Gold And Silver Market

When Silver bottomed out at $8.83 in Nov. 2008, it was because of
paper futures being dumped to pay margin calls when the Dow crashed.

Hardly a 'conspiracy', but while that was going on, the demand (and
the premiums) for physical silver for the individual investor market
was at an all-time high.

Silver has stayed up quite nicely since the Wall Street big boys
dumped their paper (and its corresponding 'drag' on spot silver
prices).

I'd be surprised if Silver ever got below $10 again, but if it did, it
would be a more gradual decline, and more reflected in real-world prices
of physical silver.

Most likely it would be because of deflation. Deflation is one of the
main reasons why countries went off of the Gold Standard in the first
place. Without wage increases to drive inflation, deflation becomes
quite possible (and this time, we can't go off the Gold Standard to
stop it!).

Inflation reduces your debt, deflation increases your debt:
If you got a $10,000 loan, and the Dollar slides in value for the
whole term of the loan, you effectively owe less in value as you go.
(on the unpaid principal) Your loan payments effectively decrease.

But if you get a $10,000 loan and the Dollar increased in value for
the term of the loan, you'll be owing more and more value as you go.
(on the unpaid principal) Your loan payments effectively increase.

Since banks generally like to lend money, they are obviously biased
in favor of slight inflation over time, because deflation would
punish their borrowers and kill borrowers' interest in new loans.

So if you really think we're headed for massive inflation,
you should get in as much debt as you possibly can!

Seriously, if you were in Zimbabwe in 2005 and you owed the bank one
Billion Zimbabwe Dollars (US $100,000 at the time!), by June 2008
your debt amount wouldn't even have bought a loaf of bread!

I think the price of gold and silver will not go too much lower than their current value. If there is economic growth, expect the price to go up for inflation, if the economy gets worse expect some people to buy gold for safety. I believe the dollars' days are numbered as the world's currency reserve. The US owes the rest of the world $100K+ per tax payer and the baby boomers' social security and medicare payouts still have to peak.

Simple:

Gold at $680 oz = BUY ( I did)

Gold at $1100 oz = sell ( I did)

Now wait, as the economy bounces back, metals as a safe harbor will lose value and we will see another opportunity to buy gold and make money in the somewhat near future.
Jim

Any basis for your thinking this will happen? Or is this simply a gut feeling?

http://www.latimes.com/news/nation-...742255.story

Short term I do not think $1,100 by the end of the week is a stretch.

DNA is correct that eventually inflation will fuel metal prices but inflation will lag the bounce in the economy. As gold and silver prices continue to drift down, more and more investors will leave gold as a safe haven and move back to the markets, as I have, and this will continue to push prices down. THEN, when inflation moves into the economy, and it will with this national debt, we will have our next opportunity to make money on gold. SELL imho
Jim

That depends a lot on how much you paid for it. If you bought at $500-$600/oz and want to take the profit, now is a good time to profit.

If you bought at $1,000 then I'd hold.

There's a lot of economic turmoil ahead. We're bouncing along the bottom right now. Gold still has a long way to run.