I know that the prices are connected to oil and other commodities but last year there were some movements by government agencies and organizations making consolidations that i didn't get a chance to fully understand. I figure if there was anywhere in the world to make this post- it would be in the CM community :)
Anyway, hope to get some interesting responses and some predictions. I am still a HUGE fan on Silver and just would like to hit the collective intelligence of the community before going double down with money acquired from a recently sold property. Thanks to everyone in advance. Best regards,- Jon
Dollar rising means gold down, along with it, silver... Dollar will likely rise further as things get worse in Europe, it is after all, still the World's preferred flight to safety. Only once the dollar (US) starts to look like even a short term gamble, will gold (and silver) be seen more as a safe haven. But as a commodity, silver has added downward price pressure at the moment. All commodities are down. Oil, copper etc. The World economy is slowing and demand for commodities is waning. There may be some episodes of optimisim that Europe is 'sorting' things out, then the euro will rise, the dollar will drop and gold and silver will rise. But interestingly, gold has very recently been rising along with the dollar, while stock markets have dropped. This may be a turning point were gold is increasingly being seen as a safe haven by intitutions along with the dollar. For the moment, the dollar is still king.
Thank you very much mryuri. That was very helpful.
(we have to go through the phase of a large dollar rally before a major flight to precious metals)
I agree with mryuri on his posts.. Once the average man,too, realizes his dollars are going to be worthless along with all the other fiat currencies gold and silver will soar. In this case, patience is a virtue.
Here's the insight....there is only one reason a market moves up or down...the big fish are eating the little fish.
Before you double down at the Silver Casino, ask yourself one question: Can I feed my family?
If the time comes, do you want to be the guy with the silver coins to trade, or the guy with the neccessities of life to trade?
Warning this is my first post here, but I've seen Silver hit $40 when everyone said NO WAY!
Here is my thinking:
They are trying to scare the crap out of the little fish... you and me.. so that we won't try to save our wealth outside of their paper fiat system. I agree with JAG that feeding your family is first... but if you have other savings that you want to hold long term.. then I think anyone who argues against Gold and Silver is a paperbug who has not studied history enough.
the scare tactic today was just the same as so many times in the past... 10,000 Gold contracts sold off in 10 minutes time... that is 10,000 contracts x 100 ounces each, or one million ounces of Gold... or... one million x $1560, or $1.56 Billion dollars worth of (paper) Gold sold (or naked shorted) in a 10 minute period. That is a non-economic sale.. in other words, no sane holder of Gold trying to sell for best price would ever do that.
One needs to understand these things in order to have the wherewithall to see it through. If you don't understand the game, and the desperation that these episodes represent, then you might just sell your Gold or Silver and let TPTB win. Don't.
The chart that shows the volume dump was presented by Jesse earlier today;
I was very comforted today to see that the miners did not completely fold up on this move.. in fact.. my favorite little miner VGZ was up today, even after the (paper) Gold Comex hit. This is an important signal... the miners are leading the way here. For those interested in trading ideas, I also bought some JAG today... bottom fishing after it has been beaten down to 1.25 from a high of 8. Cheap, cheap Gold in the ground.
Putting aside the monetary dimension that silver shares w/Au, the l/t supply/demand story for silver is very compelling & likely provides an investment tailwind for quite some time from my perch. The investment demand just a bonus IMO & likely tied to Au/Ag sentiment as a store of value/hedge for 'government stupidity' re: rising tide of liquidity via monetary interventions. The PM mining co's tricky but have 'dot-com'esque upside potential if Wall St / global investors all pile into the trade ... timing & stoplosses to step aside the hard part, as last 6mon or so have demonstrated. Valuations on almost any metric for the strong miners very attractive right now but could get 'cheaper' - just have to trade/invest with what's in front of us. Ex a deflationary collapse (where its purchasing power probably retained), silver likely going much higher as measured in fiat over the l/t despite all the s/t noise...
A little off topic, but it sure looks like the drop in US treasury yields is accelerating this morning. A direct effect of European chaos or is more involved?
RE: (we have to go through the phase of a large dollar rally before a major flight to precious metals)
What is your best gues for Gold and or Silver to go upward at least 15% from todays "depressed" value?
BTW: I'm thinking less than 6 months, especially if someone gets aggressive with IRAN...
Mike Maloney makes the case that gold will surge, likely first and more than silver, but then the 'common' man will pile into silver as they are unable to afford gold. Silver will then outperform gold. But I think initial stages, central banks and big money will pile into gold fisrt and simply drag silver along for the ride.
