How low can it go?

Steve27

Gold has been taking a bit of a dip recently:

piecesofme

and all it means is the spread (the premium) you'll have to pay for physical will widen, just like it did last time when the metals dipped recently. I remember people saying they were glad to pat Spot +$8 for silver eagles, and that was buying in quantity.
Physical remains strong no matter how much wall st. tries to manipulate it and make people think it's in a long term downward trend.
This last time when silver got to $17.something for a day or so, I was still getting as if Spot (paper) was $23 in my auctions, and on the old pour stuff I was even getting more that I had been.
As long as people are paying for what it was when Spot dipped last time, theres no need to worry this time if it indeed happens.
Now if Gold gets below $1050 and silver below $14, then I would think it (physical) would have to come down, but then again, maybe not. Who in their right mind would sell if it got down to those levels based on what the paper market says it's worth? Therefore, the premium would still be considerable over Spot.

JohnMaben

I am just bewildered. Like many, I can't fathom the behavior of the metals. Seems they react in direct opposition to any logic. I do agree that demand for physical is very strong and only increases with each downward movement. Even that confuses me though because not long ago the public (at least from my perspective) was reacting differently. They would NOT buy the dips and and then would buy when there was any sustained movement upward.

Bottom line, if you're stacking I think regular purchases makes sense. If your buying and selling in volume and maintain an inventory and are not hedged you're in deep doo doo.

John

illini420

This looks like one of those weeks where my local coin shop is suddenly "sold out" of all bullion... of course when prices go back up all of the same silver that used to be in the cases mysteriously re-appears

cohodk

Now if Gold gets below $1050 and silver below $14, then I would think it (physical) would have to come down, but then again, maybe not. Who in their right mind would sell if it got down to those levels based on what the paper market says it's worth? Therefore, the premium would still be considerable over Spot. 

Just because there are very few sellers does not mean the price cannot go lower. Highway robbery premiums would be the first to suffer.

s4ny

Physical gold and silver tends to lag moves in the metals, but adjusts
to reality over time.

It appears that the metals are moving towards new 2013 lows.

cohodk

<< <i>I am just bewildered. Like many, I can't fathom the behavior of the metals. Seems they react in direct opposition to any logic. I do agree that demand for physical is very strong and only increases with each downward movement. Even that confuses me though because not long ago the public (at least from my perspective) was reacting differently. They would NOT buy the dips and and then would buy when there was any sustained movement upward.

Bottom line, if you're stacking I think regular purchases makes sense. If your buying and selling in volume and maintain an inventory and are not hedged you're in deep doo doo.

John >>




I think many people are confused by PMs current prices because they are comparing them to the recent highs. Perhaps we should have be bewildered by $50 silver and $1900 gold?

US debt is 3x higher than 10 years ago. PMs are 4x higher than 10 years ago. Is it not possible that at current prices PMs are appropriately valued?

ricko

I still believe there will be a PM rally around year's end/new year. I have been wrong many time before.... Cheers, RickO

derryb

Speculators are not currently fueling the paper market frenzy. Prices there are being controlled regardless of what a few here believe.

gold/silver will most likely go to $1025/$18 in the intermediate term but not until other markets (primarily equities) begin to crash. As usual there will be a dash to cash in most all markets, but this time the smart money will quickly turn those dollars into something with a brighter future. Stacking requires a long term outlook on the future of the dollar.

roadrunner

The current crushing in gold to <$1300 is all paper induced by rigging the Comex, LBMA, GLD, GDX and other paper markets where the CFTC and SEC aren't enforcing
anything. Yeah, the price may go to $1,000/$16 but this is only so favored nations (and banks) can load up on cheap gold and silver prior to pulling to the rug out from
under the currency and stock markets around the world. My own thoughts are that China is being allowed to buy all the gold they want/need for the world-wide currency
revaluations coming down the pike. Someone is helping to tank the paper PM markets for them so they can stock up on the cheap.

Baley

It would be really interesting if it were all a simple matter of supply and demand affecting prices...
actually, to think of it, that would not be nearly as interesting as complex conspiracy theories

bluelobster

On JM's note, metals trading like many markets 'trading" seems anti-intuitive, that defies most logic. Sell on the news sort of thing. That's why the best traders typically are contrarian, from my observance.
All traders that love an asset weather it a particular stock,(I don't think anyone "loves the stock market"), but there are many that love a stock, a specific asset or a metal.


