Thomas Jefferson
Posted on 04/17/2013 10:37:15 AM PDT by blam
Will Silver Price Keep Falling?
Commodities / Gold and Silver 2013
April 17, 2013 - 05:41 PM GMT
Peter Krauth
By: Money Morning
As gold prices plummeted $200 in two days, silver prices fell about 14%, or $4, to below $24 an ounce.
Our Money Morning resources expert Peter Krauth explained the reasons behind gold's fall, so we went back to him to find out the deal with silver prices. Will silver keep falling? Is it a buy at the lower levels?
Here's what Krauth offered for investors.
Money Morning Staff: Peter, are silver prices falling because gold fell, or are there other factors at play here?
Peter Krauth: There are two factors.The first is that silver follows gold rather closely, and usually amplifies its behavior, both up and down. However, it can and does sometimes detach from gold and behave independently, but this is more of a rarity.
The second is silver's industrial demand. I believe is a factor that I think does affect the silver price in the current environment. Silver does have more industrial uses than gold, so there are some different price drivers.
While silver's industrial demand will help support the price, the recent selloff likely is in sympathy with the lower-than-expected Chinese gross domestic product (GDP) growth which, for the first quarter this year, came in slightly below at 7.7% rather than the expect 8%.
MM: For anyone interested in investing in silver now that the price has fallen to lower levels, what's a better buy: physical silver, or silver-related stocks?
Krauth: I'd recommend both. Buy physical silver to establish a lower risk base position. Then investors can augment that position by buying quality silver stocks that offer considerable leverage to the silver price.
MM: The CME Group, the parent company of the main metals and energy exchanges in the United States, changed on Monday the gold and silver margins by 19% and 18%, respectively. What effect will this have on further gold and silver price movements?
Krauth: I think that raising margins right now will simply provide additional headwinds to immediate gold and silver price gains.It could help push both precious metals somewhat lower in the short term, since futures buyers/owners will have to put up higher amounts to control the same quantity of gold and silver than previously. But over time I expect the effect to diminish, and those margins are likely to come down again.
Final Note from Krauth: One other thing I'd like to address is that throughout this selloff, I mean going back the last few months, we've seen very strong silver coin buying.
The U.S. Mint has sold 2.22 million ounces so far in April, which is on pace to exceed the 3.37 million and 3.36 million in March.So far this year, sales have reached 16.44 million, easily outpacing the 11.66 million for the first four months of last year.
It's very telling that even with falling silver prices, people are stepping up their buying and the premiums are high around $4 per American Silver Eagle, indicating very limited supply.
My take is they're seeing better value as the price falls.
I’m certainly no expert, but I’m not quite buying into the industrial demand for Silver. Economies are not looking good. Industrial demand is going to be a hard factor to prove. And that being the case, I don’t have the same enthusiasm for metals prices that others seem to.
What’s more, I found it remarkable that on the same day metals crunched the other day, the dollar lost ground too. There was not uptick in the dollar like what we would have normally seen in the past.
This concerns me. Where do you put your money these days. The safe havens have all been shown to be vulnerable.
Good.
I’m purchasing more gold and silver. Nope, not wasting tremendous amounts - but still putting a little of the portfolio there.
After all, who in their right mind thinks an Obamabuck will be worth anything in another couple of years?
Time to BUY! In the long haul, precious metals are the way to go.
Imo, anything under 30 is a steal right now. However, my neighbor’s 20 acres next to my place is hitting the auction block this month so i’m focusing on that particular “hard asset”. It has two streams and a fairly high output natural spring.
Rural real estate...
Dave “better than i deserve” Ramsey was on a big anti-gold rant last night. Said it is too unpredictable. Said if one really believes that a huge crash is coming, then buy guns and ammo.
(like we can get ammo any more...)
"To get some expert insights on this sell-off, I telephoned Peter Krauth, our resident natural resources expert and editor of our Real Asset Returns research service. Peter based himself in Canada to be closer to the miners and natural-resources companies he covers for his subscribers."
"I asked Peter for insights on the following three questions:"
■Why this is happening.
■What you can expect from here.
■And what investors should do.
ask= $23.38 on APMEX currently. Thats about where it was a couple of years ago when I bought a couple of Eagles out of curiosity.
Tempted to lay in a little more; can’t imagine it’s going to tank much more, especially as our paper dollar collapses.
One thing about silver minted coinage; silver isn’t worth counterfeiting like gold coins might be and it’s prima facie evidence of being real silver in a barter economy where other forms might be suspect lacking testing equipment to certify content.
How do you check silver to make sure it’s legit?
Notice they have dime-sized 1/10 oz. .999 “rounds” which might come in handy for barter, and could be easy to store and carry discretely.
Apparently the Arabs like to invest in diamonds - you can smuggle them through the airport as they are non metallic and radiotransparent. What TSA can see, TSA can steal.
They may be on to something...
There may come a time when some Americans may have to escape before it’s too late, and IIRC there are limits to how much money or precious metals you can get through customs or TSA. When the Jews who were smart enough to get out of Germany in time left before WW-II, I think they were not allowed to take much of their money with them.
Good call. There is some prime land still at bargain basement prices out there. If I were a younger man...
:^)
“Notice they have dime-sized 1/10 oz. .999 “rounds” which might come in handy for barter, and could be easy to store and carry discretely.”
Do not buy those. Every round carries a “coining charge” eg; seignorage. It costs a buck or so to coin a round, regardless of its size. If you study silver and gold coins/rounds (only real government tender, eg; eagles, can properly be called “coins”, even though anyone knows what you mean. Just a terminology thing.) you cannot escape that coining charge. Maybe, to boost sales, such 1/10 oz rounds have a 60 cent or so coining charge. If so, the effective coining charge is $6 an ounce. Don’t. If you believe barter is the purpose of acquiring silver (I don’t, but that’s just me) then buy junk silver pre-1964 US coins.
When it comes to taking PMs out of the country in a “bug out” exercise, many people imagine they will be able to take ten and only give 2 to the border guard. Think about it. The price for getting by the border guard will be ALL OF THEM.
Hey, I’m almost 60. ;-)
I’m going to be 62 in a few weeks. Sadly, my finances just got shaken to my foundation. There’s no investment strategy around here any longer.
I already moved to my “bug out” location - central KY.
Exactly. "They" have succeeded.
Funny that. Ammo gone, gold and silver are crap. Must buy stocks. Easily replicated Fed Paper is king. What a coinkydink.
And then you'll have nothing left to pay the border guard of the country you are trying to get into.
Sewing loose diamonds into the seams of your clothes like the fleeing German Jews did seems about the only option left.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.