I've been taking the last month off from reading precious metal news. Everything had been at a standstill as pm's were experiencing the summer doldrums. So I feel out of the loop and trying to catch up. The weekend news of continued problems in Europe, unresolved credit mess, and just read from one of the kitco contributors that the situation could bust open very soon!!! Imminent! There are riots in Greece, Syria and could start happening in Italy. These things have a way of spreading like a virus. The news is not good in the U.S. with the debt limit situation. Although, I'm sure they will find a way to temporarily forestall the damage and kick the can down the road until it all explodes.
So I made my way to King World News to catch up and I see a great deal of people, James Turk most notably, saying that silver could take off mid-summer and go on a run. Same as Rick Rule. And the other news that China setting up a Comex of their own could take the wind out of JPMorgan shorts. I don't quite understand all of the shorting. But I do get that it may be good news for us.
Here's my question. If things explode in Europe and have a domino effect in the US markets what does this mean for silver short term? Thank you James Dine for the prediction of $500.00 but that means nothing to me. I think some people just want to be the first person to say something so 5 years down the road he can say I told you so. What I'm worried about is a near term collapse and what it means for silver and ordinary people.
Wont' a debt crisis also take down the precious metals? By definition, a debt crisis like triggered black friday and the 1929 market crash brings prices down of everything! Except food prices keep going up and up and up. I'm hearing reports that food shortages due to weather with corn, soybean, wheat and we could pay double for a muffin or toast. If the market collapses, and the cost of living rises, how is our silver coins going to help us weather such a crisis? You'll be making the same amount of money, paying double for the cost of living, and you won't be cashing in your silver or gold if the prices decline as we are holding on to gold and silver for a hyperinflationary episode.
If the market crashes, and silver does decline like 2006, how long do we think it will stay down, if at all? Gerald Celeste says the banks could close.
I've been doing everything I can to survive a crisis buying gold and silver but I'm afraid it's just not enough to meet what feels like a big black cloud looming and the skies are ready to break open? Am I getting the right feeling?
I've also noticed that since silver was creamed, all the newsletters writers including Turd have stopped give recommendations for silver options which seems to me means that legs are still shaky?
So what do we think is going to happen for the remainder of 2011? Are we waiting for another buying opportunity or do we expect we could get back to silver at $49-$50? Somebody help me catch up.
I'll take a shot at it though.
First off the markets aren't responding to news the way they 'should'. That's been true for a month, maybe two. So toss news out the window. Except every now and then it does respond to news or seems to but I've concluded it's random like the blind squirrel finding a nut.
The summer doldrums are on. Lots of very reputable folks like Santa hinted that this summer would be different. And there is still room for that. So far though it's been doldrums and whipsaw and taking traders money.
That said the doldrums could end anytime as we're heading for August.
My personal belief is that the next month is anybody's guess then PM's start heading up.
Then somewhere between silver $45 and $55 the EE strikes again. No idea the price or timing really but in order to play the guessing game I'd say $52-54 and around US election timing.
Note I am not a chartist (TA). I am long PM's in my retirement funds and day or swing trade with current accounts. While I believe in the up trend and fundamentals I also recognize that short term moves can go seriously up or down and be meaningless except to trade and profit from.
Thanks HappyNow! Your synopsis seems quite reasonable.
Is it my imagination, that when silver was in a bullish cycle everybody was psychic, predicting what silver was going to do by the end of the week and end of the month and it would 50's, 60's and even 70's by year end. But when we are either in a bearish trend or a sideways trend, everybody short term predictive skills seem to go out the window? Sure, I can predict $100.00 silver and at some point I'll be right.
I think I'm going back into summer vacation mode sipping corona's and reading trashy novels and maybe watching the pm quotes every couple of days.
And I'll stick with the idea that we could see an event that will suck all the paper into a black hole for awhile. I have a feeling this to the moon scenario might not occur until the markets collapse and the average person starts to see how bad things are.
I am concerned about significant rise in the cost of living while the prices of pm's don't do much to offset those circumstances, at least for a time. It might not last forever but without jobs, and high prices, it could be some ouch in everybodies pockets.
Green Lantern that's about how it looks alright.
The trend will continue later. For now anybody's guess.
I'm a firm believer in PM's (primarily silver) but I've been cautioning people to tame their expectations on where PM's will go in the short and medium term.
