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FRED
05-04-11, 09:20 AM
http://www.itulip.com/images2/fallingsilverknife.png


We've received dozens of emails and phone inquiries over the past few days on EJ's Time at Last to Sell Silver ($ubscription) (http://www.itulip.com/forums/showthread.php/19150-Time-at-last-to-sell-silver) announcement on April 29, 2011 to inform subscribers of EJ's decision to sell all of his silver that day after holding it for ten years. As of May 5, silver prices have collapsed 27% since then.

To save time answering each inquiry on the call individually, here is a summary.

Five ways that EJ's silver sell call was unlike others you may have read:


Did not conflate silver and gold markets


Said gold was likely to fall, too, but not nearly as much as silver, and may even rise. This correction is about the silver market, not precious metals generally, or about gold. In the event, gold declined only 2.5% while silver plunged 12% at the open the next day.

Waited 10 years to sell


Didn't buy silver a year or two ago. Bought silver in 2001 and didn't sell it until 2011. Bought silver at $4.25 in 2001 when the price averaged $4.36 for the year. At the time an ounce of gold cost 63 ounces of silver. Sold when silver traded for $48.50, at 11.4 times the price paid.

One sell call in ten years


Unlike the stopped clocks who have been calling for a silver price correction since the price hit $20, EJ has not warned once of an imminent silver price correction before last Friday. He made one (1) sell call in ten (10) years.

Sold within 2.5% of all time peak nominal price


On the day of that one and only silver sell call, silver reached a London fix spot price peak of $48.70. The spot price EJ locked in for his sale was $48.50.

To-the-day timing


Starting the very next trading day, silver prices plunged 16%, the largest two day silver price decline in history.
EJ will send an ounce of gold to the first reader who can find another silver sell call that meets all of these five criteria.

Five reasons why EJ sold silver on April 29 after waiting 10 years:

Reason #1: The Gold/Silver ratio hit 32, near the all time low of 27 in 1978.

Reason #2: Silver prices have risen far ahead of gold, a currency, and platinum, an industrial metal. The only possible explanation is that we are experiencing a silver bubble, likely driven by a one or more large players cornering the market.

Reason #3: The Silver Stadium is packed to overflowing. Too many rabid and poorly informed silver fans in the stands for my taste. When I got in, the Silver Stadium was virtually empty.

Reason #4: High volatility implies a turning point, as the market divides into two major groups, those who justify the historically high price that's out-of-whack with gold and platinum and those who can't. As a peak approaches, both camps get increasing nervous until the trading breaks to one side or the other. I'm betting it breaks to the downside.

Reason #5: "The pigs get fat and the hogs get slaughtered." An 11x return over 10 years is acceptable.

We'll use the chart below to either confirm or invalidate EJ's theory that the silver bubble is in collapse mode. It shows the actual silver price in black, a theoretical non-bubble silver price growth rate in green, and my April 29 price crash scenario in red.



http://www.itulip.com/images2/PlatinumGoldSilverCorrectionScenario1996-2013wtmk.png
Original chart posted on Sunday May 1 before the market opened in Asia. EJ's silver crash forecast is shown in red.


http://www.itulip.com/images2/SilverCorrectionScenario0511update1996-2013wtmk.png
Last update, close of market Eastern Time May 6. We will update this chart from time to time as the silver price crash continues.

Does EJ hate silver?

EJ writes:
"On a personal note, I'm certain that many of you, like me, like silver. It was not easy for me to sell silver I'd possessed for ten years, and I did keep a small amount as a souvenir. When I buy it back, I probably will not buy 1921 silver dollars again. I enjoyed giving silver dollar coins away as tips to wait staff at restaurants and to friends as gifts. With a cost basis of $4.75, and a sell value of $10, then $20, then $30 as the price went up over the years, the novelty of a 90 year old coin communicated my feelings for the recipients perfectly: to a waiter, that I appreciated superb service, and to a friend a lasting memento of my fond wishes for their good health and success. But it's important to not get attached to one's investments. There is always a time to sell. Your silver doesn't care about you, so you should return the sentiment and view it only as a means to an end. Abstract yourself from your investments, maintain emotional distanced, and focus market dynamics -- the price action, the behavior of market participants, the macro environment, and public sentiment."
What about gold?

EJ writes:
"Gold is not a bubble. It may develop into one, but I doubt it because gold unlike silver is a reserve currency, hoarded by central banks as a back-up plan in case the global monetary system breaks down, which it has been in the process of doing for the past decade. If my theory is correct that gold is a currency and will behave like a currency during a bond market and currency crisis, then gold will not become a bubble and will not correct the way a bubble does but as a currency does following the acute phase of a currency crisis. For example, gold may rise to $6000 then decline to $5000 and more or less remain there as the "new" dollar price of gold after the crisis is resolved. Calling that peak price is a non-trivial undertaking that I have been preparing for since I purchased gold in 2001."
Subscribers can click here the original Time at last to sell silver (http://www.itulip.com/forums/showthread.php/19150-Time-at-last-to-sell-silver?p=195945#post195945) article and thread of discussion before, during, and after the silver market correction that followed.

We will add the Time at Last to Sell Silver article to the list that begins in 1998.


November 1998: Warns on Internet Bubble (http://www.itulip.com/knowyourmania.html)
August 1999: No Y2K Disaster (http://www.itulip.com/y2k.htm)
November 1999: How the Internet Bubble Will End (http://www.bankrate.com/brm/news/investing/19991129f.asp?keyword=)
March 2000: Internet Bubble Top (http://www.itulip.com/GlobeArchiveJanszen.htm)
April 2000: A Bear Market is Born (http://www.itulip.com/urgentmessage.htm#Bear)
January 2001: Post-Bubble Recession (http://www.itulip.com/recession2001.htm)
September 2001: Gold Price Bottom at US$270 (http://www.itulip.com/gold.htm)
August 2002: Warns of Housing Bubble (http://www.itulip.com/index_old.html#Today)
January 2004: How Housing Bubble will End (http://www.itulip.com/housingnotlikeequities.htm)
January 2005: Housing Bubble Correction (http://www.itulip.com/housingbubblecorrection.htm)
June 2005: Housing Bubble Top, crash to follow that leads to severe recession
(http://www.itulip.com/forums/showthread.php?t=606)
October 2006: Severe recession starts Q4 2007
(http://www.itulip.com/forums/showthread.php?t=743)
December 27, 2007: Start of Debt Deflation Bear Market, 40% decline to follow
(http://itulip.com/forums/showthread.php?t=2774)
June 16, 2008: Top of commercial real estate market, crash to follow
(http://www.itulip.com/forums/showthread.php?p=38410#post38410)
September 15, 2008: Fed Funds spread signals crash (http://itulip.com/forums/showthread.php?p=47860#post47860)
March 27, 2009: Debt Deflation Bear Market: First Bounce (http://www.itulip.com/forums/showthread.php?p=86995#post86995)

iTulip Select (http://www.itulip.com/forums/showthread.php/1032-iTulip-Select-Subscription-Description?p=7837#poststop$session[sessionurl_q]): The Investment Thesis for the Next Cycle™
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metalman
05-04-11, 10:44 AM
silver just fell below $40... 18% below EJ's call... 19.5% below the peak...

http://3.bp.blogspot.com/_Z-tqVTd9fPI/SixayqXWYVI/AAAAAAAABcU/auS7Xx97fMA/s400/game_over.jpg

c1ue
05-04-11, 12:02 PM
I'll be impressed indeed if silver falls to below $20 over the next 6 months...

peakishmael
05-04-11, 12:12 PM
We'll use the chart below to either confirm or invalidate EJ's theory that the silver bubble is in collapse mode. It shows the actual silver price in black, a theoretical non-bubble silver price growth rate in green, and my April 29 price crash scenario in red.



http://www.itulip.com/images2/SilverCorrectionScenario0511update1996-2013wtmk.png


There appears to be an error in chartsmanship here (and also in the same chart, posted in the original silver call thread). The x-axis appears to be off a year, as we are in mid-2011, not mid-2010.

5/4 p.m. seems to have been fixed in this thread, but not in the original "sell silver" call thread thread... OK, not a big deal, I'm just nit-picky.

metalman
05-04-11, 01:26 PM
I'll be impressed indeed if silver falls to below $20 over the next 6 months...

a single 'sell' call in 10 yrs... day before the mega-est silver price crash ever... & c1ue sez...

http://i282.photobucket.com/albums/kk252/LadyCatfern/funny-pictures-unimpressed-cat.jpg))O

nathanhulick
05-04-11, 02:13 PM
In all fairness, the fact that margin requirements for silver were just changed probably is responsible for a large part of this big drop in silver prices. Six months from now, silver could be much higher (or much lower). I think it's a bit too soon to be calling this a successful call, from a long term standpoint. Sure, if EJ was advocating short term trading positions, the silver sell call would be a slam dunk.

Don't get me wrong, I have followed you guys for years and years and I think this is one of the best, if not the best sites for rational investment analysis. (I actually have one of those itulip.com stock certificates you guys used to sell if that tells you how long I have been visiting this site.)

kduffey
05-04-11, 02:17 PM
What an incredibly timed call! Well done.

I look forward to EJ's future thoughts on where to allocate capital preferably for the little guy who doesn't have millions to invest.

metalman
05-04-11, 02:28 PM
In all fairness, the fact that margin requirements for silver were just changed probably is responsible for a large part of this big drop in silver prices. Six months from now, silver could be much higher (or much lower). I think it's a bit too soon to be calling this a successful call, from a long term standpoint. Sure, if EJ was advocating short term trading positions, the silver sell call would be a slam dunk.

Don't get me wrong, I have followed you guys for years and years and I think this is one of the best, if not the best sites for rational investment analysis. (I actually have one of those itulip.com stock certificates you guys used to sell if that tells you how long I have been visiting this site.)

i wondered about that too. ej's argued since the fake-o stock cert days to not trade gold/silver... taxes & fees eat up your profits. how far does silver have to fall to justify the cost of getting out & in again? 30%? 40%? to $30 or $35?

LargoWinch
05-04-11, 02:46 PM
Based on EJ's call/comments, I sold roughly 2/3 of my silver holdings last week at spot silver between $USD44.5 and $USD48.5.

However, I think it is important to keep things in perspective and understand that silver may never reach $US20/oz again.

YTD as of May 4th/11 - 2:45pm:

Silver - Start $30.63 / Current $39.80: +29.9%

Gold - Start $1,405.5 / Current $1,516.6: +7.9%

chr5648
05-04-11, 02:59 PM
a single 'sell' call in 10 yrs... day before the mega-est silver price crash ever... & c1ue sez...

http://i282.photobucket.com/albums/kk252/LadyCatfern/funny-pictures-unimpressed-cat.jpg))O

I don't know if this was that difficult of a sell call. Market, limit, stop, orders, etc. tend to congregate around previous support/resistance levels, historic price levels, and psychological numbers. $48.70 (hunt brothers 1980's high) was a historic and psychologically significant number, along with $50 being a big psychological area for orders. Even with lax margin requirements, these are historically important price levels.

I had my take profit orders spread out between $48-$50 Most hit. Price didn't drop magically, it dropped because specs/investors/etc. who knew what they were doing took profit. When there was no one else bidding up the market it dropped, the suckers who didn't take profit lost.


Abstract yourself from your investments, maintain emotional distanced, and focus market dynamics -- the price action, the behavior of market participants, the macro environment, and public sentiment."

EJ said it himself.

Raz
05-04-11, 03:14 PM
You might want to check this out.

I intended to post it last night but couldn't keep my eyes open.

http://talkdigitalnetwork.com//goto/http://media.blubrry.com/howestreet/p/www.howestreet.com/audio/Ross_Clark_2011_0503.mp3

Ross Clark is one very smart and talented Canuckian.
I've followed his chart work for years.
When you open the MP3 have the pdfs open so you can follow along.

On Tuesday, April 26th Ross said the best target for the near-term upside in Gold was $1,580.
(It was trading at $1,504 at that time.)

I show the high for the June '11 Comex was $1,577.40.
I guess that's close enough for government work.;_TU

PS. Ross remains VERY bullish on Gold, and sees the top coming in less than two years at a price well above $2,000.

metalman
05-04-11, 03:22 PM
I had my take profit orders spread out between $48-$50 Most hit. Price didn't drop magically, it dropped because specs/investors/etc. who knew what they were doing took profit. When there was no one else bidding up the market it dropped, the suckers who didn't take profit lost.

when did you get into silver? 10 yrs ago?

never trade out?

how many head-fake silver corrections went down since 2001 that blew out the technical traders?

maybe others here sold, but who except ej had the balls to make a 'time to sell' public announcement of the fact on the internet? for the record? in his own name not some anon alias? rep at stake.

think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

good trades have many fathers, bad ones are orphans.

if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

my 2 cents. +=(

Kadriana
05-04-11, 03:30 PM
i wondered about that too. ej's argued since the fake-o stock cert days to not trade gold/silver... taxes & fees eat up your profits. how far does silver have to fall to justify the cost of getting out & in again? 30%? 40%? to $30 or $35?

This is what I'm wondering too. The reasons to buy silver long term are still there, right? If you get past all the conspiracies, we're still using more than digging up so I would think it has to go up until it doesn't make financial sense to put it in socks and deodorant. I'm not sure what that price would be though.

chr5648
05-04-11, 03:41 PM
when did you get into silver? 10 yrs ago?

never trade out?

how many head-fake silver corrections went down since 2001 that blew out the technical traders?

maybe others here sold, but who except ej had the balls to make a 'time to sell' public announcement of the fact on the internet? for the record? in his own name not some anon alias? rep at stake.

think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

good trades have many fathers, bad ones are orphans.

if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

my 2 cents. +=(

Whats wrong with trading in and out?

Of course he had balls here but, he has a product to sell, and he has done a good job. I don't want to take anything away but, it wasn't JUST ej and itulip members taking profit that caused the market to go down.

photoncounter
05-04-11, 03:42 PM
when did you get into silver? 10 yrs ago?

never trade out?

how many head-fake silver corrections went down since 2001 that blew out the technical traders?

maybe others here sold, but who except ej had the balls to make a 'time to sell' public announcement of the fact on the internet? for the record? in his own name not some anon alias? rep at stake.

think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

good trades have many fathers, bad ones are orphans.

if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

my 2 cents. +=(

+1.

Raz
05-04-11, 03:47 PM
... think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

good trades have many fathers, bad ones are orphans.

if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

my 2 cents. +=(

Personally, I have great respect for EJ. And much gratitude for his work.
The only poor call I've seen was taking on additional shorts in financial stocks back in March/April of 2009.
Otherwise his calls have been outstanding, to say the least.

Had he been wrong (by $10 or even $20) with his silver call it would take an egotistical asshole to "throw shit at him".
I'd be willing to bet BIG money that the would be dung-throwers never made 90%+ per year for a decade on any investment.

The only people who are never wrong are those who do nothing; and they have nothing to show for being "right".

LargoWinch
05-04-11, 04:04 PM
The only people who are never wrong are those who do nothing; and they have nothing to show for being "right".


Well said Raz, and the people who do nothing in our current environment of deep negative interest rates are real loser - no pun intended.

metalman
05-04-11, 05:12 PM
Personally, I have great respect for EJ. And much gratitude for his work.
The only poor call I've seen was taking on additional shorts in financial stocks back in March/April of 2009.
Otherwise his calls have been outstanding, to say the least.

Had he been wrong (by $10 or even $20) with his silver call it would take an egotistical asshole to "throw shit at him".
I'd be willing to bet BIG money that the would be dung-throwers never made 90%+ per year for a decade on any investment.

The only people who are never wrong are those who do nothing; and they have nothing to show for being "right".





rip van winkle investing...

http://1.bp.blogspot.com/_RwooCpYJAMo/TJJILje90UI/AAAAAAAAACY/fl8XAxaQPMY/s1600/rip-van-winkle-3.jpg

90%/yr for 10 yrs... big reward for snoozing. true buy & hold trade of the decade, not stocks... if you sold last fri.

goadam1
05-04-11, 05:59 PM
Be careful about cherry picking. I remember a call for 20% unemployment and a first bounce is over call that is still a bit early. Nice call on the silver. I sold out of silver on the day after the volume on slv was higher than the volume on spy.

jk
05-04-11, 06:36 PM
rip van winkle investing...

http://1.bp.blogspot.com/_RwooCpYJAMo/TJJILje90UI/AAAAAAAAACY/fl8XAxaQPMY/s1600/rip-van-winkle-3.jpg

90%/yr for 10 yrs... big reward for snoozing. true buy & hold trade of the decade, not stocks... if you sold last fri.

marc faber likes to talk about a hypothetical once-a-decade trader: he bought gold [abroad] in 1970, sold it dec31, 1979. he then moved all his funds to japanese equities, which he sold dec31, 1989. he then bought american high tech, which he sold dec31, 1999. and then he did something else.

i've always been attracted to that idea, and much of my attraction to itulip is that it follows that kind of model. find the big thing, the big move, and stay with it. jesse livermore said the hardest thing he had to do with investments was sit. "be right, and sit tight."

Raz
05-04-11, 06:42 PM
Be careful about cherry picking. I remember a call for 20% unemployment and a first bounce is over call that is still a bit early. Nice call on the silver. I sold out of silver on the day after the volume on slv was higher than the volume on spy.

I remember the "First Bounce is Over" (and you're correct - it was definitely early), but EJ has never claimed to be a market timer. (Though Metalman seems to be saying that, even if he times his trades over several years instead of months.) And he didn't call for shorting the stock market at that time, so no one lost any money unless they inferred that he did.

I don't remember the 20% unemployment call, but I would venture to guess
that if we had honest numbers it would be at least 19.0%+.

And though I did pick cotton as a youth, I've never picked a cherry.:(

Penguin
05-04-11, 08:29 PM
I know one thing, the powers that be have gotten serious about taking down silver.

Wow, another margin increase. It makes believable all the conspiracy theories about some serious power brokers being on the wrong end of that deal.

In all seriousness, if nothing else the last few years have taught me to what extent the powerful will go to remain so.

Will

bart
05-04-11, 08:48 PM
<table width="170" border="0" cellpadding="0" cellspacing="0"><colgroup><col style="width:48pt" width="64"> <col style="mso-width-source:userset;mso-width-alt:3783;width:80pt" width="106"> </colgroup><tbody><tr style="height:13.2pt" height="18"> <td colspan="2" style="height:13.2pt;mso-ignore:colspan; width:128pt" width="170" height="18">CME silver margin</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">4/26/11</td> <td>was 11745</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">4/27/11</td> <td align="right">12825</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">4/28/11</td> <td>
</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">4/29/11</td> <td align="right">14513</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">5/2/11</td> <td>MF Global 25397</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">5/3/11</td> <td align="right">16200</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">5/4/11</td> <td align="right">18900</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">5/5/11</td> <td>
</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">5/6/11</td> <td>
</td> </tr> <tr style="height:13.2pt" height="18"> <td class="xl23" style="height:13.2pt" align="right" height="18">5/9/11</td> <td align="right">21600</td> </tr> </tbody></table>

FRED
05-04-11, 09:16 PM
I know one thing, the powers that be have gotten serious about taking down silver.

Wow, another margin increase. It makes believable all the conspiracy theories about some serious power brokers being on the wrong end of that deal.

In all seriousness, if nothing else the last few years have taught me to what extent the powerful will go to remain so.

Will

Some day you all will undrestand the mechanism of iTulip's remarkable record.

c1ue
05-04-11, 09:30 PM
a single 'sell' call in 10 yrs... day before the mega-est silver price crash ever... & c1ue sez...

The sell call was great, but then again, EJ was not the only one to point out the bubbly nature of silver as of Friday, April 29, 2011.

Jesse noted this, and I myself dumped a 971 oz Ag bar on 4/22.

In fact, what I was noting was that a fall under $20 is far more actionable than a call that Ag was about to fall - especially given the 4th margin increase by CFTC as well as the unquestionably parabolic nature of the rise.

bart
05-04-11, 09:38 PM
Some day you all will understand the mechanism of iTulip's remarkable record.

"Any sufficiently advanced technology is indistinguishable from magic."
-- Arthur C. Clarke



(Haven't we always been at war with EastAsia? ;-) )

Spartacus
05-04-11, 10:03 PM
good move ... I sold some, wish I had sold more ; (


Based on EJ's call/comments, I sold roughly 2/3 of my silver holdings last week at spot silver between $USD44.5 and $USD48.5.

However, I think it is important to keep things in perspective and understand that silver may never reach $US20/oz again.

YTD as of May 4th/11 - 2:45pm:

Silver - Start $30.63 / Current $39.80: +29.9%

Gold - Start $1,405.5 / Current $1,516.6: +7.9%

jpetr48
05-04-11, 11:59 PM
I probably sold 25% of my holdings a little early in January 2011 but from that experience I learned not to touch my core holdings like CEF this go around even when CEF traded like silver on Monday. On a separate note, it is interesting how their SBT.UN silver bullion fund gained 3.42% today after 5% discount to NAV yesterday and has held support three days now. (I do not own)

I agree with all of the reasons to get out for trading purposes. As the long term fundamentals are strong for silver what/when are reasons to get back in? When gold/silver ratio gets back into the mid 40s?

EasternBelle
05-05-11, 03:00 AM
Catch a falling silver knife - Notes on EJ's April 29 silver sell call


http://www.itulip.com/forums/showthread.php/images/misc/quote_icon.png Originally Posted by metalman http://www.itulip.com/forums/showthread.php/images/buttons/viewpost-right.png (http://www.itulip.com/forums/showthread.php/showthread.php?p=196422#post196422)
when did you get into silver? 10 yrs ago?

never trade out?

how many head-fake silver corrections went down since 2001 that blew out the technical traders?

maybe others here sold, but who except ej had the balls to make a 'time to sell' public announcement of the fact on the internet? for the record? in his own name not some anon alias? rep at stake.

think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

good trades have many fathers, bad ones are orphans.

if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

my 2 cents. http://www.itulip.com/forums/showthread.php/images/smilies/frustrated.gif



+2

dropthatcash
05-05-11, 06:06 AM
http://en.wikipedia.org/wiki/Pump_and_dump

j4f2h0
05-05-11, 09:51 AM
I love the call, however i have too large a stake in physical silver to sell until the landscape really changes. I used EJ's call as a warning to wait for the weak hands that got in around 30 dollars to be taken out. I have been buying silver hand over fist since 2005, i told myself i would sell when a 10oz bar would pay my mortgage around 2000 a month, or the reasons i bought in were no longer prevalent. Thank you EJ much respect!

metalman
05-05-11, 09:56 AM
today: silver off 25% from top & 23% from ej's call.

Kadriana
05-05-11, 10:02 AM
My husband stopped at the coin shop yesterday to check things out and talk to the owner. A lot of people were in the store selling the silver and the shop owner was buying all he could $1 below spot for junk. Not sure about SE's or bullion. The shop owner thinks this is a temporary blip and it will start going back up soon. I guess we'll have to wait and see. I'm relatively young, at least for this board I believe, so I probably won't be selling our small amount of physical any time soon. I don't have that large of a % of my worth in silver so it just seems like too much work to sell and then try and buy later on. I am glad for the couple of puts we have which makes this dip a little less upsetting.

pianodoctor
05-05-11, 10:09 AM
EJ wrote that if he were to invest in silver again, it would not be 1921 silver dollars, though he enjoyed owning them. Is that just because paper silver investments have become available and are preferable, or does he have another physical form in mind?

FRED wrote: "Some day you all will undrestand the mechanism of iTulip's remarkable record" Ooooo- such a tease! :-)

jpetr48
05-05-11, 10:33 AM
The shop owner thinks this is a temporary blip and it will start going back up soon. I guess we'll have to wait and see.

Most of the public jumped on the CNBC bandwagon or listened to some newsletter telling them to buy silver. These are the people that are being shaken out of the market- it is a herd mentality.

