Posted on 05/05/2011 11:54:08 AM PDT by SeekAndFind
Silver is now threatening to fall below $38/oz, which would mark a nearly 22% decline from its bubblicious highs last week.
It's obviously spectacularly volatile, and we don't know how this will end up, but we can think of several threats to silver bulls.
* As the lady in the Lind Waldock (commodities broker) commercials always says, commodities are all a price play. There's no hard metric for anyone to know whether something has gotten cheap or not. There's no P/E level that makes silver a must buy.
* Big, smart money is selling: Soros, Carlos Slim, etc.
* Margin requirements have been going up. Conspiracy theorists like to claim that the silver plunge is owed to the fact that the exchanges are nefariously requiring traders to put up more collateral to trade futures. That is definitely a headwind. If silver is to go back to its hold highs, traders will need to have more money devoted to it than they did before. But on the other hand, the margin hike explanation doesn't explain the carnage across the commodity complex. Have you seen cotton lately? Even oil is coming off.
* Investment in coins and metals has surged in recent years vs. industrial demand, which further reduces the natural floor on the price.
* If the economy falters, people are going to want to raise liquidity, and that means cash, hence the correlation with equities.
* Central banks all around the world are tightening. The cheap money thesis is fading.
(Excerpt) Read more at businessinsider.com ...
Looks like my client list from the nineties.
I won’t make any claims about my long-range predictions, but here’s what I wrote last week as Silver was rising to its peak:
I can’t say what would happen, but in silver, we might see a major short term drop (to $30-35 wouldn’t shock me).
You should have your dollar amount in mind, and set yourself a plan that is easy to follow, such as: buy $5000 in silver when it gets as low as $42, another $5000 if it reaches $38, and $15,000 more if it reaches $32. Or whatever.
Then follow your plan.
22 posted on Thursday, April 28, 2011 9:43:54 AM by Beelzebubba (...a.k.a. “Norm L. C. Bias”)
http://www.freerepublic.com/focus/news/2711821/posts?page=22#22
(Please don’t post the other 100 predictions I made that didn’t come true!) ;-)
I remember that post to me, and I greatly appreciate your advice. I’m about to implement your purchase plan tonight with my local silver seller source and perhaps more if the price keeps correcting downward.
I moved half of my silver into gold at around $47. I started buying it back this week. It’s a little strange getting Eagles for $38 again. Strange, but nice.
I expect Ag to hit bottom somewhere between $25-$28 and stay below $36 until the next round of QE. I’ve been expecting this correction/consolidation/sell-off for a while now. I didn’t expect it to fall this far, this fast though. This week has been a total free fall.
16:1 has been the ratio for most of human history.
SPECULATOR!!!!!!!
I bought a 100 oz. bar for 8.00 oz. watched it go to 1.50oz. I still have it.
The world hasn’t seen a 16:1 ratio in 200 years. We came close during the Hunt Bros bull market (17:1). The next closest was when we hit 31:1 last week. It’s currently 44:1 and rising.
`
Update from last Thursday’s post. Added to my silver inventory substantially (for me, perhaps not others who have a lot) on Friday at $35.10. It felt good. I keep thinking I should have increased the size of the order. I may consider placing another order this week if silver price doesn’t rocket back up.
Bars, rounds, bullion coins, numismatics? I've bought from Tulving in the past, but at the moment I can't meet their minimum quantities.
Just starting out last year to buy silver, I've limited my purchases to mostly 90% coins and some silver eagles, but I'm flexible to whatever presents itself as a good deal. My purchase from last Friday was from a local individual dealer I was lucky enough to make friends with last year. He allows me to buy at spot price as long as I'm willing to take what he has, selection-wise, i.e. dimes, qtrs, halfs, dollars. His source comes from personal collections he buys and estate sales mostly.
I have bought some silver from APMEX out of Oklahoma City, OK and they seem to be pretty accomodative to do business with. APMEX sells 90% in $1K, $500, $100 face value bags, as well as individual rolls of coins but you'll need to watch their price spread between spot and their sales price as it can fluctuate. As I type this, their $100 face value bag of generic 90% silver is $2,730.58 / 71.5 oz = $38.19 per oz. and spot sell price is $37.50 for a premium of $0.69 per oz. or 1.84%, which is good IMO.
