By Dian L. Chu, EconMatters

MY COMMENTS IN ITALICS

The Silver market is in a bubble stage right now. No one really knows how long this will last, whether Silver goes up another $5, 10, 20 doesn`t really matter for investors who are buying the physical metal in the form of coins because when the bubble ends they are going to be sitting on a depreciating asset.

Sure, long term, Silver will be worth more sometime in the future compared with the average price of the last 30 years in the next 30 year segment. But Silver prices have risen far too fast in to short of a time for this to be sustainable longer term.

– During a bubble mainstream news tells you it isn’t a bubble, and that its the buy of a lifetime.  And when the bubble finally pops, they tell you no one could see it coming.  Who reads articles like this?  THE PUBLIC!  This is their source of information, and will take what mainstream media tells them and think that they somehow got some secret information no one else is going to know from a mainstream outlet.  How does that make any sense?  The public is only now starting to see silver as a potential investment, and research into articles like this one make them feel as they have already missed the boat.  Along with profiting on the way up and the way down.  I may be a contrarian because of this, but the fundamental factors for buying at $10-$15 after the crash in 2008, still remain. In fact, policies from this crash are adding to the fundamentals.

Silver’s QE2 Juicing Cycle

For example, wasn`t Silver just $18 an ounce last August 2010? Guess what also corresponded to this same time period, you guessed it–QE2 (See Chart).  What happens to Silver prices when QE2 ends ? Physical Silver investors have been tricked into buying the physical because of what the speculators are doing in the futures market.

– Yes we anticipated the move with the announcement of QE2, and were right.  These same media outlets were telling you that gold and silver were in a bubble at this same time.  Analysts predicted QE2, and while there may not be an official QE3, or a time lapse between QE2 and QE3, most agree that there will be monetary stimulating.  Unless the status quo changes dramatically, there is no real reason to think there wont be further debt monetization.  If there is no QE3, the economy will again fall into a deflationary spiral, and the FED will come and “save'”us again, in which case, all assets will fall, and while the nominal price declines, so will everything you buy, thus still preserving wealth.

Hot Money – Easy Come, Easy Go 

I have news for you, physical buyers, those are not buy and hold investors, and they can go just as quickly as they came. Remember, the futures market is determined by fund flows, and right now there has been a lot of money to be made in a hot commodity market. But markets and especially commodities are very cyclical in nature, and money flows into these instruments during parts of investing cycles, and out during others.

– While this is true, those are traders, and the monetary metals like gold and silver are in long term bull runs.  Until the currencies of the world, especially the US Dollar become stable, these metals will rise.  Traders go in and out of the market, profiting from the swings, but the long term trend is still up. 

Physcial Buyers Holding The Bag

However, the physical buyers of coins are not looking to flip these investments; they are going to hang onto the physical coins for 5 years or more. Guess what, you have seen how fast Silver can rise, and you probably know that it can fall just as fast. But the one element that physical buyers of Silver are missing is that they are buying at the top of the market at many standard deviations above the average price of the past 30 years.

– I dont advocate buying at this level, but to anyone who doesn’t have a position, I tell them to buy at any level to gain a position.  The metal isn’t gaining in value itself, its the currencies falling against it.  This may be the toughest concept to grasp for a person new to the market. I wouldn’t add here, instead I’d look for a dip (or continue a monthly buying program) before adding to my long term positions.  Any short or even intermediate term positions should be done in the paper market.  You dont want to be caught holding a bag of Federal Reserve Notes as they are devalued everyday.

Miami Condos & Silver

This is a recipe for disaster , and no different than buying Miami condos at the height of the housing bubble. If you’re flipping the condo, and are lucky enough to not get stuck holding the bag is one thing, but to have bought a Miami condo just before prices fell off a cliff is another matter entirely.

Whenever prices of any asset go up this high in such a short time span, it is a bubble, and unsustainable. And no, I am not calling for a top in Silver prices, but what I am saying is that the Silver market is in a bubble, and unsustainable unless a couple of doomsday scenarios happen. Which is always a clue for your investing outcomes, if you need a doomsday scenario to have a long term profitable trade that you’re going to hold for five years, then you really are putting on a low probability trade.

