The precious metals breakout is here

[Seraphim]

Often when PM's, particularly silver, move up in the way they have over the course of the last 4 days - it coincides with stock markts ALSO moving up.

The last few days has seen most stock markets trend slightly down, mild red days, meanwhile silver has gone up nearly 3% each day.

As I've stated a few times, in 2007/2008 gold/silver corrected BEFORE the stock markets sold off and began their ascents as stocks and the general markets tanked.

Additionally, the HFT algo's are set to not allow gold (in particular) not to rise more than 1% any given day. The same can be applied to silver to a lesser extent. The only times they go up more than that is when RISK ON is the daily mantra and as just stated, the whole market moves up

My spiddy sense are tinggling VERY powerfully. Silver in particular will continue to move powerfully to the upside over the next few months.

If I could, I'd be shorting a lot of global equities and base metal commodities.

[Zippyjuan]

Let's note the price and see what happens. At this moment, according to KITCO, the spot price of gold is $1666 an ounce. SIlver $30.40 and the DOW (to represent stocks): 13,057.

[low preference guy]

Let's note the price and see what happens. At this moment, according to KITCO, the spot price of gold is $1666 an ounce. SIlver $30.40 and the DOW (to represent stocks): 13,057.

smart investors buy or sell BEFORE seeing what happens.

[Zippyjuan]

Nobody KNOWS what is going to happen at any time. They HOPE they are buying before things happen. No matter how smart they think they are.

That is why the strategy of buying a fixed dollar amount at regular time intervals can work out pretty well over the long term- when prices are higher, you end up buying less. When prices are lower, you end up buying more. Othewise it is impossible to try to time markets.

[low preference guy]

Nobody KNOWS what is going to happen at any time.

whoa, we have a genius here.

[JacobSzumniak]

The PM move up is happening right now but IMO real breakout will be when QE3 announced!

[oyarde]

My Mon through Thurs summary , off the top of my head , without looking ,DOW , down , around 213 points , gold , up about $48 , silver , up , close to $1.75 , oil , one year projection , $111. Debt , 2015 , projection , 25 Trillion , 9 trillion over , now , by then, who knows , gold 5k to 8 k ?

[oyarde]

I bought 24 oz of bacon a week ago, for $3.98 , what do you think THAT will cost , in 2015 ??

[JacobSzumniak]

That Bacons gonna be at $6 by 2015!

[oyarde]

On the bright side , ( if there is one ) , last weekend , I drove through about three states , made a couple , three stops , reverting back to my youth and participating in the underground economy , purchased , a quart of whiskey ( pretty dang good ) , a drill , a screwdriver , a box of # 1 Buckshot , two pairs of pliers , a can cooler , a new T shirt for $19.25 . In , my youth , I remember a Black Bear , very large , taken , with , a round of # 0 buck , probably , around 12 balls of.32.

[oyarde]

That Bacons gonna be at $6 by 2015!

You think that cheap ?? what about gas ? etc...

[JacobSzumniak]

May seem cheap still but at 50% increase is pretty big!

[oyarde]

That Bacons gonna be at $6 by 2015!

I am going to have to add to my , just two emergency pigs and one calf out back I see...

[oyarde]

May seem cheap still but at 50% increase is pretty big!

I think it will be more than that ....

[oyarde]

The PM move up is happening right now but IMO real breakout will be when QE3 announced!

I bought the hell out of it at $5 - $8 sold some in the 30's , kept the rest started buying the hell out of it again at $26 -27 , I do not think , 27 dollar silver will be seen again ...

[reduen]

I bought the hell out of it at $5 - $8 sold some in the 30's , kept the rest started buying the hell out of it again at $26 -27 , I do not think , 27 dollar silver will be seen again ...

Oyarde, I will by some of that $8 dollar stuff for $20.

You know someone had to be a wise guy here...

[Zippyjuan]

My Mon through Thurs summary , off the top of my head , without looking ,DOW , down , around 213 points , gold , up about $48 , silver , up , close to $1.75 , oil , one year projection , $111. Debt , 2015 , projection , 25 Trillion , 9 trillion over , now , by then, who knows , gold 5k to 8 k ?

