is gold/silver a bubble?

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is gold/silver a bubble?

so, this article explains what is a bubble.
but how does one identify the top? what are the signs to look out for?
for example, some people say gold/silver might be in a bubble, how do we know we have reached the top?
i know gold is money, but in dollar terms how do i know gold has reached its top?
thanks!

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Re: is gold/silver a bubble?

I am not an economist or financial guru. I do, however, consider myself an open-minded, common sense kind of guy.

In my younger days, I got caught up in the silver/gold bubble toward the end of the last century. Fortunately I was not hurt badly, but do have some silver candalabras left if anyone is interested!

What is anything worth? That's my starting and ending question. We, as human beings, have certain physical needs for survival: food, safe water, shelter, clothing (depending on climate). The value of everything else is based on a simple "supply and demand" situation -- not on need. The rest is all "fluff".

So where are silver and gold in this equasion? They aren't! You can not wear, eat, be sheltered from the elements or drink silver and gold. They are only as valuable as what someone else is willing to pay you for them at this very moment in time. They are just another elongated bubble -- one example of the "greater fool" theory: when you buy them you are hoping there will be a greater fool to buy them from you at a higher price than you paid. Period. 

RWS

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Re: is gold/silver a bubble?

I guess you will know when gold & silver are in a bubble when the Fed comes out and states that there is no bubble in gold and silver, like they did with real estate and tech stcoks. At that point it might be good to sell your gold and silver.

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Re: is gold/silver a bubble?
JAG wrote:

I guess you will know when gold & silver are in a bubble when the Fed comes out and states that there is no bubble in gold and silver, like they did with real estate and tech stcoks. At that point it might be good to sell your gold and silver.

At that point, I believe there would be a very real possibility that the US will default.  I would hold on to mine. 

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Re: is gold/silver a bubble?

Gold and Silver are actually grossly undervalued with the later being ridiculously undervalued. intentionally so, and with damn good reason.

Silver above ground stocks have been depleted over the past 30-40 years due to industrial CONSUMPTION. That's right, gone. Forever.

The traditional historical silver:gold ratio has been 16:1 until the rush with silver in the late 1800s caused the ratio to plunge due to bourgeoning surpluses from large finds in the US, Australia, and Canada.

Again, those surpluses are GONE. Yet the paper markets indicate a 65:1 ratio to gold. That alone makes silver undervalued by 4:1.

16:1 is almost like a silver Fibbonnaci number. At it's peak circa 81', when silver hit nearly 50 an ounce, the silver:gold ratio dropped to..

16:1.

Silver MUST be manipulated because it's supply is depleted. See, silver and gold prices are well correlated. A rise in one often pulls along the other, and vice versa. Most common folks see 500, 600, 900 dollar an ounce gold and think that "it's too expensive for me to afford". But not silver at $14 an ounce. Imagine if the public were incentivized to purchase affordable silver in a market where the paper claims the supply is better than 4x what it is?

The price would go hyperbolic. And hence drag gold up with it, and hence reveal the true nature of the dollar as precious metals have for fiat currencies for thousands of years.

Silver IS the achillles heel of the ruling superclass precisely because it is in short supply, precisely because it is affordable to the average cabbie or short-order cook, and precisely because it is capable of revealing the shenanigans of paper currency.

It MUST be manipulated. It MUST produce a low average return and be universally seen as a high risk, low yield, super volatile investment to be avoided like the plague.

It MUST generate little to no interest.

The sheeple wouldn't know what a bubble was if you popped on on their face. LOL But the sheeple are terrified of bubbles. So, take this advice:

When, not if, the political class, academic "experts", financial talking heads, and media bums start asking questions like "are gold and silver overvalued?" or "are gold and silver in a bubble?", then buy like a madman as you'll be handed the gift of a crashing price. The herd HATES bubbles. But they love their leaders and experts.

So if the leaders and experts utter the word "bubble", the flock will sell like they're holding vials of Ebola virus.

The problem is that long term this manipulation is mathematically impossible for technical reasons not unlike fractional reserve fiat banking. So the true nature of silver will someday be revealed.

By then, even the herd will ignore the experts and pile on the silver rush. And by the time the herd heads out to graze, the money's been made.

I will say this, when true price discovery of silver does occur (months, years, decades?) it will overshoot like crazy IMO. That will be contrived to be a bubble in a desperate attempt to drive down the price. Don't buy into that nonsense.

Anytime the superclass claims something is overbought or overvalued it means that they don't want you buying it. Period.

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Re: is gold/silver a bubble?

Just wait to the dollar tanks.

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Re: is gold/silver a bubble?
robertwsimpson wrote:

I am not an economist or financial guru. I do, however, consider myself an open-minded, common sense kind of guy.

In my younger days, I got caught up in the silver/gold bubble toward the end of the last century. Fortunately I was not hurt badly, but do have some silver candalabras left if anyone is interested!