Recent gold news seems to be that the low is now in as it has tested its lows/support of 1522 three times and not broken it:
Gold also had a very interesting week as it abruptly decided
on Wednesday to retest the 1,526.70 low from May 16th, just two days after trading as high as 1,599.00! Of course you could hear the collective groan from those who jumped into the fray late. Spot gold fell as low as 1,532.80 on Wednesday before rallying to close out the week at 1,573.00. Of course I view this as a retest, something I warned about in the last weekend report, and I’m more than satisfied with the result.
In fact I view the third test of critical support at 1,522.20 followed by this week’s retest as extremely bullish. If gold would have produced a lower low this week there is no telling when it would have stopped falling; I could even have made a case for gold as low as 1,375.00. I now believe the risk of a collapsing gold price is finally behind us and feel more than comfortable with the last purchases I made at 1,535.00 and 1,549.00, and will no longer attempt to trade in an out. As long as gold holds above 1,535.00 I see no problems what so ever. Below you’ll find the relevant Fibonacci support/resistance numbers for the June contract:
CONTRACT SUPPORT RESISTANCE
June Gold 1,562.10 1,579.80
Finally, I will look to add on once I see a close above 1,599.50.
One of the reasons I am so bullish about gold over the long run has to do with continued central bank buying. The latest official Central Bank gold holding figures from the IMF confirm that Central Banks around the world are continuing to buy gold - some in pretty large quantities which should be yet another stabilizing factor for the gold price - and if the trend continues suggests that the CBs will buy even more this year than last - and that's only the ones which let the world know exactly what their gold reserves are! The latest figures not only show some substantial gold buying in April, but also a big lift in gold purchases by The Philippines which actually date back to March, but were slow in being notified to the IMF. The Philippines' March gold purchases amounted to no less than 1.033 million ounces - 32 tons - of the yellow metal - the biggest volume since Mexico bought around 78 tons a little over a year ago - and increased that country's gold reserves by almost 20%.
The Philippines was not the only laggard in reporting increased gold reserves though. Tiny Sri Lanka raised its reserves by an even greater 39%, but dating back to January, with a rise of 2.177 tons to 7.807 tons - obviously far less significant in the global picture but yet another indication of the perceived significance of gold in particular in the Asian economies. The most significant reported gold purchases in April itself included 29.7 tons by Turkey (a 14% increase in its reserves, but this is thought to have largely been due to its policy of acceptance of gold as collateral from commercial banks), 2.92 tons by Mexico, 2.02 tons by Kazakhstan, and 1.4 tons by the Ukraine.
The continued buying by Central Banks does continue to indicate an underlying unease about the sovereign debt situation and its impact on the value of some key reserve currencies- not least the dollar and the euro. In an email to Mineweb respected New York gold analyst, Jeff Nichols, commented, "The latest IMF data on central bank gold reserves was just released earlier today -- showing gold purchases by Mexico, Kazakhstan, Ukraine, Russia, and the Philippines. Undoubtedly, China and perhaps a few other countries bought gold but did not report their purchases to the IMF." This reiterates the widespread belief that some countries - of which China is thought to be the major entity - for political reasons do not report their total holdings to the IMF, but hold new gold purchases in accounts that are not reported until it is considered politically expedient to do so. Last time China reported an increase in reserves was in 2009.
Since then there has been much speculation that China could be building up its reserves at a rate of four or five hundred tons a year or more given the level of domestic gold production and the big surge in imports seen. Although China is the world's sixth largest holder of gold, the metal only represents a tiny 1.8% of its reserves and there have been a number of presumably government approved (is there anything else in China?) statements by officials that do suggest the nation is carefully buying on dips in the gold price so as not to create disruption in a relatively orderly global gold market.
Overall reported Central Bank gold purchases last year amounted to over 450 tons - the highest for nearly 50 years and The World Gold Council and GFMS have suggested that this year will see another 400 tons or more flowing into Central Bank coffers - and the purchases to date suggest that this target may well be achieved. Gold may have fallen out of Central Bank favor for a few decades but the realization now is increasingly that it should be a significant part of a country's foreign reserve base as fiat currencies the world over lose their intrinsic value. Personally I can’t think of a better reason to load up on the yellow here and now. If Central Banks are buying it’s because they know something. They know that debt and fiat currency creation are going to lead the world’s economy to a bad end. The only solution is gold!
The real problem continues to be debt. It’s not just in Europe; it’s everywhere! This last week we witnessed meetings of the G-8 and the EU commission, supposedly to discuss debt, and they were followed by platitudes and no solutions. Debt is a plague found in Japan, China, and Europe and of course the US. If the truth were known America is the worst offender and it continues to create debt at a rate that exceeds US $20 billion per week. The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, this according to a USA TODAY report. Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.