– A healthy correction is due in the silver market.  It has gone far and fast, but we expect that with the relatively small silver market.  A downside swing, even severe, would be healthy for this bull run.  Nothing goes straight up, and corrections serve to shake out the weak speculative hands.  The support is fairly far from where we are, but support at 42, 36, and 31 is pretty decent.  About doomsday scenarios, it seems as though we have those every few weeks..  Egypt, Japan, Libya, bin Laden, Euro debt crisis, US debt ceiling, whenever bernanke speaks the metals react.  So to say a doomsday scenario is low probability, is to ignore current events, and the repercussions that may come from.

Bought at The Top of The Market

The bigger problem with buying at or near the top of the Physical Silver market is that the US is in an unprecedented low interest rate environment. What happens when interest rates go back to their historical averages? They were just 5.25% less than 5 years ago, what happens in the next 5 years when interest rates go back up? What do you think is going to happen to the value of your physical Silver coins? They are going to depreciate in a steady but sure fashion.

–  I addressed this issue above, but again, what would happen if rates were to rise?  The US would default, creating a doomsday scenario.  Or massive deflation would ensue, and all asset classes would fall.  Gold actually does best in deflationary scenarios, and with silver becoming more of an investment and currency, will follow its bigger brother.
Worse Than the Housing Bubble

In short, because you bought so much above the 30 year average price for the physical market, your asset will depreciate, and be heavily under water once the next rate tightening cycle begins. And we are not talking about a little under water. Your under water will make Miami condos look good by comparison.

You think there was a housing bubble? Compare your asset to a house, and look at the precipitous drop to those assets. You cannot even live in your depreciating asset. My advice to any purchasers of the Physical metal is to sell while prices are still going up, before the futures market busts.

– First of the housing bubble was held up through tax credits for first time home buyers.  Then fell when those programs ended.  The bubble is still unwinding, and has between 20-30% to fall.  In the housing bubble, everyone and their mom’s cousin was buying a house, or flipping a house, or renting a house to someone, or upgrading.  How many people do you know actually own physical silver?  Less than 2% of the investing public actually owns the metal.  So to call this a bubble is absurd.

Remember The Past Bubbles

Don`t get tricked by Wall Street momentum traders who will bid up any kind of asset if they think they can profit from it. Remember, how hot housing stocks were? Remember those Nasdaq Dot Com stocks, where every day another new internet company was doing an IPO even though they had no proven revenue streams? Does that sports streaming venture that Mark Cuban sold yahoo come to mind?

Bubbles exist in markets; traders take advantage of them, while bag holders pay the price. I bet yahoo wishes they could undo that trade, Time Warner wishes they could have a “do-over” on that AOL partnership.

– As mentioned before, is Joe Q. Public investing in the futures market?  Did he quit his job to become a professional trader like the Dot Com era?  Did he take on massive loans and re-leverage his accounts to buy a fixer upper to sell himself because he became a real estate agent?  Comparing the metals to these bubbles is like comparing my left nut to a t-shirt.  There are Cash for Gold stores, but the public is SELLING, not buying.

US Is No Greece or Japan

Yes, there are a couple of scenarios where holding the physical Silver might be profitable 5 years from now. If the US goes into default, a very unlikely scenario, given our incredible resources, and the fact that when we get serious about cutting the budget, with even a modicum of discipline we will be fine. We spend like drunken sailors, and that can be fixed.

The real problem is if you can`t produce revenue, and the US has only scratched the surface of producing technological innovation , which means we have a lot of revenue generating capabilities. A lot of countries cannot say the same, the US isn`t Greece . The US doesn`t have an aging demographics problem like Japan either.

The US has a spending problem , if worse comes to worse the US will just have to cut back on military spending, and with how far we are ahead of every other country in terms of military spending and expertise, there is a lot of budget tightening room to spare in that area and many other areas. When push comes to shove the US will get their fiscal house in order.

