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

@allspice

Price wise, anything is possible. It depends on how much the market wants to discount silver and gold. This is why averaging down is not the best thing to do, you have no idea where it stops and then what direction it takes.

At this stage, 20 would be the target to see what happens. If you are a dip buyer then start there and nibble. Should 20 break we are going to the teens for sure. looking at charts first spot for serious support would be the 18 area.

and yes, for example, yes we could spend 5 years in a narrow range doing nothing. We could spend a decade. Conversely, there would be events that could change things quickly but I would not count on a rapid return to the previous levels.

Remember, on the way down, those price points that were once support and are broken, and those where there are gaps with heavy selling on volume, will have to be tackled first and those will keep the price down. That will take a LOT of buying... something only the funds and institutional can do, NOT the general public.

So yes, since many want to dip buy and are not selling short gold and silver, you will want to make sure you can get the best possible price on your dips. This means not reacting to the low prices already and buying every 2-3 drop in silver and 100 dollar drop in gold.

Again, I don't think you would want to buy even at 20 and find out it goes to 15 and stays range bound by 3 dollars. You would STILL be underwater. And even if you were able to keep averaging down, if your money is in PMs and they stay stagnant for an extended period of time and do nothing, how was that a great financial gain?

As baseball said, everything comes in cycles. At this stage, silver and gold have played out their usefulness. The more one can absorb that in the mind and recognize the facts that a economic recovery is in stage and at play, the easier it will be to accept that higher prices are for now a thing of the past. PMs will NOT go anywhere without the markets major players showing up. Thus far, we have the evidence and FACT that they are leaving and have left by the exit doors already.

For this reason, if you are going to buy silver, then go for the higher end numismatic value coins. Instead of BU 1 oz silver, go for proofs and uncirculated coins of silver and gold. Go for Pandas. Look to see what was higher end and has come down. You will need SOMETHING to give you a cushion.

Finally, yes, all this is going to take time to play out. It will take time to find where the PMs finally settle out and the selling finally abates. Then it will take time to find out the direction of the PMs and for how long. Trust me, just as we have seen the evidence in price and volume that sellers are selling, the buyers will also leave their footprints. we'll see that. So again, no one should be in a rush to feel that the train is leaving the station without them.

Don't be surprised if out of the blue there was a rally of some sort in the PMs that pushed them higher by 10, 20, 30 % from here. I have seen this in all asset classes as a trader. But then guess what... as they run into key areas of resistance price wise, they are immediately knocked down and another fresh leg lower ensues.

Therefore, caution is to be exercised from here on out.

I want to say this also, I am AGAINST averaging down. Prices can go much lower than anyone expects, or even has financial resources to buy every dip. Then there is the emotional regret and remorse. The emotions run wild as the buyer has remorse because when silver was at 28, they bought 1000 ounces. Now its 6 bucks lower. That's a 6,000 dollar loss. So then they buy another 1,000 ounces. Silver drops another even say 2 bucks. guess what now they are down on their first position by 2,000 additional more and 2,000 on this last buy. and the losses pile up.

SO, anyone who insists on averaging down, especially with commodities, is playing with fire. Trust me, I have HEARD it all too.. fellow investors and even traders and in the end, the market wears them out and they regret they bought all the way down.

Finally, remember, this silver and gold is NOT going to pay any sort of dividend. so imagine going 5, 10 years with nothing but losses.

So hopefully you can see why I am saying, if you MUST buy-

1- nibble only, baby steps,,, small amounts

2- make sure its something with a premuim in it

be careful out there!

Thank you for the warning, yup7676! Silver made a bit of a recovery and I had an itch to buy, but I held back. As you say, the market hasn't yet settled down. I do notice, however, that the online dealers are adding premiums, whenever silver takes a major plunge. I'm watching this closely too and taking screen shots to compare the differences and figuring out when/if the premiums are being added less frequently & in smaller amounts.

Also, the Canadian dollar is dropping, so the actual price I pay is higher than the silver price (in US dollars). Also noticed some of the nicer coins are being bought up and go out of stock, yet after a couple of days re-appear in stock. So patience is rewarded in that regard. Pandas, AE's and Maples are still available, but have a longer wait time for delivery. I'll try and wait for premiums to lower on those & as the downward trend continues.