A U.S. household's median income is $49,445, the Census reports. The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules. The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government's books.
The federal government calculates the deficit in a way that makes the numbers smaller than if standard accounting rules were followed. Deficits are a major issue in this year's presidential campaign, but USA TODAY has calculated federal finances under accounting rules since 2004 and found no correlation between fluctuations in the deficit and which party ran Congress or the White House. I’m sure that doesn’t come as much of a shock to you. Here are some of the key findings:
•Social Security had the biggest financial slide. The government would need $22.2 trillion today, set aside and earning interest, to cover benefits promised to current workers and retirees beyond what taxes will cover. That's $9.5 trillion more than was needed in 2004.
•Deficits from 2004 to 2011 would be six times the official total of $5.6 trillion reported.
•Federal debt and retiree commitments equal $561,254 per household. By contrast, an average household owes a combined $116,057 for mortgages, car loans and other debts.
"By law, the federal government can't tell the truth," says accountant Sheila Weinberg of the Chicago-based Institute for Truth in Accounting. Jim Horney, a former Senate budget staff expert now at the liberal Center on Budget and Policy Priorities, says retirement programs should not count as part of the deficit because, unlike a business, Congress can change what it owes by cutting benefits or lifting taxes. "It's not easy, but it can be done. Retirement programs are not legal obligations," he says. When is an obligation not an obligation? When the government says so! Sooner or later the government will meet reality right square in the face and will have to declare itself unable to pay its debt. That day may not be all that far away!
My 'gut' is silver to double by years end. First $44 with a pull back then cruise past the $50 mark to $60 plus. My gut is also telling me silver to hit $350 within three-four years. (that is if we don't have a World wide total economic collapse - which my gut does rumble loudly about too - then all bets are off) My gut has been right enough times to get my attention, but sadly makes bad calls as well.
I listened to a speaker recently that explained that investment funds are hemorraging vast sums of cash as a lot of people and institutions are withdrawing cash. The fund holders are forced to sell holdings to free up cash, and they sell the ones that have made the most cash, gold? and hold onto the rubbish. Thus it causes the prices of quality stocks/commodities to drop. But central bank buying seems to have put a floor in the price of gold with good support at $1522.
There are few economic forcasters that see Europe lopping off a few countries and getting its act together by greater (yes, 'greater') integration of those remaining countries. (I know, hard to imagine at this juncture) This will couse a major Euro rally and the focus will turn to the biggest ticking time bomb of them all..... the US. Treasuries bubble to pop. (Not so much pop, more: KA-BOOM!) and the doller to collapse. Katrina like scenario x 52 states. No idea how silver would behave in that total SHTF scenario.
First let me thank you for the detailed reply---Outstanding!
Here is what I believe will happen before the US Dollar (US$) takes a big plunge in value:
I believe that the dollar (US$) is ripe for a really big devaluation, just like Mexico did right after NAFTA was signed.
I can see 1 New BUCK (NU$) equal to say 100 "old" dollars (US$), that way we would reduce our foreign debt by 100 times OVERNIGHT... This could only be done when the Dollar (US$) is very high because then the rest of the World would have to accept it because they are holding all our paper money. US COLA adjustments to Social Security and or Medicare would be "fuzzy" as all adjustments are. The FED would be seen by most as helping the US economy as many things would have to be adjusted but it would all be done in the name of US domestic financial security!
Another way this could happen is if the FED simply dumped a hundred times as many "newly created" dollars (US$) into the marketplace over a weekend. I like the first scenario since an added benefit to the US would be that all the Billions in bogus or the illegally gotten money would have to be declared to be exchanged to New Bucks (NU$). Additionally these New Bucks (NU$) would be traceable with new state of the art anti-forgery technology, which would save the US Billions of dollars (US$) annually due to forgery. The other thing that this would do, is that it would prevent the value of Gold and or Silver from skyrocketing because face it, cash is much easier to use than very valuable coins. If nothing else, this new monetary "coinage" (NU$) would allow all the other Countries to then readjust their own "coinage" and thereby delay everyones conversion to a new "globalized" commodity (Gold or ???) standardized currency OVERNIGHT...
For me, the signs are coming into place:
The Japanese Are Dumping Their Gold
With China starting to accept the Japanese Yen without any relationship to the dollar later this Summer
China and Iran are now trading in Oil without converting to the dollar (US$)
So the time is ripe now, before the US does not have this BIG option any longer, because we are the Worlds greatest consumers and everyone is holding our paper, this gives the USA an option that no other country now has at least until the dollar (US$) starts to tank...