– WHEN we cut the budget?  Is this a joke?  We are running 1.7 Trillion dollar deficits.  That doesnt even include the unfunded liabilites.  Both parties’ economic plans call for a US debt of $19T by republicans and $21T by democrats in 2020.  That’s their idea of cutting spending -do it later.  No aging demographics problem?  Umm, have you forgot about baby boomers and social security/medicare/medicaid/Obamacare?  bin Laden is dead, so maybe the troops will come home… not likely.  Even if they did, the US has over 900 military bases worldwide in just under 200 countries.  You would think that they could’ve cut somewhere by this point.  It looks as though their solution, to avoid default, is to inflate away the debt, and pay every liability will worthless dollars…

Dollar Devaluation Will Be Limited

Now, on to the other commonly referred to doomsday reason for holding physical Silver. The age old Dollar devaluation argument. Well, I have news for you Silver bugs, all currencies around the world are devalued with time. But the US Dollar is not going to be any more devalued than it was last year when QE1 ended, and the Dollar Index was in the 80s.

– All currencies are falling vs the metals, and even if the dollar holds above 71, all currencies are depreciating, so the metals will continue to rise, regardless of the relationship among each individual currency.  The dollar is butting up against major support at 71, and if that line is broken, a waterfall effect can happen as nations may begin to dump dollars faster than they already are. 
US Is No Zimbabwe Eithter

The currency fluctuates depending upon several factors, but Silver investors are taking a very low period in the dollar, and extrapolating this level of detioration pace forward for the next 5 years. It doesn`t work that way, unless you are Zimbabwe. The US may be a lot of things, but it isn`t Zimbabwe, and you shouldn`t base investment decisions comparing the most successful Business Country in the world to a country the size of Zimbabwe.

– The reasons Zimbabwe went into hyperinflation was because they were indebted to foreign banks and couldn’t pay them, so they printed until liabilites were met.  How do you expect to pay off a 14T debt when you run 1.7T deficits? 

Carry Trade Unwind

Remember, the US Dollar is temporarily being used by the “Risk On” Carry Traders to go long assets, and short the dollar, thus artificially making the dollar weaker than it really is.  When they unwind this trade guess what the US Dollar will start rising again. Remember last summer, what do you think will happen to Silver prices when Gold starts selling off because the US Dollar is getting stronger?

Yes, the US Dollar will lose its value to some degree, this is why a coke used to cost 35 cents at one time, and now it is over a dollar. But this is a normal rate of depreciation over several decades. And not the rate of depreciation being currently priced into the physical Silver market.

– The monetary inflation (increase of money supply) typically takes 18-24 months to work its way into the system.  The inflation we are experiencing at the grocery store and gas pump are a result of the first QE program.  We will feel the effects of QE2 in 2012.  In 2008, the dollar rose, and gold and silver tanked.  Investors sold their positions in every asset, in other words bought dollars.  Gold and silver then took off to the upside, as confidence in all currencies fell.  The dollar still being the reserve currency of the world, is still needed to conduct trade, but as we see with the BRIC nations, they are taking steps to trade outside of the dollar.  This equates to a fall in demand for US Dollars by other nations, to store as a reserve asset.

Physical Silver – Pros & Cons  

Just remember the pressures pro and con for the physical Silver trade:

  • A low interest rate environment – Not going to be this way in 5 years
  • The 30 year average price of Silver versus the current price of Silver
  • Investment fund flows now versus a portion of these same funds being applied to different markets, say real estate in 5 years
  • The US Fed versus Global Monetary Policies: What happens when the US starts tightening, and China and India are done tightening? The monetary policy gap starts to narrow.
  • These high Silver prices will bring a lot of the “precious metal” online; will there be a glut of physical Silver on the market once prices start to drop?
  • Do assets that have this meteoric rise in price? Is it usually sustainable longer term?
  • Do our financial markets have a long and storied history of unsustainable prices, i.e., bubbles?
  • Are there more attractive markets for value at this point then buying Physical Silver from a valuation standpoint?

– While the US isn’t Japan, they held interest rates low for decades; and the people had personal savings, of which the US doesn’t.  This creates a reliance on gov’t programs, which equals spending. 