In all seriousness, the more bad news about silver, like "silver plunges" in headlines the lower the public opinion. This will be one of three indicators to get back into silver if you are underweight. On this site you have diligent investors who don't react rather follow long term trends as EJ. The Gold/silver ratio definitely favors gold as a good next move. Consider GTU over GLD if you can.

metalman
05-05-11, 11:15 AM
The sell call was great, but then again, EJ was not the only one to point out the bubbly nature of silver as of Friday, April 29, 2011.

Jesse noted this, and I myself dumped a 971 oz Ag bar on 4/22.

In fact, what I was noting was that a fall under $20 is far more actionable than a call that Ag was about to fall - especially given the 4th margin increase by CFTC as well as the unquestionably parabolic nature of the rise.

bs... a single & definite 'time to sell now' & 'the price will crash' from ej after 10 yrs of silence = jesse's unactionable & repeated warnings that the price got too high too fast & we'll see a correction some day but don't sell, it'll be a temporary setback? sheesh.

this is like ej's dec. 2007 'time to short stocks... market's gonna fall 40% in 2008' but compressed into 2 weeks. the call let you dodge a 25% loss... if you were listening. if he gets it right in the other direction, the bottom ~20, that's a 2 fer.

bart
05-05-11, 11:23 AM
bs... a single & definite 'time to sell now' & 'the price will crash' from ej after 10 yrs of silence = jesse's unactionable & repeated warnings that the price got too high too fast & we'll see a correction some day but don't sell, it'll be a temporary setback? sheesh.

this is like ej's dec. 2007 'time to short stocks... market's gonna fall 40% in 2008' but compressed into 2 weeks. the call let you dodge a 25% loss... if you were listening. if he gets it right in the other direction, the bottom ~20, that's a 2 fer.


EJ and Jesse comparisons are apples and oranges. EJ is not a short term trader.

c1ue
05-05-11, 11:42 AM
bs... a single & definite 'time to sell now' & 'the price will crash' from ej after 10 yrs of silence = jesse's unactionable & repeated warnings that the price got too high too fast & we'll see a correction some day but don't sell, it'll be a temporary setback? sheesh.

this is like ej's dec. 2007 'time to short stocks... market's gonna fall 40% in 2008' but compressed into 2 weeks. the call let you dodge a 25% loss... if you were listening. if he gets it right in the other direction, the bottom ~20, that's a 2 fer.

Whatever.

Besides my own sell, I know of 3 other people - who don't even own physical Ag - who either put money into an investment account to short Ag via ZSL or directly shorted Ag because of the bubbly nature of the rise.

As someone who is not a iTulip Select member and had no idea on the sell call, my own action in selling Ag - albeit slightly early as is my historical pattern - itself is an indication that there were clear reasons for thinking Ag was due for a fall.

This doesn't detract from EJ's call, but to say it was unique is wrong.

As for Jesse - he has been a consistent 'pro' PM person for the entire year plus I've been watching. For him to say that silver is looking bubbly is a significant change in basic position, and thus is actionable. It would be like Alex Jones saying the OBL story line by the US government is believable: a significant departure from norm.

You also fail to understand that my commentary on EJ's projection of Ag's fall is in fact a compliment.

EJ isn't perfect - there have been failed calls as well as imprecision in the details of even correct calls.

This is in no way a criticism; there are so many factors behind any attempt to give precise timing and price level details that any success at all is far above noise level.

But let's be honest: while I appreciate and respect EJ's capabilities and record, his call to sell in 2007 was right as much as his failure to buy in March of 2008 was wrong.

He isn't perfect - no one is - and attacking anyone who merely doesn't think EJ is perfect is hardly conducive to rationale discourse.

metalman
05-05-11, 12:34 PM
But let's be honest: while I appreciate and respect EJ's capabilities and record, his call to sell in 2007 was right as much as his failure to buy in March of 2008 was wrong.


wrong. here's the history for you newcomers.

ej only tells us trades he makes for himself.

ej's been out of stocks since the real (adjusted for inflation) top in mar 2000 (http://www.itulip.com/urgentmessage.htm#Bear).

http://www.itulip.com/images2/RealDJIAFeb2011Noteswtmk.png

he put profits from stock sales into long tbonds & gold... the portfolio outperformed everything since (http://www.itulip.com/forums/showthread.php/17051-iTulip-Portfolio-Strategy-%C2%96-Section-1-Part-I-The-Past-Ten-Years-Eric-Janszen).

he didn't get back into stocks in 2008 cause he didn't get out in 2007. he shorted stocks end of 2007... the title 'time at last to short the market (http://www.itulip.com/forums/showthread.php/2774-Time-at-last-to-short-the-market)'

he sold silver fri after holding 10 yrs... the title 'time to sell'

get it?

c1ue
05-05-11, 01:14 PM
wrong. here's the history for you newcomers.

You're still glossing over the fact that EJ did not call the year long rally after the low on March 2009 - something which I believe EJ has said was a missed opportunity.

Again, this doesn't detract from the body of excellence which already exists, but equally detracts from the image of infallibility you are portraying.

Equally EJ has clearly stated that he did not believe the US government would blow another bubble after the collapse of the Y2K Internet stock bubble, which wound up being wrong as evidenced by the real estate bubble of 2003-2006.

In both cases, my respect for EJ and grown because of the willingness to admit fallibility and to examine the reasons for the missed opportunity.

Boosterism in contrast is of far less benefit.

cobben
05-05-11, 02:04 PM
EJ has made a great call short-term at least, time will tell about the long term.

Now the bottom might be in, just exactly about now, in this correction, if silver holds above 35.25 (futures), and what if it makes new highs after this?

I found this interesting:

Ben Davies - Silver Criticality, Why Silver Might Crash?
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/2_Ben_Davies_-_Silver_Criticality%2C_Why_Silver_Might_Crash.html

Perspective in markets is everything. The rate of acceleration is not consistent with the precursory signatures for a crash to end this market. It is, though, a mini-version of this. The big parabola is yet to come.

charliebrown
05-05-11, 02:12 PM
First I want to thank EJ on announcing his thoughts.

I had been selling paper silver, once it broke $45.00. However I was just trimming my over-extended position each week.
On Monday, I sold all of my sterling silver to Apmex for roughly 38.00 (They pay 80% of spot for sterling)
I also sold a big chunk of my over-allocation of silver I sold pslv at 21.xx.

Today I sold 1/3 of my hedged position (SLV with May 35 call written on it). I'm not selling anymore.
If it goes to 20, I'm riding it the rest of the way down. 20 is about my average cost. My allocation is now under
5%. Now if we have a bounce here, I'm would be willing to sell more into it. If we stay over $35.00 before
May expiration, I will be called out, and I will have an opportunity to reduce my postion again.
Buying my May 35s today, cost me $2.00 in premium. But I won't be really surprised if SLV dosen't go all the way
to 27 or so.

FRED
05-05-11, 03:20 PM
When EJ was doing his research in early April before making his final decision on April 29, one of the sources he referenced was eBay. Here is a screen shot of a 1921 Morgan dollar for sale on eBay on April 20.


http://www.itulip.com/images2/1921silverdollarbeforesilvercrash.png

Here is a screen shot of a similar coin for sale on eBay, in better condition, today.


http://www.itulip.com/images2/1921silverdollaraftersilvercrash.png

Meanwhile, the dealer buy price has fallen from 37 times faces to 20 times face.

LargoWinch
05-05-11, 03:28 PM
SLV dosen't go all the way
to 27 or so.

SLV appears that it will hit EJ's $20 forecast ... in two weeks!

http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_6.gif

This thing has no bottom now and same for oil.

At some point it will be a buy and I will buy back. We are all short-term speculators afterall due to ZIRP right?

bart
05-05-11, 03:38 PM
Random chart thoughts... ;-)

http://www.nowandfutures.com/download/d4/silver_and_ratio1972_1976.png

charliebrown
05-05-11, 03:51 PM
ZIRP exactly. if you're in mm, t's etc, you can watch your money get nicked on a daily basis due to rising costs.

If mm were paying 4-5%, I probably would have liquidated the entire postion, and I would also have pared down my oil holdings. I just threw 27 out their because its roughly the 200MDA. Looking at a multi-year chart, and long average 20 looks about right. However, things generally do not go straight up and straight down forever. Hoping for a reversal here so I get called out.

charliebrown
05-05-11, 03:58 PM
by the way for us short term speculators, if you have any slv, pslv etc, you may want to consider a move to CEF.
people are scared out of it because it has silver??? It is down nearly as much as SLV, and PSLV. yet it is only 54% silver.
So you would be selling silver to buy gold at a discount. If you have paper gold, you could sell that to keep your gold/silver
ratio the same.

c1ue
05-05-11, 04:07 PM
Random chart thoughts... ;-)

A reprise of the '70s seems to imply a short term bottom of 33, and a longer term bottom (1 year) of 29.

It also seems to imply that 49.5 is the peak for the next 3 years or more...

bart
05-05-11, 04:25 PM
A reprise of the '70s seems to imply a short term bottom of 33, and a longer term bottom (1 year) of 29.

It also seems to imply that 49.5 is the peak for the next 3 years or more...


Thoughts like that have crossed my mind, but "internet and new millennium years" are shorter... and I continue to dither about my large economy sized PM shorts.

Thought for the day:
http://www.nowandfutures.com/grins/eat_short.mp3 ;-)

metalman
05-05-11, 06:13 PM
You're still glossing over the fact that EJ did not call the year long rally after the low on March 2009 - something which I believe EJ has said was a missed opportunity.

Again, this doesn't detract from the body of excellence which already exists, but equally detracts from the image of infallibility you are portraying.

Equally EJ has clearly stated that he did not believe the US government would blow another bubble after the collapse of the Y2K Internet stock bubble, which wound up being wrong as evidenced by the real estate bubble of 2003-2006.

In both cases, my respect for EJ and grown because of the willingness to admit fallibility and to examine the reasons for the missed opportunity.

Boosterism in contrast is of far less benefit.

ej made an uncharacteristically harsh comment on apr 21 in ask ej in reaction to members who were arguing with him... 'Buy silver at $50 and enjoy your pump-and-dump asshanding by JP Morgan'

http://www.ratemymotivational.com/motivationals/13775-PREPARE-To_have_your_ass_handed_to_you.jpg

mesyn191
05-05-11, 06:17 PM
You're still glossing over the fact that EJ did not call the year long rally after the low on March 2009 - something which I believe EJ has said was a missed opportunity.

Again, this doesn't detract from the body of excellence which already exists, but equally detracts from the image of infallibility you are portraying.

Equally EJ has clearly stated that he did not believe the US government would blow another bubble after the collapse of the Y2K Internet stock bubble, which wound up being wrong as evidenced by the real estate bubble of 2003-2006.

In both cases, my respect for EJ and grown because of the willingness to admit fallibility and to examine the reasons for the missed opportunity.

Boosterism in contrast is of far less benefit.
QFT.

EJ does a really good job and is one of the very few people who actually seem to have a pretty good idea of what is going on and is willing to tell people what he is doing and why. He isn't perfect though and it is unreasonable to expect him to be.

mesyn191
05-05-11, 06:22 PM
http://www.nowandfutures.com/download/d4/silver_and_ratio1972_1976.png

What is your take away from this chart? That the old gold/silver price ratio that gets quoted from time to time will hold up in the future?

metalman
05-05-11, 06:40 PM
today: silver off 25% from top & 23% from ej's call.

today: silver off 31% from top & 29% from ej's call.

Kadriana
05-05-11, 08:33 PM
There is a video mentioning EJ on Max Keiser's website.

http://maxkeiser.com/2011/05/05/silver-will-go-up-when/#comments

c1ue
05-05-11, 09:03 PM
ej made an uncharacteristically harsh comment on apr 21 in ask ej in reaction to members who were arguing with him... 'Buy silver at $50 and enjoy your pump-and-dump asshanding by JP Morgan'

That may be, but you'll note that I was not one of them.

I haven't been on this silver bandwagon, nor have I been dissing the silver run.

FrankL
05-06-11, 03:18 AM
When EJ was doing his research in early April before making his final decision on April 29, one of the sources he referenced was eBay. Here is a screen shot of a 1921 Morgan dollar for sale on eBay on April 20.


http://www.itulip.com/images2/1921silverdollarbeforesilvercrash.png

Here is a screen shot of a similar coin for sale on eBay, in better condition, today.


http://www.itulip.com/images2/1921silverdollaraftersilvercrash.png

Meanwhile, the dealer buy price has fallen from 37 times faces to 20 times face.

if you want to use Ebay as support for one's arguments, be sure to at least use the settling price. Most price action happens in the last 30 seconds of trading on Ebay...

flintlock
05-06-11, 07:26 AM
if you want to use Ebay as support for one's arguments, be sure to at least use the settling price. Most price action happens in the last 30 seconds of trading on Ebay...

I was going to say the same thing. 3 minutes to go in Ebay terms is an eternity!;_TU

flintlock
05-06-11, 07:27 AM
What happens to silver after the "asshanding"?

jiimbergin
05-06-11, 07:40 AM
What happens to silver after the "asshanding"?

Well, Bart says he sees it eventually at a minimum of 130, and even EJ says 100-180. If it gets to 20 as EJ says then buying at 20 will allow you to sell at 5X while gold going from 1500 to 5000 only sees a 3.33X, so for the more brave of us we should back up the truck at 20, or even 25:(

Kadriana
05-06-11, 08:25 AM
Well, Bart says he sees it eventually at a minimum of 130, and even EJ says 100-180. If it gets to 20 as EJ says then buying at 20 will allow you to sell at 5X while gold going from 1500 to 5000 only sees a 3.33X, so for the more brave of us we should back up the truck at 20, or even 25:(

The only problem is last time silver made it's lows in 2008, it was hard to get a hold of physical. There are a lot of people that are waiting to back up the truck. If people see the slightest hint of a shortage, I think they're all going to run for it. Apmex's SE's supply is already looking a bit sad.

kduffey
05-06-11, 09:13 AM
I will probably buy some at $25 and alot at $20. Look forward to further discussion with you fine folks.

Jay
05-06-11, 09:34 AM
The only problem is last time silver made it's lows in 2008, it was hard to get a hold of physical. There are a lot of people that are waiting to back up the truck. If people see the slightest hint of a shortage, I think they're all going to run for it. Apmex's SE's supply is already looking a bit sad.

You can buy a proxy instead and then sell it once you can get hold of physical at the price you want.

Jay
05-06-11, 09:37 AM
by the way for us short term speculators, if you have any slv, pslv etc, you may want to consider a move to CEF.
people are scared out of it because it has silver??? It is down nearly as much as SLV, and PSLV. yet it is only 54% silver.
So you would be selling silver to buy gold at a discount. If you have paper gold, you could sell that to keep your gold/silver
ratio the same.

I sold my CEF position in my IRA and bought GTU the day after EJ's call. I will buy CEF again once silver hits 25. If it doesn't I will sit tight.

gnk
05-06-11, 10:15 AM
Doesn't anyone use Bullionvault here? I started selling my silver position a few weeks ago. I first started selling my SLV holdings, and then the silver in my Bullionvault account.

Point.

Click.

Done.

Unlike my SLV holdings, which I could only sell during US market hours - with Bullionvault, it's 24 hrs during the weekdays - beginning late Sunday night. I have nothing to gain from mentioning Bullionvault here - but I have to hand it to them. It's a great service.

By the way, unlike EJ, I scaled out of my position. I started early, but averaged my sell price up. EJ's call was confirmation of my opinion, but I had already started selling at $39.00... it's tough picking a top - and hats off to EJ for getting darn close - really darn close. But anyone that follows markets should know that a straight line up is not a good thing.

FRED
05-06-11, 11:14 AM
Doesn't anyone use Bullionvault here? I started selling my silver position a few weeks ago. I first started selling my SLV holdings, and then the silver in my Bullionvault account.

Point.

Click.

Done.

Unlike my SLV holdings, which I could only sell during US market hours - with Bullionvault, it's 24 hrs during the weekdays - beginning late Sunday night. I have nothing to gain from mentioning Bullionvault here - but I have to hand it to them. It's a great service.

By the way, unlike EJ, I scaled out of my position. I started early, but averaged my sell price up. EJ's call was confirmation of my opinion, but I had already started selling at $39.00... it's tough picking a top - and hats off to EJ for getting darn close - really darn close. But anyone that follows markets should know that a straight line up is not a good thing.

http://itulip.com/wp-content/uploads/2007/05/bullionvault.gif (http://www.bullionvault.com/from/itulip) is the only service we advertise, since 2006.

llanlad2
05-06-11, 02:07 PM
Doesn't anyone use Bullionvault here? I started selling my silver position a few weeks ago. I first started selling my SLV holdings, and then the silver in my Bullionvault account.

Point.

Click.

Done.

Unlike my SLV holdings, which I could only sell during US market hours - with Bullionvault, it's 24 hrs during the weekdays - beginning late Sunday night. I have nothing to gain from mentioning Bullionvault here - but I have to hand it to them. It's a great service.

By the way, unlike EJ, I scaled out of my position. I started early, but averaged my sell price up. EJ's call was confirmation of my opinion, but I had already started selling at $39.00... it's tough picking a top - and hats off to EJ for getting darn close - really darn close. But anyone that follows markets should know that a straight line up is not a good thing.

Totally agree. I did have and sold all my silver from Bullionvault ( it's the only silver I had). Like you I started selling mine early in the run up in the 40s, a large chunk after EJs initial post on silver and the rest of it on the Friday night of the call at 11.40pm out of hours of normal trading and so managed to avoid the big drop on the Monday. Dead simple. I am now glad I never went the "actual physical in hand" route of ownership.

As an aside I would like to thank EJ for the clarity of the call and the explanations behind it. It made my decision to get out completely much easier especially as a number of other "smart" investors on the site had seemingly come to the same conclusion in the discussion that followed. Much appreciated.

aaron
05-06-11, 02:25 PM
I wish I would have pulled the trigger and sold. :(

Which is why I bought physical in the first place --> I make incredibly bad choices like selling low and buying high. It takes a lot of effort to sell physical silver as opposed to paper. Plus the coins are pretty.

Is silver dead forever?

rogermexico
05-06-11, 02:33 PM
Bullionvault is secure, allocated storage and by far the best single way to own gold or silver if you want to actually own the metal. As you say, it is highly liquid and has 24 hour accesss. I sold by BV silver at a price within mere pennies of the all time high - at about 1 am central time.

It is not the most tax-advantaged form, however.

I also did not mention BV in my prior post because I was addressing physical metal held as coins and how to hedge them, and because when you report any gains from trading in BV, they will be taxed as ordinary income if held for less than one year (as much as 35%), and collectible rate of 28% if held more than one year. The futures rate of 23%, for assets of any duration beats both rates.

So in summary, here is my strategy for minimizing the tax hit on gold:

Long term holdings in GTU or PHYS - file form 8621 and max cap gains rate of 15% if you hold more than one year. (vs 28% for BV or coins)

Short term trades - use futures contracts and only pay 23% tax (vs options or trading ETFs where you pay up to 35%)

MY BV holdings serve several purposes: Political and country diversification and hedging against the very unlikely risk of default or fraud in canadian trusts. As the tax rate is higher, I try to keep just some of my gold this way. If gold is re-monetized, I might sell all my paper gold but keep some coins and BV as a residual political insurance.

EJ
05-06-11, 02:46 PM
It's been a week since April 29 when I announced to iTulip subscribers that on that day I'd sold at $48.50 all of the silver that I purchased in 2001 for $4.25.

I continue to expect silver prices to decline to $20 as shown in the chart that I posted for subscribers on May 1, the day before the crash began, and don't expect silver prices to recover to the previous peak for several years.

The collapse was more immediate and rapid than I expected. I thought we'd see $35 in a few weeks, not in one week. At $34.80 as I write, silver prices have collapsed 30% from the $49.80 peak on April 25 and 28% since I sold last Friday.

Congratulations to all here who also dodged the silver bullet.

Surprisingly, I continue to be asked if I think this is a silver price correction or a silver bubble collapse. You have to be in denial to not see that a 30% price decline in a week is a bubble collapse.

To those who got caught in the trap, you have all of my sympathy. I've seen this movie before, in tech stocks in the late 1990s when I started iTulip.com and in housing from 2002 to 2006. It's all too easy to get caught up in the arguments to justify a bubble when it's rising and we're all getting rich.

The moral of the story is that bubbles can occur in precious metals as in stocks and houses. Some day we may see a bubble in gold. Let's keep our wits about us and avoid getting caught up in that if it happens again as it did in the late 1970s.

lektrode
05-06-11, 04:06 PM
ej made an uncharacteristically harsh comment on apr 21 in ask ej in reaction to members who were arguing with him... 'Buy silver at $50 and enjoy your pump-and-dump asshanding by JP Morgan'



which was - precisely - for me and a bunch of others, presumably - The Most Memorable Phrase in recent discussions on the topic and tho i was planning on selling upon return from my mainland excursion to pay bills, that post _ended_ any reservations that lingered, as to whether to drawdown cash or liquidate AG - and i dumped on the 22nd.

i dont even pretend to know much about all this stuff, but i do know enuf to know the
bottom line: he who discounts/ignores The Boss' empirical evidence and observations displayed here is nuts

lektrode
05-06-11, 04:27 PM
... I've seen this movie before, in tech stocks in the late 1990s when I started iTulip.com and in housing from 2002 to 2006.

one things for SURE: your movie reviews are a lot more interesting than ebert's




It's all too easy to get caught up in the arguments to justify a bubble when it's rising and we're all getting rich.

The moral of the story is that bubbles can occur in precious metals as in stocks and houses. Some day we may see a bubble in gold. Let's keep our wits about us and avoid getting caught up in that if it happens again as it did in the late 1970s.

altho i dont think it's going to be a good news event...

how about a TOAST TO THE COMING BUBBLE IN GOLD

and may we all be on _that_ train before it leaves the station...

lektrode
05-06-11, 04:30 PM
What an incredibly timed call! Well done.

I look forward to EJ's future thoughts on where to allocate capital preferably for the little guy who doesn't have millions to invest.

+1, and raise +1

lektrode
05-06-11, 04:39 PM
I don't remember the 20% unemployment call, but I would venture to guess
that if we had honest numbers it would be at least 19.0%+.

And though I did pick cotton as a youth, I've never picked a cherry.:(

grew up in the north, so the only cotton i picked was what was coverin/hiding the cherries... ;)

and funny how in the span of a couple of paragraphs we see such conflicting data?

http://online.wsj.com/article/SB10001424052748703992704576306843829385166.html
Private companies ramped up their hiring in April to the fastest pace in five years, helping to allay fears that a sputtering U.S. recovery would hamper job growth.
Nonfarm payrolls rose by 244,000 last month, as the private sector posted the strongest employment gain in five years, the Labor Department said Friday in its survey of employers. Data for the previous months was revised up to show an increase of 221,000 jobs in March and 235,000 jobs in February.
However, the unemployment rate -- which is obtained from a separate household survey -- rose to 9.0% last month from 8.8%

lektrode
05-06-11, 04:56 PM
EJ wrote that if he were to invest in silver again, it would not be 1921 silver dollars, though he enjoyed owning them. Is that just because paper silver investments have become available and are preferable, or does he have another physical form in mind?

good question - any one for a show of hands/comments on where and how they will go back in to to silver?


[QUOTE=pianodoctor;196503]
FRED wrote: "Some day you all will undrestand the mechanism of iTulip's remarkable record" Ooooo- such a tease! :-)

methinks "the mechanism" is all of our collective observations and the consensus that develops around EJ's points of view (after all the buts/rebuts and arguing is done ;)

lektrode
05-06-11, 05:02 PM
by the way for us short term speculators, if you have any slv, pslv etc, you may want to consider a move to CEF.
people are scared out of it because it has silver??? It is down nearly as much as SLV, and PSLV. yet it is only 54% silver.
So you would be selling silver to buy gold at a discount. If you have paper gold, you could sell that to keep your gold/silver
ratio the same.

interesting movement today:

http://app.quotemedia.com/quotetools/getChart?chscale=5d&webmasterId=91022&snap=true&symbol=CEF&chtype=AreaChart&chwid=284&chhig=150&chfill=ee0066CC&chfill2=110066CC&chln=0066CC&chmrg=0&chfrmon=false&chton=some

lektrode
05-06-11, 05:05 PM
Thoughts like that have crossed my mind, but "internet and new millennium years" are shorter... and I continue to dither about my large economy sized PM shorts.

