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Stocks Crater, And Gold Silver Follow Suit. What The...?

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 Posted 03/19/2020  3:13 pm  Show Profile   Bookmark this reply Add jskirwin to your friends list Get a Link to this Reply
Gold and silver used to rise and fall in tandem. But since 2017 it appears that silver and gold have decoupled as shown in this chart.
I have no idea why, all I know is that while gold rises silver moves downward, and when gold tanks so does silver.



Edited by jskirwin
03/19/2020 3:13 pm
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 Posted 03/19/2020  3:43 pm  Show Profile   Bookmark this reply Add Alpha2814 to your friends list Get a Link to this Reply
I dunno. That chart looks like they follow similar patterns most of the time (but to different degrees), and your comment suggests that silver goes down no matter what gold does.

But what really gets me is the coloring. Who decided to make use gold color for the silver price, and a light blue for the gold price?
Working on: Indian quarter eagles, Chinese pandas, and San Francisco tokens; upgrading my Peace dollar and US Type sets

"Fear is the enemy of will. Will is what makes you take action; fear is what stops you, and makes you weak."
-- Sinestro to (my avatar) Hal Jordan, "Green Lantern" (2011)
Edited by Alpha2814
03/19/2020 3:44 pm
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 Posted 03/19/2020  4:18 pm  Show Profile   Bookmark this reply Add jmkendall to your friends list Get a Link to this Reply
Someone mentioned that Silver and Gold have been overpriced for a decade, and I tend to agree.

I don't think it is a secret that just a handfull of players control the market. With the right leverage they have been making some comfortable "side" money, for years. Now, they need more funds for other projects. Perhaps investing in pharma, or companies that make medical supplies.

As such they are pulling out of their "hobby investments". I am not sure why Gold is still so overstrength. Someone must still like gold at that level, is my guess.
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 Posted 03/20/2020  12:29 pm  Show Profile   Bookmark this reply Add Lunch Money to your friends list Get a Link to this Reply
2 thoughts to throw out there to see what you guys think:
Could it be that gold and silver are being sold to cover losses in the stock market? That is why we would see a drop in price at the same time.
Also, the inventory of physical is low, premiums are high - people are still buying. Maybe price plus premium equals actual price for physical. There is definitely a disconnect between "on paper" metals vs the physical metals. Is it possible that what we are seeing right now is highlighting that difference?
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 Posted 03/20/2020  1:29 pm  Show Profile   Bookmark this reply Add CitationSquirrel to your friends list Get a Link to this Reply
I was trying to wrap my head around this earlier. I keep hearing that the ETFs or paper investments are driving prices lower and that there is high demand (and possibly a low supply) of actual physical bullion, which is driving the prices of physical metals higher like we are seeing. That makes sense to some extent. On the financial side, prices are driven down as ETFs and hedgefunds and the like sell off their paper metals to raise cash to cover their losses and margin calls. On our side of things, people see the spot price dropping (driven by the financial side of things) and they want to buy bullion, which drives up demand and prices. I think I'm finally starting to get comfortable with this bifurcated pricing.

Where it all starts breaking down for me is on the buying back of bullion. I hope I can explain this well. Let's take Silver Eagles for example and let's assume that spot is at $13. I'm seeing Silver Eagles selling for say $23. Now if the supply and demand of actual physical bullion are creating that price, then I can get comfortable with that. What causes me a little head scratching is on the buy back side. If I go to sell my Silver Eagles back, what am I getting? If we are throwing spot out the window because it is driven by paper metals, shouldn't the buy back price also be higher than spot. For example, shouldn't they be selling Eagles at $23 and buying them back at say $19 (a nice $4 spread). Everyone is saying how you can't blame the sellers for not wanting to take a loss. But if they are really making a market at $23, then they don't have to sell for a loss. But, on the other side, they should be buying back at a higher price (as they can till make a nice spread). Of course we as sellers can always tell them to pound sand if we don't like the price, which will lower supply and push the price up more. In the end, hopefully, Adam Smith's "invisible hand" will set things straight.

Sorry, I may have started rambling there. But, that's whats been going through my head lately .... for what its worth.
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 Posted 03/20/2020  2:40 pm  Show Profile   Bookmark this reply Add Bret to your friends list Get a Link to this Reply
Citation Squirrel, I think you're spot on with your analysis.
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 Posted 03/20/2020  2:53 pm  Show Profile   Bookmark this reply Add Safaga to your friends list Get a Link to this Reply
CitationSquirrel, I agree with your comments. You rightly point out the difference between the price of "paper" silver and the price for silver actually delivered. I think this is a good example of supply and demand affecting the market. Paper silver is in relatively abundant supply but for actual delivery, the supply doesn't meet the demand.

