Gold is great but silver may be better

ksammut

Good article on Silver:

Silver Article

gsa1fan

Gold has hit 3 highs lately. Silver has not even broke $20 a ounce.


I keep hearing & reading of a boom! About time for some action.

ksammut

<< <i>Gold has hit 3 highs lately. Silver has not even broke $20 a ounce.


I keep hearing & reading of a boom! About time for some action. >>



When it comes (jump in silver price), it may happen very quickly. The price of silver can be easily manipulated by those with deep pockets. Much easier than the Hunt Brother days.

Take advantage of the present prices and accumulate (both the metal and silver mining shares).

gsa1fan

62+ to 1 ratio

57loaded

it might be easier to keep silver low with a few macro-big short players in the market.

i too wonder about the Au/Ag spread and wonder where it will be in two years.

OnlyGoldIsMoney

I've been stacking both AU and Ag this year. Hopefully silver will see some big moves soon and get out of its $16-18 rut.

DoubleEagle59

"Gold is great but silver IS better"

cladking

"There are only a handful of pure silver mines remaining - many with depleting reserves. This inflexible supply means that we cannot expect significant mine supply to depress the price after silver rises in price. It is extremely rare to find a good, service, commodity or investment that is price inelastic in both supply and demand. This is another powerfully bullish aspect unique to silver."

This is the key point and it's what will make the move in silver historic when it comes.

This will eventually be the biggest change ever in the valuation of a commodity on a
global scale and most probably even exceed almost all local scales. Of course a bucket
of water is pretty valuable to a rich man who's on fire.

meluaufeet

<< <i>There are only a handful of pure silver mines remaining - many with depleting reserves. >>




And lets not forget about forward sales by private, and public entities (ie Silver Wheaton). Some of the future production, has already been SOLD.

cladking

<< <i>


And lets not forget about forward sales by private, and public entities (ie Silver Wheaton). Some of the future production, has already been SOLD. >>



Good point.

It also brings up the probability that some of the largest silver users
probably have long term contracts with producers. These contracts
are usually negotiable but they would have the effect of removing
production from the market.

This has been a developing situation for milinea but the die has been
cast for half a century.

It's remarkable that this situation attracts so little attention. There's
no real possibility that the major move will be triggered by an actual
physical shortage since all hell will break loose at the initial signs of it.
When the refineries are all backed up and there is even a whif of shor-
tage the speculators will pounce on the market. It's the overhang of
coin that prevented it in the past.

fc

<< <i>"There are only a handful of pure silver mines remaining - many with depleting reserves. This inflexible supply means that we cannot expect significant mine supply to depress the price after silver rises in price. It is extremely rare to find a good, service, commodity or investment that is price inelastic in both supply and demand. This is another powerfully bullish aspect unique to silver."

This is the key point and it's what will make the move in silver historic when it comes.

This will eventually be the biggest change ever in the valuation of a commodity on a
global scale and most probably even exceed almost all local scales. Of course a bucket
of water is pretty valuable to a rich man who's on fire. >>



clad there may not be many pure silver mines left but most every mine
that goes for something else produces silver too and they just do not
toss it in the garbage

speaking of garbage, "Japanese company Yokohama Metal calculates a ton of cell phones can yield 150 grams of gold, 220 pounds of copper, and 7 pounds of silver."

as the price goes up so does the ability of people to make money off
of harder sources of metals.

i do not see a silver shortage in my lifetime. gold either. if anything
it will be some odd metal we never discussed here that is used to make
things we never discuss here like:

Neodymium is used in an alloy for high-power, lightweight magnets for electric cars. Dysprosium is used to maintain neodymium's magnetic powers at high temperatures. Lanthanium is a major ingredient in hybrid car batteries. etc...

So what does this mean for the future of rare metals? It is estimated that demand will exceed supply by 40,000 tons annually in several years.

and silver ain't one of them manufacturers are really worried about
from what i read. and to be honest i doubt the ones i listed will be a
problem either because we will design around them as needed.

my point is i think the whole silver shortage is over rated.

renman95

Traditional ratios seem to have lost it's meaning albeit arbitrary since the 1970's.