What is anything worth? That's my starting and ending question. We, as human beings, have certain physical needs for survival: food, safe water, shelter, clothing (depending on climate). The value of everything else is based on a simple "supply and demand" situation -- not on need. The rest is all "fluff".

So where are silver and gold in this equasion? They aren't! You can not wear, eat, be sheltered from the elements or drink silver and gold. They are only as valuable as what someone else is willing to pay you for them at this very moment in time. They are just another elongated bubble -- one example of the "greater fool" theory: when you buy them you are hoping there will be a greater fool to buy them from you at a higher price than you paid. Period. 

RWS

I cannot disagree with this more. Sorry.

China has made a concerted effort to develop its mining capacity and has now become the 3rd largest mining entity in the world. In the past 5 years it has allowed very little gold and silver to leave it's borders.

In other words, she keeps what she produces. And buys 1.5 billion a month in foreign gold. And the central bank is now aggresively marketing silver to it's citizens. What was once extremely illegal is now encouraged. (it was illegal to own gold and silver in China). The proceeds from the silver sales are used to...

buy more silver abroard!

The tired argument of "you can't eat precious metals" doesn't take into account it's historical 5,000 year record as default currency. It's almost instinctive of humans to run to it when times become tight. And that is regardless of culture.

Remember. PM's are scare, they are fungible, and they have a long transcultural history. As such they make a perfect storage of wealth. In rough times people intrinsically realize that and rush to them as safe harbor.

If they're so worthless then why is China trying to corner the silver market? And why all the gold purchases and hoarding by China?

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Re: is gold/silver a bubble?

 

So where are silver and gold in this equasion? They aren't! You can not wear, eat, be sheltered from the elements or drink silver and gold. They are only as valuable as what someone else is willing to pay you for them at this very moment in time. They are just another elongated bubble -- one example of the "greater fool" theory: when you buy them you are hoping there will be a greater fool to buy them from you at a higher price than you paid. Period. 

RWS

 

You can not wear, eat be sheltered from the elements or drink money either.

You can trade it for those necessities. Until it becomes worthless. People have trouble wrapping their minds around money. Think of all the money out there as one big piece of money. The bigger it gets the less the pieces that you hold are worth. Bernanke is printing trillions now. Zimbabwe did this. They stopped taking Zimbabwe currency and people were pan handling the rivers for gold.

Borrowing billions is one thing.

Creating trillions when no one will loan you money is another. It does NOT add to the value of your dollar, it detracts from it. If you don't like PMs you might want to consider buying the things you will need later now.

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Re: is gold/silver a bubble?

Robert. Might I kindly suggest that you check out this essay, and this website? GATA (Gold Anti-Trust Action Committee) is a real eye opener. It's not a bunch of fringe kooks. It's a financial civil rights group that is serious enough to have sued JPMorganChaste twice, and is 1-1.

Adrian Douglas: Don't ease up yet on MorganChase, CFTC

Section: Daily Dispatches

By Adrian Douglas
Saturday, August 22, 2009

I have a couple of issues with Ted Butler's comments in his interview this week with Eric King of King World News (http://www.gata.org/node/7705).

First, I greatly admire Butler's analytical work in silver, which is well-researched and meticulous. I disagree with his opinions expressed in that interview.

1) Butler speculates that J.P. MorganChase has hedged its silver short position on the Comex via instruments like over-the-counter derivatives and so now may not care if the silver price goes up.

The issue with precious metals short positions is the ability of the shorts to deliver real metal. Any hedging with derivatives will not necessarily result in silver being delivered to MorganChase; such hedging might deliver only dollars.

I agree that MorganChase could hold call-type derivatives that in theory would provide the firm with a neutral dollar-denominated risk on its Comex silver shorts if the silver price rises. This of course would assume that the counterparties are capitalized enough to pay up if silver rose in price significantly. The OTC derivatives market is totally unregulated with no clearinghouse, so the ability of such counterparties to pay is questionable.

But if we are going to postulate that MorganChase has dollar hedging of its silver shorts, I don't think we have to invoke the questionable OTC derivatives market. For MorganChase has the ultimate dollar hedging because the firm is essentially the Federal Reserve and the Fed has a "technology called the printing press," as Fed Chairman Ben Bernanke famously bragged.

We know that MorganChase and the Fed are essentially the same entity because MorganChase was selected by the Fed to take over Bear Stearns for $2 per share with no due diligence and apparently no competitive tender between rival banks. When Bear Stearns shareholders protested the $2 per share offer, it was arbitrarily increased to $10 per share. What normal enterprise could suddenly increase a takeover bid by 400 percent without batting an eye in times of great financial stress?

But if you have a money-printing press, who cares what you pay for Bear Stearns?

If MorganChase has access to unlimited dollars, then the firm can roll its Comex futures indefinitely and never have to deliver and never have to cover. But this does not imply that the firm does not care about the silver price rising. The firm's whole raison d'etre as the big short in Comex silver is to cap the price. I think MorganChase does care if the price of silver rises because the Fed doesn't want that.