BTW: What is your favorite "safe" currency, not counting the Dollar (US$)?
I can't tell you how many times I've heard those kinds of numbers in the last "three-four years." I've become a bit jaded.
Disclaimer: I am not a licenced investor. These are my opinions, and opinions only.
Silver is still in a short-term bearish trend right now, and unless QE III comes with the June 19th FOMC meeting, I coudl easily see it testing the (psychological) $25.00 support lievel.
A strong dollar is toxic for silver prices, and the big banks HATE precious metals with a passion (undermine the credibility of their ponzi scheme), so don't expect them to take their boot off of the neck of silver while it's down. If anything, I'd almost expect a double-down assault on silver, and gold for that matter.
Silver is one my strongest suits, both long AND short. Right now I have been, and continue to hold short positions in silver, until I see a potental reversal, which I do not in the short term. If though, I see a trend reversal forming up, then I'll hedge those shorts, and prepare to dump the short options and go long again via physical purchases.
I would pay attention to the 6/19 FOMC announcement, and also watch for some creeping, upward price action in a broad commodities basket, which may (key word "may", as opposed to "will") be indicative of insider action preluding to QE III.
I would also expect the big bullion banks to continue to knock down and beat the crap out of silver, particularly if a QE III is coming, as this would be as desirable as a high DXY index. Both need to be pushed to the extreme prior to a QE for "attempted" stability reasons.
If you are not a hard core market watcher, then I'd suggest just buying it, and do some banking, and midnight gardening while you're at it with the Bank of Folgers.
Sooner or later these schmucks are going to QE. It's what they do. Can kicking, or at least attemtping to. When they do, I think the odds are better than average that the $50 resistance level gets smashed this time.
Just my two cents.
With another round of QE this may indeed be true. No QE and even a mini meltdown and I'd consider at least hedging, or shorting it even.
Then pick it up cheap.
I like your theroy very much about devaluation. About a year ago I read a good case for about three main/major currencies all devaluing over one w/e by say 30%. This would help them look like they were getting their debts under control. Personaly, I think The Bernanke feels things will pick up as long as he can spin plates long enough and keep telling people things are improving, until they actually do improve. A devaluation would be the ultimate humiliation for the prez and for the Fed. It's a banana republic strategy. I think massive printing and loss of reserve status will do the job nicely, and bring the $ down, and along with high inflation (fiddled to appear moderate) would also allow debts to be dissolved in the meantime.
The US relies on forged currency. It is printed into existance without interest/debt. :-) It is required to slow the accumulation of interest/debt burdon. However, I believe we have now hit a point where all the US currency would only pay off 5% of all US debts. (or maybe that is true of the World?)
Favourite currency: Dollar for now and possibly for next 6 months? Swiss Fr I can't imagine will be able to be held without such massive printing, which I think will fail, and it will rise. Otherwise a currency from a small below the radar country ?
I think holding gold/silver would help you get wealth through an overnight, official, devaluation process.
I just scratched up this chart to illustrate the inverse correlation of the dollar and silver.
This, is what I believe is the primary culprit right now for lower silver prices. That, plus a few kicks below the belt by some "unseen forces". LOL.
The chart say it all I believe.
For fellow chartists, look at the "potential" penant formation. That's one of the best performing patterns in my personal arsenal, if it is indeed a penant. Also look at the double bollinger bands (I always use the double BB system, more information). The dollar is walking up the band and is almost completely bounded by the +1 and +2 STD price action bands. If that ain't bullish for the dollar, then I don't know what is. To boot, the latest bull run in the DXY comes off of a "W" reversal formation which started to form up around March. No surprise there with the EuroMess going on as it is.
However, QE would change this on a dime, no pun intended.
On second thought, I have to wonder if that "penant" in SILVER, is really a consolidation, wait-and-see if QE is coming, holding pattern. Awfully strange that SILVER seems to consolidate just when the dollar really takes off on a tear.
from 'Private Wealth Advisory'
A Phoenix Capital Research Publication May 30, 2012
"if a full scale banking crisis... silver to $20 and gold to $1,250 - both would then be a massive buying opportunity"
see page 19. (but worth reading the whole thing)
By Graham Summers
(This guy is good!)
I've been away from CM for a time (more medical issues, *sigh) but folks around here that know me, know me as a HUGE long-term silver bull, both from an industrial metal commodities view, and more importantly, from a monetary view.
I gotta tell you brother, this fall in price action doesn't bother me at all. In fact, I'm kinda getting a little giddy. When I dumped my hoard at 49 bucks (bought at 13-19 dollars) I immediately started waiting for the fire sale, hoping, praying to pick up the final "buy and hold" mother lode.