Right now, the metals market is filled with investors that LOVE it, emotionally and politically, and that is the reason metal "enthusiasts" pay ridiculous premiums(contrarian). or sell off all their other investments to go all in, even with a extremely volatile asset class like metals and convince themselves they are safer for doing so....fascinating, I might add. Sure, that kind of myopic belief in any asset has been mostly disastrous, through out history, but when your investment philosophy is not just rooted in a measured analysis of it's risks and rewards, but built on political, and emotional feelings bordering on not just an investment, but a belief system, the attraction is clearly very strong. too strong, for most peoples good, imo.

As with any investment, no one has a crystal ball, and just when you're sure an asset will do this or that....it will most likely do the opposite...that's been my experience through the years, anyway.

piecesofme

This looks like one of those weeks where my local coin shop is suddenly "sold out" of all bullion... of course when prices go back up all of the same silver that used to be in the cases mysteriously re-appears

I don't even bother stopping in anymore on down days, I make the rounds on up days now and use their own reasoning against them saying I have to buy it at X amount because it could just as well go right back down to even lower than it was.
They grin and say, what do you want to pay? rather than them saying, this is what it costs' today.

BAJJERFAN

<< <i>The current crushing in gold to <$1300 is all paper induced by rigging the Comex, LBMA, GLD, GDX and other paper markets where the CFTC and SEC aren't enforcing
anything. Yeah, the price may go to $1,000/$16 but this is only so favored nations (and banks) can load up on cheap gold and silver prior to pulling to the rug out from
under the currency and stock markets around the world. My own thoughts are that China is being allowed to buy all the gold they want/need for the world-wide currency
revaluations coming down the pike. Someone is helping to tank the paper PM markets for them so they can stock up on the cheap. >>



Say gold drops to $1,000. What do you think the premium will be if I want to buy some AGEs?

Baley

That might depend on the plastic, labels, stickers, marketing, profit margin for flippers, tax, shipping and handling, etc

Raw and in person, between willing participants?

within 5% of spot.

derryb

<< <i>Say gold drops to $1,000. What do you think the premium will be if I want to buy some AGEs? >>


When gold takes a nice drop, lately the big dealers (APMEX, etc.) offer raw 1 oz. AGEs, gold maples and gold buffalos at very low premiums. At $1000 gold I would not be surprised to see one of these go for $15-25 over spot. Silver premiums do not usually offer any bargains.

roadrunner

<< <i>

<< <i>The current crushing in gold to <$1300 is all paper induced by rigging the Comex, LBMA, GLD, GDX and other paper markets where the CFTC and SEC aren't enforcing
anything. Yeah, the price may go to $1,000/$16 but this is only so favored nations (and banks) can load up on cheap gold and silver prior to pulling to the rug out from
under the currency and stock markets around the world. My own thoughts are that China is being allowed to buy all the gold they want/need for the world-wide currency
revaluations coming down the pike. Someone is helping to tank the paper PM markets for them so they can stock up on the cheap. >>



Say gold drops to $1,000. What do you think the premium will be if I want to buy some AGEs? >>



For gold and AGE's I'd think a $100 premium or more might be in effect at $1,000 gold. It really depends on how strong the dip is to that point. If it's a very slow and drawn out drop from say $1180 to $1,000 then
premiums might end up being only $35-$50. But I don't think we are going to drag out a drop to $1,000 should it occur. It will drop quick to $1,000 and rebound off that area like a trampoline. Could all happen in just
a few days. If that drop to $1,000 occurs in 2014-2015 as a result of banking/monetary chaos I think higher premiums could result. One thing is for sure, there is no sovereign entity playing in the gold market that can
go out and purchase 30-100 tonnes or more of gold in one shot and pay the current $35-$65/oz premiums. Those guys are probably paying hundreds of dollars above spot price to procure that kind of quantity.

Indians are already paying $100/oz premiums this week

I'd say the premium would initially be around 30% for silver (ie around $5/oz assuming $16/oz silver). What was the premium for silver in October 2008 when silver dipped to $8-$9? If I recall it was around 30-40%.
The longer gold stays at $1,000 will cause the premiums to start shrinking as the market gets used to those prices. But $8-$9 silver in 2008 didn't last more than a few weeks so there was not adequate time to reduce
those premiums for single digit silver. The premiums for AGE's would be similar....and they already start at a few bucks premium to the silver price.

cohodk

eah, the price may go to $1,000/$16 but this is only so favored nations (and banks) can load up on cheap gold and silver

And smart investors.