Skip to comments.What's Driving Silver Prices? (Thoughts?)
Posted on 08/08/2011 1:33:39 PM PDT by OB1kNOb
As I type this, the Dow is down over 600 points. Gold shot from $1,660 on Sunday to $1,717 currently, while silver dropped last Friday to $38.32, then up to above $40 on Sunday, and has dropped today down to $38.94 currently.
What's driving the whipsaw pricing on silver? Thoughts were Friday's downturn was driven by forced sales of silver investors needing to cover other positions, then Sunday saw overseas markets drive price back above $40. Is today's market slide causing more forced silver sales to cover other positions today, or are there other dynamics at work? I read earlier today that this is similar to the market meltdown of 2008 where silver tumbled down from $20's? down to $9 on anticipated lower industrial use caused by market crash. the article speculated that silver may drop down to $20 range this time. What are FReeper metals investor thoughts on this matter? I'm vacillating between buying now at the dip below $40, and waiting to see if the 2008 scenario plays out again. Thoughts?
I also read a tweet today saying we may hear the Fed make their first solid stmt on a coming QE3 at tomorrow’s Fed Reserve meeting. If that happens, I have to believe that both silver and gold will really take off to the upside.
Silver is being held down on massive manipulation on the market by the trading houses and banks. It is a transparent scheme that will eventually implode.
The price of silver is way easier to manipulate down. Plus, silver is seen also as an industrial metal whereas gold is basically only a monetary metal.
I actually just bought some more silver today. If it goes down enough I’ll buy some more.
I have found this website to be a very useful source of information on the economy, gold, and silver.
First I have to identify myself as not really a precious metals investor, just an observer without any qualifications beyond being particularly interested in silver as a more accessible precious metal for me. My understanding is that silver is still priced below the historical ratio it has with gold, and that it will eventually catch up to this, reasons for it (whatever those are) being the same. Buying now would later be more profitable than buying gold now, if what I’ve just described is true.
I think part of the slight downturn might have been what you mentioned: industrial use of silver falls when industry and the economy falls. I think it’s rebound tells that it’s use as a store of value overcame that. It was closing in on $50 an ounce just a little while ago. I could easily see it doing that again.
I would say it is a battle between those that are hit by loses and need to cover their margins and those that see a huge wave of inflation coming and think that silver will go up.
Gold is money.
I wish there were another color of squiggly line under words commonly misused: its/it’s, there/their/they’re.
One ounce coin for $1785 or 45 coins of silver, it is logistics in part.
I agree, but I wonder if even the big boys be able to keep silver prices artificially low if the Fed makes any intimation towards any new program (whatever the name) that smells of QE3 in tomorrow’s meeting?
So if we (or the world) are/is going into recession/depression the "precious" aspect wants to go up but the "industrial" aspect wants to go down.
So does anyone think there is a chance we’ll see a significant price drop in silver this time around like we did when the stock markets tanked from the financial crisis in 2008? Am interested in your reasons why or why not.
Thanks for the link, SS. Will check it out.
The world banksters are putting the fix on currencies and other things in order to try to keep the debt/imbalance regime going against the USA for their pocketbooks today (and their government-dependent family members). Their anti-free-market tendencies are going to come around to bite them very hard in the future (reactions toward nationalism and conflicts). During the years to come, we’ll probably see the devolution/deconstruction of globalism.
We’ll also continue to see ever more crazy political speech. Most who have large incomes are quite dependent on the debt regime of the various levels of government to funnel the inflating currency their way (killing the dollar). Those are the constituents who influence both political parties.
Reasons to buy physical silver.
Any thoughts on which camp you think has greater force on the price direction? Industrial?
Sure, Silver is worth nothing, it will always be worth nothing. Those that can’t afford gold tried to make it worth something by stirring up a frenzy about it, but the smart folks realized, silver, ya, it’s worth nothing.
Futures and Margin Calls....great opportunity to buy it cheap relative to gold
Your best bet now would be .308 or .223.
How does one conclude that?
Personally, I believe it is the likes of Soros and Buffet wanting to panic the “little” guys out of it so they are the ones that make the killing if you will. Silver is much easier to manipulate than gold. IMHO. I am not an expert in this by any means.
