Silver Mania Predictions Don't Make Sense
CerealSpiller
Posts: 38
Hi all,
This is my first post but I've been lurking here since I started stacking last June. I got in quick and big and the payoff has been tremendous so far.
I'm posting because I'd like to discuss a position many take regarding the silver market that has bothered me for awhile now. I've heard many state that it will be time to sell when silver hits the mania phase. This makes no sense to me and defies the law of supply and demand. At least in the physical market, I'm not talking paper here. If and when we hit the mania phase and everyone is buying up physical and taking it off of the market leaving less to be had, how can it possibly not drive the price up and why would anyone ever sell in this market? It just doesn't make sense.
What do you guys/gals think?
This is my first post but I've been lurking here since I started stacking last June. I got in quick and big and the payoff has been tremendous so far.
I'm posting because I'd like to discuss a position many take regarding the silver market that has bothered me for awhile now. I've heard many state that it will be time to sell when silver hits the mania phase. This makes no sense to me and defies the law of supply and demand. At least in the physical market, I'm not talking paper here. If and when we hit the mania phase and everyone is buying up physical and taking it off of the market leaving less to be had, how can it possibly not drive the price up and why would anyone ever sell in this market? It just doesn't make sense.
What do you guys/gals think?
0
Comments
There are many very intelligent people on here, and as you have no doubt seen so far, quite a few differing opinions on many topics.
Regarding your original question, the mania phase would result in prices escalating rapidly, or as some have said, geometrically. Too many people chasing too few of anything will drive the price up, and when that happens that is the time to (theoretically) sell.
It all depends on your interpretation of when that curve goes vertical.
You will find many speculators taking their profits which helps to provide the rest of us with buying dips. Also affecting profit taking is the availability of alternative investment choices with the silver profits. Other than oil, and a few shorts, I just don't see them at this point.
Natural forces of supply and demand are the best regulators on earth.
Their definition of mania. The, "when my brother-in-law calls asking where he can buy silver it's time for me to sell". Many use a similar scenario to illustrate the mania phase. Personally I believe we are nowhere near that stage of the market and think the mania stage truly begins when industry starts buying and stockpiling on supply availability concerns.
I'm a stacker and don't plan on selling a single ounce for a very long time.
Just curiuos what others have to say on the topic.
World Collection
British Collection
German States Collection
the operative word is leverage.
<< <i>That's the same thing everyone thought in the last silver bubble. The guys left holding when the dance ended last time still aren't all whole on the price. >>
Would they not be ahead now had they kept all of their holdings?
<< <i>
<< <i>That's the same thing everyone thought in the last silver bubble. The guys left holding when the dance ended last time still aren't all whole on the price. >>
Would they not be ahead now had they kept all of their holdings? >>
No, he's referring to the Hunt Bros. fiasco that was 100% speculation driven. Dis one got some legs!
Natural forces of supply and demand are the best regulators on earth.
New wealth and larger populations lead to commodity acquisition. At some point, as people evolve, they get tired of rice and fish or tortillas and beans and begin to hunger for and have the where with all to eat steak and asparagus and drink pepsi cola and evian instead of dirty water. At some point, people want to stabilize their wealth instead of betting on fiat that is backed by the full faith of something and watching the leeches sap their wealth with ever smarter strategies. It's all about resources and getting them by what ever means possible, just look at China's acquisition of resources in their own country and the villages that were in the way, not unlike our legacy with the native indians. Real commodities have real value and not the intrinsic kind as commodities are what they call the underlying asset and when you are seeing large countries gaining affluence and population then the outcome is somewhat predictable in terms of their acquiring commodities. And that brings us to silver and gold as a means to preserving or enhancing individual wealth.
