The Gold and Silver Thread

[Toro]

Silver passed $32 this morning. It is up 21% since hitting the intra-day low on Jan 28, rising more than 1% per trading session.

 

[Valerie]

Friday February 18, 2011, 4:23 am EST

Gold rose, silver gained to a 30- year high and palladium jumped to the highest price in almost 10 years on demand for precious metals to hedge against declines in other assets because of unrest in the Middle East.

Gold Rises, Silver Goes to 30-Year High as Middle East Unrest Spurs Demand - Yahoo! Finance

 

[Toro]

I'm not sure what to make of this.

Much of this has to be coming from the Mid-East. Much of the Mid-East keeps their wealth in gold and silver. They have been a big supplier of scrap for recycled gold during this bull market. I imagine the scrap supply from the ME is dissipating. Remember, gold went from $160 to $850 in a year during the height of the Iranian Hostage Crisis in 1980. It then collapsed.

Also, problems in Europe may also be fueling demand. Overnight borrowing from the ECB has spiked to 10x the average over the past few days, leading some to think a few European banks are in trouble.

Interest rates and the dollar have been pulling back a bit over the past few days, so that is fueling demand, but with the economy starting to accelerate and interest rates rising off the bottom, it will be interesting to see if gold can continue to catch a bid.

Silver is hitting highs but gold is not. For this bull market to continue, gold has to be rising too. Silver has been impressive but we shouldn't trust the move too much until gold breaches resistance.

 

[KissMy]

I'm not sure what to make of this.

Much of this has to be coming from the Mid-East. Much of the Mid-East keeps their wealth in gold and silver. They have been a big supplier of scrap for recycled gold during this bull market. I imagine the scrap supply from the ME is dissipating. Remember, gold went from $160 to $850 in a year during the height of the Iranian Hostage Crisis in 1980. It then collapsed.

Also, problems in Europe may also be fueling demand. Overnight borrowing from the ECB has spiked to 10x the average over the past few days, leading some to think a few European banks are in trouble.

Interest rates and the dollar have been pulling back a bit over the past few days, so that is fueling demand, but with the economy starting to accelerate and interest rates rising off the bottom, it will be interesting to see if gold can continue to catch a bid.

Silver is hitting highs but gold is not. For this bull market to continue, gold has to be rising too. Silver has been impressive but we shouldn't trust the move too much until gold breaches resistance.

Charts of resistance can only tell you so much. We just had a 9% correction in gold that is very typical before it continues to new highs. It will get there. The out of whack US oil price is causing the US dollar to appear stronger than it really is. Then you have a flight to dollars because of Middle East & European problems currently helping the dollar. The reality is there is a very strong global commodities price boom going on but we can't see it here because our headline oil price is $21 dollars below true market price & our US dollar is temporarily elevated.

 

[Toro]

You aren't seeing a flight to dollars.

Also, spreads between American and European and Japanese bonds have been widening, which is why the dollar has been stronger, at least until a few days ago when spreads eased. But the technical and economic picture is for higher interest rates as growth accelerates, which is dollar positive. So the question then becomes, what happens to gold? Gold and silver have actually been trading directionless relative to the dollar this year, often rising when the dollar rises and falls when the dollar falls. This is actually positive for precious metals because you don't want PMs being a dollar play. You want it to be a fiat currency play.

 

[KissMy]

You aren't seeing a flight to dollars.

Also, spreads between American and European and Japanese bonds have been widening, which is why the dollar has been stronger, at least until a few days ago when spreads eased. But the technical and economic picture is for higher interest rates as growth accelerates, which is dollar positive. So the question then becomes, what happens to gold? Gold and silver have actually been trading directionless relative to the dollar this year, often rising when the dollar rises and falls when the dollar falls. This is actually positive for precious metals because you don't want PMs being a dollar play. You want it to be a fiat currency play.

So far when China & others raised interest rates Gold quickly recovered. Because China keeps increasing their buying more gold in-spite of those rate hikes. It is strange but the other economies are booming in-spite of rate hikes thus sucking up all the worlds commodities. The only thing that would derail that is if a bubble popped in China. Many have been calling for China's overheated economy to crash. The thing is it may not be overheated. There are massive amounts of people who want homes, food, cars, oil, etc. over there. I don't foresee demand destruction. I think their economic engine can run at least 3 times further than ours before demand falls.