I’m up to date on those investments. ;-)
You will not see a steep drop in the price of silver unless there is also a steep drop in gold. Silver will always be purchased by investors if the ratio to gold is greater than 45. For example, if gold is selling for $1700 an once then silver should be worth at least 37.77oz (1700/45). In this scenario if the price of silver is less than 37.77 then you should consider buying some silver coins. If the price of silver jumps to $50oz then you should consider buying gold coins if the ratio to gold is less than 45.
I’m confused. You mean silver dollars are not money—esp the ones 90% purity?
So, when QE3 is done, is money “loaned” to the government from the government? Or is it simply more money being printed?
That’s good to know. What’s the underlying factors driving the ratio of 45?
Silver used to have industrial demand -photographic film, xray film, dental fillings. No more. With the advent of composite ceramic fillings and digital photography, silver has very few industrial uses.
IMHO, they have been producing and stockpiling Silver during all those decades when silver was very low. They have succeeded in capitalizing on Silver.
To answer your question, you have to look at and ponder more than a little about the history of silver and more than a little about the present about silver. If you do that, and it is isn’t a ten minute undertaking, you will learn something about what some call the “DNA” of silver. I’ll try to hit some of the main points as I myself see them, in no particular order, without delving too deep into any of them and without any guarantee that I’ll hit all of them.
Silver up here at $40 does not have much volumetric support. That’s one reason why it doesn’t seem to be able to hold it well. It does not “own” $40. IMO, silver is still proving that it can hold $35. And in my opinion, that is not proven. Technically speaking, silver may very well have an appointment with the mid $31’s. Forget not that during 2008, silver got cut almost in half, to $9.
If you look at long term charts of silver, during the early 2000’s, it had lots and lots of trouble at “round numbers”. It took many months to go from $7 to $8 to $9.....Today, those round numbers are sure to be more like $25 - $30 - $35 - $40. In quanta of $5, not units of $1.
Silver spent about a third of 2008 under $10 and really only left $10 behind in 2009. This is very much new territory up here (hence, why I say it has only modest volumetric support up here) I say that silver needs time in “rehab” to prove it can hang at these levels. In truth, if you look at the history of silver, it could very easily take 2 years or more for silver to advance much from here. So...you don’t have to load up the boat this week or tomorrow. It DID its parabolic thing in April and May. Now it needs time in rehab.
Many people believe that commodities (and most markets, in general) behave in 60 years cycles. Silver took a massive 35% hit in July of 1951. One of its greatest % dumps of all time. Coincidence?
Silver is not in any way the same kind of monetary metal that gold is. It just isn’t. We may wish that it was, but it isn’t. It is far more tied to industrial production, as is Platinum and Palladium, both of which are tied mightily to automotive catalytic converters. Palladium, today, got smoked. Platinum is actually trading at about the same price as gold. I myself have never seen that before.
Silver is not especially rare. By that I mean, if you have the money you want to spend on it, you could damage the suspension of your car loading it up with silver.
High silver prices causes lots of sterling and not-especially-rare semi-numismatic coins to get pulled out of the closet and thrown into the melting pot. Particularly in tough economic times.
Now, having said all that, you, generic you, should not buy *any* silver with the idea that you are going to buy it all at once, all at one price. If you want to be a LT holder of silver and hold onto it for a much higher price, that price is not going to occur right away. And if it did, silver would have to achieve a vastly higher price to overcome the punitive dealer margins/premiums on the physical metal. If you want to trade silver short term, SLV is vastly superior because it trades like a stock, with stock-like spreads and stock-like commissions.
So if you want to buy some, just buy some. Don’t buy all you want to buy all on one day all at one time. If you buy 10 ounces today and the price declines $1.50, are you gonna cry over that? Do you think 10 ounces might make a real difference in your life? What if it falls by $5?
Don’t overthink it. That’s as simply as I can say it. I have been telling all the folks I know who regret not buying gold lower: (and that includes me, because while I have been buying silver since $6, when gold was $265, I have not bot any gold under $1500) Just buy one ounce of the stuff and be an owner instead of a spectator.
” silver has very few industrial uses.”
That is very not true. After crude oil and natural gas, silver has the most industrial uses of *any* commodity. Now one might say that the amounts of silver used (up) in industry are, relative to its annual production including mining and scrap, relatively small. But silver has many hundreds of industrial uses.
And....when it comes to photography, silver was not massively consumed in photography. Recycling rates of well north of 92% have been accepted in silver film-processing for at least 60 years. Back then, it used to be uneconomical to recycle silver all that carefully because it really wasn’t worth that much.
