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Thread: Silver spot prices rising. Why?

  1. #1

    Silver spot prices rising. Why?

    I'm understand very little about what really makes the economy work. I've been watching silver spot prices and see that they are starting another upward trend.

    I know that this is a totally ignorant question, but could someone tell me what factors in the news are driving this current trend? I see a lot of bad news, but wonder if there is any particular single news item that has caused this? Is it obvious to most that the economy is nearing a collapse?

    The upward trend that I'm asking about is the one that started on July 8th. I'm posting this on July 14th. Current silver spot is $19.20

    Thank you.



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  3. #2
    Bernanke and Paulson announced this morning that Fannie Mae and Freddie Mac would be getting a federal loan; aka bail out, from American taxpayers to stay afloat. The unfortunate news hidden behind the loan is that the Federal Reserve has no money left from taxpayers to give to the failing banks. Therefore it is implied that the Federal Reserve will be creating new money (inflation). I think the news about FRE and FNM had the biggesat impact on the PM price rise today. Also Indymac Bancorp failed on Friday after hours and the FDIC took it over. All bad news for the USD.

    The reason why the prices have been rising for the past week is because investors were preparing for the bail out announcement of FRE and FNM for days now. Many saw the inflation handwritting on the wall and bought early, such as I.
    Last edited by Shinerxx; 07-14-2008 at 01:31 PM.

  4. #3
    That's a fairly easy question, 123Tim--the Federal reserve, who's responsible for managing how much money in circulation, has been creating way way WAY too much money--this means that each unit of currency (in our case the USD) is worth less....therefore, it'll push up the price of everything else in the economy.

    so it's dollar devaluation that's the main reason that gold and silver prices have been rising.

    it's the same reason why oil has been going up....however, if you price oil in gold, it's remained virtually the same price the past 50+ years. Keep in mind, there are short-term effects that can push up the price (foreign policy, speculation, etc), but long term these become negligible.

    a good example is in the game Monopoly---(let's assume for a minute that every property must be bid on)...with the current monopoly money supply they'll bid "X" amount for "X" property....however, if you took another monopoly board game, and doubled the money...eventually that'll make its way into the economy, and people will bid up the price of "X" property twice what they did before...why? The money supply was doubled, therefore the value of each property was halved.

    prices really haven't changed, at all, but the value of each currency has changed.

  5. #4
    Many in Europe have had the savings devalued and are purchasing precious metals.

  6. #5
    The prices for gold and silver are artificially altered as well. That said, it is difficult to keep them so. For example, even though a month ago gold and silver were pretty cheap (compared to now) the dealerships were having pretty bad shortages (they still have some shortages).

    So if it ever comes down to pure bidding. Which people do when they are desperate for something, the quoted price is ignored and people start bidding on how much they actually want it for.

  7. #6
    Gold is money.

    Silver is money.

    People like money in tough economic times.

  8. #7
    Quote Originally Posted by 123tim View Post
    I'm understand very little about what really makes the economy work. I've been watching silver spot prices and see that they are starting another upward trend.

    I know that this is a totally ignorant question, but could someone tell me what factors in the news are driving this current trend? I see a lot of bad news, but wonder if there is any particular single news item that has caused this? Is it obvious to most that the economy is nearing a collapse?

    The upward trend that I'm asking about is the one that started on July 8th. I'm posting this on July 14th. Current silver spot is $19.20

    Thank you.
    Sounds like you are interested in the micro-picture, not the long term fundamentals. There are many good, fundamental reasons for metals to go up in the long term, but there are some short term trading issues to be aware of.

    Metals trade in ranges. Metals usually take one or more dips during the summer. Traders like to buy the low end of the range, and sell the high end. 1000 was considered a "high" for gold (metals like silver tend to follow), and selling started. ~850 was a "consensus" bottom, and people started buying again. There's a bit of self-fulfilling prophesy in trading ranges. A "consensus" short term high results in selling, a "consensus" bottom results in buying.

    In a long-term bull market, the range keeps getting higher (like we have in metals). So expect gold to do something like go up to 1200, and then retreat (maybe next summer) back to around 1000. Rinse, lather, repeat, always going higher until the fundamentals change.

  9. #8
    Totally uninformed view, but just from the psychological standpoint-- I think gold has gotten so expensive that your average person who doesn't have the cash to buy gold is starting to buy silver. Sort of the psychological reaction, a poor man's gold.
    Maxed out to ALL of Ron Paul's campaigns.