It's been two years. In that two years it's been an up and down short-long-short dance with The Argentum.
I'm performing a line integral of the silver price, scooping up more fiat so that I can eventually buy more money once it's script-to-coin ratio falls enough.
I HOPE that it drops to 25 bucks. Hell, I hope it drops to 10 bucks!. Because long-term I think this is a good one to get into. One way or another I will get long again, but this time for my retirement account. :)
Just my two cents. I am not an investment advisor. Just someone that has a keen interest in the silver markets.
I started reading Graham's work at Phoenix Capital a couple of years ago but I've grown really quite weary of his writing as I find it to be more high pressure marketing than anything. Some of what he says I agree with but then there are many other writers/bloggers who have a similar message (but without the "quick, buy my newsletter and stock tips before the world ends"). I would just suggest a little caution.
This is just my own opinion.
Let's see if that pennant squeezes into a tweezer like back in late December. Then you consolidation/pennant would be more appropriately labelled a "launch pad" as youv'e already alluded to. I suppose the underlying question is what will light the fuse?
If devaluation occurred at the same time the US President announced a huge Rebuild America Now Program, (using "fuzzy" money they "saved" since they would have to pay it in interest, if not for the devaluation) then the US public would accept it because everyone would be working again and that in itself would jump start the US economy! I think it would be something even bigger than this: China unveils £1 trillion green technology programme http://is.gd/yhzibt
AREA Required for Global Solar http://is.gd/oYgd5d
If the USA started to "modernize" itself, the rest of the planet would also jump onboard or be left to trade with itself! If this new effort was also coupled with a robust international plan to move toward Energy (and raw materials) from Space, then it would be like the race to the Moon all over again! The USA could Champion Solar from Space and then lead the World toward a safe new future; these books explain how:
The High Frontier by Gerard K. O'Neill,
Colonies In Space by A. Heppenheimer.
The Third Industrial Revolution by G. Harry Stine
The Space Enterprise by Philip Robert Harris
Mining the Sky by John S. Lewis
Space based Energy and "off planet" raw materials could completely "connect" all the countries on Earth and redefine all the limitations now placed on mankind that are now "only" based on Earth's own resources...
Either we continue to use up what is left of the Earth's dwindling resources as we have been doing and "accept" ever more financial and actual strife or we take that "One Small Step Upward" into Space, because that is where our SAFE future lies...
What gives me pause is that silver has stalled while dollar valuation was accelerating. That's a very divergent situation and immediately brings to question, why? Why would silver consolidate for a continuation right in the middle of the dollar's value really taking off???
What is supporting silver at the 27-28 dollar mark, when the market dynamics suggest that its price should be plummeting?
Either its a pennant, OR, a signal. Interestingly, after drawing it out for CM.com in this forum, it made me chew on it a bit harder, and after sleeping on it, I have added long option positions this morning as a hedge, particularly to lock in some value and to be in a position to benefit should a reversal be setting up. Starting to play it a little more safe with this pattern.
Another day of the precious metals rallying with the dollar. This is looking more and more like the PMs are moving into the safe haven arena. How long until the PMs push the dollar aside and the dollar is no longer seen as a safe haven, is anybody's guess. Mine is 6 months to 36 months?
Four years ago silver was $200/Kg. it went to $900 and now is around $600. So those people that you 'heard' were correct! - keep the faith. This is just a testing consolidation period. Sentiment is getting low (bullish) things are hotting up economically. There may be another big pull back if a huge deflationary wave freezes up all liquidity, but that will be short lived and a bounce will ensue.
I'm a little leary about unloading the short side of my hedge right now. All meltdowns have covering rallies, and if this is one of them and the overall market downtrend continues then I think that Silver takes a beating. Market crashes are deflationary, and silver hates deflation. Plus the Euro is rallying, (short cover rally?) which is putting downward pressure on the dollar. That might explain the recent rally.
I'm not yet convinced. But then again, I have a super cautious investing approach.
I now believe that the Financial Powers are taking their time and buying up Gold as fast as they can without starting a panic...
China wants to have it's currency be used instead of the US$ and to do so they need a similar amount of Gold, so they are now buying Gold and only making a percentage of it known... Expect to be amazed at their total amount, once China discloses how much they have as they really starts to push ever stronger to be the World currency.
At that time China will ask for Gold instead of US$ and that will put the US economy out of the running unless the Fed makes a surprize monetary move that nobody is now planning on first; like devaluating the US$, as I mentioned in this blog.
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