Silver would be in the $60 range if tradition was followed.

cladking

<< <i>

and silver ain't one of them manufacturers are really worried about
from what i read. and to be honest i doubt the ones i listed will be a
problem either because we will design around them as needed.

my point is i think the whole silver shortage is over rated. >>



Most manufacturers are sitting on hundreds of millions of ounces of worthless paper
silver they believe will keep their factories running in any eventuality. The entire econ-
omy operates on Just In Time delivery and the first indication many manufacturers have
that something is amiss is when they have to shut down.

Again, there is no silver shortage. There never has been a true silver shortage. The
one that is coming is coming because you can't forever use more of something than you
make. You can print up IOU's based on nothing but the desire to steal from the economy
but you can't make products from paper IOU's.

Eventually investors and speculators are going to see the mess that's beebn allowed to
occur in these markets and they are going to jump in. A few billion dollars coming into the
gold market is no big deal but imagine massive capital inflows in the tiny silver market!!!

There is less silver available than gold and the economy can't function without it. ...at
least not without extensive retooling. This isn't like the nickel default a couple years back
because there is no alternative to silver in most applications. Almost all of nickel's primary
applications another metal can be substituted for all or part of it. Silver is used in tiny quan-
tities in many products.

The problem isn't that there is a shortage. The problem is that silver is so tremendously
undervalued compared to other commodities. The problem is that higher prices will neither
increase supplies nor decrease consumption. The problem is that the longer this situation
persists the more destructive it will be when it unwinds. ...And it will unwind. It will unwind
as soon as speculators start paying any price to get on board and this will happen the day
before someone tries to make an electrical contact out of a worthless IOU.

derryb

Short term play is with gold. Silver's day is coming but you will see better buying opportunities before that day arrives. Be very ready to back up the truck at 12.68 between March and May 2010. Going out on a limb on this one, but my research (confidential of course) backs it up.

cladking

<< <i>Short term play is with gold. Silver's day is coming but you will see better buying opportunities before that day arrives. Be very ready to back up the truck at 12.68 between March and May 2010. Going out on a limb on this one, but my research (confidential of course) backs it up. >>




Silver is definitely a long term play but it will be an easy one to miss the boat on
when it finally comes. Gold is a superb short term play since it's doing so well de-
spite the fact very few believe in inflation. This is closer to a bottom than a top.

But those who like gold shouldn't lose sight of the fact that the only needed for
the explosion called silver is a fuse and a runaway gold price could easily set it off.

MoneyLA

first of all stop with the conspiracy and manipulation theories. the silver market is too big for anyone to manipulate, and there are too many players. even the Hunt brothers couldnt keep up the charade for too long.

while I would like to be bullish on silver, I JUST CAN'T until it makes a move, and it's not.

remember, silver's record is about 50 an ounce. today its under 18... while gold is setting new records almost daily.

one day the silver bull will return... but it hasn't, and there is a long way to go between today's price under 18 an ounce at the 50 dollar an ounce price breakout that would signal a true, new bull market.

to put it simply, I cant get excited about silver. good luck to those of you who are in advance of silver making its move.

ksammut

<< <i>first of all stop with the conspiracy and manipulation theories. the silver market is too big for anyone to manipulate, and there are too many players. even the Hunt brothers couldnt keep up the charade for too long.

while I would like to be bullish on silver, I JUST CAN'T until it makes a move, and it's not.

remember, silver's record is about 50 an ounce. today its under 18... while gold is setting new records almost daily.

one day the silver bull will return... but it hasn't, and there is a long way to go between today's price under 18 an ounce at the 50 dollar an ounce price breakout that would signal a true, new bull market.

to put it simply, I cant get excited about silver. good luck to those of you who are in advance of silver making its move. >>




I normally agree with you on most things you write. In this case, I really disagree. The silver market is tiny compared to many commodities and just a small blip compared to the equities market.