As long as the paper boys and their talking heads poo poo PM to push more of their paper, as long as Cash4gold and all it's incarnations prosper and expand, as long as our and old european fiat look like they are in trouble, as long as full page daily ads in major metro newspapers beg you to bring them your old jewelry, then real assets and real commodities will run and I haven't seen anything to turn them back but you can be sure I'm watching. Silver or gold will surely settle down at some point...at some point. If you want to know what to do, get your head in the game, read, watch, listen, study, pay attention and make your own decisions. No one on this forum is going to tell you to when buy and no one is going to tell you to when to sell because they don't want to be responsible for the results of your taking their advice if it turns out to be ill timed for your individual situation and nobody here knows your individual situation. Do your own due diligence; that means figure it out for yourself and put your own money down on the table, and believe that what you are doing has merit.
If you are going by predictions as stated in the OP then you must be believing in the predictor more than yourself. If you want to get rich over night then good luck, it happens but people get struck by lightning every now and then too. If you want to take a position with conviction, then take it and hold it and believe it and let it run...you might be wrong or you might be right but it will be by your own hand and reasoned judgement and not by responding to someone quoting old idioms. The nice thing about metal is that PM never goes to 0 and hasn't since BC (and I don't mean Before Computers), unlike GM and some other rock solid paper stocks. If you want to try, just stick your toe in the water as it seems you already have, with some descretionary cash and then do it and then do it again next month and the next and soon you will have a ministack and maybe after a year of doing that, you will have a nice stack and after a few years you will have a retirement quality, pay off the mortgage, buy a place in the country stack or you might just have your intital investment or even less but it never goes to 0. It's the same as having private assets; almost a lost concept for the middle class in todays world where damn near everything you own is on somebodys computer screen somewhere.
Best of luck to you and welcome to the forums.
<< <i>That's the same thing everyone thought in the last silver bubble. The guys left holding when the dance ended last time still aren't all whole on the price.>>
Would they not be ahead now had they kept all of their holdings?
<<No, he's referring to the Hunt Bros. fiasco that was 100% speculation driven. Dis one got some legs! >>
Ah. I thought he was referring to the crash of '08. I know all about the Hunts and wish people would let that go as I believe it has little relevance to today's market. We all know that the fundamentals have changed.
<< <i>If you want to try, just stick your toe in the water as it seems you already have, with some descretionary cash and then do it and then do it again next month and the next and soon you will have a ministack and maybe after a year of doing that, you will have a nice stack and after a few years >>
I've already positioned myself where I want to be and won't be purchasing more than an ounce here and there simply because I enjoy it. I also do some trades from time to time as well. Last Thursday at my LCS I traded thirteen 10 oz J-Ms for 130 '88 maples still in the plastic sheets. Cost me $2.50 over spot per coin but had fun. I also picked up a pristine '96 ASE at their regular premium. The guy I always deal with explained that silver has risen so much that they no longer bother charging a larger premium for the '96s!
A couple of rolls of 96's at $4.50 over spot would be awesome.
<< <i>That's the same thing everyone thought in the last silver bubble. The guys left holding when the dance ended last time still aren't all whole on the price. >>
The major differences between now and then:
1. abundance of above ground silver supplies back then - multiples of what's around today.
2. lack of $100+ Billion in silver otc derivatives back then to suppress the price - peaked in July 2008 with 12-15 yrs of world supply shorted (in 1979 no one was supressing the price).
3. $1.14 QUAD in illiquid otc derivatives - 80% of them in interest rate swaps keeping rates aritificially depressed and ensuring real interest rates stay negative for quite some time
4. world fiat system was not even close to falling apart after just 9 yrs of it. Today, with 40 yrs "invested," we're lots closer to an end of the current system
5. sovereign defaults are a threat everywhere you look around the globe....not so in 1980
6. only marked to model/maturity accounting is keeping our largest banks afloat - if the same rules were used as in 1980 - they'd already be gone. The govt was not keeping dozens
to a hundred or more banks & corporations supported back in 1980. It is today.
As long as you're looking at the last dance, those that invested in stocks since 1998 have not been made whole, especially if one factors in a dollar that has depreciated
close to 40% in that same time.
