Silver fever is about to break, and break badly (Buying opportunity as mania subsides)

Marketwatch ^ | 04/29/2011 | Howard Gold, No Nonsense Investing

[sinsofsolarempirefan]

Credit Crunch was in full swing in 2008. And yet silver went up and then crashed by about 50%. Silver may well go much higher, but its gone up too far too fast for me to think that there won’t be a HUGE correction soon...

[Atlas Sneezed]

Physical metals should be 20-40% of one’s portfolio IMO, not 5-10% as many managers suggest.

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I can’t quarrel, but once you accept the reasons for buying 20-40% (or 5-10%) it’s hard not to go for 100% (including mining, and other commodities and natural resources).

[chopperman]

The last time silver broke, the government had the capability to make it happen.

The only way the government can make it break this time is to quit printing paper money.

I’m not holding my breath.

[Atlas Sneezed]

The “can’t lose” purchase of $14 Silver I made in 1980, based on the Hunt brothers large buy at that price, FINALLY is in a profit position...

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Uh, if you bought at $14, you could have sold at a substantial gain for more than a year after, even well after the Hunt debacle fully unwound. Your poor judgment then is no reflection on whether current prices are repeating the past pattern.

And even though there is no Hunt scenario now playing out, let’s play your game. $14 then is $49 now. So we can expect silver to rise by 3.5x as it did for you then, to $171. In a few months, we’ll enter a quarter where silver trades in the $100-150 range, then it will spend a couple quarters dropping to $50, then a quarter at about $75.

That’s if we play your game. Funny, when the sarcastic gloom and doomers paint such a rosy picture, it must be a good buy, even today!

[Atlas Sneezed]

Gold and silver should not be viewed as get rich quick investments. They are insurance in case the world as we know it comes to an end.

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I agree, but there may come a time when you want to exchange your silver for something else, after it has helped your wealth survive a crisis: real estate.

[Fireone]

Agreed! The fundamental reason for owning physical is because of the looming fiat crisis worldwide. Gold and Silver are money, paper is not.

[Lurker]

I was buying back when it was 8-9 dollars. People thought I was crazy. But I was buying it because it's pretty and it pleased me, no other reason.

Now I've got a nice little stash of several pounds of the stuff both 99.99 fine rounds and a mess of scrounged pre-64 stuff. I don't look so crazy now.

BTW I'm 51. LOL

[jdsteel]

Saying WHEN instead of IF is a dangerous habit in many subjects! I can envision scenarios where the dollar and the US economy get stronger and precious metals take another slide. That said, I’m going to say “IF” instead of “WHEN”!!!

[GourmetDan]

Silver prolly won’t break just because everyone is sure that it will.

[cherry]

I'm with you....we bought a bunch of junk silver back when it was at its highest....and its taken all these years to get even, IF we sell now...

thankfully, I brought the average price down by buying some silver bullion when it was at $9 a couple of years later.....

mostly, I just thought that if nothing else, the grandkids will have some interesting things to look at...

[misanthrope]

“I can envision scenarios where the dollar and the US economy get stronger and precious metals take another slide.”

I am curious, could you please describe one or two of them?

I cannot imagine how the current national debt situation and obscene social spending could ever be resolved. Without solving these two interconnected issues, it would seem to me that any future American economic “strength” will be a short lived deception.

[jdsteel]

Sure...but promise not to laugh too hard. One scenario is that a national state of emergency on domestic energy is declared, and all new oil, gas and nuclear energy production and refinement is given fast track status for the next 4 years and a moratorium on new regulations for that period. Fines for spills and accidents will be tripled during that time. The US will start selling it’s real estate holdings, using commercial sellers. A freeze on government spending for the next 4 years. A reward program for whistleblowers that turn in fraud of social services. Two tax rates; 10 and twenty percent, starting at dollar one of income an moving to the higher rate at 100,000, adjusted for inflation. Cut all business taxes by half. Stop all subsidies for alternative and any other form of energy production. Stop making anchor babies citizens. Make those receiving welfare work for the money. Make prisoners work, including the construction of border fences and new prisons. Implement some, not even all of these and watch supply side economics work it’s magic.

[RobRoy]

>>Silver has its place.

In a worst-case scenario, I wouldn’t want to barter with gold coins.<<

That is why I have mine, and why I do only junk. Everybody knows what a silver quarter looks like. And I own all of mine long term. If silver hits $200 an oz, and the SHTF, there are a lot of things you could buy with dimes and quarters. Golden eagles, not so much.

[RobRoy]

Yeah. When I told my father about the “cheap” silver I saw somewhere, he said he really is not interested in the “value” of silver and gold. Rather, he focuses on the value of the dollar. Which is why he invests in so much physical gold and silver. The dollars he is using to purchase them are really “dead dollars walking”.

[MrB]

Yeah, I’m waiting for it to hit $20, then I’m buyin’!

[RobRoy]

>>Yeah, I’m waiting for it to hit $20, then I’m buyin’!<<

You may be in for a long wait, unless someone successfully manipulates this stuff in a “reverse Hunt bro’s” sort of way.