My dealer allows me to buy at spot price as long as I’m willing to take what he has.
I think your timing to buy more at $35 was excellent, but I’d hold off a bit for the next chunk, unless it’s your monthly allotment. There’s a psychology that tends to want to do things to confirm to yourself that past decisions were smart. We all need to be wary of it. Unless you have a lot of cash waiting to buy silver, and the next buy is only a small portion, I’d be patient, and spread out that chunk for purchases over time.
That said, this is the best “all-in” time I’ve seen in the past year (putting aside hindsight and the wish to have bought more sooner). So if you’re feeling lucky, and playing catch-up, and can afford to see it drop below 30 and still sleep OK, don’t let me stop you.
Yeah, I count myself very fortunate to have made his acquaintance at a local coin show earlier this year. He has basically dealt with coins most of his life and has made it a sideline business besides his normal career. He is probably a lot more interested in the neumismatic side of the market and I'm sure he sifts those special coins out of the 90% silver he buys at estate sales and from personal collections. That's ok by me as I'm just trying to accumulate the metal for investment, and leave the neumismatics for the experts and collectors.
Two things I've wondered about folks in his business, 1) what is the average rate they pay others selling their silver coins, is it 80% of spot, or more, and 2) where does one find estate sales that may have coin collections to perhaps bid on?
I appreciate your other comments about jumping too quickly to add to what I just bought. It's hard for me to decide whether to buy more with the cash I have available to invest or let the pot grow and wait for a better price to buy when I have more accumulated. It's hard for me to decide whether the price is gonna head right back to the mid-high 40's or meander around and consolidate in this 30's range for a while.
>>Two things I’ve wondered about folks in his business, 1) what is the average rate they pay others selling their silver coins, is it 80% of spot, or more
They tend to get what they can. 80% is ethical. Some are not. You could test this with some easy local research with other dealers.
>>2) where does one find estate sales that may have coin collections to perhaps bid on?
Don’t bother. The big buyers have *relationships*, get first dibs before the sales, and sell to you (Same for all the important categories like rare books, jewelry, antique furniture, etc.) Estate sale managers would rather take 80% and not worry about armed guards and pilferage.
>>It’s hard for me to decide whether to buy more with the cash I have available to invest or let the pot grow and wait for a better price to buy when I have more accumulated. It’s hard for me to decide whether the price is gonna head right back to the mid-high 40’s or meander around and consolidate in this 30’s range for a while.
Don’t try to predict. You can’t. Have a pattern that lets you sleep (then follow it!). I bought a little at 40.50. Saw it drop (boo! hiss!) Then bought the same amount at 34.50 (yay!) I had reason to buy a little more, and had little emotion to buy half of either prior buy at 37.50 (ho hum).
(The doberman that didn’t bark: Why did I ignore gold, when it dropped by less than 10% while silver dropped by 33% — no mystery if you think about it!)
When your buys are mostly “ho-hum” you’re doing it right. You’ll know because you’re buying so regularly (or programmatically) that you can’t decide whether you hope the market for your thing will go up or down.
In hindsight, supposing that this was the full correction, and it continues on the bull past 50, we’re both bleedin’ geniuses. And if that happens, I’ll never regret the $40 buy that pained me momentarily (was that just last week?)
If silver drops to $30 (or $20!), I’m putting more of my ongoing saved earnings into it (I don’t brag about when I bought stuff, but I guess I’m bragging about having something left over at the end of the month - not that any responsible person can’t save SOMETHING!), and will LOWER my cost of buying at these “ridiculous” (or “bargain”?) prices these days.
But consider that I bought *no* investment silver or gold during the past year’s bull market because there were no drops that reached even 15%. I’m not making up for lost buying opportunities. If you aren’t making up either, then space things out, and be patient. If you are trying to rebalance your assets, then maybe buy some more, but leave plenty more cash (or imminent monthly savings) ready for potentially better deals.
And if precious metals return to pre-2005 levels in the next 5 years (”Bwa-ha-ha-ha! Let’s buy MORE!!”) you can always take solace in the fact that we will enjoy a great economy with lots of opportunity to make money.
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