The Hunt Brothers made the mistake of trying to corner the silver market using a lot of leverage. It was easy for the government to change the margin rules overnight and wipe them out.

There is a big difference between paper silver and taking possession of the physical metal. A few hedge funds, a foreign country, or a group of today's billionaires could demand possession of just 100 million ounces and you would see silver doubling overnight. 200 million or more ounces and the POS would easily shoot past the old $50 price.

Silver has been going through an accumulation phase. Besides small investors, it is a guess on my part that there are a number of big players accumulating the metal before they make their move. It will take just a few billion dollars to come into the metal to and make it run. Again, not the paper market but the demanding of the actual metal. There is just not that much silver available.

jmski52

first of all stop with the conspiracy and manipulation theories. the silver market is too big for anyone to manipulate, and there are too many players. even the Hunt brothers couldnt keep up the charade for too long.

MoneyLA, what conspiracy and manipulation theories are you seeing in this thread? You contradict yourself by first stating that the silver market is too big for anyone to manipulate (which it is not), and then you go on to implicate the Hunts in manipulation of the silver market. Make up your mind!

Further, you call the Hunt's attempt to corner the silver market a charade. They played totally by the book, and the rules were changed on them by the CFTC in the middle of the game. The reason that the rules were changed is because the Hunts decided to start taking delivery of physical silver in order to flush out the "shorts" who were in fact the real manipulators. There is no charade involved at all if you are serious about taking delivery.

Your point has no validity. Respectfully, jmski

MoneyLA

jmski, please look at the post just above yours, and then posts #3 and #5 for references to conspiracy and manipulation... or am I reading these incorrectly?

regarding the Hunts, I used the wrong word-- "charade." My error in diction. I should have used something more like "attempt" or "plot."

Frankly if there are some people able to corner this market, and they are taking steps to corner the market, why can't silver make new highs? why is it "stuck" below $18 an ounce? why?

jmski52

MoneyLA, those aren't theories - it's a well-established fact, corroborated by the Hunts themselves that they were trying to corner the silver market. That's manipulation, not a theory. And they would have been successful in driving up the price even higher if the CFTC hadn't changed the rules on margin and bankrupted them.

The CFTC manipulation trumped the Hunt Brothers' manipulation.

The difference was that the Hunt's weren't doing anything illegal, while the CFTC's action was unethical at a minimum and was no doubt designed to protect market participants who were friends and business associates of the CFTC regulators themselves - and who just happened to be on the wrong side of the trade from the Hunts. Somebody had their fat pulled out of the fire - and we NEVER found out who it was, did we? That would qualify as a conspiracy in my book - but that was then, this is now.

Such an occurance leaves open the possibility that a similar governmental move could always happen in any market, including the gold and silver markets of today. If it becomes politically expedient to trash our gold and silver investments, the current group of crooks in government wouldn't bat an eye if it meant skimming something off the top for themselves or helping some of their well-connected banking friends.

if there are some people able to corner this market, and they are taking steps to corner the market, why can't silver make new highs? why is it "stuck" below $18 an ounce? why?

MoneyLA, you did mis-read those posts. Nobody said that anyone is currently trying to corner the silver market, however they did say that the market could be, and is being manipulated - by the large shorts. Several analyses have traced the large short positions to only two large banks - one of which is JP Morgan (who also just happens to be the trustee for SLV, I believe.) Correct me if I am wrong.

Silver stocks aren't very easy to keep accurate tabs on - that's why it is called "speculation". If games really are being played with paper silver in the ETF and by large shorts on Comex who can't come up with the physical metal, there will come a time when silver will be "stuck" alright - embedded into the surface of the Moon. That would be my preferred scenario.

cladking

When the move in silver comes it will be brutal. Remember that both supply and
demand are very inelastic and buyers will have no choice but to obtain silver regardless
of price. Most silver bulls are very bullish so there will be no rush to sell. Even some of
biggest long term bulls were flushed out when silver hit $300 / OZt in today's money in
1979. So there you have it; Most available silver is suddenly found to be worthless pap-
er at a time that there is a shortage. As the price increases the supply is unaffected as
is the demand. Indeed speculators will jump on board so investment demand will be
soaring.