The silver price manipulation will end when there is a silver shortage, but it won't be MorganChase that defaults, because the firm will continue to roll contracts and cover its dollar losses.

The physical silver market is under growing stress. China's encouraging its citizens to own silver could be the straw that breaks the camel's back. China was the last country to be on a silver standard. The word for "bank" in Chinese means "silver movement." The Chinese associate silver with money just as Mexicans do, because the Mexican peso used to be denominated in silver. There appears to be a cultural affinity for silver, so this is explosive for a nation that, like China, earns so many intrinsically worthless dollars.

2) Butler also has commented favorably on the U.S. Commodity Futures Trading Commission's withdrawal of exemptions from speculative position limits for Deutsche Bank Commodity Services LLC (http://news.silverseek.com/TedButler/1250788825.php). Butler extrapolates that the CFTC is doing what it promised in re-imposing position limits and figures that the agency eventually must reduce the concentrated short position in silver.

I don't draw the same conclusion. Deutsche Bank is a hedge fund that is long commodities. The withdrawal of its exemption fits into my view of the new CFTC chairman, Gary Gensler -- that, like his predecessors, he wants commodity prices to be low, as that is thought to be good for the United States. So the CFTC continues to attack investors in commodities. The CFTC is convinced that long-side speculators caused the boom in commodity prices in 2008 and does not see the real problem, which is the unlimited creation of dollars, whose depreciation has to be hedged.

The suppression of prices by allowing short-side speculators unfettered freedom exacerbates the problem, choking off investment in commodity production.

I wonder if this singling out of the Deutsche Bank hedge fund could be related to speculation that Germany has asked to have its national gold reserve returned from storage in the United States. Now that Switzerland won't sell any more gold, its leading bank, UBS, is threatened with criminal action by the U.S. government for helping U.S. citizens evade taxes. Are these really just innocent coincidences?

If Gensler is the knight in shining armor who is going to clean up the Comex, then why hasn't the CFTC's Enforcement Division issued a report and criminal indictments in its almost year-long investigation of the gold and silver markets? How long does it take to recognize massive concentration of the short positions there? How could the CFTC possibly be contemplating a solution to manipulation, such as the imposition of strict position limits, without first even acknowledging that there is a problem?

Gensler used to be adamantly opposed to regulation of derivatives, a detail that seriously delayed his confirmation as CFTC chairman. He is a former officer of Goldman Sachs, a company that thrives only by manipulation and front-running markets.

Has Gensler had an epiphany? Did he see the burning bush? Has he suddenly become a man of the people mounting a crusade against manipulation and corruption committed by his former employer and cronies?

I do not give the benefit of the doubt to people with such a past. Given Gensler's past, he is guilty until proven innocent, and his clamping down on long-side investors in grains at Deutsche Bank Commodity Services only compounds my fears.

I think the gold and silver cartel will be defeated only by the physical market. The precious metals will not suddenly be liberated from price suppression because MorganChase has a fiat dollar hedge or because a cartel stooge at the CTFC supposedly gets a conscience and pretends he is Eliot Ness.

I have a lot of respect for Butler's work but I'll take the opposite side of the trade here.

-----

Adrian Douglas is a commodity market analyst, publisher of the Market Force Analysis letter (http://www.MarketForceAnalysis.com), and a member of GATA's Board of Directors.

http://gata.org/node/7708

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Re: is gold/silver a bubble?

A few questions and thoughts here:

1. I read somewhere that the overall costs for 1 oz silver by a major silver miner is around $ 10 US.  A spot price of $14 seems reasonable to me. Isn't it? If so, silver is neither undervalued nor overvalued.

2. Nathan Martin (http://economicedge.blogspot.com/) predicted the final outcome of the current financial crisis: a loss of confidence in the US government and USD. I personally believe it. The loss of confidence in USD would mean hyperinflation, as people would buy anything valuable to get rid of USD. I would buy some silver now as a store of value.

3. The overall cost for mining 1 oz gold is around $800US. Gold is not overvalued.

4. Silver is a better buy than gold. There is less above ground silver stock. Silver would likely appreciate more quickly in the next 2-5 years.

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Re: is gold/silver a bubble?

Hi jlshen,

I am curious about the mining cost for gold.  Can you refer me to the source of the the $800 per ounce figure?  I thought it was closer to the $300-$400 range, based on some gold mining stock financial reports I read.  That, however, was a year or so ago.  Thanks.

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Re: is gold/silver a bubble?
jlshen2000 wrote:

A few questions and thoughts here:

1. I read somewhere that the overall costs for 1 oz silver by a major silver miner is around $ 10 US.  A spot price of $14 seems reasonable to me. Isn't it? If so, silver is neither undervalued nor overvalued.

