Posted on 04/13/2013 10:47:45 AM PDT by blam
Silver Prices, Inflation And Living With The Long Term
M Commodities / Gold and Silver 2013Apr 12, 2013 - 03:53 PM GMT
By: Dr Jeff Lewis
Short term anxiety in the silver market tends to play into the hands of the mainstream financial media that loves to cherry-pick data in order to support the sentiment flavor of the day.
This sentiment is normally biased against holding hard assets like silver, resulting in them being misunderstood or scorned.
Furthermore, as the trading range for silver widens and awareness grows of silver as an investment vehicle, more people will have bought the metal at higher levels within the trading range. They therefore tend to suffer from buyers’ remorse if the market subsequently falls.
Long Term is a Different Story
Silver is not at a three-year low, since it was trading at considerably less than $20 an ounce throughout the summer of 2010, which was less than three years ago.
Also, since first rising above the key $26 support level in November of 2010, the metal has dipped to test that point four times, but has thus far failed to fall below it. This makes silver seem like a good long term buy near current levels.
In fact, the price of silver has risen over 100 percent during the last four years, and it has risen more than 500 percent over the last ten years. Silver has been in a long term bull market that has only recently paused to consolidate its tremendous gains after peaking at the 49.77 level in April of 2011.
While the silver market may respond to inflationary fears, inflation is just one small part of the foundation for a bullish view supporting higher prices.
Some of the bullish non-inflationary factors include the favorable supply and demand profile for the metal, as well as a futures trading structure that is primed for a short squeeze.
What About Inflation?
Real inflation now seems to be completely out of the equation.
Instead, deflation is the current sentiment portrayed by traders, as large hedge funds and managed money are not trading based on inflation fears.
The official line is that there is no inflation, which means it is "safe" to employ a policy of financial repression - despite the absent of the crucial "growth" factor.
The current recipe for financial repression includes: growth, low interest rates and captive bond buyers in combination with a controlled financial media that sings the praises of rising equities in the absence of increasing underlying or fundamental value, even though this is perhaps the strongest signal of inflation.
Of course, the irony is that the economy is actually in a great deflationary cycle, and so central banks are using extraordinary inflationary measures to reboot or rescue the perhaps fatally troubled financial system.
Imagination Versus Reality
In terms of higher prices, food and energy inflation remains. Food price inflation is typically achieved by simply raising prices, but also by reducing the packaging size of products.
Imagination tends to focus on the extreme possibilities. For example, inflation tends to equate to dramatic hyperinflation in the minds of most people, although gradual price rises can be just as damaging to one’s purchasing power taken over time.
The issue of inflation has now become politicized, with those who worry about inflation being painted as conservative, anti-establishment extremists.
Nevertheless, the reality remains that inflation is alive and well, despite official attempts to keep headline inflation, as reflected in the CPI, low in order to maintain the illusion of relatively stable prices.
Interestingly, some alternative measures of inflation, like that used by John Williams of Shadow Government Statistics, show that consumer price inflation is actually almost ten percent per year in the United States, based on the pre-1980 method for computing CPI.
On his official website, Williams maintains that “methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.”
What is the Most Likely Scenario?
The silver market is seeing a new wave of buying emerge once again as prices soften. This is much like what occurred during the notable market dip down to the 8.44 level seen in October of 2008.
More and more physical investors seem to be acting on the increasingly obvious signs around them by boosting their holdings of silver.
Such interests have been underpinning the investment demand for silver — which competes with industrial demand — despite the overall slowdown in the global economy.
(Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com)
The warning sign in 1999 was that "Small Cap Growth" was the top category winner. In a Registered Rep Class the instructor noted ( and this was before the crash ) that SCG as the top performer is the warning that the Bull has topped. I am not sure this correlates with Bernake's World....
Goldbug ping.
-——When stock prices collapsed in 2008, the bear market wiped out half of the savings of Lucie White and her husband, both doctors in Houston——
One wonders what would have happened if they had not foolishly sold their stock portfolio? Unless they sold out, a well diversified portfolio should be doing well now. If they had only a few stocks in poor to marginal companies, there was no real problem. They still held the shares.
Panic selling was the problem. Now they are panic buying.
Usually true and we stayed in from 1987 onward. Then in 2007, we took a good look at returns, FEES and the erosion of capital. Looking back, had we stayed in (and we were totally and completely diversified because who expected bonds to crash along w/equities?), we would have still paid the fees and also lost another 25% or so before things turned around.
Have we regretted selling out? Sometimes. We had a few other savings and we always planned on selling our farm right about now, so we will cash that out and downsize drastically this time next year. Will we take the proceeds and invest it? Probably about 1/3 of it, yes, if things don’t change too much by then. The tax environment will probably be the deciding factor.
I know that in late 2007 I was envying those old stick-in-the-muds that only had CDs. And those who stayed invested were envying the folks holding PMs.
Every situation is different.
Somebody translate, please.
First of all, if you shoot someone in Texas, you better have a good reason. Otherwise the state is gonna fry you. So everyone knows that. We all have guns and we know how and when to use them.
If you shoot someone in Kalifornia, you really do not need a good reason. What is the worse that will happen ? 5-8 years in jail ? There are people in Kalifornia right now, contemplating if spending 5-8 years in jail is worth killing specific people. So in Kalifornia everyone that has a gun does not know how or when to use them. Thus, even though gun distribution is more restricted in California, there are more murders committed with guns in Kalifornia then in Texas. So Kalifornians have been turned into gun shooting hicks due to poorly written laws and punishments.
Oops. Wrong thread. Sorry about that.
I just spent the last 3 weeks doing a daily pilgrimage and pulling my money out of the bank in small, under 10k dollar increments... now it's all in my basement vault, in USD cash.
I now want to convert it all to US Silver Eagles. Here is what I'm struggling with:
The lowest price I've found is with Northwest territorial mint, but they have a terrible reputation for holding the metals for like 4 months before shipping. Plus, I'm struggling with how to do this without triggering form 8300's all over the place.
Can anyone tell me a)is there ANY place I can buy 500oz cases without paying +4-5 dollars per coin b) is there any way to avoid triggering the 8300's and c) should I even be worried about the 8300's? (does this make me more audit prone? What are the negatives?)
Although I appreciate it, I'm not interested in knowing how stupid I am for buying silver, I've already made the decision and it's for 2 reasons: long-term hedge against devaluation of the dollar and it seems to me Silver Eagles would be the easiest thing to use for currency in unfortunate case of a complete collapse in the US including it's currency. Gold is simply too expensive in small quantities to use for trading and few people have the cash to buy it, silver is much easier to sell off in smaller lots to a larger group of people. What I AM interested in (in the case anyone has constructive advice) is the Eagles v/s plain bullion argument. Am I foolish for spending the extra $ on the US mint coins? I'd really like to hear from some experienced people on this, I'm just guessing my way around right now and a stupid move could cost me dearly
try APMEX
I am not that experienced but they have been fast
buy soon
10% of US silver production just vanished overnight
http://silverdoctors.com/10-of-us-annual-silver-supply-just-vaporized/#more-25002
http://silverdoctors.com/10-of-us-annual-silver-supply-just-vaporized/#more-25002
this oughta affect prices
10% of US silver production just disappeared overnight
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