This will happen. It might be ten or twenty years from now or even longer but it's coming
and it has been set up by bankers and others who have been holding back the price for
a very long time for their own gain.

MoneyLA

question for cladking.

you wrote: "buyers will have no choice but to obtain silver regardless of price."

question: who will be the buyers? for example, industry, speculators, jewelry makers, who?

thanks

MoneyLA

jmski here's where we differ on the meaning of words.

you wrote: " being manipulated - by the large shorts"

I think of manipulation as being something that is not natural, or something not inherent in market forces. for example, "cooking the books" might be an extreme.

large shorts are not "manipulating" a market but naturally move a market. shorting a commodity is a natural market force.

just as going long is a natural market force.

the definitions have caused confusion. I'm going to drop this discussion and return to a more basic point which needs no dictionary or interpretation. And that is-- I just dont think silver is ready for a price break out. I look at silver as an industrial metal and a metal tied to jewelry, and I dont see enough economic activity increasing this demand to the point that prices will turn up sharply. that's my "funadamental" reasoning.

my "technical" reasoning is that silver has to get back to 50 an ounce to signal a new bull market. heck, I would be luke warm to silver if it could just get back above 18.

ksammut

<< <i>

the definitions have caused confusion. I'm going to drop this discussion and return to a more basic point which needs no dictionary or interpretation. And that is-- I just dont think silver is ready for a price break out. I look at silver as an industrial metal and a metal tied to jewelry, and I dont see enough economic activity increasing this demand to the point that prices will turn up sharply. that's my "funadamental" reasoning.

my "technical" reasoning is that silver has to get back to 50 an ounce to signal a new bull market. heck, I would be luke warm to silver if it could just get back above 18. >>



Silver investment demand by everyday investors has never been higher. Just take a look at the US Mint statistics each week when it comes to the American Silver Eagle. They have produced over 24M ASEs this year and have been having trouble filling orders in the past week or so. In addition, there were not enough blanks to mint the Proof ASEs and the Unc. W ASE for 2009.

Add in all the other Silver releases this year and we are headed for the largest one year silver minting since 1964 and .9 silver coinage.

I frequent at least two local B&M stores each week to purchase .9 silver. Investors are out in force purchasing .9, bars, and graded coinage. The purchasing would be even greater by many collectors and investors but they do not have a lot of free cash thanks to the economy.

The everyday person still has no clue about gold or silver but that is a good thing. Good investors accumulate before everyday people pile on. The Hunt Brothers started accumulating silver in the early 70s but it was not until late in 1979 that silver began to make its huge jump in price. Once it started to make its move, everyone was talking about silver. It was on the news and in the papers every day. Many people were buying up silver as fast as they could while some were selling their old coins, jewelry, and silverware to take advantage of the spike in price. The craziness lasted about 4 months when the CFTC came in and changed the margin rules forcing the bankruptcy of the Hunts and the drop in the POS.

The difference now is that investors (especially the deep pocketed investors) will not accumulate their silver (or gold) on margin. Whether they are accumulating their bullion through dealers or taking physical possession through COMEX, they will be buying with cash and arranging storage.

With most investments, the average investor does not see that accumulation is taking place. Again, the Hunts did it over a decade giving them time to accumulate and unfortunately for them, the rules were changed and they did not have deep enough pockets to turn the table.

The $50 price of silver was not warranted at the time. It was hype and a fools game brought on by speculators jumping in. The price of silver before the spike in late 1979 was around $11. The Hunts had approximately 100M ounces (again most owned on margin). Just 100M ounces along with investors and speculators jumping in drove the price up $40. There was a lot more silver available back then too.

Without the speculation, silver would have climbed in price by several dollars but not much more.
Within a couple of years, Reagan's tax cuts and the FEDs policies strengthened the Dollar and silver and gold lost a lot of its value.