2. Nathan Martin (http://economicedge.blogspot.com/) predicted the final outcome of the current financial crisis: a loss of confidence in the US government and USD. I personally believe it. The loss of confidence in USD would mean hyperinflation, as people would buy anything valuable to get rid of USD. I would buy some silver now as a store of value.

3. The overall cost for mining 1 oz gold is around $800US. Gold is not overvalued.

4. Silver is a better buy than gold. There is less above ground silver stock. Silver would likely appreciate more quickly in the next 2-5 years.

 

Why does it seem reasonable jlshen? The spread between spot and cost of production? First, 75% of all silver mined has been incidental mining in concurence with other metals such as copper, zinc, nickel, and iron. These mining companies do not throw away free silver, but do not chase silver either due to the poor return on investment. The remaining 25% of silving mining is done by dedicated operations which according to the CPM, are struggling due to undervaluation. I don't know what "reasonable" is but I do know this.

The rarity of a commodity combined with its demand normally dominates price, not cost of production. Silver and gold are extremely finite materials. That is why they are called precious metals. They are limited in quantity and difficult to extract.

The supply is artificially boosted due to ethereal gold and silver traded in the form of paper contracts. Rarely (pun intended) do these contracts ever demand physical delivery. The COMEX and OTC are fractional reserve gold and silver markets. For every oz of paper metal, there are "x" ounces of paper receipts laying claim to it. Hence market distortions are rampant in the PM trading circuit. Gets worse, OTC derivatives leverage these paper contracts, which are already fractional in nature. So if there ever is a run on gold and in particular silver, the profit could be substantial.

The question is not if, in my opinion, but when? Like a heroin junkie, the Pirates of the COMEX and other banksters seem to continually defy destiny. Just when you think they are down, they cook up another scheme of manipulation.

The risk is when? Next year? 2 years? 5? 20 years? When do the COMEX and OTC markets bust due to a massive short squeeze and failure to deliver? That's the 64,000 troy ounce question. And that is thee risk.

The $14 price of silver is due to massive market manipulation. Don't take my word for it, have a look at this report:

One more thing. You'll NEVER get physical PM's at spot. Nope, cost is 5-15% higher depending on how aggresive you are at bargain hunting.

http://www.gata.org/files/PIRATES-OF-THE-COMEX.pdf

 

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Re: is gold/silver a bubble?

FarmerBrown,

Unfortunately I did not keep record. However, I remember the numbers very clearly. The cash costs for mining 1 oz silver is about 6-7 USD, and 1 oz gold around 400 USD. However, the cash costs don't include exploration costs. The overall costs include exploration costs.

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Re: is gold/silver a bubble?

Morpheus,

I fully understand your points. On kingworldnews.com, the CEO of Silver Wheaton said a few days ago that the current silver price was good to the miner but not good enough to its stock holders.

I have put over 40% of my savings in physical silver in 1000 oz bars with an average cost of $12 per oz. The premium is about 2.2% over spot. You don't have to pay 5-15% premiums over spot. Just go to kitco.com and get their 1000 oz silver bars. Their price is 0.300 USD per oz over spot. They charge a huge premium for shipping and insurance. If you happen to live in and around New York City, you can go to their vault and get your bars wothout paying any shipping and insurance fees. This was what I did a few months ago.

I would like to see higher silver prices but I doubt it would happen soon. We are still in deflationary time. Even Marc Faber ( one of my favourite guys) predicted deflation for the next 3-6 months. I will try to keep my silver for a long time because I don't trust the stock markets (3. party risk and manipulation) and FDIC (it's broke and potential USD death).

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Re: is gold/silver a bubble?
Morpheus wrote:

Adrian Douglas: Don't ease up yet on MorganChase, CFTC

Section: Daily Dispatches

By Adrian Douglas
Saturday, August 22, 2009

Morpheus,

Your argument for a bull market in silver lost all credibility with me when you cited Adrian Douglas.

Take a look at this thread by Sam Linder, posted at the beginning of May.

Massive rise in gold/silver price in next 30 days?

Sam cites an article by Douglas predicting a massive rise in Gold/Silver in 30 days. Needless to say, Douglas' prediction didn't pan out. I can also provide GATA videos circa 2005 making the same old tired predictions.

Bottomline: This article is just marketing, not unbiased and objective investment advice.

As Bob Hoye says, "the first sign of a goldbug forecast gone wrong is the word conspiracy"

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Re: is gold/silver a bubble?
jlshen2000 wrote:

Morpheus,

I fully understand your points. On kingworldnews.com, the CEO of Silver Wheaton said a few days ago that the current silver price was good to the miner but not good enough to its stock holders.

I have put over 40% of my savings in physical silver in 1000 oz bars with an average cost of $12 per oz. The premium is about 2.2% over spot. You don't have to pay 5-15% premiums over spot. Just go to kitco.com and get their 1000 oz silver bars. Their price is 0.300 USD per oz over spot. They charge a huge premium for shipping and insurance. If you happen to live in and around New York City, you can go to their vault and get your bars wothout paying any shipping and insurance fees. This was what I did a few months ago.