 

[Toro]

Generally, a boom does not end when authorities begin tightening. Booms end when monetary conditions are tight. Even in China, despite the increases in reserve requirements, the real rate of interest is still negative. Most of the world still has easy money.

What makes me worry about the precious metals is that there was selling on huge volume a few months ago, and the resistance for gold is pretty formidable. What I want to see is gold moving through resistance preferably on higher volume. Silver sliced through resistance like it wasn't even there, so maybe gold will too. Silver is up on good volume today.

 

[KissMy]

Generally, a boom does not end when authorities begin tightening. Booms end when monetary conditions are tight. Even in China, despite the increases in reserve requirements, the real rate of interest is still negative. Most of the world still has easy money.

What makes me worry about the precious metals is that there was selling on huge volume a few months ago, and the resistance for gold is pretty formidable. What I want to see is gold moving through resistance preferably on higher volume. Silver sliced through resistance like it wasn't even there, so maybe gold will too. Silver is up on good volume today.

Investors are diversifying into other commodities that are now rising faster than gold. These other commodities are simply playing catch-up to gold's long strong run. Other commodities are currently out-performing gold as all that easy money that gold was hedging invsetors against has finally driven up global consumption levels. This does not mean gold is heading down.

 

[Terral]

Greetings to All:

... Get off your butt and buy physical silver right now (28.03 spot 1/29/11 @ 11:42 AM), before the price goes over 30 bucks, so you can cash in on the best opportunity to multiply your money in history. There is no rush, because the Chinese and big banks are still shorting the silver market, but use this opportunity to buy and take physical possession of as much silver bullion and silver coins as possible (this company is good).

How many USMB readers bought silver at $28.03 on January 29, 2011?? Click on the 'good company' (Gainsville Coins) link to see the price now at 33.81 and rising. That is almost a 6-dollar increase since the end of January! Does this mean to stop buying silver? No!

[ame="http://www.youtube.com/watch?v=PgiU62wy8No"]Max Keiser[/ame]

Some are saying that silver will blow through 80 bucks and 100 bucks and 200 bucks with some saying silver will surpass 500 dollars.

[ame="http://www.youtube.com/watch?v=3eDFTYA7ZRc"]Banksters, Gold, Silver and the Near Future[/ame]

Other experts expect silver prices to rise to more than 2000 dollars per ounce. No. I am no seller of silver (never sold one ounce) and no financial planner or any such thing. I am only sharing insider information about how to get your worthless paper dollars into silver in preparation of the coming economic crash. If you read the Opening Post and looked at all the facts, then you know that JP Morgan and the Banksters are losing their ability to manipulate silver prices down. At 16/20 to 1 for silver versus gold, silver should be selling for 80 bucks per ounce right now! JP Morgan is losing the silver short position battle, which is seeing the real value rise above the artificial paper value. More and more people are demanding delivery of the actual silver and more and more people around the world are chasing smaller and smaller amounts of gold and silver.

I am telling all of you that the price of silver will go through the roof and then there will be NO SUPPLY (link). Zero! Everywhere you go to try and buy silver will be 'Out Of Stock,' because dwindling silver inventories will be saved and only given to the best customers that does not include you and me.

GL,

Terral

 

[Ernie S.]

I bought at $20.50 and again at 28.50. I also bought quite a bit of gold at $1240 something, gotta check... I wish I had put that into silver back in August. In stead of about 16%, I'd be looking at over 60% return. I'm thinking that if Silver settles back under 30, I may convert half of my gold.

 

[kwc57]

No, Glenn Beck told me to buy gold.

 

[Ernie S.]

No, Glenn Beck told me to buy gold.

Someone is paying Beck to tell me to buy gold...

Evewryone who has researched precious metals has their own theory. When I started buying PM's a friend told me to go 75% silver and 25% gold, maybe a bit of platinum if I felt lucky. What I had read told me to go 75% gold. I should have listened to Mark, I guess. When I bought my last silver at $28.50, Mark told me silver was ready to crash and he had gotten out.
I was tempted to follow him out of PM all together, but I was seeing $35 Ag. I'm glad I didn't follow his advice this time.
Now that Ag is $34, I'm betting on a 10% fallback before a run to $50 by summer.