Thought for the day:
http://www.nowandfutures.com/grins/eat_short.mp3 ;-)

eye take this to mean you disagree with Mr c1ue's implication, Mr Bart?

pianodoctor
05-06-11, 09:31 PM
Thank you, thank you, thank you for the GREAT call. I missed the trade on Friday, but got out Monday at about $43-44. A latecomer to iTulip, I bought in (via CEF) when it was about $15. Now I'm "all gold".

cjppjc
05-06-11, 09:49 PM
An incredible call. Especially considering there aren't too many "do this now" calls from EJ. I tip my hat to you Mr. Janszen. This will live for as long as the Man of Metal breathes.

LargoWinch
05-06-11, 09:55 PM
An incredible call. Especially considering there aren't too many "do this now" calls from EJ. I tip my hat to you Mr. Janszen. This will live for as long as the Man of Metal breathes.

That is Friday night funny sir! Well played!

tombat1913
05-07-11, 01:09 AM
It's him that's trying to make it worth our while as paying subscribers, not the other way around.

tombat1913
05-07-11, 01:30 AM
I am totally glad I went physical, I was able to sell my silver on Saturday at over $47/oz to Northwest Territorial Mint.

touchring
05-07-11, 10:36 AM
I am totally glad I went physical, I was able ro sell my silver on Saturday at over $47/oz to Northwest Territorial Mint.


Sorry, I'm a bit confused. Do you mean SLV price is not real?

pianodoctor
05-07-11, 11:15 AM
I just noticed someone mentioned they hold silver via Bullion Vault. Either that's new or I somehow didn't notice when I looked at Bullion Vault quite a while back. So there is a 'third way'...... and that would be my guess as to EJs preference.

jpatter666
05-07-11, 07:09 PM
I just noticed someone mentioned they hold silver via Bullion Vault. Either that's new or I somehow didn't notice when I looked at Bullion Vault quite a while back. So there is a 'third way'...... and that would be my guess as to EJs preference.

It's not new, but definitely in the last six months or so I think. So kinda new... ;-)

goadam1
05-07-11, 09:10 PM
I don't think it was a coincidence that there was a major drop in all commodities (silver being the bubbliest) right after the killing of bin laden. The risk premium most of been between 3 and 8 percent to the collective mindset of the market.

tastymannatees
05-08-11, 12:02 AM
bs... a single & definite 'time to sell now' & 'the price will crash' from ej after 10 yrs of silence = jesse's unactionable & repeated warnings that the price got too high too fast & we'll see a correction some day but don't sell, it'll be a temporary setback? sheesh.

this is like ej's dec. 2007 'time to short stocks... market's gonna fall 40% in 2008' but compressed into 2 weeks. the call let you dodge a 25% loss... if you were listening. if he gets it right in the other direction, the bottom ~20, that's a 2 fer.

Mish's Global Economic Trend Analysis called it on April 27 (http://globaleconomicanalysis.blogspot.com/2011/04/taking-silver-profits-swapping-silver.html)

I think that one thing gives me pause in anyone's forecasts is that past history is no guarantee of future performance.

When the Hunt brothers tried to corner the market there was plenty supply available and price was high enough that redemptions glutted the market as well as being cut off at the knees by the FED which killed the silver market momentum and brought the price down.

I would like to note also the recent smaller multiple crashes in all commodities as coincidental to the recent silver margin price hikes might also not be comparable to the Hunt episode or past history.

Currently silver supplies are tight, no new mines etc. and rather than rely on a past pricing model it seems to me a better template would be a peak oil model with future dwindling supply combined with increasing use would be more appropriate. Maybe the same for rare earths as it seems to meet the peak oil preconditions.

My thinking going forward that the recent exchange/government response to the parabolic rise in silver might be an indicator as to the future government response to the evil speculators with rising prices in oil, gold and other commodities. Perhaps only allowing liquidation orders and no buy orders? I believe this is what happened to the Hunt Brothers.

That would certainly dampen any market...

tombat1913
05-08-11, 01:54 AM
No, I mean the stock market is closed on Saturday, so owning physical silver allowed me to sell off my holdings on the weekend before silver started tanking on Monday.

metalman
05-08-11, 10:23 AM
No, I mean the stock market is closed on Saturday, so owning physical silver allowed me to sell off my holdings on the weekend before silver started tanking on Monday.

smart... i was visiting family over the weekend & didn't see the article until mon. dern.

Jill Nephew
05-09-11, 11:36 AM
Mish's Global Economic Trend Analysis called it on April 27 (http://globaleconomicanalysis.blogspot.com/2011/04/taking-silver-profits-swapping-silver.html)

Currently silver supplies are tight, no new mines etc. and rather than rely on a past pricing model it seems to me a better template would be a peak oil model with future dwindling supply combined with increasing use would be more appropriate. Maybe the same for rare earths as it seems to meet the peak oil preconditions.

I appreciate this perspective, i have heard it from my silver 'true believer' friends about the no new mines, silver is a by-product.

I think the argument comes down to what are the alternatives? It would seem as though if there is a silver shortage it would drive more materials research into competing alloys. Has this avenue been exhausted (meaning that those doing research in the area have effectively given up or discovered a fundamental limiting factor)? Is this a closed field in physics (alloys to match silver's reflectivity and conductivity?) I guess i have the same question for the rare-earth metals. Is there a price where all of a sudden it gets profitable to manufacture alloys instead of dig it out of the ground? It does seem as though expert weigh-in from a well educated material scientist/condensed matter physicists could shed a lot of insight as the arguments seem to hinge on this.

My only insight is my condensed matter physics professor back in the 90's who realized/stumbled on (totally accidental) the fact that doped polymers could conduct as well emit light. This was not theoretically predicted (i don't know if it has even been explained yet why they can do this). If you have a whole bunch of people researching silver alternatives and rare earth alternatives, might there be similar breakthroughs?

EJ
05-09-11, 12:00 PM
Mish's Global Economic Trend Analysis called it on April 27 (http://globaleconomicanalysis.blogspot.com/2011/04/taking-silver-profits-swapping-silver.html)

I think that one thing gives me pause in anyone's forecasts is that past history is no guarantee of future performance.

When the Hunt brothers tried to corner the market there was plenty supply available and price was high enough that redemptions glutted the market as well as being cut off at the knees by the FED which killed the silver market momentum and brought the price down.

I would like to note also the recent smaller multiple crashes in all commodities as coincidental to the recent silver margin price hikes might also not be comparable to the Hunt episode or past history.

I don't think the recent silver bubble was analogous to the Hunt Bros. episode.


Currently silver supplies are tight, no new mines etc. and rather than rely on a past pricing model it seems to me a better template would be a peak oil model with future dwindling supply combined with increasing use would be more appropriate. Maybe the same for rare earths as it seems to meet the peak oil preconditions.

In the long run, over the next decade, yes. But this bubble in silver overwhelmed the Peak Cheap Oil Cycle influence on the silver prices.


My thinking going forward that the recent exchange/government response to the parabolic rise in silver might be an indicator as to the future government response to the evil speculators with rising prices in oil, gold and other commodities. Perhaps only allowing liquidation orders and no buy orders? I believe this is what happened to the Hunt Brothers.

That would certainly dampen any market...

This is a persistent concern of mine and one I've raised in response to questions I've received since 2001 about gold confiscation. The modern way of achieving the same goal as confiscation is via taxation. When giving the keynote at the Hard Assets conference in Las Vegas 2007 (http://www.itulip.com/forums/showthread.php/1992-Janszen-s-Hard-Assets-Las-Vegas-Conference-2007-Keynote-Presentation), I noted that mining companies needed to lobby Congress to re-classify gold as a financial asset subject to 15% capital gains taxes rather than as a collectible subject to a 28% tax rate, and think about hiring the same lobbyists as the residential real estate industry that was able to pump up housing prices through a rash of tax subsidies. Conversely, these same lobbies can be used to fight the Feds if they decide that gold prices are too high, creating a special tax class for gold as well as export taxes to restrict capital flight in the event such higher special taxes are passed. I've been pinging my contacts over the years for signs of any movement in this direction and so far I don't see anything. In fact, it appears that a higher gold price suits the Feds should the gold window need to be reopened to halt a run on the dollar.

thriftyandboringinohio
05-09-11, 12:57 PM
....it appears that a higher gold price suits the Feds should the gold window need to be reopened to halt a run on the dollar.

That may be the heart of the matter, and the single best reason to hang on to that physical gold.

grapejelly
05-09-11, 01:33 PM
silver was and is NOT a bubble. It is simply a commodity (with some monetary characteristic) that has "gone parabolic" as many commodities do occasionally...and this is a temporary phenomenon. I don't believe silver is toast for all that long...this is NOTHING like a bubble (yet).

EJ
05-09-11, 02:01 PM
silver was and is NOT a bubble. It is simply a commodity (with some monetary characteristic) that has "gone parabolic" as many commodities do occasionally...and this is a temporary phenomenon. I don't believe silver is toast for all that long...this is NOTHING like a bubble (yet).

I'm using the term "bubble" as the mainstream media does to mean a market driven by price and euphoria, having given up on my more refined definition ever gaining currency. To me a true asset bubble requires government to get it going and keep it going, as in the case of the telecom and housing bubbles. Governments hate commodity bubbles and don't tolerate them for long, killing them off early with margin requirement hikes. Before the FIRE Economy era that used to also be true of property bubbles. So perhaps mini-bubble is a better term. Below is an explanation and chart that divides the silver market into five camps as discussed here (http://www.itulip.com/forums/showthread.php/19213-Silver-Pump-and-dump-crash-week-two).


What I'm looking for is that moment in a decade or so when we're at a turning point; anxiety among all market participants peaks, and the market divides into two camps: those who fear losing out on additional gains and those who fear losses in a crash. There are always insiders in a bubble that know when to cut and run. After the initial crash, the market becomes more complicated again as market participants differentiate from two into several camps and the weightings change. We'll see that in the silver market this coming week.

The figment of a $34 fair value for silver complicates the picture for now. Maybe once enough buyers are sucked in to bring prices back up to, say, $40, the rug will get pulled out from under the believers and the chartists who are tracking the popular chart. That's one possible game to be played this week, meaning that a rise from $35 to $39 may be another trading opportunity like $33 to $36. Alternatively the market simply keeps falling.

To help me understand what to look for, I've created the following chart. We go at this armed with our understanding of the dynamics of debt deflation, Peak Cheap Oil, and the ongoing decommissioning of the US dollar as these relate to eras of boom and bust driven by these processes and events as they are reflected in the silver price.


http://www.itulip.com/images2/silverpostcrashMay82011.png

The chart shows five different interpretations of a silver "fair price" tomorrow. The dreamers who believed in $50 gold and beyond, legion only ten days ago, are all but gone. The straight up red line, while absurd on the face of it, was their projection of silver prices until recently.

One the other end of the spectrum are the pessimists who never owned any silver and never will at any price. They are extrapolating the silver price rate of rise from 2003 when silver stopped bumping around $5 as it had for two years after I bought it and started a steady albeit modest rise, and nearly coincides with the early stages of the dollar's decade long decline. The trend ends in 2006 with the bursting of the housing bubble. If you think silver is an industrial metal, the demand for which will decline once the post recession reflation money runs out, and that the dollar will stage a recovery as a result rather than tanking further in response to rising sovereign default risk, you are a silver pessimist and $14 is your number.

Next up the ladder are the realists who believe that silver is an industrial metal but that despite unfavorable economic conditions and only modest demand, more dollars will be needed to buy it as the US economy weakens. They think $21 is a fair extrapolation of the rate of price increases since the dollar started to weaken with the beginning of the end of the FIRE economy in 2001, plus the wars, plus Peak Cheap Oil, net of financial crisis and reflation.

Next are the optimists who think the rate of price growth since the reflation began in March 2009 is the "new normal" growth rate. This includes nearly everyone in the stock market as well, who thinks they've been promised QE3 and whatever else is necessary to keep asset prices rising. To them $25 seems quite fair and puts the gold/silver ratio back to its gold/silver ratio of 60 since governments stopped buying silver.

Finally comes the consensus as published in the mainstream press. Barron's and Marketwatch and so on called silver fund managers over the weekend to ask them what they think and, lo! They think the price silver closed at on Friday is just about right. It's also, not coincidentally, the price that most silver chartists have been using to identify the transition from "buy" to "hold." I have no idea where they get this $34 price from. It doesn't correlate to anything that has occurred on a macro level, but there it is, set in pixels like that fake image of Obama smoking a cigarette that everyone has seen and most people believe.

The way I see it, market participants will fight their way among macro-driven price levels, as well as the chartist levels, as the silver falls toward $20 and possibly under before rebounding to over $20.

BK
05-09-11, 02:33 PM
Your chart takes me back to 2000-2001 and a startup that was lucky enough to get acquired by ADCT - but, the stock of the acquiring company was falling like a rock. Many Engineers at the startup could not sell their shares at $30/share because it was too low, and the $23 was too low, at $19-$20 they couldn't sell because the stock was bound to trade back at $23 share and so on and so on. Humans just weren't designed to understand Financial Markets.

EJ
05-09-11, 03:01 PM
Your chart takes me back to 2000-2001 and a startup that was lucky enough to get acquired by ADCT - but, the stock of the acquiring company was falling like a rock. Many Engineers at the startup could not sell their shares at $30/share because it was too low, and the $23 was too low, at $19-$20 they couldn't sell because the stock was bound to trade back at $23 share and so on and so on. Humans just weren't designed to understand Financial Markets.

I was CEO of a wireless networking company from 2001 to 2004. I hired as my VP Marketing a fellow from Nortel. He had most of his money tied up in Nortel stock. It collapsed approximately 80% by the time he'd joined my company. It staged a moderate recovery to only a 70% loss from the peak in early 2004, at which time I took him out for a beer and strongly suggested to him that he'd regret not selling the stock he had left. He was mortified. He was certain that the peak price was in fact the "real" price and that what had happened was sure to be reversed in time once investors came to their senses and bid the stock up to a price that reflects the true greatness that was Nortel. I told him that despite all of the hard work and love he'd put into Nortel, and his loyalty to the company, the stock would be trading in the pink sheets eventually, virtually worthless, because the company was never competitive in the first place, and a collapsing stock price at a certain point creates its own self-fulfilling dynamic of failure, and Nortel had long ago surpassed that point. He could not understand my argument. As far as I know rode the stock all the way down. It's a very, very painful thing to watch a friend put themselves through this.

jk
05-09-11, 03:11 PM
jesse livermore: Remember that stocks are never too high for you to begin buying or too low to begin selling.

another useful tool is to ask yourself: if i didn't own this asset, would i buy it at today's price? if the answer is no, why are you holding it? [leaving aside spreads, slippage, brokerage fees and possible tax considerations]

bart
05-09-11, 03:30 PM
Finally comes the consensus as published in the mainstream press. Barron's and Marketwatch and so on called silver fund managers over the weekend to ask them what they think and, lo! They think the price silver closed at on Friday is just about right. It's also, not coincidentally, the price that most silver chartists have been using to identify the transition from "buy" to "hold." I have no idea where they get this $34 price from. It doesn't correlate to anything that has occurred on a macro level, but there it is, set in pixels like that fake image of Obama smoking a cigarette that everyone has seen and most people believe.



Fibonacci ratio is the most likely source in my opinion:


http://www.nowandfutures.com/temp/t_fib_silver34.png

llanlad2
05-09-11, 03:43 PM
It's not new, but definitely in the last six months or so I think. So kinda new... ;-)

I had some there from May 2010 which was quite soon after they introduced it I think. One thing that may put people off is that it can only be held in a London vault unlike the gold which allows you to choose Zurich for example.

Jill Nephew
05-09-11, 05:02 PM
I really recommend "Your Money and Your Brain" for those that haven't read it.

The best investment advice/algorithm i have every heard was on KGO (local news) back in 94. It is responsible for almost all my good trade decisions, here it is:

When something catches your attention and you are confronting a sell decision, ask yourself "what is the probability i think it will go up versus down?" and sell that percentage. If i give 50% chance it will go up, i sell half, if i give 20% chance it will go up, i sell 80%, if i give 80% it will go up (but just feeling nervous) i may even sell 20%.

This does two miraculous things:
1. It gets you to do SOMETHING, and breaks the deadlock of needing certainty to take action
2. You can't beat yourself up or reward yourself easily. The glass is always partly full/partly empty. Avoiding the reward/punishment chemicals in the brain helps you to make more rational decisions in the future and not try to 'make up for what was lost' or 'repeat the win' etc.

When a small software company i worked for from 99-2003 (bubble time) was acquired, i watched virtually all my coworkers miss every sell opportunity because they couldn't concieve of a fractional trade and were waiting for a better price.

c1ue
05-09-11, 08:01 PM
When something catches your attention and you are confronting a sell decision, ask yourself "what is the probability i think it will go up versus down?" and sell that percentage. If i give 50% chance it will go up, i sell half, if i give 20% chance it will go up, i sell 80%, if i give 80% it will go up (but just feeling nervous) i may even sell 20%.


This isn't bad advice, but unfortunately still relies on human assessments of probability.

These are generally exaggerated - what is 50% in reality is pushed to up to 80% or down to 20% by emotion.

rogermexico
05-09-11, 11:04 PM
That may be the heart of the matter, and the single best reason to hang on to that physical gold.

+1

rogermexico
05-09-11, 11:43 PM
jesse livermore: Remember that stocks are never too high for you to begin buying or too low to begin selling.

another useful tool is to ask yourself: if i didn't own this asset, would i buy it at today's price? if the answer is no, why are you holding it? [leaving aside spreads, slippage, brokerage fees and possible tax considerations]

The "would I pay this much for it now rule" has been rule number one for me for well over a decade.

The biggest impediment I see for most people in exercising this rule is the bullhorn's insisitence on minimizing taxes.

Yes, if you let your gains evaporate that certainly will minimize your tax hit : )

aaron
05-10-11, 02:18 AM
It is the move from the high in 2008, to the low after the crash, when broken out past the previous high. In other words, the move from about $21 to $8 was $13... Once we took out $21 the next goal would be plus $13 = $34. ---> At least this was the number I was looking towards, until it was passed by.

I say this as a non-expert, but somebody who has read TA. In other words, I am the sheeple.

FRED
05-12-11, 06:44 PM
EJ and Jesse comparisons are apples and oranges. EJ is not a short term trader.

He is when he wants to be, such as after a silver bubble collapse (http://www.itulip.com/forums/showthread.php/19213-Silver-Pump-and-dump-crash-week-two?p=196808#poststop). ;_TU

bart
05-12-11, 10:57 PM
He is when he wants to be, such as after a silver bubble collapse (http://www.itulip.com/forums/showthread.php/19213-Silver-Pump-and-dump-crash-week-two?p=196808#poststop). ;_TU

Indeed and truly, but in general he's not a trader - he did hold that silver for about a decade... and blew returns of folk like Mish virtually totally into the weeds.

ocelotl
05-14-11, 09:50 PM
On April 16th I posted the following:


Sorry for not explaining myself. I was trying to say that we were still in the bullish trend and that some of the weakest bulls could be shaken out. Even when since the trend has recovered and there are people out there talking about it as getting parabolic, we still have some room to go before getting out of silver. As I posted somewhere else, we have to pay some attention to be sure of getting out at an appropriate moment, so that we don't have to worry about selling more than a kilo at a time or so... Well, that was my approach when buying, and I'm still Long silver.

I was already worried about the peak, and was preparing for it, somehow, my expected signals didn't materialize, I felt something was very wrong when I saw the buy quote from Banco Azteca at MXN 500 per OZT. I sold part of it, just enough to recover my initial investment plus a percentage for the holding time (about a third of all my physical) and let the rest ride. It all is coasting, but essentially, since mexican laws don't include a tax for PM profits (even they are considered as legal tender at market value, thus making a "face value" argument when bringing large quantities is laughable at least, as happened to: http://www.economicpolicyjournal.com/2010/04/150-gold-coins-seized-from-american-in.html ), all those libertad ounces will just have to hold on their own, since I also still think the long term trend will resume after it is quoted between MXN 250 and 300. Lets see how it evolves.

icm63
05-17-11, 04:32 AM
Silver gold ratio has a very important dominant cycle

http://www.readtheticker.com/Pages/Blog1.aspx?65tf=208_the-only-chart-that-will-make-you-a-silver-millionaire-2011-05

Camtender
05-19-11, 02:16 PM
[CENTER]


EJ writes:
"Gold is not a bubble. It may develop into one, but I doubt it because gold unlike silver is a reserve currency, hoarded by central banks as a back-up plan in case the global monetary system breaks down, which it has been in the process of doing for the past decade. If my theory is correct that gold is a currency and will behave like a currency during a bond market and currency crisis, then gold will not become a bubble and will not correct the way a bubble does but as a currency does following the acute phase of a currency crisis. For example, gold may rise to $6000 then decline to $5000 and more or less remain there as the "new" dollar price of gold after the crisis is resolved. Calling that peak price is a non-trivial undertaking that I have been preparing for since I purchased gold in 2001."
Subscribers can click here the original Time at last to sell silver (http://www.itulip.com/forums/showthread.php/19150-Time-at-last-to-sell-silver?p=195945#post195945) article and thread of discussion before, during, and after the silver market correction that followed.

Full Disclaimer (http://www.itulip.com/GeneralDisclaimer.htm)

Hugo Salinas Price

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/16_Hugo_Salinas_Price_-_QE_in_US_Will_Lead_to_Utter_Destruction.html

When asked about how this central bank purchase might influence his proposal to monetize silver Mr. Price remarked, “I think that maybe the central bank would not look upon our proposal with such a jaundiced eye. I mean if they bought gold maybe it would not be unreasonable to hope that they would see the monetization of a silver ounce as a good thing for the country.

I can’t help telling you that we have very strong support in the Congress for the monetization of silver, very strong support. Congress is not in session now and will not be back in session until September, but I have high hopes that when both the upper and the lower Houses reconvene in September that we will see something very good happen.”

When asked if the monetization of silver in Mexico could happen in one, two or three years Hugo Salinas Price replied, “I think it could happen sooner than that, I think that it might happen this year. Things are looking good. Of course I have been saying this for some time, but now I am saying it with more emphasis...The idea is now firmly entrenched and it’s only a matter of time before we see some action.”

Time will tell................

BillMasi
05-19-11, 05:40 PM
"Five ways that EJ's silver sell call was unlike others you may have read:"

It was unlike other calls, alright. Because I never read it.

How is a subscriber for years supposed to be aware of posts like EJ's "Sell Silver?"

jiimbergin
05-19-11, 05:44 PM
"Five ways that EJ's silver sell call was unlike others you may have read:"

It was unlike other calls, alright. Because I never read it.

How is a subscriber for years supposed to be aware of posts like EJ's "Sell Silver?"

click on new posts. I do that many times every day.

erw698
05-21-11, 06:33 AM
click on new posts. I do that many times every day.

That must be nice. Unfortunately not all of us have such freedom or capacity. Speaking of which, just what is the nature of this post? It certainly is not a call directed at guiding the ITulip Community that has paid and followed for years looking for this very guidance as much as it is bragging about a call that for all intensive purposes left the majority of the ITulip Community in the dust.

Congratualtions EJ! Great Call! Blah, blah, blah...............next time perhaps you could take a minute to think about the rest of us. Your post reaks of ego and bravado. I for one, am not impressed. Evidently that doesn't matter much as you are certainly impressed with yourself.

EJ, what initially attracted me to your writings was a level of humility that is essentially non-existent in the financial industry. Is that now gone?

Your writings as of late suggest to me that it is. That's sad.

EJ
05-22-11, 11:31 AM
That must be nice. Unfortunately not all of us have such freedom or capacity. Speaking of which, just what is the nature of this post? It certainly is not a call directed at guiding the ITulip Community that has paid and followed for years looking for this very guidance as much as it is bragging about a call that for all intensive purposes left the majority of the ITulip Community in the dust.