I would like to see higher silver prices but I doubt it would happen soon. We are still in deflationary time. Even Marc Faber ( one of my favourite guys) predicted deflation for the next 3-6 months. I will try to keep my silver for a long time because I don't trust the stock markets (3. party risk and manipulation) and FDIC (it's broke and potential USD death).

I use Kitco, but I don't buy 1,000 oz bars. To each his own but 1,000 oz bars are too large for me and it's the threshold for reportability I believe. But, to your advantage, the large bars reduce production costs and hence the 2.2% above spot. Typically I buy 200 oz at a time but on a basis consistent with the lulls in the market (in addition to an engineer I am a statistician/analyst so I apply some software analysis tools that I built and really watch this stuff closely. It's a nice hobby on the side that could pay handsomely). My time averaged price over the past few years has been about $13.30 an oz. But, I am in this long haul. And considering my estimates of future value I'd consider $18-20 an oz to be good value. Doesn't mean that I'd pay that today, but in the future my cutoff is $20 an oz. By then I'll have more than plenty. In fact, I am almost there.

I myself (in addition to gold) prefer a hodgepodge of 1, 5, 10, and 100 oz bars, 1 oz rounds, and some 1 oz silver eagles. The later as you know have the highest price above spot and hence the lowest ROI but they are my SHTF insurance. A garbageman, plumber, accountant, truck driver, doctor, teacher, or bricklayer will ALL immediately recognize and accept 1 oz US silver eagles without too much fuss and generally without assays when the quantity is small.

Interesting data from the USGS, 2009.

http://minerals.usgs.gov/minerals/pubs/commodity/silver/mcs-2009-silve.pdf

Deflation? When in modern history of a fiat monetary system has deflation ever happened? Japan? Nope.

Deflation is when the value of your currency increases. I'm not buying any deflationary arguments save those "apparent" anecdotal claims based on suppressed commodity prices via smoke and mirror manipulation (can you tell that I think the markets are rigged ALL over the place?).

Now I will buy into a monetary inflation/ asset deflation argument occuring simultaneously. But long haul that is the best outcome for silver anyways.

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Re: is gold/silver a bubble?
Morpheus wrote:

Deflation is when the value of your currency increases.

Cool+1

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Re: is gold/silver a bubble?
Morpheus wrote:

Deflation? When in modern history of a fiat monetary system has deflation ever happened? 

United States of America, (and the rest of the world) in 2008, 2009

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Re: is gold/silver a bubble?

I think he meant Currency not Asset price. But I agree a lot of prices have gone down during that period. Myself I don't think that is really deflation.

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Re: is gold/silver a bubble?
JAG wrote:
Morpheus wrote:

Adrian Douglas: Don't ease up yet on MorganChase, CFTC

Section: Daily Dispatches

By Adrian Douglas
Saturday, August 22, 2009

Morpheus,

Your argument for a bull market in silver lost all credibility with me when you cited Adrian Douglas.

Take a look at this thread by Sam Linder, posted at the beginning of May.

Massive rise in gold/silver price in next 30 days?

Sam cites an article by Douglas predicting a massive rise in Gold/Silver in 30 days. Needless to say, Douglas' prediction didn't pan out. I can also provide GATA videos circa 2005 making the same old tired predictions.

Bottomline: This article is just marketing, not unbiased and objective investment advice.

As Bob Hoye says, "the first sign of a goldbug forecast gone wrong is the word conspiracy"

Jag. If you read MY opinions on this I make no claim to timing. Unfortunately too many people, even well intentioned people get caught up in making temporal predictions. Timing, in my opinion, is not possible. I argue the the question is of  "when" not "if".

To dismiss someone due to inappropriate timing is silly. I'm sorry, but your credibility goes to zero when quibbling about timing and invoking the ridiculing and thought-stopping word "conspiracy" which you seemed to feel the need to highlight. 

They must be "conspiracy theorists"..... I've seen this approach before. And usually I'm better off talking to a brick wall. Because people that go that route have made up their minds in advance and don't really need to be confused with evidence.

Almost all financial crimes are conspiracies. They don't happen impulsively, and they sure as hell aren't crimes of passion.

Now back to timing. Peter Schiff initially predicted the meltdown of the markets in 2002. And some still point to that as "proof" that he was wrong and that he has no credibility, even though he caught hell for years laying out the same message, and then spelling out the exact unraveling as it later happened.  What Schiff later admits is that he didn't see the next level of even more grandious bubble blowing with respect to the housing markets. Which I, and many others could reasonably argue, were criminal actions, and impossible to predict.  In a manipulative environment, if a curveball is tossed via malfeasance, then predictions of timing are impossible as the natural ebb and flow market patterns, predicated on supply, demand, and macro-economics are disrupted.