The silver mania will occur when people who never considered it an investment and have no real clue about the market, decide to jump in because their next door
neighbor has. This is equivalent to those jumping into the tech bubble in 1999 because they were afraid to miss the move. But a dose of reality is that silver did go from
$50 to about $4 from 1980-2001. While it didn't go to zero, that's close enough to zero in my book. But then again I think the fundamentals today are radically diff from 1980.
If silver is indeed coming to a world wide choke point in supply, then it will find an equilibrium point down the road where industrial demand and supply balance at some level
much higher than $4 and probably a lot less than $300. Since most silver demand probably comes from outside the United States, it matters little what J6P is doing.
I'm more concerned about what they're doing on the other continents.
roadrunner
mhammerman & roadrunner said more than I could by typing all day.
How did you come to the conclusion that you needed to get into metals so big and so quickly? That takes some bold thinking.
I knew it would happen.
it becomes obvious the buying panic has started then you sell perhaps 10% to lock in some pro-
fits. It's impossible to know how high it will go and you don't want to miss an opportunity. I
wouldn't even blame someone for already have taken some profit though at this point I'm holding
on for the real panic. When things start getting crazy then sell another 10%. Try to sell the bulk
after lightening up near the top when your brother in law buys. Almost immediately there will be
a massive correction and it will be time to buy. I'm thinking it will correct from about $250 to about
155. You should have sold at about $240 when the brother in law got in. Buy at $155 and you'll
see a nice steady 10 or 20% annual gain for many years when the brother in law decides to get
in again.
When silver calms down and rarely moves more than .25% in a single day you'll know it's fairly
valued. You'll have to look at the fundamentals again since the future is never predictable and
that's what brothers in law are for. Don't get caught with a lot of wealth tied up in silver when
there is a major breakthrough in materials technology. You should have at least eight or ten
years (I hope). Don't count your chickens until they're hatched and don't be afraid to take profits.
There are always good things to buy and while silver was obviously a great buy at $5 there's no
certainty it's a good buy at $40. We'll have a buying panic in the long run. This might not be it.
<< <i>How did you come to the conclusion that you needed to get into metals so big and so quickly? That takes some bold thinking. >>
Back in June I took a two week vacation to remodel a room in the house. Each day I listened to Rush and Beck and the Goldline commercials. Ordered a 1/2 oz AGE and three ASEs online. When they arrived I liked them and started researching silver on the internet. The more research I did the more convinced I became. I knew it was going up and wanted in BIG. I sold my F-350 diesel, my tools, the wife's treadmill, furniture, anything I could sell for hard cash. But I had to have more. I applied for and got approved for numerous 0% credit cards and maxed them out with silver. The wife thought I had lost my mind. I was obsessed! I had trouble sleeping at night. I couldn't concentrate at work. I was ordering monster boxes and picking up bars and coins at the LCS. Even sold my AGE to buy more ASEs. I'm not a gambling man and have never invested in anything. Have never trusted the stock market with my money. But when I do commit to something it's all or nothing. No diversification for this guy! Or as Eric Sprott calls it "Di-worse-ification". I'm all for throwing my eggs into one basket and letting it ride on silver. You don't get rich by diversifying in the stock market or maxing out a 401K. Talk about risk!
The higher silver went the more my wife came around and now supports me fully. We have no mortgage, no car payments, and minimal monthly bills. I live like a pauper and everything goes to paying off the cards before the interest kicks in. The higher balance cards will get transfered to another 2 year 0% card when the time comes.
My family and in-laws think I'm crazy. I'm glad. They tell me how risky this is. I tell them I can sell a 1/4 of my stack tomorrow and pay off the credit cards so where is this wreckless risk? Even if silver completely tanks and drops to $18 (which I don't think it will) I still break even.
Anyway, that's my story.
$41.37!!! On the move again!!!!!