Congratualtions EJ! Great Call! Blah, blah, blah...............next time perhaps you could take a minute to think about the rest of us. Your post reaks of ego and bravado. I for one, am not impressed. Evidently that doesn't matter much as you are certainly impressed with yourself.

We have found that email via Constant Contact is effective for distribution of articles but ineffective as a means to communicate time-sensitive information. The Constant Contact system keeps a detailed record of data on numbers of subscribers who click on an article over time. A typical newsletter or alert is read by fewer than 20% in the first day. These are generally the same members who are also frequent visitors of the site.

To be instantly notified when an article is posted, members are instead encouraged to use our RRS feeds. Members can subscribe to any forum they like, including my Janszen's Quick Comment (http://www.itulip.com/forums/external.php?type=RSS2&forumids=8) and Janszen Commentaries (http://www.itulip.com/forums/external.php?type=RSS2&forumids=50) forums using the RSS feed subscription function built into every Internet browser.


EJ, what initially attracted me to your writings was a level of humility that is essentially non-existent in the financial industry. Is that now gone?

Your writings as of late suggest to me that it is. That's sad.This call was unlike others in iTulip's 13 year history, except perhaps in March 2000 when I confronted a wall of noise out of the mainstream media promoting the idea of the New Economy as justification for NASDAQ 5000 and beyond. In early 2000 I had to on occasion resort to strident rhetoric to draw attention to my contrarian view.

The sell silver call demanded a higher volume of definitive exclamation than usual. When I decided to announce a time to exit the stock market in Dec. 2007, I was not competing with a hundred sites that claimed that the DJIA was destined to rise to 20,000 and beyond in 2008. Many members already knew that something was amiss in late 2007. Making a definitive "Time at Last to Short the Stock Market" call for a 40% decline in stocks in 2008 gave members a way to evaluate their position against a clear forecast, but they had plenty of time to respond.

My objective in posting this was not bravado but to get the believers to seriously question their assumptions while there was still time. To do that, I had to pound on the table. The sites that promoted the idea of silver as a monetary metal, as "the common mans's gold, as a way to get back at JP Morgan, were as a rock concert at 140 decibels, and iTulip is but a single voice and not much amplified as the more popular financial doomertainment sites are. It's not my style, but I could not whisper and hope to be heard above the din. I had to yell.

The call was not entirely a surprise. I had been laying out my argument for more than a week prior to the call, such as in this answer to a members Ask EJ question on silver on April 21 (http://www.itulip.com/forums/showthread.php/19082-silver). It was almost too late, and I do wish I'd been able to move a day earlier but meetings and other obligations made that impossible.

Now that the main event of the silver pump-and-dump is over, I look forward to returning to a communications style that is more natural for me. The primary objective of the silver sell call, and subsequent trades on a new forum started for that purpose at the request of members (http://www.itulip.com/forums/showthread.php/19213-Silver-Pump-and-dump-crash-week-two), is to hone our skills for a future exit from gold. It will entail selling when nearly everyone else is buying, but not just because everyone else is buying because there are times when the crowd is right to be buying and there are times when they are not.

Polish_Silver
05-28-11, 07:57 AM
May 28, 2011: Silver is holding constant at $38.

The call was very good from a trading, or profit taking perspective, but the price history looks
more like a correction during a bull market than a top in value.

Haven’t both gold and silver had bigger corrections during the last 10 years?
<FONT size=3><?xml:namespace prefix = o ns = "urn:schemas-microsoft-comhttp://www.itulip.com/forums/ /><o:p></o:p></FONT></FONT></P><P><o:p></o:p></P><P><FONT alt=There are so few alternatives out there.
Consider silver against $USD, GB pounds, Yen, Euro. Any takers?
National debit to GDP is 97.8% today (http://www.usdebtclock.org/). <o:p></o:p>
<o:p></o:p>
<o:p></o:p>
Gold is $1535, making the ratio about 40. That is low for recent decades, but still high
Historically. And there is far more gold above ground than silver.

<o:p></o:p>
I also question EJ’s assertion that “silver is not a monetary metal.”
Central banks don’t hoard silver, but:
National mints do coin silver and put legal tender values on it.
Coin stores sell it.
Individuals hoard it.
<o:p></o:p>
Silver coins were circulating in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-comhttp://www.itulip.com/forums/ /><st1:country-region w:st=</st1:country-region>US until the mid 1960’s, thirty years
after gold vanished.
<o:p></o:p>
Gold is “not monetary” in the sense that McDonalds won’t take it for hamburgers.
Oil is monetary if it backs $USD in the sense that OPEC accepts $ for oil.
<o:p></o:p>
Something is somewhat monetary if people are using it for some of the traditional uses of money.

PS

BlackVoid
05-29-11, 04:44 AM
Nice call by EJ, but this was just a bull market correction. We will see new highs in silver before the end of 2012 - likely much sooner.

I did not sell any silver and plan to buy more. At the end of all this (debt crisis, Peak Oil), FIAT currencies will experience a major shock, confidence will plummet, economic depression will set in for the long term. Very likely this will mean more wars. (War is the Health of the State).

Maybe gold will outperform silver from now, but I highly doubt that. The silver market is smaller, that is why you see these wild swings. The best in this situation is to own silver, gold and farmland. And some emergency fuel and food supplies.

BlackVoid
05-29-11, 04:47 AM
Mexico may monetize silver soon.
Asians are buying both gold and silver.

What we have seen in silver is that hedge funds got involved. Then they panicked and got out.

c1ue
05-29-11, 12:12 PM
Nice call by EJ, but this was just a bull market correction. We will see new highs in silver before the end of 2012 - likely much sooner.

You've made your call, now we'll see if you were right.

IMO - the Empire hasn't struck back yet. What we're seeing now is an unsurprising dollar bounceback, both from a long period of dollar devaluation induced weakness and the resumption of the European debt crisis.

However, the US debt crisis - while it will continue, doesn't show any indication of accelerating.

The possibility of Fed rate increases is still on the table - and so long as this exists then there exist major headwinds for another PM breakout.

jpetr48
05-29-11, 01:21 PM
The possibility of Fed rate increases is still on the table - and so long as this exists then there exist major headwinds for another PM breakout.

Look at press clippings that 10 of 12 governors from April meeting are not in favor of raising rates. Bullard's last comment this past week at Rotary in MO is an about face from March where he is now looking at second half of 2012 before he supports a rate increase. The reality of a revised Q1 GDP at 1.8% not taking into account CPI-U is starting to set in.

c1ue
05-29-11, 01:55 PM
Look at press clippings that 10 of 12 governors from April meeting are not in favor of raising rates. Bullard's last comment this past week at Rotary in MO is an about face from March where he is now looking at second half of 2012 before he supports a rate increase. The reality of a revised Q1 GDP at 1.8% not taking into account CPI-U is starting to set in.

The Fed is not about economics - nor has it been for decades.

The play right now is political: the entitlement squeeze plus the federal debt ceiling.

plebeian regime
06-05-11, 03:08 AM
buy & hold trade of the decade
I guess I'm off beat with the trade of the decade thing. I bought in to silver a few years ago and at current post correction/peak prices I will still come out fine if I sell it soon and I would come out up even if it went back to $20, but I really doubt silver will be anywhere near that low in, say five years. I don't doubt my ignorance, but are the prospects for gold over silver really so robust now as to justify the cost/risk of transitioning my physical stash for a few years? What's the new 'trade of the decade' thesis here? Or is that now a quaint notion?

FRED
06-05-11, 11:06 AM
I guess I'm off beat with the trade of the decade thing. I bought in to silver a few years ago and at current post correction/peak prices I will still come out fine if I sell it soon and I would come out up even if it went back to $20, but I really doubt silver will be anywhere near that low in, say five years. I don't doubt my ignorance, but are the prospects for gold over silver really so robust now as to justify the cost/risk of transitioning my physical stash for a few years? What's the new 'trade of the decade' thesis here? Or is that now a quaint notion?

No mystery here.

If you bought silver at $4.25 in 2001 and sold at $48.5 on April 29, 2011 you realized a 11.4x return over ten years.

But if you bought at $4.25 in 2001 and sold at $38, the highest price silver has traded at since April 29, 2011, then you realized a 8.9x return in ten years

For a $100,000 investment in 2001 that means:

$100,000 x 11.4 = $1,141,177

versus

$100,000 x 8.9 = $894,118

If you waited until after April 29, 2011 you left $247,059 on the table, best case.

If you sold last Friday, you left $287,000 on the table.

James Turk's May 9 prediction (http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/9_James_Turk_-_Silver_Will_Hit_New_Highs_in_a_Matter_of_Weeks.ht ml) that "This time I expect silver will take only several weeks before exceeding $49.78, the 31-year high reached on April 25th" did not come to pass.

plebeian regime
06-05-11, 04:49 PM
No mystery here.

If you bought silver at $4.25 in 2001 and sold at $48.5 on April 29, 2011 you realized a 11.4x return over ten years.

But if you bought at $4.25 in 2001 and sold at $38, the highest price silver has traded at since April 29, 2011, then you realized a 8.9x return in ten years

For a $100,000 investment in 2001 that means:

$100,000 x 11.4 = $1,141,177

versus

$100,000 x 8.9 = $894,118

If you waited until after April 29, 2011 you left $247,059 on the table, best case.

If you sold last Friday, you left $287,000 on the table.

James Turk's May 9 prediction (http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/9_James_Turk_-_Silver_Will_Hit_New_Highs_in_a_Matter_of_Weeks.ht ml) that "This time I expect silver will take only several weeks before exceeding $49.78, the 31-year high reached on April 25th" did not come to pass.

Please re-read my post. I'm fine with what was and is. My question is: so what is next? If I'm supposed to sell silver, what is going to out perform it for the next decade? Or is it just switch to gold for three years and then see what happens?

LargoWinch
06-05-11, 05:37 PM
Please re-read my post. I'm fine with what was and is. My question is: so what is next? If I'm supposed to sell silver, what is going to out perform it for the next decade? Or is it just switch to gold for three years and then see what happens?

EJ indicated that the money raised by selling silver was to be allocated in Private Equity ventures.

I indicated early on that for me, the proceeds from selling silver were to be used to buy gold. (http://www.itulip.com/forums/showthread.php/19150-Time-at-last-to-sell-silver?p=195983#post195983)

santafe2
06-27-11, 11:16 PM
I prefer long term trading to buy and hold. There have been 3 distinct bull movements in silver since the bottom in 2001/2002. I'm not sure if my trading will allow me more profit than your strategy but I do know it suits my personality and I'm sure it's produced an equal result over the last 10 years. My concern with this thread is that it encouranges a buy and hold strategy which has no place in the modern investment market. As I regularly document online, I still hold a 25% of my original 2001 stake in silver and will advance that position as silver comes down in price. I disagree with the idea that this was a 10 year run with a perfect exit point.

jk
06-28-11, 10:26 AM
i sold all my silver a few hours before ej posted his sell recommendation, but i am open to the idea of buying again if prices go low enough. in the meantime i movedthe majority of the proceeds into gold, the rest into cash.

nice to see you posting again, santafe2. welcome back.

santafe2
07-02-11, 02:20 AM
i sold all my silver a few hours before ej posted his sell recomm endation, but i am open to the idea of buying again if prices go low enough. in the meantime i movedthe majority of the proceeds into gold, the rest into cash.

nice to see you posting again, santafe2. welcome back.

I've no interest in making an investment point on iTulip with regard to silver as I've sold in and out of it since 2000 with good success and that is not the iTulip POV. I've sold the majority of my silver into this run up but I'll be a happy buyer if it moves into the 20s. EJ and I are different investors. He's a buy and hold investor and I'm a trader. Both work well but trading has little respect here.

Thank you for the welcome back. If it works, I'll continue to post, if not, I'm OK with that too, and I'll read the mostly excellent comments.

charliebrown
07-05-11, 09:42 AM
i did not get into silver at 4.00 and oz either. I have been trading it since 2009, with good success. If you are in a 4.00 you can take a longer term view. I've been underwater on silver twice. I did sell 30% into the last rally. I now have an average cost of under 20.00 I will hold that and add to it if we see silver back in the 20's. I also sold all of my junk silver into the rally (sterling commeratives).

drom
07-13-11, 08:13 AM
It seems to be back to normal with silver trading in lock step with gold but at a higher beta

It is currently sticking around a ratio of 43, its hard to imagine it crashing under $20 at this point. Is this still the expectation?

Down Under
07-14-11, 02:16 AM
It is currently sticking around a ratio of 43, its hard to imagine it crashing under $20 at this point. Is this still the expectation?

I don't think EJ said it'd crash below $20; I think he said mid twenties.

jiimbergin
07-14-11, 07:55 AM
I don't think EJ said it'd crash below $20; I think he said mid twenties.

he said "Did I catch the exact top? Probably not. Prices may go higher, but I expect a correction to under $20 later this year"

http://www.itulip.com/forums/showthread.php/19150-Time-at-last-to-sell-silver?highlight=time+sell+silver

drom
07-14-11, 09:04 AM
What jimber replied with is what I am referring to, but on 5/8 he also said:

"I believe that if no bubble had occurred, silver would today trade around $25. As bubbles tend to overshoot on the way down, a dip below $20 remains a strong possibility."

http://www.itulip.com/forums/showthread.php/19213-Silver-Pump-and-dump-crash-week-two?p=196808#poststop

I am not trying to be hyper critical here as EJ has a lot of great work, just seems unlikely to even get below $30 at this point unless gold takes a dive since it is in lock step with gold now.
EJ did also call for a dip in gold as QE takes a breather, but it looks like more recent Eurozone problems may have prevented that dip and brought out more gold buyers.

Down Under
07-14-11, 06:50 PM
he said "Did I catch the exact top? Probably not. Prices may go higher, but I expect a correction to under $20 later this year"

http://www.itulip.com/forums/showthread.php/19150-Time-at-last-to-sell-silver?highlight=time+sell+silver

Thanks Jim, for the correction. That'll teach me to be lazy and not bother looking up what EJ said.

But, if it does go below $20, most likely I'll be a buyer; it will depend a little on where the Aussie's also at, at the time.

jiimbergin
07-14-11, 07:46 PM
Thanks Jim, for the correction. That'll teach me to be lazy and not bother looking up what EJ said.

But, if it does go below $20, most likely I'll be a buyer; it will depend a little on where the Aussie's also at, at the time.

I will be a definite buyer. I have never sold all of my silver and probably never will sell it all. I have had some physical gold and silver since 1979.

jk
07-14-11, 08:39 PM
I have never sold all of my silver and probably never will sell it all. I have had some physical gold and silver since 1979.
me too.
that was the last time the currency was in doubt, though for different reasons.

shiny!
07-14-11, 10:22 PM
Thanks Jim, for the correction. That'll teach me to be lazy and not bother looking up what EJ said.

But, if it does go below $20, most likely I'll be a buyer; it will depend a little on where the Aussie's also at, at the time.

If silver drops a great deal you can expect the premium on physical will go up a lot. You won't find it on the street for spot, if you can find it at all.

metalman
09-23-11, 01:37 PM
time to check in on all the silver price rocket scientists before & after ej called the top of the silver bubble & sold silver apr 29...

jimmy rogers same day...


Posted on 29 April 2011 with 4 comments (http://www.arabianmoney.net/gold-silver/2011/04/29/silver-at-50-not-yet-parabolic-says-jim-rogers/#comments) from readers http://www.arabianmoney.net/wp-content/uploads/2011/04/jr1.jpg
Decade-long commodities bull and billionaire investor Jim Rogers explains how parabolic price rises will always collapse but he does not think silver at $50 is in a bubble.

If silver hit $100 this year he says that would change his mind. But Mr Rogers hopes that will not happen, and that gold and silver will continue on a relatively steady uptrend for some years into the future.james turk 3 days before silver crash...


April 26, 2011

James Turk - Silver Still in Backwardation, Headed Higher (http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/4/26_James_Turk_-_Silver_Still_in_Backwardation,_Headed_Higher.html )

With gold and silver surfing the wave of volatility, today King World News interviewed James Turk out of Spain. When asked about the reason for the increased volatility Turk stated, “There are some earthshaking events coming, that’s what the precious metals are telling us. That’s what the dollar chart has also been telling us and that is why I am expecting a waterfall decline in the dollar index. The dollar has a unique position as the world’s reserve currency and as people lose confidence in it they will go to other moneys they consider safer.”james turk again a week after silver crash...


May 9, 2011

James Turk - “Silver Will Hit New Highs in a Matter of Weeks” (http://www.kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/9_James_Turk_-_Silver_Will_Hit_New_Highs_in_a_Matter_of_Weeks.ht ml)

http://www.kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/5/9_James_Turk_-_Silver_Will_Hit_New_Highs_in_a_Matter_of_Weeks_fi les/shapeimage_24.png

Silver’s Correction – We’ve Been Here Before

By James Turk, Founder of GoldMoney.com

May 9 (King World News) Silver’s price drop last week has been variously called historic, extraordinary and unprecedented. It was none of those, as is clear from the following chart (above). We’ve been here before, note the four red ovals. All four outline similar drops in price over short periods of time.

This chart is prepared on a log scale so that the distances shown on the chart can easily be compared in percentage terms. In other words, last week’s drop in the silver price from near $50 is essentially no different in percentage terms from the drop that occurred once $15 was approached in 2006 or the drop after $8 was reached in 2004. In both of these prior instances, silver bottomed after the drop, marking a level from which it climbed to eventually make a new high.

The drop in silver’s price in 2008 was different. Silver continued lower, breaking down from the red oval, but we all know why that happened. Lehman Brothers had collapsed, and in the subsequent rush for liquidity, every asset class was hit – even gold and silver. It was a classic example of the ‘baby being thrown out with the bath water’.

So what is ahead for this current correction? Repeats of 2004 and 2006, or another 2008? My guess is none of the above. It took several months after these three previous corrections before silver climbed above the high price that preceded the correction. This time I expect silver will take only several weeks before exceeding $49.78, the 31-year high reached on April 25th.eric sprott 2 weeks after silver crash...


Tyler Durden
Zero Hedge
May 17, 2011

Eric Sprott, who according to some catalyzed the initial move lower in silver following his sale of PSLV units, to be followed by a bullish clarification that he transferred all proceeds into other silver holdings, was on Max Keiser late last week in an interview that anyone interested in the silver market should listen to.

Among the key summary highlights: “I will be a buyer of silver today. I will be a buyer of silver tomorrow. We have not lost any faith in what has happened to silver.” As for what happened with that instantaneous $6 dollar drop in silver on May 1:

“In my mind it was just one of those raids that we experience from time to time. There was no particular reason for it. And then we end up with 5 margin rate increases. It just reeks of someone manipulating the price of silver down. I have no fear of silver here. Yes it will be parabolic, but it’s going to be way more parabolic than what we have today… I believe that gold today is the de facto reserve currency. It’s outperformed everything for 11 years. Silver has always been a currency, people are now treating it as a currency, and it’s a very, very small market. There is no way that with roughly $50 billion of silver inventory around that we can make it a currency, so I see the price going much higher.” And on the ridiculous recent trading volume in silver: “One of the things we should look at is the trading of silver in the paper markets, I mean the Comex and the SLV. Last week it averaged 1.2 billion ounces per day. There is only 700 million ounces mined in a year. There is only 33 million ounces of physical silver that is available for delivery by the commercial shorters. If something like 3% of the people that were trading silver in one day demanded physical delivery, there would be no silver on the Comex…. The key market is the physical market. I don’t think this raid is going to work.”derp derp....

http://i56.tinypic.com/vrsxzl.gif

Adeptus
09-23-11, 02:39 PM
I'm offended Metalman! No reference to me? hehe

metalman
09-23-11, 03:21 PM
I'm offended Metalman! No reference to me? hehe

got a pm from mr fred... told me to clean up my act & be nicer to members... all on the same team & all that. ok.

gold dumps 8.5% in the past 3 days... & silver dumps 25% ;_CC

my read of turk's chart is silver's headed below even ej's $25 target...

http://i53.tinypic.com/xgfcc5.gif

jimmygu3
09-23-11, 03:43 PM
my read of turk's chart is gold's headed below even ej's $25 target...
http://i53.tinypic.com/xgfcc5.gif

You meant to say, "silver's headed below even ej's $25 target...."

The limit sell order on my ZSL shares just popped, netting me a 42% profit over 2 months. It was a bumpy ride, but EJ was right! I have had mixed results taking action based on his short-term calls, but this one nailed it. I may have left a little fat on the bone, but a 500% annualized return on this trade was enough for me. THANKS, EJ!:)

-Jimmy

metalman
09-23-11, 04:13 PM
You meant to say, "silver's headed below even ej's $25 target...."

The limit sell order on my ZSL shares just popped, netting me a 42% profit over 2 months. It was a bumpy ride, but EJ was right! I have had mixed results taking action based on his short-term calls, but this one nailed it. I may have left a little fat on the bone, but a 500% annualized return on this trade was enough for me. THANKS, EJ!:)

-Jimmy

he promised he'd get better at the short term calls...

charliebrown
09-23-11, 04:49 PM
same here, thanks EJ, in August I lowered my paper silve holdings again, I bought paper gold with them.
I am stuck owning a 33 oct put on slv. Hoping for a little bounce here. If it expires unexercised, I will thank the market gods.

metalman
09-23-11, 05:51 PM
i'd like to see an update to this chart...

http://www.itulip.com/images2/SilverCorrectionScenario0511update1996-2013wtmk.png

sunpearl71
09-23-11, 06:28 PM
I also executed a small limit sell order earlier today when ZSL popped briefly over $20, for a 40% profit over 2 months. Will re-enter silver when it falls into the mid to low 20s. Thanks EJ!

FRED
09-23-11, 09:41 PM
i'd like to see an update to this chart...

http://www.itulip.com/images2/SilverCorrectionScenario0511update1996-2013wtmk.png

As you wish.


http://www.itulip.com/images2/SilverCorrectionScenarioSep232011update1996-2013wtmk.png

jpetr48
09-23-11, 10:00 PM
Fred

Thank you for the forecast out to 2013.
Any idea what happens afterwards -out to 2016? Some of us have a longer term horizon.
Joe

mikedev10
09-24-11, 10:11 PM
i have to throw a big thanks to EJ here too. rough ride and went a bit risky (i'm 32 and single though) - bought a bunch of SLV puts in my roth ira. being not so disciplined i've held off taking profits just yet - bought 5 positions, the only one i've covered is the october puts. the 3 in january and 1 in april are way up, looking to see what silver does monday and sell half or more then.

Camtender
09-25-11, 12:10 AM
I guess when your Jim Rogers or Eric Sprott, there are plenty of haters....... by the way, where is the Rogers interview?????????

So Metal Man, has there been any fundamental change in the Western World that would indicate there is political will to stop printing money (i.e. the fundamental basis for owning silver)? All bubbles have periods of consolidation, nothing goes up in a straight line.

I suspect that most of us are not traders, but long term investors. We will see at the end of the day where silver is at, because, as Jimmy always says......... every thing always makes a new high...........

c1ue
09-25-11, 02:40 PM
I guess when your Jim Rogers or Eric Sprott, there are plenty of haters....... by the way, where is the Rogers interview?????????

So Metal Man, has there been any fundamental change in the Western World that would indicate there is political will to stop printing money (i.e. the fundamental basis for owning silver)? All bubbles have periods of consolidation, nothing goes up in a straight line.

I suspect that most of us are not traders, but long term investors. We will see at the end of the day where silver is at, because, as Jimmy always says......... every thing always makes a new high...........

The point isn't that currencies are being depreciated (iTulip view, as compared to being devalued...I guess the difference is time scale), it is that simply because this depreciation occurs doesn't mean any PM is automatically a good investment at any price.

The second point is that there are plenty of people out there who are happy to take a point which is true (currency depreciation) and use it to line their own pockets by selling against this point irregardless of any other factors.

It isn't clear to me that Sprott and Rogers are in this category, but certainly they're both salesmen.