So, is Peter Schiff's credibility in the mud because he predicted the crash too early, and perhaps being somewhat naive in underestimating how rigged the game was? Is gata guilty of nothing more than the same? Tell you what, have a look at the paper that I linked regarding Pirates of the Comex. Look at the data and reach your own conclusions.

But please, don't give me the mocking "it's a conspiracy" crap. That's disrespectful and I sure as heck won't put up with it sitting down. Take apart my arguments piece by piece. Don't dismiss them out of hand due to timing or derisive thought stopper statements like "conspiracy".

Conspiracies happen every day all over the world. It's called crime. Most on a small scale, but the big ones are the ones that hurt the most people the most. Bernie Madoff's ponzi scheme was a conspiracy by the way.

One more thing. When did I claim a bull market was going to occur soon? I didn't. I said that silver/gold was going to explode someday. Then said "when"?, implying "sometime in my lifetime".

Another thing. Look at the USGS data that I also posted here, get out a spreadsheet, and calculate yearly Ag/Au ratios. Then do the same for total global reserves. They are NOT 65:1 as you will find out. Then look at yearly industrial consumption. Add up the descrepencies in annual consumption, Ag/Au ratio, annual production deficit, and tell me with a straight face why silver is sitting at $14 an ounce? And, if you care to, read the paper on short-sale manipulation and then try to dismiss this out of hand. I really don't care what Bob Hoye says. In the end I trust myself. And I am pointing you right to the well to look at the facts and do the same. Analyze the data and reach a conclusion.

Facts are facts. Look at all those other links that I posted. It's government data. Prima facie evidence of market manipulation.

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Re: is gold/silver a bubble?
JAG wrote:
Morpheus wrote:

Deflation? When in modern history of a fiat monetary system has deflation ever happened? 

United States of America, (and the rest of the world) in 2008, 2009

Our currency is getting stronger with time?

JAG's picture
JAG
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Posts: 2492
Re: is gold/silver a bubble?

Timing is everything to successful trading and investing. I can predict that the Dow will be at 20,000 in the future based on fundamentals, but does acting on that prediction make you any money?  Market behavior has nothing to do with fundamental analysis. It has everything to do with how do I get you to give me your money. The most effective way to achieve that is to convince you to chase a potential profit somewhere in your future. The age old market adage of "Get long and get loud" has made lots of money for the established market players. I'm simply offering a warning to what I have seen a thousand times in my trading career.

Pete,

I truly think that your are a very intelligent and savvy guy, but I owe it to this community to balance your strong viewpoints with an opposing point of reference. But the truth of the matter is that we are on the same team here. I'm sorry if I offended you with my potshots. I respect your viewpoints and I owe you more explanation in my arguments. The brevity of my responses have more to do with my inability to multitask (and a screaming two year old daughter doesn't help either). 

We are in a unique market environment here, and we need to keep both eyes open if we are going to survive this intact and functional. I welcome your opposing point of view because it widens my perspective. I hope you can welcome mine for the same reason.

All the best...Jeff

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britinbe
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Re: is gold/silver a bubble?

Some may argue that quantative easing is already a default on debt by the back door and so for me gold and silver are about protecting what wealth I have over the long term.  If I look at the CC as a whole I know that at some point I will be out of a job and that isn't a fatalistic view, its a balanced view of what is likely to happen; it will also be a situation that affect many amny others like me, I kind of have Zimbabwe's 70% unemployment number in mind. 

Gold and silver are my attempt to preserve what little wealth I have fot when TSHTF because the PTB will certainly try and take anything they consider to be an excess from me I am made unemployed assuming there is any kind of viable welfare programs available at that time.  If this is the first trough on the way down, as Chris and other commentators have suggested, the gold and silver are a long game to play.  If this game goes beyond my life time, then at least it will be something for the kids.

Interestingly, the dealer I used in the UK who is based in one of the jewellery manufacturing areas said that that only real business going on is the melting of scrap gold and jewellery rather than the making and selling of the stuff.  I appears the apparent high prices have force folks to dig out grandma's old rings and grandpa's soverigns that have been  in the draw for years and sell them on. 

So bubble of not, I'm holding on and buying more when I can; and given what I believe and see going on around me, I cannot see how the classical tools and analysis approaches hold true any longer.

 

Morpheus's picture
Morpheus
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Posts: 1200
Re: is gold/silver a bubble?
JAG wrote:

Timing is everything to successful trading and investing. I can predict that the Dow will be at 20,000 in the future based on fundamentals, but does acting on that prediction make you any money?  Market behavior has nothing to do with fundamental analysis. It has everything to do with how do I get you to give me your money. The most effective way to achieve that is to convince you to chase a potential profit somewhere in your future. The age old market adage of "Get long and get loud" has made lots of money for the established market players. I'm simply offering a warning to what I have seen a thousand times in my trading career.

Pete,

I truly think that your are a very intelligent and savvy guy, but I owe it to this community to balance your strong viewpoints with an opposing point of reference. But the truth of the matter is that we are on the same team here. I'm sorry if I offended you with my potshots. I respect your viewpoints and I owe you more explanation in my arguments. The brevity of my responses have more to do with my inability to multitask (and a screaming two year old daughter doesn't help either). 

We are in a unique market environment here, and we need to keep both eyes open if we are going to survive this intact and functional. I welcome your opposing point of view because it widens my perspective. I hope you can welcome mine for the same reason.

All the best...Jeff

 

JAG, you SHOULD provide a counterbalance. In fact, I too WANT that. But please, I have seen stuff like the word "conspiracy" tossed out and it does not become a counterbalance, it becomes a thought stopper. Many people will just shut down upon reading that particular noun. Sorry, that's what got my goat. Not counterpoints, but what I see as a potential to shut down debate on a subject.

We are on the same team. And I expect disagreement and savoir opposing viewpoints provided that they either offer a premise or refute one already on the table.

Furthermore, anyone that takes somone elses advice on money, without doing the homework themselves (and particularly playing devil's advocate) should assume "buyer beware".  What if someone here is wrong, myself included, and people either miss an opportunity, or pour money into an opportunity and get taken to the cleaners on someone else's arguments.

I strongly believe in what Chris quotes with regularity. Trust yourself. That's why I quoted it. And why I implored you to look at the data yourself. I don't want anyone taking my word for it. Because if they do, and I get Peter Schiff'ed (LOL!) then they get burned on my opinion. But, if they do their own homework and arrive at the same conclusion, then I feel more confident in my analysis, and they can't wag their finger later and say "you said...".

Even in the Ag markets there is no sure thing. For instance, what if the duration of the price manipulation exceeds my ability to breath oxygen in into my golden years? What if China has more Ag than she's letting onto? What if the USGS is wrong and new, economically feasible reserves are found that are double what is presently known. There is no sure thing. Everything is about risk analysis.

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Cloudfire
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Posts: 1813
Re: is gold/silver a bubble?
Morpheus wrote:

What Schiff later admits is that he didn't see the next level of even more grandious bubble blowing with respect to the housing markets. Which I, and many others could reasonably argue, were criminal actions, and impossible to predict.  In a manipulative environment, if a curveball is tossed via malfeasance, then predictions of timing are impossible as the natural ebb and flow market patterns, predicated on supply, demand, and macro-economics are disrupted.

This is precisely why I am not putting my energy into attempting to discern which roulette table I want to play at today . . . As noted earlier in this thread, it appears that all of the markets are rigged . . . and I'm not a gambler at heart.  There's just not enough reliable data out there to make a decisive move these days . . . At least not that I can see without spending every waking hour watching this stuff.

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Morpheus
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Posts: 1200
Re: is gold/silver a bubble?
C1oudfire wrote:
Morpheus wrote:

What Schiff later admits is that he didn't see the next level of even more grandious bubble blowing with respect to the housing markets. Which I, and many others could reasonably argue, were criminal actions, and impossible to predict.  In a manipulative environment, if a curveball is tossed via malfeasance, then predictions of timing are impossible as the natural ebb and flow market patterns, predicated on supply, demand, and macro-economics are disrupted.

This is precisely why I am not putting my energy into attempting to discern which roulette table I want to play at today . . . As noted earlier in this thread, it appears that all of the markets are rigged . . . and I'm not a gambler at heart.  There's just not enough reliable data out there to make a decisive move these days . . . At least not that I can see without spending every waking hour watching this stuff.

Cloud, the problem is that "they" (the plutocratic superclass) have turned everything into a roullete table, even the Federal Reserve Notes in your wallet.

So. we have no choice but to step up with our chips. I'd run far far away from anyone that predicts timing. It's not possible to do. We have no idea what game rigger is up next. What we can discern are economic fundementals if we do our research. Then we'll have a good idea of what is ultimately safe (no guarantees) but still no idea of when.

Nice post. And welcome to the Gambler's Economy. Step right up, step right up. Place your bets, place your bets. Never mind the magnet in the roullette ball.

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Cloudfire
Status: Diamond Member (Offline)
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Posts: 1813
Commodities that I Trust
Morpheus wrote:
C1oudfire wrote:
Morpheus wrote:

What Schiff later admits is that he didn't see the next level of even more grandious bubble blowing with respect to the housing markets. Which I, and many others could reasonably argue, were criminal actions, and impossible to predict.  In a manipulative environment, if a curveball is tossed via malfeasance, then predictions of timing are impossible as the natural ebb and flow market patterns, predicated on supply, demand, and macro-economics are disrupted.

This is precisely why I am not putting my energy into attempting to discern which roulette table I want to play at today . . . As noted earlier in this thread, it appears that all of the markets are rigged . . . and I'm not a gambler at heart.  There's just not enough reliable data out there to make a decisive move these days . . . At least not that I can see without spending every waking hour watching this stuff.

Cloud, the problem is that "they" (the plutocratic superclass) have turned everything into a roullete table, even the Federal Reserve Notes in your wallet.

So. we have no choice but to step up with our chips. I'd run far far away from anyone that predicts timing. It's not possible to do. We have no idea what game rigger is up next. What we can discern are economic fundementals if we do our research. Then we'll have a good idea of what is ultimately safe (no guarantees) but still no idea of when.

Nice post. And welcome to the Gambler's Economy. Step right up, step right up. Place your bets, place your bets. Never mind the magnet in the roullette ball.

Well put, Morpheus.  It seems that one would have a fair chance in a truly free market to "time" the market, but there is so much manipulation going on that it becomes a game of reverse psychology, and double-reverse psychology, which is nothing more than crystal gazing, in my book.  I agree that fundamentals count, but I'm going a step farther . . . These days, I'm most interested in assets that can be of real, physical value to me, right now, and going forward, into the future:  land, improvements to make land more productive, sustainable on site energy production, tools, hardware, and supplies that directly affect productivity, sustainability, or food, energy, and health independence. 

This conversation reminds me of an old adage in the real estate investing business.  It was something to the effect that one should never invest in a property, regardless of the market trend, that one wouldn't want to personally own, and live in, or do business from.  I feel the same way about commodities, at this juncture.  If I can't work with it, or market it myself, it's just plain too spooky for me at this point.  Investing, at this point, feels like walking through a minefield with a blindfold on.  No, thanks . . . I'll just sit here, work with the land I'm on, and let the customers come to me. 

Sure, I'm a cynic . . . But, heck, it's not like my cynicism developed in a vacuum . . . and, I don't feel at all fearful, or depressed, or even angry, on a day-to-day basis, because I am actively working at a solution, and, well, I just don't have much time or energy to expend on mental gymnastics and directionless anger and frustration.  For instance, I spend little time hyperanalyzing the healthcare issue, as I have little confidence in mainstream medicine, and we are well on our way toward healthcare independence, and developing more skills, supplies, and connections toward that goal, all the time.   

For me, it comes down to rolling up my sleeves and taking responsibility for all of our needs that "the market" used to take care of for us.  What I mean is that I used to be able to reliably make enough money in the market that I could afford all of the "public" solutions to food acquisition, transportation, energy production, and healthcare.  I no longer trust either the market or most of our "public" systems for the task of procuring our needs.  So, now, we need to be farmers, engineers, laborers, manufacturers, and so on . . . Or, (and this is CM's strength) we need to network, locally, with persons who have the skills and hardware that we don't have, and whom we can look in the eye, and gauge the honesty thereof. 

This way of doing business is undoubtedly "messier" . . . it requires that we get our hands dirty, and that we actually stop and talk with those we do business with . . . but, in the same sense it is less "sterile" than clicking away on the keyboard for quick profits.  All-in-all, I find it very satisfying.

-- C1oudfire

 

PS:  Sorry about the rather philosophical tangent . . . This is a thread about gold and silver investing . . . I'll stand down, now . . . But, I will also note that I consider physical gold/silver as one of the commodities that I can use in a very real, practical sense.

 

Morpheus's picture
Morpheus
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Posts: 1200
Re: is gold/silver a bubble?

The plain hard facts regarding gold and silver ratio'ed to the DJIA. Here's the data, discuss.

Are we in a PM bubble?

 

Right now I see a WEAKENING of the postion of PM's relative to the stock market if we can assume that the Dow Jones is representative of the US market.  Remember though, this is a three-four month period. One thing is certain to stay the same. And that is that things never stay the same. 

Ohh, the Hong Kong index looks eerily similar. Are the Asian economies getting pounded harder than we are? (Me, I doubt it.. stock market is NOT an indicator of overall economic health).

Farmer Brown's picture
Farmer Brown
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Posts: 1503
Re: is gold/silver a bubble?

Don't know if I agree, but it's interesting analysis:

JAG's picture
JAG
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Joined: Oct 26 2008
Posts: 2492
Gold-vs- Government Confidence

Since this is the current thread of choice for gold talk, and because I can no longer search for The Definite Near-term Gold Outlook Thread to post this there, I will post it here.

Martin Armstrong: Will Gold Reach $5,000+?

It should be an interesting read.

Morpheus's picture
Morpheus
Status: Diamond Member (Offline)
Joined: Dec 27 2008
Posts: 1200
Re: Gold-vs- Government Confidence
JAG wrote:

Since this is the current thread of choice for gold talk, and because I can no longer search for The Definite Near-term Gold Outlook Thread to post this there, I will post it here.

Martin Armstrong: Will Gold Reach $5,000+?

It should be an interesting read.

Read it. If you register you can print a hard copy.

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