<< <i>
<< <i>How did you come to the conclusion that you needed to get into metals so big and so quickly? That takes some bold thinking. >>
Back in June I took a two week vacation to remodel a room in the house. Each day I listened to Rush and Beck and the Goldline commercials. Ordered a 1/2 oz AGE and three ASEs online. When they arrived I liked them and started researching silver on the internet. The more research I did the more convinced I became. I knew it was going up and wanted in BIG. I sold my F-350 diesel, my tools, the wife's treadmill, furniture, anything I could sell for hard cash. But I had to have more. I applied for and got approved for numerous 0% credit cards and maxed them out with silver. The wife thought I had lost my mind. I was obsessed! I had trouble sleeping at night. I couldn't concentrate at work. I was ordering monster boxes and picking up bars and coins at the LCS. Even sold my AGE to buy more ASEs. I'm not a gambling man and have never invested in anything. Have never trusted the stock market with my money. But when I do commit to something it's all or nothing. No diversification for this guy! Or as Eric Sprott calls it "Di-worse-ification". I'm all for throwing my eggs into one basket and letting it ride on silver. You don't get rich by diversifying in the stock market or maxing out a 401K. Talk about risk!
The higher silver went the more my wife came around and now supports me fully. We have no mortgage, no car payments, and minimal monthly bills. I live like a pauper and everything goes to paying off the cards before the interest kicks in. The higher balance cards will get transfered to another 2 year 0% card when the time comes.
My family and in-laws think I'm crazy. I'm glad. They tell me how risky this is. I tell them I can sell a 1/4 of my stack tomorrow and pay off the credit cards so where is this wreckless risk? Even if silver completely tanks and drops to $18 (which I don't think it will) I still break even.
Anyway, that's my story.
$41.37!!! On the move again!!!!!
So if you sold off about 1/2 of your entire stock....you are freerolling? I might.....MIGHT consider that as a decent move if I had somewhere in the neighborhood of 5 thousand oz. But then the question becomes....what to do with the cash after the CCs are paid in full?
<< <i>So if you sold off about 1/2 of your entire stock....you are freerolling? I might.....MIGHT consider that as a decent move if I had somewhere in the neighborhood of 5 thousand oz. But then the question becomes....what to do with the cash after the CCs are paid in full? >>
I'm freerolling if I sell 1/4 of my stack. As in zero debt. After the credit cards are paid I should be sitting just above 4,000 oz. No cash here. Like Robert Kiyosaki says "Cash is trash".
If I was debt-free and had cash on hand I would be at the LCS tomorrow.
<< <i>
<< <i>So if you sold off about 1/2 of your entire stock....you are freerolling? I might.....MIGHT consider that as a decent move if I had somewhere in the neighborhood of 5 thousand oz. But then the question becomes....what to do with the cash after the CCs are paid in full? >>
I'm freerolling if I sell 1/4 of my stack. As in zero debt. After the credit cards are paid I should be sitting just above 4,000 oz. No cash here. Like Robert Kiyosaki says "Cash is trash".
You said that if silver hits $18 again you are even. That means that you are approx double right now on the money you have into the game. Hence, you are freerolling if you sell 1/2 your stack. I dont care how much cash you owe on the silver you have.....just pointing out that if you averaged in at $18, and sold 1/2 off it all.....the silver remaining would have cost you $0.
<< <i>You said that if silver hits $18 again you are even. That means that you are approx double right now on the money you have into the game. Hence, you are freerolling if you sell 1/2 your stack. I dont care how much cash you owe on the silver you have.....just pointing out that if you averaged in at $18, and sold 1/2 off it all.....the silver remaining would have cost you $0. >>
Well let's see here. I owe 60K on the cards so I would need to sell about 1450 to pay the cards off. That would leave about 2600 oz left over. So that's 35% not 25% right?
Sorry, I was doing the math in my head and I'm terrible at math. The calculator is more pessimistic than I am.
seems to make much sense to me.The people have really lost control of
our Nation as well as our very well being. What is happening with PMs,
is a reflection that people recognize their danger and are seeking the
only avenue that seems to allow a historic control over ones economic destiny.