If we look at the real estate bubble - again it isn't that real estate was a bad investment historically. Previous to 2006, real estate was a sure fire way to make slow and steady investment growth. While there were some who recognized the fundamentals of this real estate appreciation, there were plenty more who only wanted to use this to pull money out of people's pockets: Kiyosaki and Trump come to mind. There were also those who were cheerleaders without regard to the consumer's ultimate interests: the NAR comes to mind.

Now that we've been in a gold price upswing for over a decade, the sharpers and the cheerleaders for gold have multiplied considerably.

Ditto silver despite (or perhaps because of) its much higher volatility.

Lastly as far as new highs: when will we see the new Nasdaq high? How about the Dow Jones Industrials?

Theoretically these will happen someday, but as the Great Depression shows, it might be well after a full generation has passed (i.e. you're dead).

Camtender
09-25-11, 10:25 PM
The point isn't that currencies are being depreciated (iTulip view, as compared to being devalued...I guess the difference is time scale), it is that simply because this depreciation occurs doesn't mean any PM is automatically a good investment at any price.

The second point is that there are plenty of people out there who are happy to take a point which is true (currency depreciation) and use it to line their own pockets by selling against this point irregardless of any other factors.

It isn't clear to me that Sprott and Rogers are in this category, but certainly they're both salesmen.

If we look at the real estate bubble - again it isn't that real estate was a bad investment historically. Previous to 2006, real estate was a sure fire way to make slow and steady investment growth. While there were some who recognized the fundamentals of this real estate appreciation, there were plenty more who only wanted to use this to pull money out of people's pockets: Kiyosaki and Trump come to mind. There were also those who were cheerleaders without regard to the consumer's ultimate interests: the NAR comes to mind.

Now that we've been in a gold price upswing for over a decade, the sharpers and the cheerleaders for gold have multiplied considerably.

Ditto silver despite (or perhaps because of) its much higher volatility.

Lastly as far as new highs: when will we see the new Nasdaq high? How about the Dow Jones Industrials?

Theoretically these will happen someday, but as the Great Depression shows, it might be well after a full generation has passed (i.e. you're dead).

I suspect that when QE4/QE5 is announced, you will get your new NASDAQ & DOW high. Unless you have less than 18 months to live, you might just see it.

Jim Rogers a salesmen, how many of us could actually purchase into one of his funds. List time I check, if I remember correctly, it was six figures to get in.

I will take the 4,000 plus years of silver being a store of value to someone who "long term investing" mind goes back to the NASDAQ bubble.

And finally, it really does not matter what I, you, Rogers, Sprott & or anyone else in the US thinks about PM's. What matter is what the creditors of the largest debtor nation in the wold thinks. Have you been to China in the last six months or spoke to anyone from India and asked them about your silver thoughts? I will take the opinion of several billion creditors to the thoughts of three hundred million people that have lived way beyond their means for decades.

A society cannot consume more that it produces over the long term (the "long-term" has been extended in the US due to $$$ reserve status).

FRED
09-26-11, 10:48 AM
I suspect that when QE4/QE5 is announced, you will get your new NASDAQ & DOW high. Unless you have less than 18 months to live, you might just see it.

Jim Rogers a salesmen, how many of us could actually purchase into one of his funds. List time I check, if I remember correctly, it was six figures to get in.

I will take the 4,000 plus years of silver being a store of value to someone who "long term investing" mind goes back to the NASDAQ bubble.

And finally, it really does not matter what I, you, Rogers, Sprott & or anyone else in the US thinks about PM's. What matter is what the creditors of the largest debtor nation in the wold thinks. Have you been to China in the last six months or spoke to anyone from India and asked them about your silver thoughts? I will take the opinion of several billion creditors to the thoughts of three hundred million people that have lived way beyond their means for decades.

A society cannot consume more that it produces over the long term (the "long-term" has been extended in the US due to $$$ reserve status).

Today's update of our April 29, 2011 silver price forecast chart:


http://www.itulip.com/images2/SilverCorrectionScenarioSep262011update1996-2013wtmk.png

Adeptus
09-26-11, 11:17 AM
Today's update of our April 29, 2011 silver price forecast chart:



FRED, any chance you can explain which variables are considered when you generate these silver charts? I ask because, at this time, the governments/IMF/CME/Central Banks (etc) intervention in markets is so dramatic, that I'm left wondering how can anybody predict anything accuratly and *be right for the right reasons*?

For instance:

1) How does your model account for CME margin hikes (that by the way, happened again over the weekend in the Shanghai exchange (http://www.zerohedge.com/news/shanghai-gold-exchange-hikes-silver-margin-20)) that have an immediate downside effect on PM prices (gold included it seems).
2) How does your model account for mass influential events such as the European crisis, when iTulip has written very little about it? Although you have written about the China and USA ones.
3) How do you account for influential events such as mini black swans (http://2.bp.blogspot.com/-eFJV98hnKe8/ToCESEu_ayI/AAAAAAAAAqs/MpOWpAVue_4/s1600/LGE.jpg)? Or large market-wide black-swans for that matter.

Perhaps iTulip looks at these events as symptoms of larger influencial trends, rather than variables to attempt to include in calculations? If so, can you then share which influencing factors/variables you do include? You can of course, claim it as *iTulip Secret Sauce* and I would respect that, but if you can share parts of it, I (and others) would appreciate it. I have no time personnaly to try to figure out competing models, so my intent here is just to understand how iTulip understands the silver market so I can make a decision as to what degree I should consider your silver forcasting. I have a lot of respect for iTulip's forcasting capabilities in nearly every other area, in part because you guys write a mini-book thesis on how you arrived at your conclusions. For silver however, I'm not yet convinced of your projection capabilities. Being right once, isn't good enough for me. Especially when there are few details explaining your projecting thesis.

For instance, in your article in this thread you give 5 reasons: (paraphrased)

1) Gold/Silver ratio
2) Silver in a temporary bubble due to accelerate in price exceeding that of gold
3) Too many poorly informed investors in silver. The stadium is packed, it was empty ~10 years ago.
4) High volatility implies a turning point either down or up. iTulip bets on down.
5) (Ommitted, not related to silver price projecting)


If all iTulip uses are just these 4 factors (it seems very doubtful to me, considering every other detailed and well thoughout article you guys write), then I have to call you on it. It strikes me as over simplistic to use in creating price projection charts that will remain accurate over a longer period of time.

Thanks in advance,
Adeptus

llanlad2
09-26-11, 11:23 AM
I suspect that when QE4/QE5 is announced, you will get your new NASDAQ & DOW high. Unless you have less than 18 months to live, you might just see it.

Jim Rogers a salesmen, how many of us could actually purchase into one of his funds. List time I check, if I remember correctly, it was six figures to get in.

I will take the 4,000 plus years of silver being a store of value to someone who "long term investing" mind goes back to the NASDAQ bubble.

And finally, it really does not matter what I, you, Rogers, Sprott & or anyone else in the US thinks about PM's. What matter is what the creditors of the largest debtor nation in the wold thinks. Have you been to China in the last six months or spoke to anyone from India and asked them about your silver thoughts? I will take the opinion of several billion creditors to the thoughts of three hundred million people that have lived way beyond their means for decades.

A society cannot consume more that it produces over the long term (the "long-term" has been extended in the US due to $$$ reserve status).

So does that mean you are buying more silver? Or that those who have just seen it crash are buying more? Or that central banks are about to start buying silver?

EJs silver call was spot on (dead cat bounce notwithstanding) ,brilliant and deserves utmost respect. Calling for such a major crash when many predicted a correction is what makes it so exceptional.
When it was called originally lots of people said they would be backing up trucks if it broke to 35/30/25. I don't think they will be. Even if 3 billion people already have some silver without new buyers it won't be going up.



FRED, any chance you can explain which variables are considered when you generate these silver charts? I ask because, at this time, the governments/IMF/CME/Central Banks (etc) intervention in markets is so dramatic, that I'm left wondering how can anybody predict anything accuratly and *be right for the right reasons*.

EJ explained his thinking in numerous threads. Everything else is hot air. It was a bubble.

"Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof."

Adeptus
09-26-11, 11:51 AM
It was a bubble

Sorry, IMO, that remains to be seen. Aren't bubbles supposed to result in price depression over a long period of time (i.e. Nasdaq, Real Estate)? Isn't that what EJ's updated silver chart to 2014 tries to indicate (although there is an intial rise in price)? That silver will remain below $30 into ~2014? I'll only believe that if there is no more money printing/stimulus. The QE3 or some other major 'free money' event comes up (apparently operation twist didn't count), I expect silver will rise as fast, if not much faster than gold will.

And that's where I disagree with iTulip. This idea that silver will decouple from gold. The only decouple event I would agree with is, related to the recent iTulip thesis that when the global SHTF finally happens, and a new reserve currency is created, silver is likely to NOT be part of it, where as gold is almost guaranteed to be part of it, and then gold will way out perform silver.

tastymannatees
09-26-11, 12:11 PM
EJ explained his thinking in numerous threads. Everything else is hot air. It was a bubble.

"Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof."

Depends on the context you use - I would be more impressed If he had called the 20% drop in gold as I have 25% of assets in silver and 75% in gold. Was gold overbought(bubble) relative to the current economic environment? If so then he missed the gold call completely.

http://www.zerohedge.com/news/shanghai-gold-exchange-hikes-silver-margin-20

Multiple margin hikes this year on both gold and silver especially with a margin hike with silver well off the highs along with discussion of actually closing the silver market makes it seem less of a fundamental market call and more of a call on market manipulation.

Perhaps the silver supply is not there? Ever increasing measures to control the price "to protect the investor" suggests to me the market is breaking down.

rogermexico
09-26-11, 12:17 PM
FRED, any chance you can explain which variables are considered when you generate these silver charts? I ask because, at this time, the governments/IMF/CME/Central Banks (etc) intervention in markets is so dramatic, that I'm left wondering how can anybody predict anything accuratly and *be right for the right reasons*?

For instance:

1) How does your model account for CME margin hikes (that by the way, happened again over the weekend in the Shanghai exchange (http://www.zerohedge.com/news/shanghai-gold-exchange-hikes-silver-margin-20)) that have an immediate downside effect on PM prices (gold included it seems).
2) How does your model account for mass influential events such as the European crisis, when iTulip has written very little about it? Although you have written about the China and USA ones.
3) How do you account for influential events such as mini black swans (http://2.bp.blogspot.com/-eFJV98hnKe8/ToCESEu_ayI/AAAAAAAAAqs/MpOWpAVue_4/s1600/LGE.jpg)? Or large market-wide black-swans for that matter.

Perhaps iTulip looks at these events as symptoms of larger influencial trends, rather than variables to attempt to include in calculations? If so, can you then share which influencing factors/variables you do include? You can of course, claim it as *iTulip Secret Sauce* and I would respect that, but if you can share parts of it, I (and others) would appreciate it. I have no time personnaly to try to figure out competing models, so my intent here is just to understand how iTulip understands the silver market so I can make a decision as to what degree I should consider your silver forcasting. I have a lot of respect for iTulip's forcasting capabilities in nearly every other area, in part because you guys write a mini-book thesis on how you arrived at your conclusions. For silver however, I'm not yet convinced of your projection capabilities. Being right once, isn't good enough for me. Especially when there are few details explaining your projecting thesis.

For instance, in your article in this thread you give 5 reasons: (paraphrased)

1) Gold/Silver ratio
2) Silver in a temporary bubble due to accelerate in price exceeding that of gold
3) Too many poorly informed investors in silver. The stadium is packed, it was empty ~10 years ago.
4) High volatility implies a turning point either down or up. iTulip bets on down.
5) (Ommitted, not related to silver price projecting)


If all iTulip uses are just these 4 factors (it seems very doubtful to me, considering every other detailed and well thoughout article you guys write), then I have to call you on it. It strikes me as over simplistic to use in creating price projection charts that will remain accurate over a longer period of time.

Thanks in advance,
Adeptus


It seems to me the premise in your question is that all these "factors" are things you see as ultimately determining the price of silver.

But CME margins hikes merely adjust the leverage allowed to keep it constant and actually inhibit speculation. When have they ever raised margins not in response to a price rise? The CME is protecting counterparties and acting responsibly by doing so, if you think about it.

(I have to say I find it amusing that the same internet writers who worry about "failure to deliver" at the comex think it is a nefarious conspiracy for CME to limit the leverage used in the same market, which helps ensure that positions are covered! Which is it??)

You might be spending too much time with ZH and Turd Ferguson ; ) And "events" are more often just post-hoc justifications for price action driven by real fundamentals. "Events", like TA, "work" in the short term because traders and other actors think they work or expect them to work.

EJ's call worked because he understood the underlying dynamics driving silver vs gold. That he did not need to account for pseudo-events like margin hikes is precisely why it worked as it was not based on such noise.

Look at the current situation and hand-wringing over gold. Do you think anything fundamental has really changed with gold? Are central banks no longer accumulating? Is the massive debt overhang that will be inflated away- eventually deflated against gold - suddenly gone?

It is indeed such a "simplistic" analysis, focusing on a few powerful if not deterministic factors that drive the gold price long term, that allows any of us who hold it to do so with confidence, and not freak out about trivia like margin hikes or the current correction which, whether driven by hedge funds raising cash, or even fed driven proxy price suppression, cannot be anything but temporary.

"I have to call you on it"

Well then I guess you can "call" me on it too, as I sold 100% of my silver at 48.50 based on an analysis similar to EJ's that it was a bubble. (I put most of the proceeds into gold at around $1495 - the differential is now 50%). And you can think I am full of it because I only used the "factors" of understanding the difference between gold and silver and using the absurd proletarian enthusiasm for silver as a contrarian indicator. I had no margin hikes or unknowable "black swans" accounted for in my model : )

Understand the fundamentals of what is happening and don't be distracted by the noise.

rogermexico
09-26-11, 12:32 PM
Depends on the context you use - I would be more impressed If he had called the 20% drop in gold as I have 25% of assets in silver and 75% in gold. Was gold overbought(bubble) relative to the current economic environment? If so then he missed the gold call completely.

http://www.zerohedge.com/news/shanghai-gold-exchange-hikes-silver-margin-20

Multiple margin hikes this year on both gold and silver especially with a margin hike with silver well off the highs along with discussion of actually closing the silver market makes it seem less of a fundamental market call and more of a call on market manipulation.

Perhaps the silver supply is not there? Ever increasing measures to control the price "to protect the investor" suggests to me the market is breaking down.

Your objection implies that the 20% decline in gold and the now 40% decline in silver have the same meaning. At the time silver was sold, gold was only 1500, so if you had swapped them out you would be UP 7% after avoiding a 42% loss - so could have preserved all your silver profits and added to them by 7%. If gold stays at 1600, silver now needs to go from 28 + to 51 for you to break even if you still hold it.

Perhaps it was important to predict the silver decline because it was predictable, and the same thing that made it predictable is the reason it was to be avoided - you would permanently lose money by not avoiding it.

With gold, maybe there is no need to predict it, and it was unpredictable - both for the same reasons. It was not a bubble, and unless you sell at the bottom of the correction, it is not costing you any money as it will come back and eventually go much higher.

Of course EJ did predict that gold could correct to 1100 earlier this year, so it seems foolish to assert that this is any kind of surprise.

I think EJ appropriately treated both gold and silver - the first is a long term hold based on fundamentals and the the latter was a trade that should have been exploited when it could have been.

I don't want EJ to waste time trying to trade in and out of gold, I want him to tell me when to sell all of it and buy something else. The fact that the silver opportunity was offered as a one-time bonus (whether anyone paid attention or not) should not attract complaints that you are not getting a gold trading service here. That seems unfair to me.

rogermexico
09-26-11, 12:36 PM
Depends on the context you use - I would be more impressed If he had called the 20% drop in gold as I have 25% of assets in silver and 75% in gold. Was gold overbought(bubble) relative to the current economic environment? If so then he missed the gold call completely.

http://www.zerohedge.com/news/shanghai-gold-exchange-hikes-silver-margin-20

Multiple margin hikes this year on both gold and silver especially with a margin hike with silver well off the highs along with discussion of actually closing the silver market makes it seem less of a fundamental market call and more of a call on market manipulation.

Perhaps the silver supply is not there? Ever increasing measures to control the price "to protect the investor" suggests to me the market is breaking down.


And this margin increase thing is just nonsense. Go back and calculate CME margin requirements relative to the commodity prices. No change.
Margins have to increase with the price and it can't be done in a daily continuous fashion.

Adeptus
09-26-11, 12:40 PM
Hi rogermexico,

Thanks for the rebuttal :)



But CME margins hikes merely adjust the leverage allowed to keep it constant and actually inhibit speculation. When have they ever raised margins not in response to a price rise? The CME is protecting counterparties and acting responsibly by doing so, if you think about it.

Wrong question! The quesitons are:
Why are they raising margins AFTER the price goes down?
Why are they leaking information of margin hikes which results in the prices going down?
Why a few months go did Western Exchanges increase margin hikes at the same time Asian decreased margin hikes on the same globally traded product?
Why do CFTC position limits apply to everyone EXCEPT the largest speculators of all? (i.e. JPM)

This just all reeks of manipulation. And you can call it 'noise', but over the long term trend, if none of this occured, just how much higher would silver be today? Let me tell you... a heck of a lot higher. ;-)


EJ's call worked because he understood the underlying dynamics driving silver vs gold. That he did not need to account for pseudo-events like margin hikes is precisely why it worked as it was not based on such noise.

Fair enough, and that is precisely what I am getting at. What exactly ARE those underlying dynamics. The ones I see stated strike me as too broad-stroke and may not continue to remain accurate going forward. Silver to remain below ~$30 until 2014? I have some serious doubts!


Look at the current situation and hand-wringing over gold. Do you think anything fundamental has really changed with gold? Are central banks no longer accumulating? Is the massive debt overhang that will be inflated away- eventually deflated against gold - suddenly gone?

I didn't question gold. But I would ask the exact same questions regarding silver (except for the central banks accumulating it, which only china is rumoured to be doing so in relatively small quantities as compared to gold).



Adeptus said: "I have to call you on it"
RogerMexico replied: And you can think I am full of it because I only used the "factors" of understanding the difference between gold and silver and using the absurd proletarian enthusiasm for silver as a contrarian indicator. I had no margin hikes or unknowable "black swans" accounted for in my model : )

Let me be more clear. I have to call iTulip on their *future forecast* of silver (not their past forcast ).
My congrats to you (rogermexico & iTulip) on all your excellent timing! :-)


Understand the fundamentals of what is happening and don't be distracted by the noise.
Yes, I do agree, and I do admit that the noise is affecting my judgement... however, I also think the noise seems to be getting louder and louder and after a while I am unclear as to which events/variables have the *MOST* influence over the long term trend of silver, and that is precisely what I am trying to get clarity on and am asking iTulip to clarify.

Cheers,
Adeptus.

rogermexico
09-26-11, 01:25 PM
Hi rogermexico,

Thanks for the rebuttal :)



Wrong question! The quesitons are:
Why are they raising margins AFTER the price goes down?
Why are they leaking information of margin hikes which results in the prices going down?
Why do position limits apply to everyone EXCEPT the largest speculators of all? (i.e. JPM)

OK, I am not saying there are no "anomalies" in this or any other market. With regard to "wrong question" let me just say that I take a completely pragmatic approach to investment and trading.

My indifference to the questions that you might ask reflects the fact that I don't ask questions I have never found profitable, not that I am naive about motives in the market.

being skeptical of individual companies and their management? useful.

investing based on theories about short term price manipulation?

I've never made a dime trying this in either direction. I am not saying no one attempts to manipulate prices, I am saying these efforts always ultimately fail and are not actionable enough to trade on even if they "work" in the very short term. Fears or hopes about price manipulation with large fungible commodities are just not very tradeable for any INVESTOR. There are exceptions for traders - the commodity bubble of 2008 is a good example, but as you can see that did not last - oil returned to a more fundamentally based price later on.

What IS actionable is when large actors drive prices UP, and they likely will fall later - a pump and dump - you can earn unexpected profits by selling at the top - silver.

But as far as long term suppression, just look at gold. How effective could price suppression be long term if gold has gone from 270 to 1500 in a decade???



Fair enough, and that is precisely what I am getting at. What exactly ARE those underlying dynamics. The ones I see stated strike me as too broad-stroke and may not continue to remain accurate going forward. Silver to remain below ~$30 until 2014? I have some serious doubts!

Have you read all of EJ's commentary? It seems pretty clear to me. Gold is held and accumulated by central banks as the fourth currency. The current macro picture, with an unpayable debt overhang as a legacy of the FIRE economy, makes it likely that there will be loss of faith in fiat currencies and eventually re-monetization of gold. Not silver, but gold. Silver was $7-9 in the last deflationary downdraft, so a price of "only" $30 in an inflationary environment seems plenty high if you think about it. Perhaps the bubble price of 48 has distorted your perspective?

The point is not that silver is going down ($9 to $30 in 5-6 years is not down), it is that gold is going up more for different reasons, and silver should have never been $48 in the first place




I didn't question gold. But I would ask the exact same questions regarding silver (except for the central banks accumulating it, which only china is rumoured to be doing so in relatively small quantities as compared to gold).

You can ask any question you want. But that does not make the answers useful. Silver is more towards the industrial metal end of the spectrum and has recently come down from a bubble high. I don't own any, but might look again in the low 20's. Even then, I would not likely buy silver unless the gold/silver ratio was very favorable on a historical basis - 60:1 or more.



Let me be more clear. I have to call iTulip on their *future forecast* of silver (not their past forcast ).
My congrats to you (rogermexico & iTulip) on all your excellent timing! :-)

Timing matters when time matters. I bought some more gold for the first time in well over a year at around 1750 - not too happy about that right now! But it's better than paying 1900 and if you think, as I do, that the long term price of gold may eventually be more than twice this amount, it makes very little difference in the long run. OTOH, with silver I sold it because it seemed likely there would not soon be another chance to do so - so time was important for silver in a way it was not for gold.

I would not view EJ's silver forecast as a trading tool so much as guide to allocation.



Yes, I do agree, and I do admit that the noise is affecting my judgement... however, I also think the noise seems to be getting louder and louder and after a while I am unclear as to which events/variables have the *MOST* influence over the long term trend of silver, and that is precisely what I am trying to get clarity on and am asking iTulip to clarify.

Cheers,
Adeptus.

Well maybe EJ will pipe in here, but I think he would just direct you to his forecast, which at least to me looks quite plausible as a guide to the relative investment attractiveness of gold vs silver.

bart
09-26-11, 01:38 PM
http://www.nowandfutures.com/images/silver_margin.png

rogermexico
09-26-11, 01:49 PM
http://www.nowandfutures.com/images/silver_margin.png

Thanks Bart

How about the same graphic that goes for 5 or 10 years instead of 10 months. Maybe that would tell us something, as it seems to me this jsut shows the CME playing catch-up to the 200% price rise.

And are we to believe that limiting leverage to merely 9:1 instead of 13:1 is why silver is now off 40%?

Not arguing with you here, as who can argue with a picture that has no comments attached?

bart
09-26-11, 02:02 PM
Thanks Bart

How about the same graphic that goes for 5 or 10 years instead of 10 months. Maybe that would tell us something, as it seems to me this jsut shows the CME playing catch-up to the 200% price rise.

And are we to believe that limiting leverage to merely 9:1 instead of 13:1 is why silver is now off 40%?

Not arguing with you here, as who can argue with a picture that has no comments attached?


Sure - if you have the historical margin data or a link, I'll extend the chart. I don't have data prior to late 2010 and am, as usual, time crunched.

One point that's frequently missed is absolute move size per day or short period of time. The daily move last Friday for example translated to about $34,000 which was way larger than the maintenance margin (not shown), putting the actual COMEX owners at substantial risk if the specs can't meet a margin call.