“It was closing in on $50 an ounce just a little while ago. I could easily see it doing that again.”
The last time silver hit $50 was in 1980. You should get a substantially history-cognizant view of silver’s “DNA” as we call it. I’ve posted some info downthread on this.
$50 is a 30-year anomaly. If you like silver, please feel free to like silver. I do. Just widen your perspective some.
Totally wrong. Silver has a ton of industrial uses and new ones are created all the time. Silver is the best reflective metal, best conductor of heat & electricity, and also a unique bacteria killer. It also becomes more in demand as jewellry as the price goes up.
It also can be used as money like gold. In fact it is much more useful for small transactions.
It was at $49 around six months ago.
Incorrect with rohs implementation for circuit boards silver finishes and solders are often the only choice left - especially in high reli or non-magnetic situations.
that makes sense, thanks
Correct, I should have said the PRIOR time silver hit $50 was in 1980. I know people who bought 100 oz bars of silver in 1980. They still own them. A friend of mine and I had a deal for me to buy both of his JM 100 oz bars for $1100 in 2001, but he reneged. My point was that if you buy into a big frenzy, you stand the chance of being badly stranded, and for a long time. Thirty years in this case. At $6, silver was priced below what it costs to find it, dig it out of the ground, crush it, smelt it, pour it into a mold or pound it into a coin, and ship it to a dealer. Same with $265 gold. At those prices, I didn’t have think too hard about buying silver.
The answer is not to try to overthink it. All the talking in the world does not obviate the possibility that the metal is smarter than you or I happen to be. Gold has been “too high” since $450, hasn’t it?
Go buy 5 or 10 silver eagles or ten rounds if you want to own some silver. It isn’t going to kill you if it drops $5 and it isn’t going to fund your retirement if it triples.
AG is a two-faced, very interesting investment and normally trades 40-1 ration to AU. Silver as two-faced is industrial and a cheap man’s hedge against the dollar.
Silver is manipulated by Goldman’s, HSBC, and Morgan Stanley...the COMEX manipulates and cheats and if you want to track AG, look at Harvey Organ’s website every day and Saturdays.
Silver hesitated because both are due for a large correction sometime in the next 2 weeks
Manipulation via paper silver with no metal behind it. Get your silver while it is cheap. The manipulation has to come to an end at some point, probably a very expensive(to the manipulators) end.
The first is the method of the second.
You posted a long diatribe about gold and silver and its value.
Do you actually own any gold and silver of substance? Because based on your comments, you don’t seem like a precious metals investor.
Everyone should put at least 5-10% of their money into physical silver.
$50 in 1980 is not the same as $50 in 2011. So even if silver hits $50 it is still no where near its all time high in value. Furthermore, there was way more silver lying around in 1980 then there is now. Silver gets consumed industrially while basically all the gold that has ever been found is still around.
I own hundreds of pounds of silver and unfortunately, less than 10 oz of gold.
I maintain a very sober and detached view of PMs because I have studied them for ten years, I have heard it all, and I try to remain apart from “gold standard” “end of the world” “JP Morgan manipulation” frenzies. I know a lot about the production of and trading of the metals, but I am not a trader nor miner nor refiner (though I woud like to be) of same.
When I first began to acquire silver it was from the school lunchroom gals who made change at my jr high cafeteria, in 1965. I exchanged dimes and quarters for dimes and quarters, at face value. I eventually saved about $175 which was a serious pile of money for me at the time. One day, my very own silver window snapped shut and I stopped getting any change after school.
In 2001, I could see that one could not get silver out of the ground for $6. Same with $265 gold. It had NOTHING to do with being a precious metal. It was a price that was below the cost of production for something that I liked. It was like buying a slice of baloney for a penny. You can not birth the cow, feed the cow, raise the cow, slaughter the cow, and bring the product to market for one cent. I happened to like silver and began buying it. I wish I had done so for gold.
Silver is money too. The Silver market is much smaller and much easier to manipulate. The govt will try to manipulate precious metals to save fiat currencies. The will raise margin requirements and other things. Gold is harder to manipulate.
The final govt action is what FDR did - confiscate it. It will be a “patriotic” thing to do.
Via silver derivatives, the big boys have manipulated the market in order to profit on silver’s volatility.
Physical silver will have it’s day.
The house of cards has to fall eventually.
This blog will help you understand the demand for silver
It has not been updated today yet. Usually around 7pm EST
Silver is absolutely money and has always been used as, and considered, money.
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