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BW - Thanks for posting some of the helpful charts and information that I was looking for! I agree that the international stuff is hard to find, but very interesting to read when it is found. Since this is a worldwide meltdown, it is great to have a well-rounded view of how bad the problem is, and to compare our country's problems to theirs. It seems that US has no problem exporting prosperity and despair -- we are so interconnected!
This is no different than the oil market and other commodities. Basically, you have the public, hedge funds, and other large entities buying up a ton of paper assets (including SLV), then dumping it. The unique thing about silver is the public did NOT want to sell the physical when the price of SLV was dropping. This could lead to a dramatic price gain in the physical silver market because people may have to turn to SLV to buy it since they can't find the physical stuff without paying a huge premium! I'm wondering if the huge premiums for physical silver are here to stay.
What I could see happening is some large entity bought a ton of SLV early on, then dumped it so they could pick up whatever physical they could find at lower prices. Now that the GAME IS OVER, I would guess we will see another big wave of higher prices. We went from $4 to $20 (5X), down to $10. Using simple math, now we should go from $10 to $50, then find support at our previous major high of $20.
Whatever happens to the price of Silver will be fun to watch for sure.
If you use relative price of gold to silver, silver is the better buy. If you price in the premium that dealers charge for buying and selling gold and silver, gold is the better buy. In other words, it is a wash.
As far as mining stocks, I sold my miner longs this week and will take a wait and see approach... I'm only looking for high probability runs up/down. The market showed us that mining stocks are the baby that gets thrown out with the bath water when equities are selling off hard. I think we all know that our economic problems are far from over so the bath water will get thrown out again. Physical gold held up best probably because it is a store of value for the rich. Silver didn't probably because it is tied more to manufacturing and the middle class buyers (poor man's gold).
Off subject:: Here are some seasonality charts for gold to help time your gold/silver purchases AT THE LOWS (the first chart has the months to look for the "typical" low time periods) -- I also like using gold sentiment charts (subscriber site) along with technicals to time my purchases -- my last gold buy was early Nov and last silver buys were in Nov-early Dec during the APMEX Christmas special discount period -- it helped me nail the lowest price period on both gold/silver:
Speaking of job numbers, I hope Obama reverses the decision that Bush made to classify people that "manufacture hamburgers" (a.k.a. burger flippers at McDonalds) as US Manufacturing Jobs. True story.
LOL
Great article. I could definitely see this happening in the next 1-10 years. Got gold ... and lots of it?
BW - Have you read anything recently that talks about whether the housing in bubble in China popping yet? What about the construction bubble in Abu Dhabi popping? It would be very interesting to see a chart on building starts and home prices for those two areas of the world. My guess is the construction boom popped in those two countries about the time oil collapsed (mid-2008).
At the time of this breakout, the volume was strongest it has been on both Silver and Gold in the last four months. Very telling.
I'm glad nearly everyone on this board was able to contain their excitement this week. Cautious optimism after a sizeable bottom is usually very positive for the price of gold/silver. I also like the small trader sentiment... it is still in a territory where it hasn't been in over 4 years.
LOL... In my opinion, there most like likely will be two currencies (western and eastern). I think we are pissing the rest of the world off with our parabolically growing deficit ($11 trillion and quickly counting). As much as the public likes Obama, I don't see him slowing it down. Our government got the snowball of debt rolling down the mountain years ago... and it will be smashing into everything in its path.
US Morgans are the MOST desirable because they were melted down to make the Peace Dollars so they are rarer. I also like the fact that they are older (1800s). Collectors/Dealers pay a smaller premium more for these heavy coins because they are more desirable than smaller coinage. And like 4God says, they are classified as numismatics so they cannot be confiscated. Yes, I am able to get Peace and Morgans at melt value, BUT only at this one "We Buy Gold Store"... that is because the store does not place a premium on numismatics. (It is actually rare that I even have this opportunity.)
You can get a great feel for what coins people are interested in by visiting your local coin shops. My local dealers (as a consensus) only buy the following:
-gold eagles, k-rands, maples, gold US coins
-silver liberties (no canadian silver bullion), silver US coins, junk silver
-no platinum or other lesser common collectible coins
I like having a local market for the stuff I am collecting because it gives me another avenue when it comes to selling. The way I see it, when it comes time to liquidate quickly, I will either be selling to my local dealer, to an online dealer (APMEX, NW Territorial Mint), and/or Ebay.
Let me know if you have further questions. We are here to help.
I prefer to go to my "we buy gold" dealer and buy his VG+ Morgans and Peace silver dollars at melt... when he has them. There is a double market for these coins -- collectors and investors. The silver bullion only has one market -- "silver/gold bug investors".
Beautiful descending wedge... up we go.