The price increase in PMs, is a good indicator of the level that confidence has fallen .
Camelot
<< <i>To this old fuzzy bear, very little of what I hear or see in today's world
seems to make much sense to me.The people have really lost control of
our Nation as well as our very well being. What is happening with PMs,
is a reflection that people recognize their danger and are seeking the
only avenue that seems to allow a historic control over ones economic destiny.
The price increase in PMs, is a good indicator of the level that confidence has fallen . >>
You could even take that a step further and say that a bet on silver is a bet against the dollar.....and quite possibly even a bet against the U.S. government?
Camelot
CerealSpiller, somebody probably ought to suggest to you that being obsessed with any investment idea, no matter how convincing - is grounds for some serious introspection. Going big on silver with leveraged money is an absolute rush while you're on the right side of the trade. What's the plan if it turns against you? To be clear about it, I think that your relatives are correct in telling you that you are doing something very risky. Because for the record - you are.
I wish you success.
I knew it would happen.
<< <i>
<< <i>You said that if silver hits $18 again you are even. That means that you are approx double right now on the money you have into the game. Hence, you are freerolling if you sell 1/2 your stack. I dont care how much cash you owe on the silver you have.....just pointing out that if you averaged in at $18, and sold 1/2 off it all.....the silver remaining would have cost you $0. >>
Well let's see here. I owe 60K on the cards so I would need to sell about 1450 to pay the cards off. That would leave about 2600 oz left over. So that's 35% not 25% right?
Sorry, I was doing the math in my head and I'm terrible at math. The calculator is more pessimistic than I am.
I'll try to clarify using math.
You own 4,000 oz at a cost basis of $18 for a total investment of $72,000
Your 4,000 oz today is worth a total of $164,000
If you sold 1,756 oz tomorrow, you would raise $72,000 in cash.....or your entire money out of pocket investment.
You would pay off the $60,000, and have $12,000 in cash in hand.
You would then have a remaining 2,244 ounces of "free" silver that cost you not 1 red cent to freeroll with.
That seems like a nice overall play to me!
Why risk financial ruin when you can enjoy a debt free investment and a guaranteed
profit. Please, listen and do as Gecko recommends just as soon as you can. We are in
a most unstable and perilous time. You appear to be risking all that you have on the roll
of the dice. Losing is a most bitter pill to have to swallow.**************************
Camelot
<< <i>Would they not be ahead now had they kept all of their holdings? >>
Not unless you throw out the 30 years worth of inflation. They might have gotten back the same anmount of dollars they spent in 1980 for the silver, but those dollars are now worth a whole lot less.
The Mania you describe in the OP is the same with everything, tulip bulbs, beanie babies, cowrie shells, silver bullion, dotcom stocks in 1995, doesn't matter what it is. The mania drives up prices for a while, but eventually a few people begin to understand that the actual supply and demand curve is broken, or the fed/comex intervene, and down it goes. Trillions of dollars of "paper" silver being traded at the speed of light, every man and his dog stacking 20-50% of their net worth in silver, little old ladies trundling down to the mall to sell their old silver and gold jewelry sounds a lot like mania to me. If it was not "mania", but actual investment then the price collapse would not have happened because the supply/demand curve would have remained intact and people would have been buying the actual amount of silver needed for productive purposes. Prices would have risen methodically over time, gaining perhaps 5-10% a year(which is not a bad long term return in my book) basically nullifying the effects of a deflating dollar.
Yes, there is a temporary shortage of metal showing in the market over the past couple of years, that's at least partly due to many people buying and stacking (aka hoarding) silver with basically no useful (to society) purpose in mind for it. Stacking silver in the closet doesn't contribute to society or deliver any product into the economy, it actually takes liquidity out of the general economy and hides it in the closet.