All other commodities have surpassed their all time highs long ago, silver still needs to catch up.  Nominal highs have just been met, and if you look at inflation adjusted highs, we still have another 300% increase to go. 

Again, if the US tightens, the markets go bankrupt, if the FED comes in and buys up the debt, massive inflation ensues, and gold and silver will be the only remaining safe haven. 

Glut of silver?  industry uses about half of total supply, investment demand is really what is moving this market.  The paper price doesn’t reflect the true price of silver.  There is backwardation in the market, and a short squeeze is currently unfolding.  Look at premiums on silver and actual supply.  There is much less silver on the market than there was a year ago.  Maples and Eagles are flying off the mints’ presses, and every month record sales in these continue. 

Its not the asset rising, its the currency falling.

Eventually the metals will become a bubble, now is not that time.  The public is way under invested in this asset.

There may be other markets that are less volitile, yet most are commodities.  If you hold dollars, they depreciate, the metals retain their value.

There’s Time To Buys

It makes no rational investing sense to buy Physical Silver during a low rate environment, because the investor will be stuck with a well under water investment in a 5% rate environment. The time to buy Physical Silver was when the Fed Funds Rate was 5.25%, and the time to sell Physical Silver is now during the last vestiges of an equivalent Zero Fed Funds Rate.

– We have had low rates since 2000, when silver was $5, but if you bought at $15 two years ago, $20, $25 a year ago, would you say that its a bad investment?  All this time, since 2000, if you were invested in the Dow Jones from 2000, got slaughtered in 2008, and if you had the courage to stick with it, youd be even now.  But you couldve bought silver at the top in 2008, taken the hit and still held, you’d be at a 200% increase.  I agree that if interest rates rise, they can impact the metals, but they would have to be a significant hike, which outpaced real inflation (we have negative rates now).  A hike to even 10% (Volker went to 20% in the 80’s) would cause the financial system to collapse.

QE2 Induced Irrational Investing 

This irrational investing in the Silver Market, based upon concerns regarding the long term stability and security of the US Dollar, is one of the unintended consequences of the QE2 Initiative. And much of this irrational investing in the Silver Market will reverse itself once QE2 is finished, and the US Dollar strengthens.

– The damage has yet to be seen on the public level of the effects of QE2.  We are witnessing the effects of QE1 now.  I said this before, several times, no?

Silver & Subprime – No Difference To Wall Street

I am not trying to rain on anybody`s Silver parade. And who knows where the top is in Silver. But don`t get caught up in the hysteria of another Wall Street trade. Remember, the Silver market is just another trade for Wall Street. They don`t have any special affinity for this shiny metal, any more than they had for subprime mortgages, and when the writing was on the wall, they packaged these assets up, and pawned them off to other bag holders.

The Silver market will be no different, when they are done with this trade, they will run from this market faster than they came. And if you bought physical Silver based upon the meteoric price rise occurring in the futures market, you may end up having an asset that declines in value by more than half what you originally bought it for. So you can buy a Silver American Eagle for over $50 today, and have it be worth less than $20 in the future.

This is the epitome of a bad investment. You’re supposed to buy low and sell high, not the other way around. Remember, you are an investor not a trader if you’re buying the Physical Silver Coins. Thus you have to be a “Value Investor”. And I am here to tell you there are no ‘Values’ in the Physical Silver Market, or any other Silver Market for that matter.

– I will say that silver and gold preserve your purchasing power regardless of its nominal price.  You are 100% guaranteed that US dollars will depreciate vs real items, given the current monetary policy.  Until that policy is changed, silver and gold will be the best way to preserve your wealth.  We’re not trying to get rich off this investment, we are trying to keep what we have before we are wiped out by inflation, or some sort of global default.  Silver has upside, and is actually gaining on other commodities like gold and oil, so there is room for gain, but with that comes the volitility of the silver market.   If you cant stomach the volitility, buy gold!
Related ReadingWhy The Fed Must End QE2 on April 27  <—This did not happen

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

 
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Posted by on May 2, 2011 in Gold And Silver, Related News