The basic reason I made the chart is to show that there are very real facts behind margin changes (which ZH and others don't always cover), not to say that there aren't any "special moments" with margin changes.

shiny!
09-26-11, 02:07 PM
I just want to thank Adeptus and rogermexico for such an informative debate. It's impossible to get the right answers unless one first asks the right questions. These are great questions- I really appreciate the discussion.

tastymannatees
09-26-11, 02:29 PM
I am a simple guy, I had one economics course in college 35 years ago and probably the first basic concept I was introduced to was a supply/demand chart. Simple - plenty of supply price is low, short supply price is high.

It is a fact as far that I can tell from multiple sources 30-40 years ago there was 10 billion ounces above ground in silver = Plenty supply low price.

Today there is less than a years supply above ground as it is being used faster than it can be mined along with increasing annual demand= Tightening supply high price.

Despite several years of high prices supply is not increasing and in fact still declining (not meeting demand increases) coupled with small amount of increased investor demand and price should be? $5 or $50??? Lacking free market arms length transactions and only able to observe manipulated pricing with the objective of bringing the price down leads to the the conclusion the higher number must be closer to the REAL market price

So what is the real silver price without the market manipulation or "noise" ? EJ arrives at a price with past performance charts/data which as we all know is "no guarantee of future performance" but publicly ignores the supply/demand issue as regards to silver, for all I know it may be part of the secret sauce but for me I am skeptical of any analysis that fails to factor it in or dismiss it entirely.

CBs view gold as money and some % of the people on the street or other countries and cultures view silver as money as store of wealth and if that is the custom then that is what it is a store of wealth, not saying that gold is not the universal store as itulip defines it but silver has it's place and use. Offer me $5000 silver for my used car or equivalent paper money and I would take the silver for me it's money.

rtchoke
09-26-11, 02:31 PM
I just want to thank Adeptus and rogermexico for such an informative debate. It's impossible to get the right answers unless one first asks the right questions. These are great questions- I really appreciate the discussion.

+1 * 100

c1ue
09-26-11, 03:30 PM
I suspect that when QE4/QE5 is announced, you will get your new NASDAQ & DOW high. Unless you have less than 18 months to live, you might just see it.

Fair enough - you've put up a definitive statement and a falsifiability criteria. I've entered this into my calendar for verification in 18 months time.


Jim Rogers a salesmen, how many of us could actually purchase into one of his funds. List time I check, if I remember correctly, it was six figures to get in.

Unclear why this is relevant.


I will take the 4,000 plus years of silver being a store of value to someone who "long term investing" mind goes back to the NASDAQ bubble.

Um ok. As someone who sold a block of silver which my mother bought in 1980 - back at the last bubble - I'd say your definition of 'store of value' and mine are clearly thoroughly divergent.

Yes, the block had 'some' value, but an increase of 4.4% per year from 1980 to 2011 is hardly earthshaking.

And had I held on to the same block, the increase to date would only have been 2.9%.

Given that the BLS' own inflation calculator shows a 3.3% annual rise in inflation from 1980 to 2011, this is not an earth-shaking performance. Rather the opposite.


And finally, it really does not matter what I, you, Rogers, Sprott & or anyone else in the US thinks about PM's. What matter is what the creditors of the largest debtor nation in the wold thinks. Have you been to China in the last six months or spoke to anyone from India and asked them about your silver thoughts? I will take the opinion of several billion creditors to the thoughts of three hundred million people that have lived way beyond their means for decades.

A society cannot consume more that it produces over the long term (the "long-term" has been extended in the US due to $$$ reserve status).

I'm not sure again what your point is? That the Indians and Chinese will produce so much demand that silver will soar to undreamed of heights?

That may be, but it would be nice to have some kind of mechanism or proof beyond assertion.


Aren't bubbles supposed to result in price depression over a long period of time (i.e. Nasdaq, Real Estate)? Isn't that what EJ's updated silver chart to 2014 tries to indicate (although there is an intial rise in price)?

Bubbles arise from too much cheerleading from public and/or private sources.

Real Estate was not undervalued in the 3 decades before 2003.

Neither was the Nasdaq undervalued in 1997.

So this part of your thesis requires a lot more proof.


And that's where I disagree with iTulip. This idea that silver will decouple from gold. The only decouple event I would agree with is, related to the recent iTulip thesis that when the global SHTF finally happens, and a new reserve currency is created, silver is likely to NOT be part of it, where as gold is almost guaranteed to be part of it, and then gold will way out perform silver.

I would think the relative performance of gold vs. silver over the last 10 years, 5 years, or even 2 years would clearly indicate the two commodities are not closely coupled.

From an analysis standpoint, this is also clear: gold is still considered some form of money by Central Banks due to its presence in CB reserves. Silver is not. Silver in turn is an industrial metal - one whose single largest category of demand has gone into irreversible decline (photography). Other sources of industrial demand would almost certainly be affected by silver price increases.


Why are they raising margins AFTER the price goes down?

For one thing, margin hikes are a regulatory process and require time to go through the system. You're reading way too much into this - over time the margin hikes are irrelevant if the underlying factors are as strong as you say.


Why are they leaking information of margin hikes which results in the prices going down?

Because there are plenty of banksters speculating using margin for silver to go up - even as there may be Sith Lord Central Banksters or Sith Lord JP Morgan shorts speculating on silver going down.


Why a few months go did Western Exchanges increase margin hikes at the same time Asian decreased margin hikes on the same globally traded product?

There could be all sorts of reasons, including too much speculation in the West whereas there was too little speculation in the East.


Why do CFTC position limits apply to everyone EXCEPT the largest speculators of all? (i.e. JPM)

Because we're in a bankster world, my friend.

Why do the largest speculators get their borrowed money for little or nothing? The same reason.

Adeptus
09-26-11, 04:37 PM
Thanks Bart

Yes, thank you! And if I may ask, any chance you can show a graph showing the price of silver in USD overlayed with the Margin Hikes? The idea is to get a clear picture of what IS actually crashing the price of silver.

Feel free to overlay other inputs if you suspect there's other major factors at play (i.e. USD index, Silver Options Expiration dates, silver supply/demand, Timing of Fed/Gov Stimulus plans (risk on/risk off). It would also be interesting to see a similar chart for gold, because the initial theory was (paraphrase) "gold will not be affected by margin hikes nearly as much as silver, because gold is in 'strong & lard hands' aka: central banks".


I could see these type of charts potentially translating into a significant trading methodology into the next year or two. While it may be extremely difficult to project timing and size of future margin hikes, one thing is clear: There's some 80% left until margin = 100%, and there is no more leverage in the system. So if to get to ~17% margin we passed through 2 major margin hikes that crashed silver ~25 to 40%, then perhaps we can extrapolate that we are 1/5th of the way until we see 100% margin. In other words, at least several more major margin hikes are left. So perhaps silver ON AVERAGE until Q4 2013 may end up at below $30 as per iTulip, but a zoom in of what may happen may look something like the below (red line) which can offer additional trading opportunities. And if margin hikes are discovered to be the major catalyst pushing silver down, once we run out of margin hikes (i.e. margin = 100% = 1:1 silver price:contract), then why wouldn't price rocket up based on supply/demand or other fundamentals?

http://i56.tinypic.com/2vxk5mq.jpg
NOTE: My red line in the top/right chart with 'real silver price' was hand drawn, and is not based on any real data... just trying to show very roughly how I suspect margin hikes will impact the price of silver going forward.


Maybe that would tell us something, as it seems to me this jsut shows the CME playing catch-up to the 200% price rise.

CME isn't necessarily just playing catch-up. Margin hikes are being justified based on excessive speculation that seem to be occuring over recent short periods of time, not from 2001 to 2008.

Adeptus
09-26-11, 05:06 PM
Ok I just found this Seeking Alpha article from a few days ago, that touches upon what I am talking about.
SOURCE: http://seekingalpha.com/article/294886-margins-effects-on-precious-metals-prices

Borrowed (and modified graph: orange elipses & green writing are mine) graph from above article.
Note the impact of margin hikes on silver.... Now show me a "fundamental" that impacts silver more than margin hikes, and explain how iTulip's future silver projections consider margin hikes (whether directly or indirectly).

http://i51.tinypic.com/bi5ekx.jpg

llanlad2
09-26-11, 05:53 PM
[QUOTE=Adeptus;210442]Now show me a "fundamental" that impacts silver more than margin hikes, and explain how iTulip's future silver projections consider margin hikes (whether directly or indirectly).

If you believe in the fundamentals are you buying more then? Who is? Are new silver ETFs still being set up? Are the quantities of silver increasing in the silver funds now it's so cheap? Why don't you do a poll on itulip on who is buying?
I am quite confident not many will be buying more silver (if they have any left) compared to those who may be adding to their gold positions.

Finally with silver at 50 dollars an ounce what should the margin be in your opinion?

bart
09-26-11, 06:12 PM
Yes, thank you! And if I may ask, any chance you can show a graph showing the price of silver in USD overlayed with the Margin Hikes? The idea is to get a clear picture of what IS actually crashing the price of silver.



Perhaps it's quite a number of factors that caused the relative crash, margin hikes being only one... and the factors change in relative importance. At least that's my take.

Here's the chart:

http://www.nowandfutures.com/images/silver_margin2.png



Feel free to overlay other inputs if you suspect there's other major factors at play (i.e. USD index, Silver Options Expiration dates, silver supply/demand, Timing of Fed/Gov Stimulus plans (risk on/risk off). It would also be interesting to see a similar chart for gold, because the initial theory was (paraphrase) "gold will not be affected by margin hikes nearly as much as silver, because gold is in 'strong & lard hands' aka: central banks".



There are of course many other factors, but all that I'd produce would be a spaghetti chart that would be very hard to read, and I'd also be giving away quite a bit of my "secret sauce".

I'd love to see a similar chart with gold margin myself. I recall seeing the data in the last week or so but don't recall where. Perhaps someone else recalls it and has the link...

Adeptus
09-26-11, 06:20 PM
llanlad2 asked:

If you believe in the fundamentals are you buying more then?
Yes, possibly in a couple of days: after tonight's margin hike implementation + tomorrow's Options expiration
I will also buy more gold. My target was $1650 to buy the dip... that's where we are roughly at now (in fact much lower in Canadian dollars). But will also wait a day or two.
I think the biggest upcoming impact is WTF is Europe going to do. Plenty of speculation/rumours abound that EU/EBC is going to do a massive bailout any day now.... which would mean PM prices jump right back way UP. If they don't, we'll see a massive crash#2 along with the stock markets. Today's stock market rally (2-3%) I believe was primarily based on
EU Bailout (http://www.zerohedge.com/news/presenting-mother-all-european-bailout-flowcharts) rumours (http://www.zerohedge.com/news/market-snapshot-gold-silver-recover-eu-doubles-down).

Are new silver ETFs still being set up?
Good question. Not sure about in the West, but in Asia, they are on the verge of opening up Silver to be traded in their newly open exchange (Q3/Q4 2011).
This does not answer your ETF question. I don't know. Perhaps somebody else can chime in. I suspect the answer may be no or at least nothing significant, and that is a valid point, as that has been a significant method for the masses to invest in and speculate on PMs. There are however, many other methods to trade PMs: Physical, Options on existing ETFs, Bullion Vault & equivalents, Chinese gold saving accts, Unallocated/Allocated Bank Certificates, whatever else they come up with that I can't imagine.

Are the quantities of silver increasing in the silver funds now it's so cheap?
Are you referring to NAV? I haven't looked to be honest. My expectation is that NAV will have decreased, making it a good time to buy - as compared to a few weeks ago.

Why don't you do a poll on itulip on who is buying?
Well, I'm not sure that would be representative of the broader market. In fact, I'd expect it to be quite skewed since some X large % of people on here are following EJ's suggestion that silver will remain depressed for years to come (below $35 till Q4 2013?).

I am quite confident not many will be buying more silver (if they have any left) compared to those who may be adding to their gold positions.
What makes you "quite confident" about this? I agree, gold is the safer option of the two. I'm buying more gold for my mother, but no more silver for her. For me, I am buying more silver soon as well as gold, and possibly oil if we see it go into the mid $50's.

Finally with silver at 50 dollars an ounce what should the margin be in your opinion?
How do you figure an asset price is tied to margin? My understanding is that margin is raised due to excessive speculation (i.e. large trading volume increases resulting in higher or lower price). If we get to $50 over 3+ years, then that may be achieved without any significant volume spikes, and so no margin hikes may be justified for such a price growth trend.


FYI, for anybody following this thread please note: I'm rasing a lot of questions here for one reason, I am an amateur at this... and more specifically a part time amateur (I have a real day job ~40hrs/week + lots of overtime to boot)and am just trying to understand what's going on to a degree that makes me more comfortable... precisely because I am not very clear (yet).

Adeptus
09-26-11, 06:28 PM
Thanks Bart :-)

FRED
09-26-11, 06:32 PM
Depends on the context you use - I would be more impressed If he had called the 20% drop in gold as I have 25% of assets in silver and 75% in gold. Was gold overbought(bubble) relative to the current economic environment? If so then he missed the gold call completely.

http://www.zerohedge.com/news/shanghai-gold-exchange-hikes-silver-margin-20

Multiple margin hikes this year on both gold and silver especially with a margin hike with silver well off the highs along with discussion of actually closing the silver market makes it seem less of a fundamental market call and more of a call on market manipulation.

Perhaps the silver supply is not there? Ever increasing measures to control the price "to protect the investor" suggests to me the market is breaking down.

Does this chart address your concern?


http://www.itulip.com/images2/goldvssilverApr292011-Sept262011wtmk.png

llanlad2
09-26-11, 07:22 PM
llanlad2 asked:

If you believe in the fundamentals are you buying more then?
Yes, possibly in a couple of days: after tonight's margin hike implementation + tomorrow's Options expiration
I will also buy more gold. My target was $1650 to buy the dip... that's where we are roughly at now (in fact much lower in Canadian dollars). But will also wait a day or two.

You said possibly and yet you are sure the price is cheap. I am just trying to point out that buyers are needed in large quantities to drive prices up to new highs. If believers like yourself are doubtful where are the buyers coming from? The laggards(general public buying at 5 dollars over spot on E-bay at the peak price) have been and now been taken to the cleaners. Where are the new buyers to drive prices higher?

Are new silver ETFs still being set up?
Good question. Not sure about in the West, but in Asia, they are on the verge of opening up Silver to be traded in their newly open exchange (Q3/Q4 2011).
This does not answer your ETF question. I don't know. Perhaps somebody else can chime in. I suspect the answer may be no or at least nothing significant, and that is a valid point, as that has been a significant method for the masses to invest in and speculate on PMs. There are however, many other methods to trade PMs: Physical, Options on existing ETFs, Bullion Vault & equivalents, Chinese gold saving accts, Unallocated/Allocated Bank Certificates, whatever else they come up with that I can't imagine.

Are the quantities of silver increasing in the silver funds now it's so cheap?
Are you referring to NAV? I haven't looked to be honest. My expectation is that NAV will have decreased, making it a good time to buy - as compared to a few weeks ago.

Sorry if I wasn't clear. I meant are people buying in at the new "low"prices and thus increasing the amount of silver?

Why don't you do a poll on itulip on who is buying?
Well, I'm not sure that would be representative of the broader market. In fact, I'd expect it to be quite skewed since some X large % of people on here are following EJ's suggestion that silver will remain depressed for years to come (below $35 till Q4 2013?).

It may be worth while. Many expressed disbelief it would crash so hard and said they would buy back in if it did. It would be interesting to see if they still would now it has crashed. Such a crash can really put people off buying and sorry to harp on but without buyers there is no quick return to new highs.

I am quite confident not many will be buying more silver (if they have any left) compared to those who may be adding to their gold positions.
What makes you "quite confident" about this? I agree, gold is the safer option of the two. I'm buying more gold for my mother, but no more silver for her. For me, I am buying more silver soon as well as gold, and possibly oil if we see it go into the mid $50's.

Why are you buying more gold for your mother but not silver?
The gold fundamentals haven't changed. The people who matter are hedging currency risk with gold not silver.

Finally with silver at 50 dollars an ounce what should the margin be in your opinion?
How do you figure an asset price is tied to margin? My understanding is that margin is raised due to excessive speculation (i.e. large trading volume increases resulting in higher or lower price). If we get to $50 over 3+ years, then that may be achieved without any significant volume spikes, and so no margin hikes may be justified for such a price growth trend.

True but silver was trading with a lot of volatilty prior to the April 20. Shouldn't they have changed the requirements to dampen speculation.

I guess time will tell. But if it does recover to new highs a la the 1970s I for one will look forward to shorting it as the crash following the peak in the late 70s was truly spectacular. :)

rogermexico
09-26-11, 07:44 PM
The basic reason I made the chart is to show that there are very real facts behind margin changes (which ZH and others don't always cover), not to say that there aren't any "special moments" with margin changes.

I have read this sentence a few times and I am not sure I understand it. I too am asserting that there are "very real facts" behind margin changes. It sounds like you are agreeing with me that there are fundamental and rational reasons for margin increases and they relate to both price and volatility.

My main questions are:

Are the margins changes motivated primarily by manipulation on the behalf of insiders or government price suppression?

If yes to #1, is it likely that this will be the primary driver of prices in the long run or even in the intermediate term? And by primary driver, I mean that it is more important than the fundamentals we have discussed ad nauseum? For example, would it be the dominant variable in an ANOVA test of the variance in price over time?

If yes again, is this actionable by the average investor, such that one can reliably trade on it?


I have no idea if I disagree with you on silver or on margin, as I can't tell from your 10 month chart or your statement about "very real facts" what you think.

Maybe take off the tin foil hat to let the thoughts escape : )

Speaking to everyone and no one:

It seem to me a person who insists that silver is a great investment and also that there is powerful and efficacious price suppression going on should be SHORT silver! Why on earth would anyone be invested in something where the principle driver of value is price manipulation downward?

Or are the silver bulls who believe margin hikes are powerful saying that when the suppression is lifted (or fails?) that silver will inevitable rebound profitably? Seems like there are better risk/reward bets in the investment universe, though.

rogermexico
09-26-11, 08:06 PM
I could see these type of charts potentially translating into a significant trading methodology into the next year or two. ....

And if margin hikes are discovered to be the major catalyst pushing silver down, once we run out of margin hikes (i.e. margin = 100% = 1:1 silver price:contract), then why wouldn't price rocket up based on supply/demand or other fundamentals?

My apologies as it looks like you have answered my question, at least in your case, about what silver bulls who believe in the efficacy of price suppression via margin hikes believe will happen.

But are you serious?

You propose that the more susceptible silver is to manipulation, that is, the more margin hikes are able to suppress the OTHER FUNDAMENTALS, and the more efficacious the price suppression downward, , the higher will be the ultimate price in response to those easily overridden fundamentals?

What is the coiled spring that will drive silver to a 400% gain from here when there is no leverage at all allowed? How in the heck will silver become that bubblicious with a 100% margin requirement?

How can silver have fundamentals so weak that the price can be so effectively suppressed, yet simultaneously the fundamentals are so strong that it must rise hugely when not being suppressed?

Does that really make sense to you? Honestly, this sounds like massive confirmation bias from someone who owns silver.

Even concluding that margin hikes are a fundamental driver of silver prices (rather than the other way around, that silver volatility is the primary driver of margin hikes) is likely fallacious.

bart
09-26-11, 09:02 PM
I have read this sentence a few times and I am not sure I understand it. I too am asserting that there are "very real facts" behind margin changes. It sounds like you are agreeing with me that there are fundamental and rational reasons for margin increases and they relate to both price and volatility.



Apologies for the lack of clarity. My primary intention was to point out that margin changes have actual financial purposes (and a probable and varying element of price control attempts too). Margin is raised when it gets below 5-6%, and when either volatility or absolute price changes per day gets way higher than the actual margin amount.

It's those two elements that are seldom if ever covered by the extreme bull or manipulation crowd, plus they tend to ignore that margin changes by definition can't come before large up or down moves - that would involve prediction of the future.


My main questions are:

Are the margins changes motivated primarily by manipulation on the behalf of insiders or government price suppression?



They're amongst the primary factors, but I don't believe they're always #1 or #2. That would give no credence to many other important things like fundamentals or fear or greed or profligate money printing or inflation or interest rates or TA, etc.


If yes to #1, is it likely that this will be the primary driver of prices in the long run or even in the intermediate term? And by primary driver, I mean that it is more important than the fundamentals we have discussed ad nauseum? For example, would it be the dominant variable in an ANOVA test of the variance in price over time?

If yes again, is this actionable by the average investor, such that one can reliably trade on it?



I'm personally not a big fan of ANOVA and similar, especially when used alone. But I'm sure you could find folk who like using it and similar tools.

As far as "actionable by the average investor", there are certainly ways to reliably trade silver etc., but in my experience the most successful ones use their own system that's been built over the years. And one of EJ's targets is certainly the average investor, as shown by some damn good calls over the years.

Just in case, I'm not trying to avoid the questions or be oblique. Its just that there is no "holy grail" or anything that always works. In my case, my successes over the years has been more to do with behind-the-scenes elements or things off the beaten path like manipulation than any other single elements. I use any tool that helps.


I have no idea if I disagree with you on silver or on margin, as I can't tell from your 10 month chart or your statement about "very real facts" what you think.

Maybe take off the tin foil hat to let the thoughts escape : )



*rimshots* :-)

I shot as straight as I know how. It's far from a simple subject, and feel free to ask on anything else unclear.


Speaking to everyone and no one:

It seem to me a person who insists that silver is a great investment and also that there is powerful and efficacious price suppression going on should be SHORT silver! Why on earth would anyone be invested in something where the principle driver of value is price manipulation downward?

Or are the silver bulls who believe margin hikes are powerful saying that when the suppression is lifted (or fails?) that silver will inevitable rebound profitably? Seems like there are better risk/reward bets in the investment universe, though.


If the suppression was truly efficacious, then silver wouldn't have gone from $5 to $25 or $50. Fundamentals always win eventually, regardless of suppression efforts.

Just to be clear, I've been both short and long silver since 2003. I'm not a perma-bull, and was short and then some from $48 down to $34, and other times too. I also believe that silver has far far more upside than downside in the next 3-7 years, and have been on public record since 2005 for a minimum high of over $125 (privately and since 1981, much higher... and I sold 97%+ of my silver about 3-4 days before the last peak in Jan 1980).

If you think there are places that have better risk/reward than silver, then go for it - seriously, and with no criticism intended. There are few commodities that are more volatile or more difficult to trade than silver.

tastymannatees
09-26-11, 09:44 PM
Does this chart address your concern?
Not really as first drop in April was preceded by something like 5 or 7 margin hikes in span of about a week. Latest drop was preceded by a another margin hike and perhaps some game playing by the majors. My view of the above chart is that gold is down 20+ some % from it's high for the period and silver is off 34.5% from it's high for the period in discussion.

Pick another time slice - compare from 2008 to present and you see silver handily outperforms gold over a 3 year period even after the crash 25 number or say from Jan 1st. to April 28. For me the question is what is the real market price or potential price without manipulation, with short supply considerations my bet is higher when the game ends.

http://silverdoctors.blogspot.com/2011/09/cftc-provided-temporary-reporting.html
http://silverdoctors.blogspot.com/2011/09/is-jp-morgan-attempting-to-extricate.html

Now this all may coincidental to your April 29 call but a good argument is made here on the manipulated market with margin hikes combined with the general market take down we just experienced. Gold and silver moved to the downside in tandem so silver call was was spot on, 20% + drop in gold was missed not that it matters to me as I am long on both and quit my day trading ways in 2008.

I would like to see the supply/demand issue with silver addressed if you can find the time.

cjppjc
09-26-11, 10:21 PM
This can't be good for prices.


http://www.wealthwire.com/news/metals/1922

Divers Discover 240 Tons of Silver in Sunken WWII Ship

rogermexico
09-26-11, 10:37 PM
If the suppression was truly efficacious, then silver wouldn't have gone from $5 to $25 or $50. Fundamentals always win eventually, regardless of suppression efforts.

Just to be clear, I've been both short and long silver since 2003. I'm not a perma-bull, and was short and then some from $48 down to $34, and other times too. I also believe that silver has far far more upside than downside in the next 3-7 years, and have been on public record since 2005 for a minimum high of over $125 (privately and since 1981, much higher... and I sold 97%+ of my silver about 3-4 days before the last peak in Jan 1980).

