What Happens To Gold And Silver Next? Look Out Below?

yup7676,

Isn't gold dropping because the Federal Reserve ended their QE? Maybe that's all it takes and it doesn't matter what anyone else is doing.

FUTURES UP DATE

I have been away from commodities too long

The CME offers a MINY and MICRO gold contacts.

10 oz of GOLD -- and 50 oz of GOLD

The MICRO 10 oz contract is well in the range of most all hedgers and speculators.

Its funny you ask that question because some reports on line have suggested that ....




I am shocked by the anergy of the gold and silver market to these QE events , I guess the issue now is... once the downtrend runs out of steam will prices start to rise or will they settle on a new low for while .....thats what might keep some tossing and turning in their sleep at night

My general rule is to commit no more than 5-10% of my net worth into commodities and be VERY PATIENT to choose the right entry point. At $16/oz, I think this is an excellent point to enter Silver.

With all investments, the key is to determine true value and ignore the whims (current quotation) of the marketplace. The "all in" cost to produce silver, inclusive of capital investment for mining equipment, is on the order of $24 per ounce. Existing mines can crank out the metal for a production cost of around $10 per ounce but that supply won't last forever certainly not 20 years.

So optimistically we're getting a $24 asset for $16 and, pessimistically, we're getting a fairly priced asset that will almost certainly rise with inflation - due to production costs - and probably much more due to central bank currency manipulation.

How fundamental? =======>


In the late 1970s early 80s every one was saying High interest rates meant higher PM prices. People were buying gold to protect against inflation. ( I recall My first mortgage was regarded as cheap at 19% per annum)

Currently Interest rates are ridiculously low...... My wife and I pay under 1% per annum on our floating mortgage in Vienna Austria. I think the inflation rate in Europe has to get to normal level (2-3%) with interest rates at 4-5% before inflation starts to even look like a problem.

Its hard to say what happens whenever this downtrend ends.

It will end at some point. What happens after that, I really dont know. I have seen assets chop around and waste away in a long range for years, I have seen some regain have their value, I have seen a FEW rocket back to highs, tho not historic highs.....

When the downtrend ends, it will be important to keep an open mind, just as one keeps an open mind that it started to fall years ago, instead of fighting it, one has to keep an open mind that eventually the downtrend dies off, and gold and silver attempt to get into some sort of range.

What we do know for sure is any grind up will be very slow, choppy, as every level we encountered on the way down, we will run into on the way up. That will cause the price to stall, drop, and chop.

Patience will once again be needed and time. Time works out things in the markets.

I would be very careful in deciding how to value any commodity thats dropping. That is for the market to decide. Trying to determine the value of silver based on the miners is a losing proposition and nothing but mere guessing. The miners are not very straight forward of what and how they come around on production costs, furthermore, many many many of them hedge their production via currencies, futures contracts and more so unless this is your area of expertise, you are going to have a hard time.

In the end, it is the market place that decides the real value of gold and silver. The market doesn't work on whims. The market is the worlds greatest discounting machine and it works into the future. What it is doing now is what it is expecting and will work out in the future. It is taking the knowns and processing them and displaying via the price action.

That brings me to another point. As a trader, I dont waste my time with thinking about deflation, stagnation, inflation or anything else. It really doesn't matter at all. It means absolutely nothing to me.

It is not my job to "guess" whats coming up. What matters right now, whats leaving clues is the price action. I dont need to waste my time in debating in my mind "what if" or "could be" .... I see it, when price reaches important points, I take action.

In time, we will know exactly why something happened.. but whats more important is taking action when the market is signaling to take action, the "why" will come later and is the least of my worry.


BTW, for those who really want to attempt to dig deep into the miners, both gold and silver, and really hear what is exactly going on, skip the financial media and go right to managements discussion via the reports they by law must file with the SEC.

I highly encourage those who want to learn in detail about the miners to go to sec.gov go to the tab where you enter a companies stock symbol and all their reports are there.

In many of them, in the quarterly report, you will find a section called managements discussion, and there you will find a open, easy to understand discussion of production costs, hedging, and more. you can see right from management what do they plan on doing going forward, etc.

Silver down another $0.33 to $18.55. Looks like Monday might be another rout.