People forget, TPTB control everything, including the paper price of our PM's. ZH said it best a few weeks back. Following QE2, EVERYTHING will tank because they HAVE to. With the markets sitting where they currently are, Bernanke would have a tough time selling QE3 to anyone. But allow the markets to drop 10-20+ percent (including many commodities) and Wall Street and Washington will be BEGGING for QE3.
I personally think that PM's will trade sideways with downward momentum until Bernanke announces QE3. Once he does that, the rest of the world (namely China) will lose pretty much any remaining confidence they have left in the US dollar. After QE3 is formally announced, I give the US 12-18 months until China abandons the USD.
Today I believe we are seeing the Forex community close their positions by July 15.
I think you're right to expect everything to fall in the event of a debt crisis starting in Europe that potentially spreads to the US and the rest of the world. If the 2008 Lehman episode could be seen as an indication of what to expect then hedge funds will be liquidating all profitable assets to pay for losses elsewhere - therefore gold and silver will be dragged down in the initial stages of any crisis. If one believes such a crisis is imminent there could be much merit in holding cash until the down draft is complete and then buying (geared) silver which will almost certainly rebound strongly and significantly.
In predicting short term movements and suitable entry points for silver one really has to first assess the likelihood of a debt crisis in Europe and the implications for currencies and other asset markets generally. Until these macro events can be anticipated any other investment strategies become not much more than chancy guesswork, otherwise know as gambling.
I've also been thinking about how those rules will affect the market, and I've come to the conclusion that it probably won't affect it positively or negatively. There are still plenty of ways to trade currencies against silver or gold.
Those trading currencies against silver/gold never had any intention of investing in silver--they were simply making money from the gap. In other words, I don't think Forex traders in any way affected the price or price discovery of silver.
Also, I just read that the state of Minnesota is CLOSED!! All governments offices, parks, zoo's and services are almost NADA because they have no budget. I think I read that is 22,000 jobs. I wonder how many more states will be running into the same problem.
I have this reoccurring nightmare except it hasn't occurred yet but once I do have it, it will reoccur. It is the dog days of summer, August 2011. It's a sweltering hot day. The fire hydrants are open in all the cities to cool down the kids. Lawns have turned brown from the heat wave and food prices are high because of lack of rain. This is called foreshadowing. We wake up one morning, turn on CNBC, and the market begins tanking. All of a sudden we are in a depression. I'm sitting in my dark, hot house (electricity went off in this scenario) with my pile of silver coins that have now lost 1/2 their value along with the market tanking. The Obama's are off vacationing in Hawaii so there is no press conference. Panic ensues and because of the heat and anger, fires are raging in many cities because they all had to cut the budgets and closed many of their firehouses. The lines are long in the supermarkets for low quality high priced goods. But I got my silver:
Turd posts his first blog of the day at 9:30am after a night out drinking with his buddies. "This is the Moment We've All Been Waiting For" So I quickly put my shorts on to run to the bank so I can start buying precious metals, junior mines and silver options at a ridiculous discount and when I get there, I find out the bank is closed with a sign GONE FISHING. I drive over to the coin store to sell some silver coins for money but he has shut the place down. Finally, my wife wakes up and says Honey, you were having a bad dream. I splash water on my face. Thanking God that I woke up and sit down with my cup of coffee, turn on the tv to find out it wasn't a dream AAAAAHHHH! The Twilight Zone
If the price moves downward its an opportunity to decrease the dollar cost avg of your regular purchasing of silver. I reckon thats a good thing.
If the price moves up you can take profits and hope for a later correction. Or hold on hoping for higher prices still. Also a good thing.
Either way the patient long term buyer benefits
Count on manipulation. Especially when its to the downside as a gift.
with this sideways grind I don't pay such close attention to daily price action and buy when I have the money rather than "timing" the market.
I achieved my core position of 1000 physical ounces and the rest is now gravy.
I have my exit plan ready and have a contingency plan should prices on PM collapse while food prices soar.
best of luck to us all and keep stacking
After the last major correction my coin shop closed its doors for the week. did anyone else experience this? Ah well, the online dealers were still open, dang those non cash fee's, I used Monarch PM's. Does anyone have experience with Monarch? Are there better companies? Ones that don't charge a non cash fee?