If you think there are places that have better risk/reward than silver, then go for it - seriously, and with no criticism intended. There are few commodities that are more volatile or more difficult to trade than silver.



Thanks Bart

I swing trade opportunistically at the margins. Mostly SPY, oil, UST, Copper, what have you via futures. It has never accounted for more than a few % a year of my returns, but that is enough for walking around money ; )

My system is deeply unsophisticated. With no sarcasm intended, it's buy low, sell high (or vice versa). I can't put it in writing any more than I could "show my work" doing story problems in third grade math. Right answer, but teacher not satisfied with "I did it in my head, the answer is obvious..."

I'll keep an eye on silver as a potential target but I am not anxious to give back the "house money" from the sale in April, so will be pretty conservative.

I appreciate your thoughts. They are more sophisticated and informed than my own, but otherwise concordant.

rogermexico
09-26-11, 11:06 PM
Gold and silver moved to the downside in tandem so silver call was was spot on, 20% + drop in gold was missed not that it matters to me as I am long on both and quit my day trading ways in 2008.


Since the time of the April 29 call, gold is UP 7% and silver is DOWN 34%. Doesn't sound like tandem linkage to me. "In tandem' means contemporaneously linked and similar in magnitude and direction, right?

What really happened is that EJ "failed" to call the spike from 1500 to 1900 in gold, not that he failed to say gold would only be up 7% and not up 25%.

I think that only an accounting dating since the date of the call really makes any sense. Why does the bonus you got of being saved from a bloodbath in silver require that you also be alerted to a pop in gold to 1900 from 1500 ( that later corrected)? I don't see the connection.

Would it have benefited you more to be alerted to nothing, in order to preserve some sort of symmetry?

tastymannatees
09-27-11, 01:36 AM
Since the time of the April 29 call, gold is UP 7% and silver is DOWN 34%. Doesn't sound like tandem linkage to me. "In tandem' means contemporaneously linked and similar in magnitude and direction, right?

What really happened is that EJ "failed" to call the spike from 1500 to 1900 in gold, not that he failed to say gold would only be up 7% and not up 25%.

I think that only an accounting dating since the date of the call really makes any sense. Why does the bonus you got of being saved from a bloodbath in silver require that you also be alerted to a pop in gold to 1900 from 1500 ( that later corrected)? I don't see the connection.

Would it have benefited you more to be alerted to nothing, in order to preserve some sort of symmetry?



I have lost no money on the call since I been in since 2008 in both gold and silver and despite the two recent take downs in silver I am still ahead of my gold position.

April 29 silver dropped gold did not, Sept 26 both moved down rather dramatically with some rebound since. Two people can look at the same chart and draw alternate conclusions that's OK I am happy with my interpretation.

I just have a different view on silver and I guess not making my point well, the metrics that caused the simultaneous recent fall in silver and gold is either the same and/or different than the April 29 call- so which is it ? I am longer term on my gold/silver so I do not put much much weight on whether I made or lost on the day to day gyrations believing in the broader itulip theory I have more than doubled my wealth in the last 3 years (thanks EJ!) and at least % wise more on silver in that time frame despite the volatility.

My difference is not so much in the call but rather his negative view on silver in general I believe colors his analysis on future prospects for silver. I have a more bullish attitude about it IMHO it will still outperform gold in the near future.

Alvaro Spain
09-27-11, 06:36 AM
There are of course many other factors, but all that I'd produce would be a spaghetti chart that would be very hard to read, and I'd also be giving away quite a bit of my "secret sauce".



I, like Adeptus, am trying to understand the movements of silver. I'd like to know if, in your opinion, the amount of second residences for sale correlate somehow with the silver market. The possible link: if confidence increases the amount of second residences for sale decreases and silver falls.

Thanks.

Chomsky
09-27-11, 06:39 AM
Not really as first drop in April was preceded by something like 5 or 7 margin hikes in span of about a week. Latest drop was preceded by a another margin hike and perhaps some game playing by the majors.

Are margin hikes not consistent with a pump-and-dump, as EJ alleged the silver takedown would be?

Prazak
09-27-11, 09:26 AM
How can silver have fundamentals so weak that the price can be so effectively suppressed, yet simultaneously the fundamentals are so strong that it must rise hugely when not being suppressed?

Can't the same question be asked of the GATA and Sinclair crowd with respect to gold?

bart
09-27-11, 09:47 AM
I, like Adeptus, am trying to understand the movements of silver. I'd like to know if, in your opinion, the amount of second residences for sale correlate somehow with the silver market. The possible link: if confidence increases the amount of second residences for sale decreases and silver falls.

Thanks.


I don't track second residence sales so am not sure, but best guess I'd think the gold/silver ratio would have a better correlation than silver alone since the gold/silver ratio has a decent reverse correlation with liquidity, aka money printing.

rogermexico
09-27-11, 12:10 PM
Can't the same question be asked of the GATA and Sinclair crowd with respect to gold?

I would and EJ has...

bart
09-27-11, 12:35 PM
And "GATA and Sinclair crowd" have similar expectations for gold as EJ, although EJ is not as "optimistic" on the eventual gold high.

rogermexico
09-27-11, 12:46 PM
And "GATA and Sinclair crowd" have similar expectations for gold as EJ, although EJ is not as "optimistic" on the eventual gold high.

So that means....????

bart
09-27-11, 01:46 PM
So that means....????

My thought is that they're far closer to on the same team than not.

Prazak
09-28-11, 12:27 PM
My thought is that they're far closer to on the same team than not.

Agreed, and I check in with Sinclair's website regularly. But IIRC EJ consistently rubbishes the notion of gold or silver being intentionally kept down by the Fed and its proxies.

jiimbergin
09-28-11, 12:38 PM
Agreed, and I check in with Sinclair's website regularly. But IIRC EJ consistently rubbishes the notion of gold or silver being intentionally kept down by the Fed and its proxies.

from Jesse http://jessescrossroadscafe.blogspot.com/2011/09/interesting-series-of-events-at-end-of.html

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake.

Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded.

The US Fed was very active in getting the gold price down. So was the U.K."

Sir Eddie George, Bank of England, September 1999


"That day the U.S. announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake."

Paul Volcker, Nikkei Weekly 2004


“Central banks stand ready to lease gold in increasing quantities should the price rise.”

Alan Greenspan, US Federal Reserve Bank, 24 July 1998

bart
09-28-11, 12:43 PM
Agreed, and I check in with Sinclair's website regularly. But IIRC EJ consistently rubbishes the notion of gold or silver being intentionally kept down by the Fed and its proxies.

Sort of, but I do recall him quoting Volcker about gold being the enemy... which is part way there.

I also think he's not at all into the heavy conspiracy aspect of it espoused by many at places like ZH, as in his "sometimes a cigar really is just a cigar" overall view, or at least my take of it. When something goes parabolic or "excessive", it virtually always corrects - not unlike the mid 70s move of gold to $103 after hitting about $197.

rogermexico
09-28-11, 01:06 PM
My thought is that they're far closer to on the same team than not.

Precisely what makes the GATA crowd's perseveration about suppression incoherent.

Is gold a compelling investment in the presence of highly efficacious price suppression when the suppression is held to be so effective we should worry about it?

Makes no sense to me for the same reason it seems to make no sense to EJ.

rogermexico
09-28-11, 01:11 PM
Sort of, but I do recall him quoting Volcker about gold being the enemy... which is part way there.

I also think he's not at all into the heavy conspiracy aspect of it espoused by many at places like ZH, as in his "sometimes a cigar really is just a cigar" overall view, or at least my take of it. When something goes parabolic or "excessive", it virtually always corrects - not unlike the mid 70s move of gold to $103 after hitting about $197.

Agreed. Those of us who poo-poo the suppression talk are not saying it is not being tried or that there is no motive, or even that it might mot be actionable by nimble traders, we just think it should not affect investment decisions as it cannot be a long term driver of price.

That would be a fair synthesis I think. If you or some other genius trader can profit from it, more power to you.

But when I see the "coiled spring" argument - essentially that suppression is powerfully effective and therefore the lower the price the higher it must go later, or whatever, that is when I reach for my gun....

bart
09-28-11, 01:38 PM
Agreed. Those of us who poo-poo the suppression talk are not saying it is not being tried or that there is no motive, or even that it might mot be actionable by nimble traders, we just think it should not affect investment decisions as it cannot be a long term driver of price.

That would be a fair synthesis I think. If you or some other genius trader can profit from it, more power to you.

But when I see the "coiled spring" argument - essentially that suppression is powerfully effective and therefore the lower the price the higher it must go later, or whatever, that is when I reach for my gun....


Indeed - manipulation or vested interests or intervention or behind the scenes stuff does exist and can have substantial effects, but on something like the precious metal or hard asset long term trend, it has little long term effect when all is netted... and they can make a truly *huge* difference on the shorter term (a point which a certain "clownish" blogger can't or won't admit ;-).

Being aware of the tinfoil hat stuff sure does help in trading (and bah humbug on 'genius')(the majority of the stuff I use is 100% public), but perhaps surprisingly or non intuitively, they generally help more in the area of *not* making a trade than making one. Stated more clearly, various things I watch have an intervention indicator/algo attached and I won't start a trade when its high and close to the trigger point.

On silver itself, one of my top five reasons for getting back in back in 2003 was a GATA article showing how the commercials in the futures market had *never* been long - that's not conspiracy, that's a fact.

Overall, the only thing in markets are humans... and they can be very weird and illogical, and quite sneaky or even scummy too.

FRED
09-28-11, 02:24 PM
Today's update on the performance of gold and silver since the silver sell call April 29, 2011.


http://www.itulip.com/images2/goldvssilverApr292011-Sept282011.png

jpetr48
09-28-11, 11:03 PM
Fred,

Can you please update EJ's gold forecast? I recall he did say it was more difficult to estimate and that he expected prices to remain constant rather than fall as they did.

My question is now centered on a probable 15-20% S&P correction. It looks like gold will be liquidated as well in a market sell off- just wonder if EJ is more confident in forecasting gold now.

Polish_Silver
09-30-11, 09:33 AM
Silver in turn is an industrial metal - one whose single largest category of demand has gone into irreversible decline (photography). Other sources of industrial demand would almost certainly be affected by silver price increases.



Silver potography has been small for 10 years. Even befor that, much of photographic silver was recycled. Silver has diverse industrial uses, which cannot be easily substituted for by other materials. Many of the substitutes are more expensive (gold, Pt, etc) or give worse performance. Silver (like every other element) has unique electrical, optical, and chemical properties.

Silver is certainly not the bargain it was in 2000. Silver is not money to central banks. It's long term performance is not great, and neither is gold's. That's what stores of value are! But to survivalists and many others, silver is a store of wealth. Coin shops have huge inventories of silver, hardly any of Pt, Pd, etc. Gold is so precious it is awkward for barter. By all accounts, the silver markets behave like monetary markets that is, large value of paper contracts relative to physical delivery. I can hardly wait for Mexico to monetize silver.

bart
09-30-11, 09:38 AM
Silver photography has been small for 10 years. Even before that, much of photographic silver was recycled.
...


For what its worth, I owned a photofinishing plant for decades, and we recovered 86-92% of the theoretically available silver. The 1 hour labs averaged about 10% less in my experience.

c1ue
09-30-11, 10:35 AM
Silver potography has been small for 10 years.

That may be true for the United States and the 1st world with regards to consumer photography; it is not true overall. Medical devices, for example, still primarily rely on silver photography.

http://www.silverusersassociation.org/silver/demand.shtml


In 2004, total fabrication fell 2% to a six-year low of 836.7Moz. This figure is more than the amount of newly mined silver (634.4 Moz), however, scrap metal accounts for approximately 25% of the world's consumable silver. Industrial demand has grown with the increasing use of electronics and electrical uses. From mirrors to paints, and dental alloys to coins, silver is used in numerous areas. Today industrial uses account for 44% of worldwide silver consumption.
Silver Demand Worldwide
<table width="300"><tbody><tr> <td width="200">Industrial</td> <td align="right" width="100">367.1 Moz</td> </tr> <tr> <td>Photography</td> <td align="right">181 Moz</td> </tr> <tr> <td>Jewelry & Silverware</td> <td align="right">247.5 Moz</td> </tr> <tr> <td>Coins and Medals</td> <td align="right">41.1 Moz</td></tr></tbody></table>More recent data shows a decline, but a still significant source of demand:

http://seekingalpha.com/instablog/758521-pehrlich/168092-silver-fundamentals-part-i-industrial-demand
http://static.seekingalpha.com/uploads/2011/4/23/758521-130357760985273-PEhrlich.png (http://static.seekingalpha.com/uploads/2011/4/23/758521-130357760985273-PEhrlich_origin.png)

This also shows 'investment' demand being the clear driver for silver in recent years.


For what its worth, I owned a photofinishing plant for decades, and we recovered 86-92% of the theoretically available silver. The 1 hour labs averaged about 10% less in my experience.

Out of curiosity - is energy a significant factor in silver recovery?

shiny!
09-30-11, 11:07 AM
Out of curiosity - is energy a significant factor in silver recovery?

Large quantities of silver are used industrially, but the amount used in each device manufactured, say, for example, tiny circuit boards used in cellphones, appliances, automobiles, etc, is very, very small. This makes silver uneconomical to recover because the energy output to reclaim it costs more than the value of silver recovered. So most silver consumed by manufacturing ends up in the landfill. Does this answer your question?

bart
09-30-11, 11:59 AM
That may be true for the United States and the 1st world with regards to consumer photography; it is not true overall. Medical devices, for example, still primarily rely on silver photography.


This also shows 'investment' demand being the clear driver for silver in recent years.



I urge caution on some of the numbers since recovery and re-use is substantial. X-ray film is bought by refiners etc. for example due to its substantial silver content.


Out of curiosity - is energy a significant factor in silver recovery?


Not much, electrostatic devices or osmosis devices require little power. Most small labs just use a specialized bucket with steel wool in it, no power needed at all.

verdo
11-28-12, 07:35 PM
I'm using the term "bubble" as the mainstream media does to mean a market driven by price and euphoria, having given up on my more refined definition ever gaining currency. To me a true asset bubble requires government to get it going and keep it going, as in the case of the telecom and housing bubbles. Governments hate commodity bubbles and don't tolerate them for long, killing them off early with margin requirement hikes. Before the FIRE Economy era that used to also be true of property bubbles. So perhaps mini-bubble is a better term. Below is an explanation and chart that divides the silver market into five camps as discussed here (http://www.itulip.com/forums/showthread.php/19213-Silver-Pump-and-dump-crash-week-two).


What I'm looking for is that moment in a decade or so when we're at a turning point; anxiety among all market participants peaks, and the market divides into two camps: those who fear losing out on additional gains and those who fear losses in a crash. There are always insiders in a bubble that know when to cut and run. After the initial crash, the market becomes more complicated again as market participants differentiate from two into several camps and the weightings change. We'll see that in the silver market this coming week.

The figment of a $34 fair value for silver complicates the picture for now. Maybe once enough buyers are sucked in to bring prices back up to, say, $40, the rug will get pulled out from under the believers and the chartists who are tracking the popular chart. That's one possible game to be played this week, meaning that a rise from $35 to $39 may be another trading opportunity like $33 to $36. Alternatively the market simply keeps falling.

To help me understand what to look for, I've created the following chart. We go at this armed with our understanding of the dynamics of debt deflation, Peak Cheap Oil, and the ongoing decommissioning of the US dollar as these relate to eras of boom and bust driven by these processes and events as they are reflected in the silver price.

http://www.itulip.com/images2/silverpostcrashMay82011.png

The chart shows five different interpretations of a silver "fair price" tomorrow. The dreamers who believed in $50 gold and beyond, legion only ten days ago, are all but gone. The straight up red line, while absurd on the face of it, was their projection of silver prices until recently.

One the other end of the spectrum are the pessimists who never owned any silver and never will at any price. They are extrapolating the silver price rate of rise from 2003 when silver stopped bumping around $5 as it had for two years after I bought it and started a steady albeit modest rise, and nearly coincides with the early stages of the dollar's decade long decline. The trend ends in 2006 with the bursting of the housing bubble. If you think silver is an industrial metal, the demand for which will decline once the post recession reflation money runs out, and that the dollar will stage a recovery as a result rather than tanking further in response to rising sovereign default risk, you are a silver pessimist and $14 is your number.

Next up the ladder are the realists who believe that silver is an industrial metal but that despite unfavorable economic conditions and only modest demand, more dollars will be needed to buy it as the US economy weakens. They think $21 is a fair extrapolation of the rate of price increases since the dollar started to weaken with the beginning of the end of the FIRE economy in 2001, plus the wars, plus Peak Cheap Oil, net of financial crisis and reflation.

Next are the optimists who think the rate of price growth since the reflation began in March 2009 is the "new normal" growth rate. This includes nearly everyone in the stock market as well, who thinks they've been promised QE3 and whatever else is necessary to keep asset prices rising. To them $25 seems quite fair and puts the gold/silver ratio back to its gold/silver ratio of 60 since governments stopped buying silver.

Finally comes the consensus as published in the mainstream press. Barron's and Marketwatch and so on called silver fund managers over the weekend to ask them what they think and, lo! They think the price silver closed at on Friday is just about right. It's also, not coincidentally, the price that most silver chartists have been using to identify the transition from "buy" to "hold." I have no idea where they get this $34 price from. It doesn't correlate to anything that has occurred on a macro level, but there it is, set in pixels like that fake image of Obama smoking a cigarette that everyone has seen and most people believe.

The way I see it, market participants will fight their way among macro-driven price levels, as well as the chartist levels, as the silver falls toward $20 and possibly under before rebounding to over $20.


So before I go into my question, I want to apologize for bumping this. I'm a long time follower, but a first time poster. I wanted to make a new thread getting the itulip consensus view on silver today, but I really did not know the right place to make it on this forum. Its been some time now since the call, and I've been reading through much of what was on here and I wanted to see what the opinions were. I personally didn't see what happened last year as the final end for silver. If gold was as small a market as silver is, I think the correction in gold could have been almost as severe. But beyond that, I find it hard to believe that silver wont retest the $50 level if gold rises back up to test the $2000 level. Am I the only one who thinks this way atm? Also, in terms of the posts i quoted from Eric, I just wanted to know if his view personally has changed at all. He made some pretty scathing attacks here on the silver expectations going forward after the crash, but we are right now hovering around Eric's 'consensus price' view (which I've bolded), and judging by what he wrote, this consensus price was supposed to be a fallacy. I'm not attacking you Eric, or anything like that...so i apologize if I came off that way. I'm just very curious if you still think silver is a bad investment, and that in terms of precious metals, we should be gold only.

If high inflation is really what we see comiing, how could silver possibly not perform in that environment? When it comes to periods of high inflation, silver is practically queen bee. I mean, I understand that silver wont be money and that central banks aren't buying it. But that was true in the 70's also, and silver rose several thousand percent because the public bought into it with the same fervor that brought gold prices up. Again, I just find it very difficult to believe that gold will move back to $2000 and silver will stay where it is right now. The dynamics that got me into silver (inflation fears, low interest rates, etc) really haven't changed, so I just don't understand the argument for silver being a poor buy right now. It just doesn't make much sense to me, but perhaps one of you (or Eric himself) can throw out some thoughts.

Btw, right now I hold both gold and silver, and I was actually planning on buying more of both. Should I just buy gold? Should I continue with the plan to buy both? or should I not only buy gold solely, but sell what silver I have and put it into gold?

Thanks

bart
11-28-12, 08:04 PM
My $.02 worth, mostly in TA-ville.

Next target on gold, around $2040. I'm still looking at a ~$1775 target by the end of the year as I established near the beginning of 2012, but with a trip down to the $1680 range quite possible.

Next target on silver, just under $40 with a spike down into the $31 range before EoY. I have no EoY target on silver.

As far as which to buy or trade, whether short or intermediate term, good advice that I got from a successful geezer trader in the 70s is to watch the gold/silver ratio (GSR) ( http://stockcharts.com/h-sc/ui?s=$GOLD:$SILVER&p=D&b=5&g=0&id=p31633526550 ) and use trend lines of a period length that is close to your average trade length. Short term traders use daily or weekly, intermediate use weekly or even monthly.
When the GSR is headed down, the probabilities and rule of thumb guidance are for higher inflation and/or "uncertainty" (social 'upsets' included) with the opposite for GSR going up.

It remains my strong belief that silver will hugely outperform gold in the inflation blow off that's ahead, but not imminent.


YMMV, as always. I'm far from always right.


Lastly, the $34 area on silver is in my opinion due to it being a long term support/resistance level (even in 1979-80). It's also a Fibonacci number... and wacky/weirdo traders don't exactly always make strict or logical sense, and EJ is very much not a weirdo trader.

BadJuju
11-28-12, 08:04 PM
Btw, right now I hold both gold and silver, and I was actually planning on buying more of both. Should I just buy gold? Should I continue with the plan to buy both? or should I not only buy gold solely, but sell what silver I have and put it into gold?

Thanks

I think the point was that gold would simply be the better investment of the two due to greater returns.

verdo
11-28-12, 08:14 PM
My $.02 worth, mostly in TA-ville.

Next target on gold, around $2040. I'm still looking at a ~$1775 target by the end of the year as I established near the beginning of 2012, but with a trip down to the $1680 range quite possible.

Next target on silver, just under $40 with a spike down into the $31 range before EoY. I have no EoY target on silver.

As far as which to buy or trade, whether short or intermediate term, good advice that I got from a successful geezer trader in the 70s is to watch the gold/silver ratio (GSR) ( http://stockcharts.com/h-sc/ui?s=$GOLD:$SILVER&p=D&b=5&g=0&id=p31633526550 ) and use trend lines of a period length that is close to your average trade length. Short term traders use daily or weekly, intermediate use weekly or even monthly.
When the GSR is headed down, the probabilities and rule of thumb guidance are for higher inflation and/or "uncertainty" (social 'upsets' included) with the opposite for GSR going up.


YMMV, as always. I'm far from always right.


Lastly, the $34 area on silver is in my opinion due to it being a long term support/resistance level (even in 1979-80). It's also a Fibonacci number... and wacky/weirdo traders don't exactly always make strict or logical sense.

Well, I'm not too interested in the whole quick trading thing, but I'll check your link out. I just see the next few years as a continuation of a general commodities bull market, which is why I'm confused as to why Eric hasn't bought back (or most ituliper's from what ive read so far) silver.


I think the point was that gold would simply be the better investment of the two due to greater returns.

Okay but why would silver not continue to outperform as it has over the last decade, and as it did at the end of the bull run in 1980? When I saw Eric's call, I had half-expected that he would take the profits he made from the sell at the top, and buy it back after the crash had completed. But since he hasn't bought any back, that tells me that the view here is that the silver story is over. That is what I was curious about.

bart
11-28-12, 08:17 PM
I think the point was that gold would simply be the better investment of the two due to greater returns.

The last bull from 1966-1980 per the hard vs. paper asset cycle:

Gold went from $35 to $850, 24.3x
Silver went from $1.29 to $49.45, 38.3x

Similar stats from prior cycles although not as big a difference, and perhaps this time is different.

bart
11-28-12, 08:21 PM
Well, I'm not too interested in the whole quick trading thing, but I'll check your link out. I just see the next few years as a continuation of a general commodities bull market, which is why I'm confused as to why Eric hasn't bought back (or most ituliper's from what ive read so far) silver.
...



The data applies to the long term too, as far as what to buy when and what balance to use between silver & gold, or at least it has for me in over 15x'ing my net worth since 2004.

YMMV


By the way, here's my hard vs. paper asset cycle since 1900 to which I referred.

http://www.nowandfutures.com/images/dow_gold_oil_crb1900-current.png

BadJuju
11-28-12, 09:03 PM
Okay but why would silver not continue to outperform as it has over the last decade, and as it did at the end of the bull run in 1980? When I saw Eric's call, I had half-expected that he would take the profits he made from the sell at the top, and buy it back after the crash had completed. But since he hasn't bought any back, that tells me that the view here is that the silver story is over. That is what I was curious about.