I too have thought that the buy price of hard silver should approach the price that it is being sold at. However, I have problems rationalizing two different silver markets -- one for paper silver and another for hard silver. It's not supposed to work that way. Where am I going wrong?
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 Posted 03/20/2020  3:38 pm  Show Profile   Bookmark this reply Add CitationSquirrel to your friends list Get a Link to this Reply
Safaga:. I just think we never had a situation where the two markets split apart like this (that I can remember anyway). Since no one was expecting the paper market and hard market to split the way they did, we never thought to see it coming. It's something I guess we had to learn by experiencing it.
Edited by CitationSquirrel
03/20/2020 3:39 pm
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 Posted 03/20/2020  3:58 pm  Show Profile   Bookmark this reply Add nemlas to your friends list Get a Link to this Reply
this is for paper silver and gold. Real physical silver / metals are rising.
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 Posted 03/20/2020  4:00 pm  Show Profile   Bookmark this reply Add Bret to your friends list Get a Link to this Reply
It does work the other way too sometimes. I've bought 1oz gold bars at spot and rolls of 1oz silver rounds at spot. They were delivered for free as well, so when you factor the delivery price in I purchased bullion below spot.
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 Posted 03/20/2020  8:48 pm  Show Profile   Bookmark this reply Add jskirwin to your friends list Get a Link to this Reply

Quote:
this is for paper silver and gold. Real physical silver / metals are rising.


But isn't the paper supposed to reflect physical metals? Or has the lie finally been exposed that paper metals have no physical basis as some have stated?
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 Posted 03/20/2020  9:25 pm  Show Profile   Bookmark this reply Add fortcollins to your friends list Get a Link to this Reply
Commodities are a hedge on inflation. When equities and commodities drop and the flight to safety drives bond yields lower, the market is signaling either a recession or a depression. The depth of this plunge suggests the latter.

With the time we all will be isolated from life, I recommend reading accounts of the (badly) misnamed "Panic of 1893." It was likely the most severe depression the US has experienced, with over 40% unemployment in western states and waves of bank failures. As just one example, Denver had 39 banks in mid-March 1893. Two remained by the start of April. It is the reason for spectacularly low mintage coins in 1893-1895. Triggering events included failure of the largest company on the NYSE and railroad bankruptcies in 1892. The final predicate act was the UK's limitation of lending by Baring Brothers Bank to the UK, following bailout of that bank after its speculative loans in Argentina. This removed backstop lending to many US banks, undermining liquidity.
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 Posted 03/20/2020  9:42 pm  Show Profile   Bookmark this reply Add Bret to your friends list Get a Link to this Reply

Quote:
But isn't the paper supposed to reflect physical metals? Or has the lie finally been exposed that paper metals have no physical basis as some have stated?

The bid and ask prices for precious metals are the futures market where people agree to buy/sell in the future, commonly a month, at an agreed to price. This is similar to how oil prices work. They're based on a buy/sell at a certain price at a given point in the future. Oil is way down, yet the price of the physical oil and gasoline that's available right now is significantly higher. Once the contracts are exercised, the price of physical will be lower and the price of gasoline will be lower too. The same holds true for precious metals, so just wait for time to pass.
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 Posted 03/20/2020  9:46 pm  Show Profile   Bookmark this reply Add CitationSquirrel to your friends list Get a Link to this Reply
Sounds like an interesting topic to read up on. Thanks for the suggestion fortcollins.

As to the connection between paper and real metals .... Maybe 15 years ago (don't remey the exact year), the were starting one of the first silver ETF after the success of the gold ETFs. Anyway, given the lower price of silver, if you did the math, you quickly realized that there wasn't enough silver in the market to back the ETF. So, as the ETF came online, demand increased and so did the price of silver. One of the few times I actually got in on the ground floor of something and made a little (I didn't have a lot to invest at the time) profit.
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 Posted 04/14/2020  12:57 pm  Show Profile   Bookmark this reply Add coin rejector to your friends list Get a Link to this Reply
$GLD finally confirmed the breakout I suggested would happen over a month ago, unfortunately it took the long way around to get there.... for about 3 weeks I was questioning my own sanity....

$SLV OTM July 17 ex. $19 purchased for (.17 x .18) currently trading currently @ (.37 x .39) aka +100% double ROI, might peel off half & play w/ house money going forward....

Hopefully you guys/gals took the opportunity to start/add a position that the March meltdown gave you....
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