Yup, thanks for the heads up regarding the averaging down. I'm just buying modest amounts, not more than I can afford and nothing on credit. The moves down are quick & painful, so I'll try to watch out for falling knives.

Please keep us posted regarding trend changes. If there is a rally, it certainly can be tempting to chase it, thinking it's the last chance to buy low, but as you say, that could easily be knocked back down.

I'm going to draw a few trend-lines of highs and lows; higher lows, lower highs, etc. That should prove helpful. Thanks again!!

Ya that appears to be the case , SGB didnt have any tubes of maples left yesterday but now have some in "stock" with only a "4 week" wait time

Investing can be a very personal situation and most of our investments are in what I know back to front and inside out. I specialise in Australia and know very little about anything else.
There has to be a solid 500% + profit in the auction buy before I am res bidding. After a solid 10 years of buying this way our stock, all purchased by profit, has become huge.This collection is not an asset to the tax man. We sell something for $3 and $2 is clear profit. So our business is great stuff but a fire or sickness shortens this profit greatly.
Gold bullion purchased by the business profit on a per monthly basis sound like a much needed added investment but I was not buying at US$1,700 per oz.
Sold most of our shares in 2007 and do not want to go down that road again in the med term.
A cash float is what we have been building for some time now and it is good fun noodling with some of it.
Silver Australian coins 1945 and down have 92% silver and it is a tempting diversion.
The best investment is to have no debt.

With all the people supposedly selling, you'd think theyd be swimming in Silver. If you are bullish on Silver and don't buy this reaction, then you should give up silver, its not for you. Silver has lost more than 1/2 its value from its peak. While I'm not bullish on silver because central banks don't buy it, I think its a much beter buy here, but I still worry about demand and the fact that economic growth is slowing globally. In any event, you re close to a bottomif not at the bottom as the small specs are now net short.

"Are we in or headed for either one of those stages at this time, wjl? Some say we are in a deflationary period because PMs are going down...any thoughts?"

Well you can take take that last comment with a shot of stiff liquor. Debt money systems always tend towards deflation. Under a debt money system someone must borrow every dollar in circulation CASH OR CREDIT!!
Such a system can only create money by creating a corresponding obligation. The interest on that obligation is not created, which is why under susch a system you are constantly playing with intertest rates and taxes, and budgets, etc. Thats the purpose of QE you are in essence creating free money because the central bank is returning the interest it collects back to the treasury. At this point bonds are no longer the house you live in but a vehicle for speculation. This another reason why QE cannot end because the release of those bonds to the market now means the interest again becomes payable. ANd if the central bank rips up the bonds it destroys its balance sheet capital and then must mark up its gold or it ceases to exist. If it ceases to exist the result will be hyperinflation.

We do not have fiat money though. Bankers absolutely hate fiat money, and this is a nation owned and run by banks Fiat places them at the bottom of the food chain. As much as they hate gold they much prefer it to fiat.

"want to say this also, I am AGAINST averaging down"

Silver seemed to try and find a little ground around 30 to 31, then it falls to 27 and change for a while. Then it spirals down to 23 and some change....

If it holds this trend above and runs sideways a few more months, THEN drops to 19 and change you would really have to stop and ask yourself this.....

Here is that dream window you never thought you would see, so why not do what you always said you were gonna do and put your money where your mouth is and buy in big at a much lower price?

The one big reason that may keep you from going all in at that point could be this....

The fact that silver hoovered around a low value from post Hunts brothers all the way up until the take off in early to mid 2000's....

I mention often my mother in 2002 buying 2001 Trade tower silver rounds in New York for 10 each when silver was at 4 bucks spot....

My point that is about a 30 year gap in-between. Do I think history will repeat itself and silver drop to 4 bucks and oz. again for 30 years? Absolutely not, its a new technical world with much new industrial demand and many new collectors etc.. But it still could happen and we all know that in the back of our minds....

And that possible fear keeps some of us at least teetering on the edge as it should be I guess...