As long as the 'general optimism toward gold' is contained and people feel like they are climbing the golden wall of worry, we should be able to do it no problem. I didn't get that feeling on this board the last time we were approaching $1000.
And from what I read, China's R.E. bubble has yet to burst and it is MUCH larger than ours. Then there is Abu Dhabi's R.E. bubble too which probably tops them all, probably even going back thousands of years B.C. Their bubbles will probably make our subprime and Alt-A look like nothing.
60minutes - Did Speculation Fuel Oil Price Swings?
(CBS) As gas prices skyrocket, attention has turned to public "pits," where brokers trade "oil futures" - the right to buy or sell crude oil at a specific price, on a future date.
But far away from the hue and cry, hundreds of millions of barrels of oil futures contracts are traded electronically every day, CBS News chief investigative correspondent Armen Keteyian reports.
More than 30 percent, experts say, exchanged in so-called "dark markets," the exact size and scope unknown to U.S. regulators.
"If you can trade out of the sight of U.S. regulators, you can manipulate these markets," said Michael Greenberger, a former top staffer at the Commodities Futures Trading Commission, or CFTC, which regulates the trading of commodities like oil in this country.
He recently told Congress that speculation is placing a huge premium on the price of oil.
"How much per barrel?" Keteyian asked.
"Well, there have been various estimates - anywhere from 25 percent to 50 percent," Greenberger said.
"People can actually corner the market and drive up the price," said Sen. Maria Cantwell, D-Wash. "When there is no policeman on the beat, you know that crime can go up."
More and more fingers are pointing at one of the least-known but most powerful foreign exchanges - the InterContinental Exchange, or ICE.
By the end of 2007, the all-electronic exchange accounted for nearly a 50 percent market share of all global oil futures contracts, a total of 138.5 million contracts - up 49 percent from 2006.
Today it boasts more than 2,100 individual traders representing virtually all of the major players in oil - banks, hedge funds, energy companies, investment giants.
And according to a securities filing, two of those giants, Goldman Sachs and Morgan Stanley, were founding partners of ICE.
"The fact that they started this shows the intent of where they wanted to go," Greenberger said. "Which was to trade crude oil and energy products without any police in the United States supervising it."
That's because it's considered a foreign exchange. Taking advantage of a loophole created by the CFTC, the company says its "energy futures business" is conducted in London, it is not subject to U.S. laws. Over strong criticism, the CFTC agreed.
All this despite the fact ICE headquarters are in this building in Atlanta, it's primary data center in Chicago, and nearly all its trades settled in U.S. dollars.
"It is a charade, and ... it defies explanation," Greenberger said.
In a statement, ICE CEO Jeffrey Sprecher told CBS News that ICE is committed to providing "the same visibility in our oil markets that exists for U.S. Exchanges," and that ICE Futures Europe is "fully regulated" by the British government.
But British financial authorities are notoriously lax.
Now Congress and others are asking just how much of the crude oil futures market is being manipulated by either excessive buying designed to drive up the price, or phony transactions that imply a supply problem that does not exist.
Today, under pressure, ICE finally agreed to impose stricter limits on certain trading, shedding some much needed light on the dark side of oil.
http://www.cbsnews.com/stories/2008/06/17/broadcasts/main4188620.shtml
I think we all know what "W" stands for now in GWB... "WMD". The WMD was not in Iraq... it was in the White House for 8 long years. Why it took America 8 years to realize it is beyond me. If the American public actually followed the news (and I'm not talking Fox news) and read history they would have recognized WMD a long time ago.
Happy New Year to you too! 2009 is going to be one heck of an interesting year.
Scary numbers. I see a humanitarian crisis unfolding in the U.S. 50X greater than Katrina.
Right now gold and silver is slightly positive (almost flat) relative to Friday's close. The news is a nice catalyst for a strong move, but it would not surprise me if we get another moderately positive week like last week as some entity (like our government) seems to be quelling some of the bullishness. Moves in moderation, however, are a great thing as they tend to make the bullish move last much longer.
Have you noticed that politicians have been throwing around the word "trillion" lately like it is going out of style? Scary.
From a contrarian viewpoint, I don't like seeing reports like this. I'm seeing TOO MANY PEOPLE expecting gold to hit well over $1000 in 2009. We may not get there with this many newsletter recommendations unless a lot of people get discouraged by even lower prices. I'm prepared for a rough and bumpy ride and will add more if it closes below $750 to shake these newsletter writers out. My sentiment indicators look favorable for a nice gold/silver run and it looks like we should get over $1000 in the near future, BUT it is these bullish newsletters that reduce the near-term probability. What we need is some well-known brokerage to come out with a sell on gold... if that occurred, chances of another strong bull run would grow significantly.
