Silver: OH This Is Going To Be Good...

On behalf of those of us in the 2nd group... ... let me say that it will not trouble me AT ALL if silver prices drop to whatever is perceived as being "historical norms" and I am holding 2% of my investable wealth in silver. There have been WEEKS in the stock market when I lost or made more than 100% of my current silver investment. Somehow, it always seems to recover. I suppose that there could come a time when it does not but then, maybe, that is what the silver is for?



Well, as they say in the stock market, "Previous results do not guarantee future results". When the economy starts growing again? Who says that it will? It might. Then again, it might not. The US economy is absolutely gagging on WAY too much government (rules, regs, taxes, licenses, etc.) and there seems little impetus in DC to make any meaningful change in that.

Silver fundamentals look very strong. Betting against them looks a lot riskier to me than betting with them.

Silver and gold tend to move in rough tandem. It's not in lock-step or anything resembling that but they do tend to behave similarly as far as their price moves go. Does your prediction for normal (whatever that is) prices to return to the silver market extend to the gold market?

I agree, Angel. Most stackers see silver as insurance against terrible times and will not sell their silver for the most part until such times are upon us. If that happens, then they will probably not be selling their silver for fiat paper but for groceries, gasoline, etc.

Of course, even stackers might sell a part of their hoard if silver makes a very strong move back to near $50. For the most part, they would be looking for a short-term profit and then buying more silver back on any price pull-back.

I agree that there is manipulation of the price of silver and probably gold as well. I find it interesting that in light of the MF Global fiasco, the CME Group is very rapidly making itself completely irrelevant. Traders and investors who once did a lot of business with them are now refusing to do any business with them. Having separate client accounts raided and then not covering those losses will do that to a business that has long said that it had $100B in assets specifically for this purpose. They seem to have forgotten that in the investing world, a great deal rests on trust. If you cannot trust someone to do what they say they will, you cannot do business with them, no matter how tempting is the deal that they offer. We are very likely witnessing the final months of the CME as it now exists. The paper tail has wagged the physical dog about as long as it can.

Fortunately, not all of the news concerning the manipulation of paper silver prices is bad for physical silver buyers. By artificially suppressing silver prices, CME Group has quite kindly provided silver buyers with some very nice prices at which to acquire additional physical silver metal. Thanks, CME! I needed that!

All is not lost. Before silver resumes its uptrend there should be at least one more pullback to at least somewhere in the 27s. Theoretically, it is still possible to see $25, but I seriously doubt it.

I wouldn't we concerned with that amount of exposure either. In my mind you aren't really a stacker. The people I'm concerned about are the people of modest means that are converting what little savings they have into gold and silver. A guy I know is in the process of converting his entire retirement savings into physical silver. That is an "all-in" bet on silver so if silver prices collapse he is screwed.

It is not wise at all to be 100% in at any time.

That said, I have been 100% in for over 40 years in the scrap market. By all rights, I should have gone bust decades ago. Except for a very minor amount of PMs, and some dabbling in options & grains, I have never been in any other market.

I have always distrusted banks, so I have never stored anything except cash flow money in them. Excess has always gone into scrap.

Stocks, housing, and other markets have been avoided like the plague, though at times I wish I had invested in property when I was younger.

Actually, I did try to buy some property before I got into the scrap business. Loan was denied on the day Nixon put price caps on, even though I had a very good job. That soured me even more on banks and other money grubbers.

He is an acquaintance that I see a couple times a month so I don't know exactly when he cashed out his retirement accounts. I do know it was split between 2009 and 2010 for tax purposes. He is in his mid-50's so he paid regular taxes plus a 10% penalty to cash out his accounts. The catalyst for this sale was listening to Glenn Beck. My acquaintance is convinced that the US economy is about to collapse and PM's are the only safe haven. At least he is buying from a local dealer instead of from Goldline. http://www.ritholtz.com/blog/2010/0...ck-goldline/

Now instead of contributing to his 401K he is using that money to buy silver rounds from a local dealer. He said the dealer sells for 5% over spot (cash only and doesn't charge taxes). The dealer says he buys at 5% under spot but my acquaintance hasn't tried to sell, he is stacking. He was shocked to find out that the dealer he uses only offered me 63% of spot for my silver Washington quarters.