Quite high on that debt projection. 2015 is only three years away and that would require a deficit of about $3 trillion a year- which is roughly the whole budget so we would have to nearly double all spending from what it is now beginning next year. (this year's project shortfall is about $1.2 trillion).

[Seraphim]

This goes much deeper than just PM's, but I feel as though the masses are currently all sitting on the beach - and the water line is receeding in a very big way.

Incoming...

We're not in Kansas anymore...

[youngbuck]

I think I should've bought an ounce of gold a month ago like I was thinking...

I'm still holding out a little hope that the dollar will strengthen as European money migrates its way here from the deteriorating situation over there.

[Seraphim]

If all you can afford is an ounce of gold, on a pure valuation basis, you are MUCH more likely to increase wealth with silver at this point in the bull market.

Just a thought.

I think I should've bought an ounce of gold a month ago like I was thinking...

I'm still holding out a little hope that the dollar will strengthen as European money migrates its way here from the deteriorating situation over there.

[youngbuck]

If all you can afford is an ounce of gold, on a pure valuation basis, you are MUCH more likely to increase wealth with silver at this point in the bull market.

Just a thought.

Yea, I agree that there's more upside to silver. It's just that my PMs are about 70/30 silver/gold, so I'm trying to bump gold up. It's not crucial, though. I'm also eyeballin another 20oz roll of ASEs.

[Steven Douglas]

I am beginning to wonder about the ultimate difference between silver and gold. My thought has always been that silver is more undervalued than gold, but lately something has been itching at me -- a powerful fundamental that I think is mostly ignored.

The actual market value of a commodity depends, not upon how much of that commodity exists, but rather how much of that commodity is circulating -- bought and sold -- at any given point in time, (assuming no distortion from unredeemed circulating derivatives). The more a commodity is hoarded, saved, or withheld from circulation, the more valuable it becomes. In the case of gold, NOT SILVER, it is the undisputed king in terms of hoarding, and only because whole governments are buying it up and stashing it away by the scores, hundreds and thousands of tonnes.

So what if we returned to actual gold as currency -- not just "backing", as governments control the supply between themselves, and everyone else is forced to use irredeemable derivatives -- but actual gold and bills that are directly redeemable in gold. There is no doubt in my mind that gold would have far more value than silver, even over what would have been the value based on fundamentals a hundred years ago, and only because governments have distorted that value by hoarding it, not silver, themselves - making it far more scarce than silver, which is not so deliberately hoarded.

[Seraphim]

^^ Actually, Steven...due to industrial usage, the amount of physical, above ground silver is roughly 5 times LESS than physical gold.

Above ground silver is MUCH more scare than above ground gold. It's a big reason why if/when PM's become circulated as currency, silver will actually appreciate much faster than gold - that's with gold appreciating rapidly itself.

Gold is king of what is hoarded, but that's ironically what has created the conditions for silver to appreciate even more than gold, in relation to each other.

Silver is what is being circulated in the market (industrial use) and then lost (economically unviable to retrieve, until near 1000$ an ounce prices for silver)...as a result, silver is more scare than gold.

When this bull run is over, 1 gold ounce will likely be equivalent to 5-10 ounces of silver. A 5-10 times appreciation of silver in relation to gold.

[Seraphim]

Additionally, the Chinese have a long history of using silver as currency. The Chinese, when they push for their gold currency, will also add silver to their currency backing.

Think: Gold for international trade, Silver for currency for the commoners.

[Seraphim]

For any stack of substancial measure (current USD valuation of 10,000$ or more)...my prescribed ratio is exactly 70% silver, 30% gold...

So I'm gonna shut up now and let you do your thing. .

LOL!

Yea, I agree that there's more upside to silver. It's just that my PMs are about 70/30 silver/gold, so I'm trying to bump gold up. It's not crucial, though. I'm also eyeballin another 20oz roll of ASEs.