Don't follow me any more than you'd follow Beck. I've been wrong as often as I've been right.

 

[LordBrownTrout]

Massive debt, economy spiraling, QE.....infinite +1, dwindling silver resources, to name a few. I bought in at 10 an ounce, 1460 oz, two bags, sold one, bought another one, have been on a wait for three months for another 715 ounces.

 

[Ernie S.]

Massive debt, economy spiraling, QE.....infinite +1, dwindling silver resources, to name a few. I bought in at 10 an ounce, 1460 oz, two bags, sold one, bought another one, have been on a wait for three months for another 715 ounces.

Buying 90% coins? Sometimes I get a good buy. Like today, I could probably buy at about $27 at one local pawn shop. I usually buy .999 10, 100 and kilo bars. You can buy junk silver coin cheap, but they rape you at sale

 

[LordBrownTrout]

Massive debt, economy spiraling, QE.....infinite +1, dwindling silver resources, to name a few. I bought in at 10 an ounce, 1460 oz, two bags, sold one, bought another one, have been on a wait for three months for another 715 ounces.

Buying 90% coins? Sometimes I get a good buy. Like today, I could probably buy at about $27 at one local pawn shop. I usually buy .999 10, 100 and kilo bars. You can buy junk silver coin cheap, but they rape you at sale

Yeah, that's the drawback. I usually price junk coins every two or three weeks and they're usually about three bucks off spot. These are at local coin dealers. I checked at thirty and they were offering between 26 and 27 on junk coins. Are kilo bars and .999 hard to find?

 

[Toro]

Well, I have to give Terral credit. Even though he has a lot of wacky theories, silver is up almost 30% since the OP.

I only hope he knows when to get out!

 

[Ernie S.]

Massive debt, economy spiraling, QE.....infinite +1, dwindling silver resources, to name a few. I bought in at 10 an ounce, 1460 oz, two bags, sold one, bought another one, have been on a wait for three months for another 715 ounces.

Buying 90% coins? Sometimes I get a good buy. Like today, I could probably buy at about $27 at one local pawn shop. I usually buy .999 10, 100 and kilo bars. You can buy junk silver coin cheap, but they rape you at sale

Yeah, that's the drawback. I usually price junk coins every two or three weeks and they're usually about three bucks off spot. These are at local coin dealers. I checked at thirty and they were offering between 26 and 27 on junk coins. Are kilo bars and .999 hard to find?

I have a guy in Fort Lauderdale I deal with. If I just stop by, he generally has 2 or 3oo oz on hand. If I give him a couple days I can get more. He's a jewler located in a co-op. He sells mostly estate jewlery, does some nice custom stuff, but most of his business is PM. He deals in cash only and on a first name basis. A local flea market here usually has 10 and 100 oz bars on display, but they're very proud of them at spot + 5 or so.. I give Marty a buck or buck and a half over spot.
There's probably someone like that near you. You just gotta look for them or talk to friends into PM.

 

[Toro]

Gold and silver may be putting in a top here, at least in the near-term. Both have reversed intra-day, and the stocks of the gold and silver companies appear to be acting in classic topping fashion. Also, even though silver hit new highs, gold did not, and there is significant resistance at the $1430 level.

 

[KissMy]

Gold will make a new high. The global economy will continue to drive commodities. Crude oil will also make a new high. We just saw Corn, Wheat, Cotton, & Copper have all just made new highs. Prices do not go in a straight line but they are consistently making new highs. BUY THE DIPS! The US dollar is done by 2020. $113 Trillion in unfunded liabilities. Then you have huge problems in 38 US States. CYA!!!

 

[liebuster]

Gold will make a new high. The global economy will continue to drive commodities. Crude oil will also make a new high. We just saw Corn, Wheat, Cotton, & Copper have all just made new highs. Prices do not go in a straight line but they are consistently making new highs. BUY THE DIPS! The US dollar is done by 2020. $113 Trillion in unfunded liabilities. Then you have huge problems in 38 US States. CYA!!!

I'd be willing to say the dollar is gone by late 2012 or 2013. If I'm wrong, then good for everyone.