As some say, this time is different. US Debt both in realized and future liabilities is so great ($12 Trillion now and approaching $100 Trillion in future liabilities) the FED cannot raise rates to strengthen the Dollar and taxes cannot go up to pay for the debt as we would be in a depression within months.

Europe is in the same boat. The fiat currencies stink. Gold will soar higher. Silver will follow and on a percentage basis may even do better than gold even without any manipulation. I would not be surprised to see a 40 to 45 gold to silver ratio. The wildcard is the supply of silver. Because it is an industrial metal, industry will need to purchase it even if the price moves higher. It would be relatively easy and not too expensive an investment for a relatively few deep pocket investors to take ownership of the available supply to spike up prices. Just a few billion dollars is all that is needed. These investors, like the Hunts, would have been accumulating before they make their big move. Time will tell if this possibility plays out.

In the meantime, I will continue to accumulate not counting on a spike, but on the fact that the Western World is in deep (fill in the blank) and there is no easy cure.

jmski52

I think of manipulation as being something that is not natural, or something not inherent in market forces. for example, "cooking the books" might be an extreme.

large shorts are not "manipulating" a market but naturally move a market. shorting a commodity is a natural market force.

MoneyLA, you really don't understand.

Being short isn't the same as naked, leveraged, unidentified shorts in a market that doesn't force full disclosure. Even in the stock market, insiders are required by law to disclose their buying and selling more than a certain percentage (5% I believe) of any stock that they own. In Comex, the two largest shorts own 80% of all short positions, and there is NO disclosure - no disclosure - none, get it?

If there is NO disclosure, it is virtually impossible to know what moves the markets - no way to know who, what, where, when, how or if the markets are going up, down or sideways.

"Cooking the Books" is a walk in the park compared to what they are doing over at the Comex. It's a disgrace to capitalism and a monument to cronyism.

cladking

<< <i>question for cladking.

you wrote: "buyers will have no choice but to obtain silver regardless of price."

question: who will be the buyers? for example, industry, speculators, jewelry makers, who?

thanks >>




Industry. I really should have said "users" rather than "buyers" to make this more clear.

But in a sense speculators have little choice but chasing markets higher. It's human nature
to try to catch a shooting star even if this isn't usually a good trait for investors.

cladking

<< <i>
... I'm going to drop this discussion and return to a more basic point which needs no dictionary or interpretation. And that is-- I just dont think silver is ready for a price break out. I look at silver as an industrial metal and a metal tied to jewelry, and I dont see enough economic activity increasing this demand to the point that prices will turn up sharply. that's my "funadamental" reasoning.
>>



I won't argue the point because predicting the future is already a fool's
game and timing it is more difficult yet.

I would say this though: If I'm right that all this market needs is a trigger
then the greatly reduced silver production caused by a weak economy
could be just such a trigger. So far it hasn't been a very dramatic factor
but if base metal demand were to stay low then these mines would curtail
operations. Most silver production is a byproduct of other mining so it's
entirely possible that supply could drop much more sharply than demand.

57loaded

something to munch on

this may play into another OP about ratios of physical holdings and being content with the ratios. again this may be more of an investment food for thought with the ratios as they are.

don't know how many of you "trade" this way or have thought about following the ratios as an investment method playing the metals off of each other.

fc

i like to think that all this bullion being produced right now will be a
nice easy purchase down the road as it all gets sold by buyers who
will not appreciate it anymore.

i am not one to think that the US is dead for the upcoming decades.
everything goes in cycles.


to me the time to buy is not right now but when no one wants the
stuff. comparable to what was happening just several years back.

i am out of the game.

jmski52

i like to think that all this bullion being produced right now will be a nice easy purchase down the road as it all gets sold by buyers who
will not appreciate it anymore.

There are certainly very few guarantees in life, but I suspect that in not too many years, today's $18.00 silver will be comparable to the $6.00 silver from a few years ago.

The debt and spending are increasing a whole lot faster than incomes. Math, being somewhat objective, tells me that something's got to give.