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

Yup thanks for all your postings here. I know it has been said before but for everyone that says this there are ~10-20 who are just reading along thinking the same.

I have a quick question about the bottom level of gold and silver and how it may be tied to production costs. Your analysis treats gold and silver almost as a stock but the paper is still tied to a physical product.

In the stock market there is no real bottom. Stocks can become worthless and there are many penny stocks but this just can't happen with commodities. When silver hits a certain price mines will start to close. Even the largest scale plants can't operate above a certain price. What is the bottom silver and gold can really fall to before production ceases? In your posts you seem to indicate that demand trumps supply every time but at some point production costs and supply has to come into play.....right?

Gold is roughly 10% industrial, 40% bullion / investment & 50% jewelery. Silver obviously has a much higher industrial market and smaller jewelery market, but I still think the industrial figures are much lower than some predict. I don't think industries alone could cause prices to change in the PM markets.

Now, I remember hearing on CNN about 10 days ago how the gold miners up in the klondike & alaska have stopped mining as it cost's roughly (their numbers) $1,100 to mine 1 oz of gold and that the profit margin has gone so slim that they cannot afford to run the mine.

Not sure how true that is, but just an idea to toss around. I don't think we will see sub $1,000 gold, if we do id be surprised.

Funny thing is I don't want to sell my silver or gold no mater what I paid for it, as long as I don't "need" too I wont be selling. I guess when the time comes its not going to matter where the spot is, if it has to be sold then that's what I will get, must likely my kids will be the ones making that decision after I am gone anyway.

That begs another question...if I show a loss when selling PM do I get to deduct it on my income taxes?

Bouncy...Bouncy... time to separate the men from the boys...Can you resist...

Errr buying I meant lol...

Nothing helps understanding better than having a few dollars at stake. I'd like to open an account and play with a few dollars. Not so much to make it rich but so I can follow it and understand things better.

Are there are threads here for rookie paper investors?

Basics on best places to set up an initial account etc.

@Miggs

Yes, the caution side of me and experience tells me that when an asset gets a big run in either direction and it continues day after day in one direction, it can either pause or viciously change direction, such as a counter trend move. When we talk commodities, that move can be even more severe and sharp than say compared to equities. Yesterday we saw a little bit of what I was waiting for. Gold had been in a free fall since the 19th of June so I was managing the trade to the short side, which was going in my direction but then as we started to drop and drop I was raising trailing stops to have an exit and walk away from the trade with a very nice profit.

Unfortunately Miggs if you are waiting for all time highs in gold and silver, that will not be happening anytime soon. Why do I say this with no hesitation? Well, gold and silver are NOT correcting. Yes, we can see corrections in rising assets where they drop 30%. But here is the difference- its happening as it makes 52 lows, not within the overall context of an uptrend. When an asset makes repeated yearly lows, it is being dumped and it has no support from funds or institutions to support the price. It is extremely weak. So no, gold and silver are not going to come back with a huge out of the blue rally to all time highs.

I actually think that higher interests are here because things are getting better. There is strength in the USA economy which is the most important. The funds and institutions would not be selling gold and silver if they knew they needed it, the inside money always is way ahead of the game and they are saying, I should say, they BEEN saying gold and silver are done by the price action. To put money into assets that are being dumped by the major market participants is like putting a gun to your head and pulling the trigger financially speaking if you are betting on a collapse or thinking that things are going to get worse.

I would greatly encourage you Miggs, because I don't want you getting burned, to sell half your gold, you have a nice tidy profit. My friend, you are ahead of the game, if you don't want to sell half, sell a 1/4 of it. At least you book some gains and do something else with the money OR just keep it cash and wait, you can probably buy those coins you sell at a much lower price that where you bought at.

@VGRX

I would say Interactive Brokers is the best place to be bar none.

However, as BaseB says, most of those online places should work for anyone interested. All you really need is their access to get to the markets as anything else from them is quite useless.

I would disagree with the notion of just doing a system without real money. The reason being, a big part of trading and investing is how do you deal with your emotions. Once you have money that is yours on the line, how do you deal with it? How do you deal with money when you do well? How do you deal with money when you dont? How do you deal with risk? Things change dramatically when money is on the line.

Therefore, opening an account and funding it with the minimum amount is the best.

Finally, I highly suggest a time honored tradition among all traders who do this for a living, find the book How To Trade In Stocks by Jesse Livermore. This book has been passed from trader to trader for decades and MANY of the rules and guidelines that are used in trading today are the same as he established almost 100 years ago.

I have thought many times of starting a thread regarding using the financial markets products to make money on gold and silver as an example how tos and what not. However, if you go back in some of these threads, you will notice the disproportionate amount of people on this forum and incredible negativity about how these vehicles arent real, and even bigger was a constant complaint by MANY here that no one here on these forums was interested nor smart enough to handle these instruments, to which I thought was a MAJOR insult to the many smart folks here who could and can understand how the financial markets work and want get involved in gold and silver without having to just be stuck to buying coins.

I for one, would have gladly shared various ideas and options on how to sell short gold and silver had there been enough chorus, and I would have done it freely with no motivation other than to help folks see how they could benefit from sliding prices.