[Steven Douglas]

^^ Actually, Steven...due to industrial usage, the amount of physical, above ground silver is roughly 5 times LESS than physical gold.

I agree that the total above ground silver is less than the total above ground gold. We could be wrong, but I believe that's true.

Above ground silver is MUCH more scare than above ground gold.

That goes to the core of what is meant by "scarce". In economics, scarcity is not a function of a total quantity, above ground or in existence, but only the total quantity supplied. So even though there may be a fifth of the total above ground silver relative to total above ground gold, gold still may be much more economically scarce than silver, in terms of actual quantity supplied to the market.

It's a big reason why if/when PM's become circulated as currency, silver will actually appreciate much faster than gold - that's with gold appreciating rapidly itself.

Appreciation is a function of buying/saving/demand that outpaces selling/spending/demand. That's a two-edged sword, and the cause of my questioning.

Gold is king of what is hoarded, but that's ironically what has created the conditions for silver to appreciate even more than gold, in relation to each other.

I agree. Silver is undervalued more than gold, I believe, because the derivatives exist in far greater numbers relative to the amount in existence. And that is precisely, I believe, because most people ignore the destruction fundamental, and think of silver as if it, too, is being recycled. So if the prohibition against PM's as currency are abolished, the market correction for silver SHOULD outpace gold by a country mile. Except for one thing.

If paper derivatives are destroyed (through runs on both physical PM's, which would make them worthless), the true market value of PM's will be revealed as massive corrections, once it is realized exactly how much of each PM is actually made available to the market to satisfy existing currency demands. We automatically think that silver will be more scarce in that regard, but only because of what we think is the glaring disparity in above ground totals -- as if that was the supply. But that's not the economic supply.

Silver is what is being circulated in the market (industrial use) and then lost (economically unviable to retrieve, until near 1000$ an ounce prices for silver)...as a result, silver is more scarce than gold.

The key phrase is "what is being circulated in the market". That brings me to two points. There is a massive amount of above ground silver that is not in bullion or coin, but rather jewelry and flatware. If silver shot up anywhere near gold, there would be incentive for those things to enter circulation. But that's not the biggest problem I see...

When this bull run is over, 1 gold ounce will likely be equivalent to 5-10 ounces of silver. A 5-10 times appreciation of silver in relation to gold.

A bull run is an economic consequence of more buyers than suppliers of a given thing. If silver and gold competed as currency commodities, and everyone was on a massive bull run for both, people as well as governments will have incentive NOT to sell -- not to make their stores available to the market. And that's where the difference - the potential check mate by governments - kicks in.

Bull runs don't last forever. Not everyone has staying power, and most silver is already in people's hands. Thus, the silver market will correct much faster than gold, as silver becomes the more common medium in circulation. The vast majority of gold, on the other hand, is in far fewer hands, mostly owned by governments. Those same governments can tax and spend the silver already, causing it to artificially circulate even more (suppressing its value), even while holding back the gold, as reserves, making it even more artificially scarce, causing its value to skyrocket. Not because they have more, but because they will be loathe to let go of it, and see it circulate.

So if 10 tons of gold and 2 tons of silver were the hypothetical total in existence, we could fully expect that the silver would be worth much more. However, if all two tons of silver circulates, and only 1 ton of that 10 tons of gold makes it into circulation, the gold will still be twice as valuable as the silver, even though the total amount in existence is five times that of silver. That is because, economically speaking, the gold will still be twice as scarce.

[torchbearer]

Quite high on that debt projection. 2015 is only three years away and that would require a deficit of about $3 trillion a year- which is roughly the whole budget so we would have to nearly double all spending from what it is now beginning next year. (this year's project shortfall is about $1.2 trillion).

what was our deficit in obama's first two years?

[Bern]

Rumors abound that the LBMA is having trouble delivering physical silver. If the rumors are true, it's very bullish news for silver.

[Seraphim]

Yea I see what you're saying Steven.

[oyarde]

what was our deficit in obama's first two years?

Just guessing ( without looking ), 1971 , less than 400 Billion , 2007 , under half the 16 trillion now , 2015 , 25 trillion....