Comment: Silver

(See in situ)


Many may not like to hear this, but I have called the fall in gold and silver prices quite well since Sept. of 2011, and I see one more bottom coming that will test the lows. I do sell gold and silver for a living, and have told my clients to dollar cost average into an allocation and am still doing so, rather than go all in.

The dollar, which really represents the inverse of the Euro and Yen (70% of the dollar index), is set to rise as we unwind the damage done from the excesses of the last 20 years or so. The Fed is trying to throw trillions at it via QE, but they are failing miserably. There will be no tapering.

But the tax loss selling by the end of the year by the professional traders, mutual funds and hedge funds will bring precious metals to lower prices. Has nothing to do with QE, inflation, etc. It's just going to happen.

The gold and silver supply is so small it an be pushed anywhere a big player wants it to go. The Hunt brothers did it in 1979 to 1980 by buying physical silver. Today, as the April plunge showed, it can be done by selling paper ETF's along with the physical in one to two days.

Tax loss selling is a given. You are stupid if you don't sell and lock in the losses. This will be true of mining company ETF's and Mutual Funds as well.

If you are long gold and silver, or the mining companies, you may want to hedge your longs at this point. We have not bottomed.

But keep in mind, just like in April, as the price dips, the premium will shoot up again on Silver Eagles, just like they did in April. With that in mind, if we were to dip to $17 in silver, you can expect a premium of about $6 so the Silver Eagle will cost you $23, about $2 less than where it is today. But today the premium is about $2.50 for Silver Eagles. If the above is true, your ideal price to purchase more Eagles should be when silver hits $20 an ounce.

If you are a long term buyer, does it matter that silver falls to $20 or $17 when you will be selling at $40, $50, $60 or $100? Probably not.

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!