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  11. #9
    Quote Originally Posted by 123tim View Post
    I'm understand very little about what really makes the economy work. I've been watching silver spot prices and see that they are starting another upward trend.

    I know that this is a totally ignorant question, but could someone tell me what factors in the news are driving this current trend? I see a lot of bad news, but wonder if there is any particular single news item that has caused this? Is it obvious to most that the economy is nearing a collapse?

    The upward trend that I'm asking about is the one that started on July 8th. I'm posting this on July 14th. Current silver spot is $19.20

    Thank you.
    I think the real reason is simple......

    Investors are realizing that the financial sector and the entire dow are in deep trouble.....

    so you are seeing more and more investors putting their assets into soft and hard commodities......it will only snoball over the next few years as the slow learners catch on.......

    It's not just gold and silver......

    you should see nice returns on most commodities.....

  12. #10
    Quote Originally Posted by pacelli View Post
    Totally uninformed view, but just from the psychological standpoint--
    Which view?

  13. #11
    Quote Originally Posted by Brian4Liberty View Post
    Which view?
    My view is totally uninformed. I have no experience in economics or PMs.
    Maxed out to ALL of Ron Paul's campaigns.

    Listen to Liberty Tree Radio! ::

    Pro-Liberty, Pro-Gun, Pro-Militia Radio 5 days a week, 10 LIVE HRS TALK RADIO PER DAY!

    http://www.libertytreeradio.4mg.com

    http://www.themicroeffect.com (8A - 11A EST daily)

    http://www.live365.com/stations/edtheak47 (3 PM- 9 PM EST daily)


    Organize, Arm, Equip, and Train as a Militia !


  14. #12
    Quote Originally Posted by pacelli View Post
    My view is totally uninformed. I have no experience in economics or PMs.
    Well, you got it right, silver is the poor man's gold. Silver is more volatile, and tends to follow gold, rather than lead. Another thing to note is that silver price is relatively low in comparison to gold. The multiple historically is lower (gold to silver), so consensus is that silver has a lot of catching up to do. It will hit some resistence at 20 though...one of those temporary psychological barriers.

    p.s. Silver is taking a hit today, we always have to have these pull-backs. Never goes in a straight line up or down.

  15. #13
    Quote Originally Posted by Brian4Liberty View Post
    p.s. Silver is taking a hit today, we always have to have these pull-backs. Never goes in a straight line up or down.
    I think the short sellers did a little bit of profit taking today.
    Last edited by Dr.3D; 07-15-2008 at 09:40 AM.

  16. #14
    Quote Originally Posted by Dr.3D View Post
    I think the short sellers did a little bit of profit taking today.
    it was synchronized with crude oil's huge drop around midday
    No more Mr. Bad guy

  17. #15
    Quote Originally Posted by Paul.Bearer.of.Injustice View Post
    it was synchronized with crude oil's huge drop around midday
    Do you suppose it could be the same people who are shorting both?

  18. #16
    Quote Originally Posted by Dr.3D View Post
    Do you suppose it could be the same people who are shorting both?
    I doubt it was shorting, but who knows. Could have been Bush's 'everything is fine' speech.
    No more Mr. Bad guy



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  20. #17
    Quote Originally Posted by Dr.3D View Post
    I think the short sellers did a little bit of profit taking today.
    Do you mind if I ask you what a "short seller" is?
    Thanks.

    Forget this. I googled

    In finance, short selling or "shorting" is the practice of selling securities the seller does not then own, in the hope of repurchasing them later at a lower price. This is done in an attempt to profit from an expected decline in price of a security, such as a stock or a bond, in contrast to the ordinary investment practice, where an investor "goes long," purchasing a security in the hope the price will rise.
    Last edited by 123tim; 07-15-2008 at 01:08 PM.

  21. #18
    Quote Originally Posted by Paul.Bearer.of.Injustice View Post
    I doubt it was shorting, but who knows. Could have been Bush's 'everything is fine' speech.
    Speechs and Senate Hearings do crazy things to the market. Mostly a short-term effect though.

  22. #19
    Quote Originally Posted by 123tim View Post
    Do you mind if I ask you what a "short seller" is?
    Thanks.
    Forget that. I googled:

    In finance, short selling or "shorting" is the practice of selling securities the seller does not then own, in the hope of repurchasing them later at a lower price. This is done in an attempt to profit from an expected decline in price of a security, such as a stock or a bond, in contrast to the ordinary investment practice, where an investor "goes long," purchasing a security in the hope the price will rise.



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