But for anyone (like one of my coworkers) who bought 500 ounces of silver last Friday for $48.85 don't beat yourself up about it. Consider it part of an expensive education, and also consider that it could go over $50 pretty quickly. The mania will not be as exagerrated next time, assuming that it happens within the next 3-5 years, some people will actually learn from history and not be seduced by that age old tale "it's different this time". If it takes another 30 years then it will be exactly the same because a new generation of speculators will say "it's different this time".
World Collection
British Collection
German States Collection
At an average cost of $18.00, I wouldn't call it terrible.
I knew it would happen.
Sounds like you have already Won
time to pay off the debt and freeroll
"As much as Cash is Trash"
"Debt is Death"
Terry
<< <i>
A couple of rolls of 96's at $4.50 over spot would be awesome.
Nothing special about 96's except their price. Lowest mintage is not the same as low mintage.
Natural forces of supply and demand are the best regulators on earth.
What made this mania different from the one in 1980 is that there werent long lines of household silver sellers at pawn shops... and probably because there isnt as much house hold silver left to be sold. (sterling silver flatware and hollow ware went out of style, relatively speaking during the last couple of decades.)
we had our bubble. now the true market forces are left.
www.AlanBestBuys.com
www.VegasBestBuys.com
<< <i>"Debt is Death" >>
Generally yes but not always. My cards basically allowed me to lock in silver at low spot and make 0% monthly payments. When the 0% offers stop it will be time to sell enough silver to pay the balances.
<< <i>we had our bubble. now the true market forces are left. >>
I hope this is true.
<< <i>
<< <i>
A couple of rolls of 96's at $4.50 over spot would be awesome.
Nothing special about 96's except their price. Lowest mintage is not the same as low mintage. >>
It's all about the price.
JPMorgue and HSBC hedged to the hilt
$130 BILL in otc silver derivatives (5-6 yrs of world production)
5 silver margin increases in less than 2 weeks
Those were true market forces before and after the crash. Strange...but true.
roadrunner
Camelot
Liberty: Parent of Science & Industry
Also interesting is the current discussion by many that silver (while in the midst of a 42 month bear market) will continue lower.
Someone on this board has always stated that bubbles (manias) usually correct about 70%. $50 down to $15 is a 70% drop. Stupid freaking charts---they never anticipate the future. LOL
Knowledge is the enemy of fear
<< <i>Got that right, Bear. RIP buddy. >>
+1
<< <i>...and the gecko? >>
Banned...
The higher silver went the more my wife came around and now supports me fully. We have no mortgage, no car payments, and minimal monthly bills. I live like a pauper and everything goes to paying off the cards before the interest kicks in. The higher balance cards will get transfered to another 2 year 0% card when the time comes.
My family and in-laws think I'm crazy. I'm glad. They tell me how risky this is. I tell them I can sell a 1/4 of my stack tomorrow and pay off the credit cards so where is this wreckless risk? Even if silver completely tanks and drops to $18 (which I don't think it will) I still break even.
Anyway, that's my story.
Yikes!
Liberty: Parent of Science & Industry
<< <i>Lol, these are hilarious... Man Derry b u had some Derry bs flowin back then to... >>
On 4/8/11 at $40 silver I posted in this thread "we are in the mania phase. Is now the time to bail out? No."
Silver then continued upward to it's peak of 48.70 for another 20% gain.
BS? you seem to be the expert. lol
Natural forces of supply and demand are the best regulators on earth.
I thought it was Cereal Killer?
It is good fun to look back and read the old comments. Hindsight is always 20/20.
<< <i>lol, yea I guess when u posted buy the dips that meant for everyone to sell ay $47+...lol >>
only if they wanted 20%+ more.
Your continuing criticism of everyone else would be more acceptable if you at least had opinions or thoughts of your own that concern precious metals.
Natural forces of supply and demand are the best regulators on earth.
<< <i>Your continuing criticism of everyone else would be more acceptable if you at least had opinions or thoughts of your own that concern precious metals. >>
Ignore the troll. The guy provides no benefit to this forum.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole