Silver Bears--Post Your Reasons

ddink

The bulls have spoken, so if you believe that ultimately (whether in this run up or in a future run up) silver will go up substantially, please post in another thread. I started this thread because I want some real arguments as to *why* the price of silver will go back down and stay down. I have an open mind, but unfortunately I cannot find any silver bears willing to state their side, only a few people saying "sell now" but not giving any reasons.

Please respond to at least one of the following assertions stated by silver bulls:

a) There is a silver deficit. We consume more silver than we mine, not just in the form of jewelry and coins which can be melted, but in industry as well, where the silver is irretrievably lost.

b) One billion ounces of silver have been "leased"--these billion ounces exist only on paper, not in physical form.

c) 550 million ounces of silver have been short sold. This means that "the big boys" have sold 550 million ounces of silver they *don't* have, hoping to buy 550 million ounces of silver if the price goes down, thus making money. However, if the price continues to go up, they will find themselves scrambling to buy all that silver on the open market. Considering along with this that COMEX only has about 50 million ounces in its vaults and that a Canadian bank that ordered 5 million ounces has been waiting six months to take delivery and still hasn't received their shipment yet.

There are some brilliant people on these forums, and I know there must be some good arguments out there.

nankraut

I believe silver prices are due for a major correction because they've gone up too far too fast. The end....

roadrunner

I'll play devil's advocate:

Because silver once went to $50/oz and lost a lot of average people a ton of money in the process. The govt will NEVER allow that to happen again.

Silver is a barbarous relic from the ancient past that has no meaning in today's computerized, fiat money society.

You can't eat silver. Not even with garlic to kill the taste.

Anyone can open up a silver mine within a week and start producing silver to open the flood gates of supply.

Warren Buffet has enough silver to depress prices all by himself.



roadrunner

atomic

Because we're in a "New Economy" and it's "different this time." Because Keynesian economics guarantees us all a free lunch.

NoGvmnt

I believe that the price may go down only because it went up to fast. I also believe that it will go much higher in the not too distant future after a short pullback.

Jim

mrearlygold

Because Keynesian economics guarantees us all a free lunch. >>



Even if it is just a bowl of potatoes

TP

NoGvmnt

"Because silver once went to $50/oz and lost a lot of average people a ton of money in the process. The govt will NEVER allow that to happen again."

The government only has limited control of the price swings of silver as they can not control the demand.



"Silver is a barbarous relic from the ancient past that has no meaning in today's computerized, fiat money society."

If you truly believe that statement, you are totally ignorant of the facts.




"You can't eat silver. Not even with garlic to kill the taste."

Ever hear of colloidal silver? Conduct a Google search.




"Anyone can open up a silver mine within a week and start producing silver to open the flood gates of supply."

Uh-huh, tell that to the copper miners as silver mining is a by-product of copper mining and is rarely found and mined as a primary production.




"Warren Buffet has enough silver to depress prices all by himself."

At last count Buffet had 137 Million ounces, not even 3-momnths of annual demand. With the closing of numerous major mines in South America and Chile last year and no major discoveries of new resources AND with the buying season opwning in India within the next 2-months AND the U.S. Mint now having to buy from the open market instead of using the now depleted U.S. stockpile AND with hospital suppliers now scrambling to purchase forward delivery contracts AND with manufacturing picking-up in the United States (where silver is a major industrial metal) upward price pressure is a given.

Jim

oreville

dddink: I posted this on another thread a few minutes after you started this thread.

<<<<<<<<<<<<Silver has certainly had a big run up. Doubled in price. It is in need of a short term correction to prevent or slow down the overspeculation that will or may have already begun. >>>>>>>>>>>>>

Also keep in mind that the citizens of India has probably more silver in the hands of their citizens (where they adore silver as jewelry) than any other country including the United States. Will they suddenly dump their silver as prices rise??