Oh, I don't know. I just assumed that is why EJ recommends gold over silver. Personally, I hold equal parts silver and gold.

EJ
11-28-12, 11:27 PM
Time for a quick update to answer the key question here.

Question: Why not buy back into silver when it fell to $27 from my sell price of $48?

Answer: The silver play was for a 628% gain from $4.25 to $48.50 between 2001 to 2011. It won't be repeated.


http://www.itulip.com/images2/SilverUpdateNov272012wtmk.png


To get another 628% gain on silver from $27 it has to rise to $179.

Realistic?

No.

Game Over.

Free tip: Buy cheap. It's the only way to make money.

At $27 silver wasn't cheap like it was at $4.25 in 2001.

That's why I didn't buy back in.

Time to move on.

Move on to what?

That's what we talk about in the subscriber area. There are always un-loved and under-priced things to buy, but it takes discipline to find them and distinguish the undeservedly underpriced from the deservedly low priced.

verdo
11-28-12, 11:33 PM
I see. Well that settles it then, Gold it is

rogermexico
11-28-12, 11:36 PM
Time for a quick update to answer the key question here.

Question: Why not buy back into silver when it fell to $27 from my sell price of $48?

Answer: The silver play was for a 628% gain from $4.25 to $48.50 between 2001 to 2011. It won't be repeated.


http://www.itulip.com/images2/SilverUpdateNov272012wtmk.png


To get another 628% gain on silver from $27 it has to rise to $179.

Realistic?

No.

Game Over.

Free tip: Buy cheap. It's the only way to make money.

At $27 silver wasn't cheap like it was at $4.25 in 2001.

That's why I didn't buy back in.

Time to move on.

Move on to what?

That's what we talk about in the subscriber area. There are always un-loved and under-priced things to buy, but it takes discipline to find them and distinguish the undeservedly underpriced from the deservedly low priced.


A true investment pearl. There is ALWAYS some asset that is cheap enough to have a high probability of abnormal gains going forward. ALWAYS.

The key to investment success is having the discipline to keep your powder dry until you find this asset, and then having the courage to buy enough of it to make a difference.

jpetr48
11-29-12, 12:09 AM
Yes I agree and did buy a good amount of coal stocks early September with thesis of Mideast war and spike in energy prices. However thankfully this war did not happen. Coal is cyclical and will get hit hard in coming months, so i sold and may rebuy on next correction. I was ready to buy natgas at 2.80 but I do not have time nor energy to learn futures or to roll over contracts. Thanks though rogermexico for your contribution.

Raz
11-29-12, 01:22 AM
A true investment pearl. There is ALWAYS some asset that is cheap enough to have a high probability of abnormal gains going forward. ALWAYS.

The key to investment success is having the discipline to keep your powder dry until you find this asset, and then having the courage to buy enough of it to make a difference.

;_TU ;_Y This is the only way I've made any significant gains during my lifetime.

DRumsfeld2000
11-29-12, 01:37 AM
EJ "Answer: The silver play was for a 628% gain from $4.25 to $48.50 between 2001 to 2011. It won't be repeated.''

Am I being stupid here as I write early in the morning, but is this not a gain of over 1,000%?

Polish_Silver
11-29-12, 08:29 AM
. . .

It remains my strong belief that silver will hugely outperform gold in the inflation blow off that's ahead, but not imminent.



I have often wondered about this. Gold is best for central banks, who want to stabilize currencies, post collateral for international loans, etc.

Are you thinking the "inflation blow off" will result in a barter system, or that people will want to store wealth in silver coins instead of paper bills? Silver might well be the "metal of choice" in that situation, since even a 1/10oz gold coin will be too valuable for most transactions.

But what kind of scenario will cause silver to "hugely outperform gold"? It seems like Hyperinflation, radical currency devaluation, or sustained high inflation, or the fear them.

In favor of that idea, I have seen any number of articles from "prominent economists" calling for inflation or negative real rates, to encourage individuals and institutions to spend the money they have. As though saving for the future is unpatriotic.

This so called "paradox of thrift" should be thoroughly debunked by some one.
Slowly falling prices are beneficial, unless the economy has high debt levels.

jpatter666
11-29-12, 08:38 AM
I have often wondered about this. Gold is best for central banks, who want to stabilize currencies, post collateral for international loans, etc.

Are you thinking the "inflation blow off" will result in a barter system, or that people will want to store wealth in silver coins instead of paper bills? Silver might well be the "metal of choice" in that situation, since even a 1/10oz gold coin will be too valuable for most transactions.

But what kind of scenario will cause silver to "hugely outperform gold"? It seems like Hyperinflation, radical currency devaluation, or sustained high inflation, or the fear them.

In favor of that idea, I have seen any number of articles from "prominent economists" calling for inflation or negative real rates, to encourage individuals and institutions to spend the money they have. As though saving for the future is unpatriotic.

This so called "paradox of thrift" should be thoroughly debunked by some one.
Slowly falling prices are beneficial, unless the economy has high debt levels.

I do not see silver outperforming gold purely on a monetary metal basis. On the other hand, silver has very interesting industrial uses, potentially in its antibacterial properties (as I recall, might be wrong here, but something along those lines) which could lead silver higher.

I do not see a return to only using actual silver coins/gold -- the electronic payment system is NOT going away as the government has many, many reasons for moving away from a cash basis. I do see the possibility of having electronic debit/credit accounts which are denominated in grams of gold against some physical reserve held elsewhere (basically bullionvault taken to the next level)

Polish_Silver
11-29-12, 08:52 AM
Buffet and Peter Lynch used to talk about finding undervalued stocks, and recommend it
for everyone. But with more people using the internet, and more money in 401k's, perhaps there are fewer undervalued stocks. Information flows more freely. Buffet is not making most of his money on a "buy and hold" strategy in recent years, but on arbitrage deals.

Grantham is also on the prowl for undervalued assets. He is a macro thinker, so his findings are of interest to bugs and I-tulipers. Doesn't he claim it is difficult to find good investments?

Shiller's opinion is that we are not much better off than people 3000 years ago trying to increase the size of their goat herd, or have more children to take care of them.

I doubt there is any scalable asset undervalued to the extent gold was in 2000.

There may be a myriad of smaller ones you could invest in, but I think there are not enough around for all the investors who want even 6% real returns.

bart
11-29-12, 08:56 AM
I have often wondered about this. Gold is best for central banks, who want to stabilize currencies, post collateral for international loans, etc.

Are you thinking the "inflation blow off" will result in a barter system, or that people will want to store wealth in silver coins instead of paper bills? Silver might well be the "metal of choice" in that situation, since even a 1/10oz gold coin will be too valuable for most transactions.


That's certainly one of the reasons, due to the quantity of folk expecting a 'Mad Max' scenario, but I don't think a 'Mad Max' scenario is very likely.



But what kind of scenario will cause silver to "hugely outperform gold"? It seems like Hyperinflation, radical currency devaluation, or sustained high inflation, or the fear them.



In my opinion those are the primary reasons, with the addition of 'social unrest'.
I haven't seen any posts by EJ backing away from an expectation of prices doubling in some 3 year period either, although I could have missed it.


In favor of that idea, I have seen any number of articles from "prominent economists" calling for inflation or negative real rates, to encourage individuals and institutions to spend the money they have. As though saving for the future is unpatriotic.

This so called "paradox of thrift" should be thoroughly debunked by some one.
Slowly falling prices are beneficial, unless the economy has high debt levels.

We already have both inflation (my CPPI is around 6%, Williams SGS-CPI is around 9-10%) and negative real rates. Even just using CPI, the current 3 month Treasury rate is around minus 3%.

One of the worrying aspects about prominent economists calling for inflation is that one of them is Krugman. ;-)

The huge wild card though is the whole area of geo-politics. We had nothing like the political control and lack of sanity and "PR crud" and fascism we have today when compared to the late 70s and early 80s.

verdo
11-29-12, 09:07 AM
One of the worrying aspects about prominent economists calling for inflation is that one of them is Krugman. ;-)


A clock that tells the wrong time is still right for half the day, lol.

bart
11-29-12, 09:54 AM
A clock that tells the wrong time is still right for half the day, lol.

"Krugman: Bring Back the 91% Tax Rate"
– The New York Times, November 18

He is redeemed!!! /sarcasm

rogermexico
11-29-12, 10:05 AM
EJ "Answer: The silver play was for a 628% gain from $4.25 to $48.50 between 2001 to 2011. It won't be repeated.''

Am I being stupid here as I write early in the morning, but is this not a gain of over 1,000%?


Yes, it is.

EJ is not saying that silver will not go up again or that it will be dead money. He is saying that this buy and hold ten-bagger performance will not likely be repeated. More importantly, he is saying that we should focus on things that will do better than silver over the near- to-intermediate term. These things may or may not be evident or even exist at any given point in time, hence my comment about keeping your powder dry.

Rational speculation is always about handicapping among various investment alternatives. And anyone who holds any asset at all is a speculator......

rogermexico
11-29-12, 10:17 AM
Buffet and Peter Lynch used to talk about finding undervalued stocks, and recommend it
for everyone. But with more people using the internet, and more money in 401k's, perhaps there are fewer undervalued stocks. Information flows more freely. Buffet is not making most of his money on a "buy and hold" strategy in recent years, but on arbitrage deals.

Grantham is also on the prowl for undervalued assets. He is a macro thinker, so his findings are of interest to bugs and I-tulipers. Doesn't he claim it is difficult to find good investments?

Shiller's opinion is that we are not much better off than people 3000 years ago trying to increase the size of their goat herd, or have more children to take care of them.

I doubt there is any scalable asset undervalued to the extent gold was in 2000.

There may be a myriad of smaller ones you could invest in, but I think there are not enough around for all the investors who want even 6% real returns.

The macro approach we use here is not the only alternative. There are trading approaches and deep value approaches focusing only on equities that work very well and would have given great performance

Grantham and Buffett are hampered by having too much capital to invest, something Buffett has talked about repeatedly. Give these guys a few million instead of billions and they would have no trouble even limiting themselves to equities.

Imagine BRK had funded the entire 5 M B round of trutouch. Even is TTT is a ten-bagger (which is easily conceivable if not predictable) this event would not even move the needle of BRK's market value.

My own preference for asset class based macro investing is because it is much more time efficient for me, not because swing trading or deep value equity investing is impossible or inferior in returns. I've done both successfully in the past. That said, I have also had better IRR over time with macro investing, with the exception of 1999 where my IRR was 97% in that one year. But that was an exceptional year of bubbly market behavior as we all know, and like the silver trade, not likely to be repeated with stocks for a quite a while.

rogermexico
11-29-12, 10:26 AM
I would add that despite what I just said about reverse economies of scale, many of the best macro plays are not only in plain view to all investors, but have enough float that any hedge fund could buy or short them.

Think gold in 2001, shorting silver in April 2011, buying natural gas when it trades at a 3 sigma low ratio to crude oil, shorting or selling the NASDAQ in early 2000, etc.

Politics, marketing, groupthink, SEC rules and herd behaviour are what prevent the larger actors from exploiting these opportunities as well as we amateurs can.

DRumsfeld2000
11-29-12, 10:26 AM
Errr, what are you talking about? I was simply asking where he gets 628% from.

rogermexico
11-29-12, 10:35 AM
Errr, what are you talking about? I was simply asking where he gets 628% from.


Obviously I was responding to the whole thread. I agree that you have good math skills....

vinoveri
11-29-12, 10:36 AM
Yes, it is.

EJ is not saying that silver will not go up again or that it will be dead money. He is saying that this buy and hold ten-bagger performance will not likely be repeated. More importantly, he is saying that we should focus on things that will do better than silver over the near- to-intermediate term. These things may or may not be evident or even exist at any given point in time, hence my comment about keeping your powder dry.


Rational speculation is always about handicapping among various investment alternatives. And anyone who holds any asset at all is a speculator......

I for one would be much obliged for suggestion on where to keep one's dry powder in a ZIRP environment with real inflation.
The worry for loss of purchasing power of wealth can hinder patience and cause one to invest unwisely.
What would you recommend as a non-cash highly liquid means of storing powder?
thanks

rogermexico
11-29-12, 10:41 AM
I for one would be much obliged for suggestion on where to keep one's dry powder in a ZIRP environment with real inflation.
The worry for loss of purchasing power of wealth can hinder patience and cause one to invest unwisely.
What would you recommend as a non-cash highly liquid means of storing powder?
thanks

Some combination of paper gold, cash and T-bills (not notes) would be my suggestion. Mix to suit risk tolerance.

shiny!
11-29-12, 11:09 AM
In addition to watching the gold:silver ratio as an indicator of inflation, you can also use this ratio to increase your holdings of either metal without spending any money. Example:

When silver was under-priced and the G:S ratio was high, I bought silver, from the 90's when it was $4.50, then again starting in 2007-2009 or so, when the ratio eventually climbed to 1:80. One ounce of gold was equal to 80 ounces of silver.

At the time EJ made his "sell silver" call, the G:S ratio was 1:33, IIRC. I traded most of my silver for gold. Ended up with twice as much gold for my original dollar outlay as I would have had if I'd bought gold originally. If the ratio ever expands again dramatically, I might trade some of the gold for silver again, then trade back when and if the ratio shrinks substantially.

Trade opportunities like this don't come along often, but when they do you can use them to significantly increase your holdings.

I think it's a good idea to keep at least some silver- not that we're going all Mad Max, but I do recall the gas shortages in the 70's, with gas station owners giving preference to people who could pay with silver dimes and quarters. It never hurts to have insurance.

rogermexico
11-29-12, 11:16 AM
In addition to watching the gold:silver ratio as an indicator of inflation, you can also use this ratio to increase your holdings of either metal without spending any money. Example:

When silver was under-priced and the G:S ratio was high, I bought silver, from the 90's when it was $4.50, then again starting in 2007-2009 or so, when the ratio eventually climbed to 1:80. One ounce of gold was equal to 80 ounces of silver.

At the time EJ made his "sell silver" call, the G:S ratio was 1:33, IIRC. I traded most of my silver for gold.

I also rolled all my silver, bought at 14.00 and sold at 47.50, into gold at around $1500. That's worked out reasonably well.

EJ
11-29-12, 11:55 AM
Buffet and Peter Lynch used to talk about finding undervalued stocks, and recommend it
for everyone. But with more people using the internet, and more money in 401k's, perhaps there are fewer undervalued stocks. Information flows more freely. Buffet is not making most of his money on a "buy and hold" strategy in recent years, but on arbitrage deals.

That's fine for Buffet and Lynch who can hire an army of analysts to pour over the financials and industry details of hundred's of companies to narrow your search to a dozen or so. Then you visit the company and meet management, get the tour, and learn more about the company first hand. You get this access because you have millions of dollars to invest. When the news of your investment is made public and is widely followed because you are a public figure who writes op eds in the Wall Street Journal and otherwise participates in the "debate" on the markets and the economy, including a heavy dose of gold bashing, guess what happens to the price of the stock you invested in? That's right. It goes up.

Your average retail stock investor can't do any of this. The performance of a portfolio of individual stocks purchased over time by a retail investor using all of the online tools that every other retail investor has is rarely better than the performance of a stock index and usually worse.


Grantham is also on the prowl for undervalued assets. He is a macro thinker, so his findings are of interest to bugs and I-tulipers. Doesn't he claim it is difficult to find good investments?

I met Grantham in November 2008 at the time he asserted that the market bottomed. The market proceeded to to drop another 13% into March. He called another bottom then. That's the bottom he refers to when he claims to have correctly noted the financial crisis market bottom.


Shiller's opinion is that we are not much better off than people 3000 years ago trying to increase the size of their goat herd, or have more children to take care of them.

I've met Shiller and Karl Case, too. I prefer the FHFA's old All-Transactions House Price Index over the newer Case-Shiller index. The media uses the Case-Shiller indexes when talking up the housing market, not the more established All-Transactions index. A comparison between the two indexes suggests the reason why: the FHSA index does't make for much debate about the state of the housing market.


http://research.stlouisfed.org/fredgraph.png?g=dfm


I doubt there is any scalable asset undervalued to the extent gold was in 2000.

Not so. We have discussed two. Both are energy related. One is a widely hated and derided dirty energy source that is under-produced and the other is the subject of a media frenzy and is being over-produced. There are also under-priced private equity plays, although these are few and far between and not available to all members. We're always looking.


There may be a myriad of smaller ones you could invest in, but I think there are not enough around for all the investors who want even 6% real returns.

Agree on the hard to find part. It takes discipline. Let me give you an example.

I worked as Entrepreneur-in-Residence for Venetia Kontogouris, Managing Director Trident Capital, for six months. She'd come up to Boston from Westport, Conn. for meetings I'd set up with start-ups. She'd get up at 5AM to be in a meeting in Boston by 7AM. We'd have one meeting after another until 8PM then knock off for a working dinner to review notes. We'd do this for days on end. This was a normal day for her. Her motto, spend 99% of your time hunting, then 1% pouncing. Her personal IRR was 66% last I checked, three times the industry average.

The boys at Eastham Capital take the same approach to deals. They turn down something like 95% of the deals they look at. I assume members who invested in Eastham Capital Fund II are pleased with the results.

So we keep doing what we do: hunt for the underpriced thing and, on rare occasion when we find it, pounce.

EJ
11-29-12, 12:04 PM
EJ "Answer: The silver play was for a 628% gain from $4.25 to $48.50 between 2001 to 2011. It won't be repeated.''

Am I being stupid here as I write early in the morning, but is this not a gain of over 1,000%?

I was reading the % number off the Kitco chart that Kitco calculated. I could have used 1000% but then the question arises, Why is my number 1000% and Kitco's 628%? For the sake of the argument I'm making, it was a large return and won't be as large again.

EJ
11-29-12, 12:18 PM
I also rolled all my silver, bought at 14.00 and sold at 47.50, into gold at around $1500. That's worked out reasonably well.

That decision worked out like this:


http://www.itulip.com/images2/SellSilverApr292011BuyGoldwtmk.png

If you hung on you saw silver prices fall 43%


http://www.itulip.com/images2/SilverPriceBottomoff43percentwtmk.png

If you re-purchased silver exactly at the bottom you have experienced a 27% gain.



http://www.itulip.com/images2/SilverPriceBottomup25percentwtmk.png

Not bad, but what's the total upside versus downside risk at $34.20 in 2012 versus 4.25 in 2001?

We can say the same for gold. We hold gold not for capital gain but for insurance against IMS crisis, that is, for the same reason that Russia, China, Argentina and dozens of other countries have been buying it.

rogermexico
11-29-12, 12:30 PM
That decision worked out like this:


http://www.itulip.com/images2/SellSilverApr292011BuyGoldwtmk.png

If you hung on you saw silver prices fall 43%


http://www.itulip.com/images2/SilverPriceBottomoff43percentwtmk.png

If you re-purchased silver exactly at the bottom you have experienced a 27% gain.



http://www.itulip.com/images2/SilverPriceBottomup25percentwtmk.png

Not bad, but what's the total upside versus downside risk at $34.20 in 2012 versus 4.25 in 2001?

We can say the same for gold. We hold gold not for capital gain but for insurance against IMS crisis, that is, for the same reason that Russia, China, Argentina and dozens of other countries have been buying it.

It's true that one could have done better than the 10% gold has gone up, but I look at the swap from silver to gold in 24 hours as one trade, and the move out of silver and back in as requiring two trades and two calls- calling a top in silver and then calling a subsequent bottom in silver... So in addition to gold being the sounder long term holding (fourth currency) I am really pretty happy with the incremental 10% gained vs leaving silver proceeds in cash..

EJ
11-29-12, 02:05 PM
It's true that one could have done better than the 10% gold has gone up, but I look at the swap from silver to gold in 24 hours as one trade, and the move out of silver and back in as requiring two trades and two calls- calling a top in silver and then calling a subsequent bottom in silver... So in addition to gold being the sounder long term holding (fourth currency) I am really pretty happy with the incremental 10% gained vs leaving silver proceeds in cash..

I recall JK and others also made a decision at the time to trade silver, a commodity that was the subject of a pump-and-dump operation by the usual suspects, for the only commodity that is also an international reserve currency, gold. A perfectly reasonable move.

shiny!
11-29-12, 05:01 PM
I recall JK and others also made a decision at the time to trade silver, a commodity that was the subject of a pump-and-dump operation by the usual suspects, for the only commodity that is also an international reserve currency, gold. A perfectly reasonable move.

EJ, while the price of gold:silver is approximately 1:50, I've read that the actual physical G:S ratio is more like 1:16. Do you agree with the claims that miners have essentially reached "peak silver", or is that a myth to support the pump-and-dump scheme?

What are the long-term prospects for silver as an industrial commodity, i.e. how do you perceive supply and demand over the next 10-20 years?

And do you still expect silver to hit $100-$180 in a blow-off top?

globaleconomicollaps
11-29-12, 06:02 PM
I have often wondered about this. Gold is best for central banks, who want to stabilize currencies, post collateral for international loans, etc.

Are you thinking the "inflation blow off" will result in a barter system, or that people will want to store wealth in silver coins instead of paper bills? Silver might well be the "metal of choice" in that situation, since even a 1/10oz gold coin will be too valuable for most transactions.

But what kind of scenario will cause silver to "hugely outperform gold"? It seems like Hyperinflation, radical currency devaluation, or sustained high inflation, or the fear them.

In favor of that idea, I have seen any number of articles from "prominent economists" calling for inflation or negative real rates, to encourage individuals and institutions to spend the money they have. As though saving for the future is unpatriotic.

This so called "paradox of thrift" should be thoroughly debunked by some one.
Slowly falling prices are beneficial, unless the economy has high debt levels.
There was an article about this today:
http://fofoa.blogspot.fr/2012/11/regular-forum-archives-1998-2001.html

EJ
11-29-12, 07:08 PM
EJ, while the price of gold:silver is approximately 1:50, I've read that the actual physical G:S ratio is more like 1:16. Do you agree with the claims that miners have essentially reached "peak silver", or is that a myth to support the pump-and-dump scheme?

What are the long-term prospects for silver as an industrial commodity, i.e. how do you perceive supply and demand over the next 10-20 years?

And do you still expect silver to hit $100-$180 in a blow-off top?

Silver may reach $100 if gold reaches $5,000.

Until the day silver is burned as fuel and lost into the atmosphere forever as fossil fuels are there will be no peak silver or peak any kind of metal. Silver is recycled at 50%, lead at 80%, and steel at 88%. As prices rise with PCO, so shall recycling.

As for the industrial, jewelry, investor and other sources of demand for silver, I recommend you reference only reputable sources (http://www.silverinstitute.org/site/supply-demand/).

shiny!
11-30-12, 12:28 AM
Thank you very much, EJ. Excellent link, now bookmarked.

tastymannatees
11-30-12, 09:17 AM
I bought my precious metals in 2008 - 25% silver75% gold

I am up a little over 100% on my gold and 240% on my silver to date and I am happy with the trade and glad I did not sell on the call.

Probably one of EJ's less popular calls, I and many others here made the argument that the short fundemental supply was a different animal and should not be viewed solely through the bubble prisim and should be seen as more like peak cheap oil -Time will decide who was right.

In any event I have 2X'ed my wealth since joining in 2008 from Itulip so I have no complaints, sometimes you have to go on your gut understanding of things and not rely on others.

goldrush
02-03-14, 08:29 AM
2011... EJ gives the sell call on the very day silver peaked at $49. 2 years later, silver is about $19 (Feb 3, 2014.) Is it "Time at last to buy silver again?" While the bears are calling for $14-$15 silver, a lot of traders are getting interested in silver again... in EJ's latest article he expects gold to close around $1,400-$1,500 for 2014... with a gold to silver ratio of almost 65 (it was about 27 when EJ sold) what are EJ's thoughts? Thank you!

verdo
02-03-14, 05:22 PM
Personally I would wait. I don't see silver (an industrial metal) doing well if the stock market (which helps finance the industry) goes under, which seems to be on the horizon for 2014