16 votes

How The Coming Silver Bubble Will Develop

The two greatest upward price forces known to man, an asset bubble and a genuine commodity shortage, appear set to combine in silver. Either one, alone, would have a profound impact on the price, but the combination seems both inevitable and almost impossible to contemplate in terms of how high the price of silver could be driven. And it’s hard to see how intense investment buying wouldn’t trip off industrial user attempted inventory stockpiling or vice versa; it doesn’t matter which comes first.


Trending on the Web

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

I wouldn't bet the farm on it.

Silver at the present price is a fair buy. Supplies are not constrained. If you have $100,000 sitting around, there are plenty of silver dealers who are willing to exchange physical silver for your federal reserve notes. They will provide it at a price not that far marked up from the spot price.

The whole thesis of the article is that prices will skyrocket if market psychology changes. Silver is a relatively small market and IF a lot of new buying comes in, then the price will go up significantly. You have to remember the IF part of that argument. You are speculating, and things could fail to turn out as you predict. What if some other crisis develops before that dollar crisis everyone is predicting? Silver could just as easily fall to $2 as rise to $200. It is more likely to rise in my opinion, but I am speculating.

Profiting from a bubble is not easy to do, because no one knows how big it will get or when it will pop. The author admits it himself at the end of the article. Silver was overpriced at $50 back in 2011. How many of these hucksters writing investment newsletters were telling people to get out of silver in 2011?

It saddens me to see people talk about throwing all of their money in one asset, or even worse, going into debt to buy one speculative asset. It is boring advice, but it is much safer to diversify your investments. Save money, don't take on debt, and whatever money is left over should be distributed among investments that are diversified. That even includes, dare I say, holding some cash. Take my advice for what it is...just a random guy giving it away for free on the internet. I do speak from hard knock experience, though.

We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.

-C. S. Lewis

So if you knew a dollar crash was coming...

And that $50k of silver today would be worth $400k in 4 or 5 years, or that the dollar was gonna crash and be useless, but silver did not crash...

Would you take out a loan to buy $50k worth of silver?

SteveO24's picture


I think it will happen. When? I don't know. I go to my local silver dealer every Friday and buy some. Stacking little by little and it feels good, it feels right.

I'm saving scrap electronics.

If the price goes up enough, I'd sell and increase my urban mining efforts.

Free includes debt-free!

Just wishful thinking....

Ted Butler even shoots down his own argument for a "bubble", as shown below:

"Tying everything together, there is one and only one explanation for why silver is so undervalued and the asset bubble/industrial shortage hasn’t occurred yet – the ongoing price manipulation on the COMEX.

Massive amounts of paper contracts traded between two groups of large speculators (technical funds and commercials), measuring in the hundreds of millions of ounces and completely unrelated to the supply/demand fundamentals have set the price of silver.

The connection between paper and physical has been forged because the main COMEX futures speculators are only interested in trading paper futures contracts and not in trading physical metal. Technical funds have no desire to buy and sell real metal for full cash payment when they can deal in paper contracts for only 10% cash down because they are trading, not investing.

The problem is that the trading between the technical funds and the commercials has become so large that it dwarfs real world silver supply/demand fundamentals, and ends up setting the price of silver in violation of commodity law."

The only way that there will be a dramatic rise, is if COMEX were suddenly harshly regulated, and prevented from dealing in its paper trading anymore. This, of course, will never happen.

So what we are left with is just 'business as usual' -- which means the paragraphs above, and completely rigged exchange prices.

Well another angle

That is not the only way .. there actually could be a shortage where you can't get physical silver then the COMEX paper price will be irrelevant, and you will see a paper price and a separate higher physical price

Fuzzy area?

So what then happens with an ETF Fund like the Sprott Physical Gold/Silver which are just paper holdings, and based on the ETF fund valuation, but they are supposedly backed by a physical gold/silver store somewhere(maintained by Sprott I suppose) -?

Does this track with the price of physical? or the price of COMEX? or neither?

I tend to think that the "spot price" once manipulated will always poison the well as far as the 'offical' exchange rate of gold/silver ... aside from purely personal bartering situations between private parties, or something like bitcoin transactions perhaps.

So I *WANT* to believe this...

but this is just speculation... prognostication...

as the article points out, the whole game's rigged, so it's tough to tell what will happen until there's a disconnect between paper and physical.

I keep stacking... whether we get an opportunity to take a giant profit or just store wealth in something more permanent than FRNs, I'm a big silver fan either way.

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

SteveO24's picture

Same here

I'm not sure what will happen. But it does feel good to have silver. Just sayin.