I doubt it. Some selling, yes but not wholesale dumping, no.

roadrunner

Gee, I guess nogovt hasn't been keeping current with these posts.
My tongue got lost in my cheek somewhere

roadrunner

ddink

About the quick run-up in prices, my view is this: I would love to see the price of silver rise slowly over time, maybe a dollar a year. The problem, however, can best be described in the form of an analogy. The Mississippi River normally shifts it's course very slightly several times a century. However, not wanting to risk New Orleans being washed away, the Army Corp of Engineers has built extensive levees in south Louisiana in order to keep the Mississippi from making those gradual course changes. It's perhaps inevitable, at some point (hopefully in the very, very distant future) that one of these days the Mississippi River *will* break through the levees, but after being held back for so long, it will rapidly, rather than gradually, seek a new course.

The same, in my mind, applies to silver. The short sellers and silver leasers, in my opinion, have built levees all around the silver market. One day, perhaps today, perhaps in five years, perhaps in twenty years, but one day silver will finally free itself of the manipulation, and just like the Mississippi River, will rapidly correct itself. I think we are looking at an inverted bubble though--when we see high prices going higher, we automatically think that a correction is bound to happen, dropping the price of silver until it can regain its momentum. In point of fact however (again in my opinion), what we're seeing *is* the correction--an upward, not downward, correction. Silver is struggling mightily to cast off the chains of decades of manipulations.

When a stock rises in price too fast, even if the company is promising, we assume that it will need to pause at some point and adjust downward to "correct" itself. But for the most part, the stock market is relatively free of manipulation. Silver is just the other way--rather than rise slowly based on its fundamentals, gradually correcting itself in a slow rise to it's market equilibrium, once it finally does break free of the barriers that have been built, it will quickly seek its desired height. Then again, all this is conjecture coming from a 21-year old history major, who has taken one economics course in his life.

***

Nogvt: RR was playing devils' advocate there. I think it's safe to say he's a confirmed bull!

***



<< <i>Also keep in mind that the citizens of India has probably more silver in the hands of their citizens (where they adore silver as jewelry) than any other country including the United States. Will they suddenly dump their silver as prices rise?? >>



Oreville, a great point I was thinking of just the other day. I took an Indian history class last semester, and I was totally astonished by the culture. My professor said that many poor Indians have substantial gold and silver jewelry, but have run down farm equipment, etc. He said one time he visited a poor Indian farmer and the guy had several ounces of gold jewelry on, plus some silver jewelry, that had been passed down as heirlooms. The farm was run down and half the stuff barely worked, but when my professor asked him why he didn't sell the gold and silver and repair some stuff, the guy looked at my professor as if he was crazy.

Americans are *sometimes* so greedy that they'll melt down anything if they can make a buck off it, yet Indians living in utter poverty cling to their heritage, in the form of valuable heirlooms. So in short, I don't think we'll see India ever shift from being a demander of silver to a supplier.

MoneyLA

In another thread I posted one factor that could hurt silver prices and thats rising interest rates which would pull money out of the metals and push the money into interest bearing securities. However, in the current environment, silver is clearly in a bull run, something which Ive been on the record about for a year -- both on TV and on the internet. cheers, and watch out silver bears -- you're soon to be an endangered species. alan mendelson

SportsModerator

RR

I agree

What you need to do is sell all your metals and get into some high grade mutual funds. I got this tip from a relaible source

AValde

Yes Silver and Gold won't go up. The bull market is over. Bush has created many jobs this year almost miraculously. He is god.

He will create more technology jobs by classifying McDs and Burger Kings as High Tech companies and the college kids helping out as Manufacturing workers. Wonder why the college kids don't quit school and stay back in their highly paid manufacturing jobs.

There is no inflation. Gas price hikes were long overdue. Don't whine about a 1 dollar increase in gas price over the last 1 year and we will be out of Iraq shortly.

What more can one ask for ? Its utopia again. Enjoy.

AValde

Oh and by the way, don't ever go on strike, coz when you join back, you will be considered as a newly employed person to Bush's credit.

The striking california grocery workers 50000 of them, are newly employed workers in the Bush's miraculous job creation program because they rejoined their work.