Northwest Territorial Mint
Yes, I made a couple small orders with them to establish a level of confidence (5 gold maples and 60 silver eagles) before I consider doing larger orders. I agree that their delivery dates are pushed out far (4-5 months!). I am beginning to wonder if this is a Madoff-like Ponzi scheme business. They needs to get more people to sell so they can make deliveries to people like me. What you sent is very concerning.
4GodNWV is the one that recommended it to me. You/I will have to raise the question to 4GodNWV on the Goldbugs board.
I agree with you Picassa. The new bull run in gold and silver is exhibiting classic bullish formation inside the Bband lines. Sentiment low among the small traders bottomed out several weeks ago and is now heading back up.
That only thing that could give us a lower low at this point is another liquidity bombshell where the stock markets tank around the world and gold/silver need to be sold to raise cash. To me, that is no big deal as that is a MAJOR opportunity to buy more at even lower prices.
I do plan on unloading some of this stuff on this next round when gold is well above $1000. I will sell off mainly my junk silver halves, quarters, dimes, etc. and some of my Peace dollars. I will hold on to most of the finer unusual stuff that I bought.
Does anyone have a chart showing the relative price of Gold to the Icelandic Krona?
How Iceland Collapsed Video
One word: Liquidity
http://www.marketwatch.com/video/asset/how-iceland-collapsed/F7F0A5B0-EF8C-425C-96D0-6579D5955AFD
It is $1.38 here in Michigan. In Wyoming north of Cheyenne, it is about $1.10. If this is not a bottom, we are very close. I don't anticipate seeing $0.99 gas!!
Nice second chart FQ. Can you post a historic chart that goes from 2000-2006? It would be nice to see this historic seven year span.
We should at least be able to get to the 3:1 range. That is what I am expecting as the minimum. e.g. Gold $1500 DJIA 4500. I think 2:1 is a more likely outcome. e.g. Gold $2000 DJIA 4000. We've been able to get to that 3:1 range for the last 100 years.
2013 will mark a 100 years of fiat currency. I wonder if by chance that may be the year we return to the gold standard?
That piece goes to show you how helpless and misguided our elected/appointed officials feel about how to solve our economic crisis. This crisis definitely has the "Sinking of the Titanic" mentality written all over it. The ultra rich get to board the lifeboats and they will leave the rest of us to drown. This country is definitely on the path to creating significant civil unrest. I expect we will see more Madoffs and Pardos in 2009.
Hi TechniTrend,
Hope all is well. Long time no see.
My intermediate-term system said today to open up a leveraged short position on China (UHPIX) that mimics the $SSEC index. Just curious, what does your intermediate-term system say about playing $SSEC short right now?
The Bank of Spain chief must be lurking on this Economy board. LOL
They might be done if they don't get oil back up to $55+/barrel in 2009.
S&P Since 1825
I found this chart interesting:
http://www.uglychart.com/2008/12/10/percentage-change-in-the-sp-since-1825/
What are the hours that the markets are open for trading this Friday? Is it till 4pm or is it a shortened day (e.g. 1pm)?
If I remember correctly, Alt-A and Option Arms hit hardest in 2010-2011. I also think pensions will implode big time in 2009. Even more, my guess is 2 of the Detroit 3 will file for Chapter 11 reorganization in 2009.
The first year of a new administration (2009) is usually the worst performer for stocks. And I see that the the news media and brokerage firms are married at the hip, saying buy this fire-sale potential bottom. Your sentiment chart shows that Joe Sixpack is buying this hype, hook-line-and-sinker.
2009-2011 is going to be downright ugly for the Joe Sixpack buy and hold investor as well as the Warren Buffet-style smart money. The markets look like they can roll over at any time... sporting ascending wedges that typically break to the downside.
I also think pensions will implode big time in 2009. My guess is at least one of the Detroit 3 will file for Chapter 11 reorganization in 2009.
If sentiment is still a good contrarian indicator, that sentiment chart SCREAMS that this is not an intermediate-term bottom... no bounce expected here! I have other sentiment charts that agree. People are growing stubbornly bullish as the market is falling... that is a recipe for disaster and last occurred during the Great Depression. It seems Joe Sixpack FORGOT to throw in the towel during our recent crash.
The USD is having some major mood swings recently, much like the $VIX when it comes to stocks. This may "forshadow" what is to come... if so, I expect this ride for gold and the USD to be a VERY SCARY rollercoaster ride. There will be many people thrown under the bus as it swings violently in both directions. The people that can ride it out will be richly rewarded.
The misery index is obviously way off ... it should also include stock losses, home value losses, and depreciated USD. This misery index makes "W" look like an awesome president.
That is good value. How did you hear about that deal?
I didn't get an e-mail from them so it could be unadvertised.
You are finally seeing what I mentioned a couple times on this board at least a month ago. Thanks for the beautiful chart!