Is the Spot price for Gold/Silver doomed?
Back in July (not that long ago), Gold had recovered quite a bit from its earlier downfall (after going over 1000 back in early March), and was priced at around 970. The spot price for Silver had also recovered substantially (from an even greater fall) and was priced at around 19.30. At this point (mid-July), I was hopeful that I would be able to recover losses from my earlier investment in silver and gold.
But then in late-July, yet more bailouts occurred (Fannie, Freddy), and Gold plunged to even below 800 into the 700s. Silver lost approx. 50% of its value. Each and every time a "bailout" has occurred, commodities have dropped like a stone.
The spot price has fallen so low now, I am not even sure if they are at all recoverable. The more money that the Fed prints, the more that they go down. The more bailouts and bank failures, the more that they go down. The more economic turnmoil, the more they go down. The more that we hear about supposed shortages in Silver, they more that the spot price goes down. The more that we hear about supposed rising demand, demand exceeding supply, they more they go down. The more debt that is created, the more they go down. Even the ratio between Gold & Silver has also gone down (to the point where silver has less and less value).
So, is the spot price for Gold & Silver in retreat to back to 1990s levels?
Are they doomed?
Will we ever see a return back to the spot price levels that had been in effect back in July?
Please focus any feedback on the spot price, and not tangent discussions about the trading of coins on ebay, coins shops, or shortages of coins when ordering.
I am trying to understand whether the spot price itself is doomed, and whether I should consider taking horrific losses from ETFs now, rather then wait untold years? ( decades?) for some leap-frogging miracle to occur in the price, under these conditions (please hold any rehashing about what a bad decision it was to invest in ETFs, as I cannot turn the clock backwards now).
At this point, the spot price is the sole determinant as to just how much money I will lose. If this is doomed to disaster, I need to know about it.
Volume Discounting
The spot price of silver only has meaning if you intend to purchase a contract for five thousand ounces. It is not the cost per ounce per piece, it is the cost computed at a per ounce rate for five thousand ounces. A more practical retail cost of silver would be on the order of twenty dollars to the ounce. Witness the prices on e-bay and at your local coin shops for generic rounds or Silver Eagles.
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hello...
Why is it that when silver is at $20/oz everyone here says "buy,buy,buy."? And now, at $11/oz everyone is wanting to sell?
1. Remember buy low, sell high.
2. If you sell metals, where are you going to invest it? the dollar?
3. Gold and Silver are recommended to perserve wealth, not for short term gains (for the outsider little peeps anyway)
Short term, it seems that we have "credit deflation" which means
Gold/Silver will NOT see substantial short term gains.
But, as Paulson & Bernanke speed up the proverbial "printing press", eventually the reflation caused by the Fed's money will exceed the deflation caused by the tightening (disappearance) of banking-credit-money... and we'll almost certainly begin to see some substantial inflation, probably some super-inflation (10%..25%) and if they keep "printing" possibly hyper-inflation.
You have to realize that the Fed really does NOT have anything equivalent to "brakes" that can be applied to the economy. They also do NOT really have control of the main gas pedal.
What they DO have is control of a "secondary" gas pedal / drivetrain / wheels.
Right now, the banks & economy have the REAL gas pedal in Reverse & are backing up... the Fed is "burning rubber" try to get the car to stop and slowly begin moving forward again. Problem is, THAT is a really tricky thing to try to do... and once the Fed's rubber begins to "gain traction" the car will likely take off in a "wild ride" forward... most likely right off of a cliff!
Silver is based on the dollar
People are buying gold for the safety factor. Silver seems to connect with the dollar. Believe it or not, the dollar is up today because the world currencies are falling. The Euro is dropping like a rock. It's at the lowest point since before October of 07. The world is having the same problem as we are now, banks failing, credit tightening etc., so Europe and other countries are having to deflate their currency by lowering rates and saving their own banks.
Unfortunately, the US dollar is the primary currency in the world and I'm still glad that I own silver and I'm thinking about buying more because the FED meets Friday and is thinking about lowering interest rates. This whole situation is going to end badly and I strongly feel that silver (the poor mans gold) will shoot up like a rocket.
How then do you explain the spot price?
How then do you explain the spot price for Silver plummeting from around 19.35+ in mid-July down to 10-11?
The economic conditions that produced that plummeting, are still in effect...no?
Because it's priced in dollars.
.
So is gold
So is Health Care
So is food.
Everything is going up, but Silver lost 50%?
All the Experts...
We've seen that all the "Experts" who predicted that 2008 would be a continuation of the rise in metals/commodities got it wrong.
Why did they all miss the mark so badly?
Who was out there predicting a dramatic pullback in commodities?
Manipulation is King
It looks to me like the small physical supply of gold and silver make for easy manipulation. It's all about the futures contracts. They can set target pricing anywhere they want it, and the ones setting it are the industrial users. They write futures contracts for way more than the supply can deliver, but they do it over and over with fresh contracts, never intending on taking delivery. It's another market made scam, but this market looks pretty well under their control. That's what scares me about silver. Sure the market may bust open, but who knows when.
alan laney
Manipulation
But if the market was subject to and rife with widespread manipulation (which should have been recognized anyway since there is no actual "gold" in Fort Knox anymore), then why were all the big "Experts" out there predicting things like 2000 gold, 1500 gold, even 5000 gold, etc., in the first place?
Seems like they were either duping the public, or they never understood the manipulation of these markets -- in which case, why were they ever considered experts to begin with?
silver != gold
Silver is more of an industrial metal than gold. I expect silver and gold will not perform the same as each other.
http://FlipFlopRomney.blogspot.com
History
The charts show that they follow roughly the same trajectory.
When gold goes up, silver will lag for a bit, but then will also rise upwards (at a faster pace). When gold goes down, silver will sink like a stone.
In general, silver is more volatile, but they both follow the same general chart patterns. If gold is on a sustained upward slope, silver will be the best place to put your money (rise higher).
In any case, can you address the original question raised?
Something changed around the
Something changed around the 1st of August. Silver and gold had been going up and down in lock-step for quite some time, trading at a price ratio of about 55:1 per ounce. But then silver started losing significantly vs. gold. The ratio now stands near 79! It has not been that high since 2003, so maybe it will revert to the mean. I don't know.