Silver will go $1,500/oz

[MarkyX]

I'd call that a small-time online auction, not a commodity market.

Or the price of steel, plastic, and leather just go up significantly, because I sold a 600-pound motorcycle for $13000?

It's still a secondary market for goods, regardless.

As michael stated, the prices are a premium for an immediate delivery and that they are recognized. With some of these orders forcing you to wait weeks for delivery due to low supply, some people are willing to pay extra.

Supply and demand at its basics.

 

[Eddie Dane]

Silver is about to break 34 bucks.

Going down like a DC-10.

Hanging on for that buying opportunity.

 

[roger]

Silver is about to break 34 bucks.

Going down like a DC-10.

Hanging on for that buying opportunity.

Ya, look at what these idiots at Barron's say:

Several increases in margin rates are clearly forcing many speculative investors to sell silver.

....

Some investors may view silver's remarkable decline as a buying opportunity, but that is likely a costly mistake.

....

The implied volatility of SLV's options is up some 11% Thursday, indicating that even the options market, which is expert in pricing risk, is unsure how to price silver.

.....

The selling is exacerbated by an ultrashort exchange-traded fund loaded with derivatives that sharply increase in value if silver prices decline. Trading volumes are immense.
....

The weak report prompted many institutional investors to push the "risk-off button" and even exit silver trades that so many first bought a few years ago in anticipation of a U.S. economic recovery.

source

Just think how much better they would be with the expertise of JREF posters. Those stupid institutional investors - buying silver because they expected a recovery, whereas here on JREF we learn that we should buy silver in expectation of a crash. They argue silver's price is influenced by unpredictable things like derivative positions, speculative investing, etc., whereas here on JREF we learn just how predictable all of it actually is.


(Not directed to you personally, Eddie, I have no idea of your position re all of this, your post just offered a handy thing to quote and run with).

 

[roger]

I agree.

I think most of the downward move has been due to margin hikes and speculators taking profits.

As speculation is squeezed out of the silver market, it will have nowhere to go but up, and rapidly so. Especially if there is a run on the dollar, which could happen in a rather swift manner.

Silver eagles are selling for well over 50 on ebay and silver rounds are selling above 45 consistently. The spot price does not reflect the actual market value of silver.

Strong selling pressure = increased prices? Ya.

 

[michaelsuede]

Strong selling pressure = increased prices? Ya.

There is strong pressure to deleverage with massive margin hikes.

I don't think the physical markets are under any pressure to sell.

Most of the people holding physical are not leveraged and are holding it for hedging purposes against a dollar collapse.

 

[roger]

There is strong pressure to deleverage with massive margin hikes.

I don't think the physical markets are under any pressure to sell.

Most of the people holding physical are not leveraged and are holding it for hedging purposes against a dollar collapse.

Yup.

None of that explains how massive flooding of the silver market = "it will have nowhere to go but up". Price = demand vs supply. Demand will be much lower, supply will be much higher. Don't see the up in that. And no, I'm not buying hyperinflation disaster scenarios.

edit: note that on ebay already the going price is more like $45, and people are only biting on 1 coin at a time, for the most part. Packs are getting 0 bids. Not seeing the physical demand. (okay, to be fair, I do not accept ebay as proof of anything much)

 

[michaelsuede]

Yup.

None of that explains how massive flooding of the silver market = "it will have nowhere to go but up". Price = demand vs supply. Demand will be much lower, supply will be much higher. Don't see the up in that. And no, I'm not buying hyperinflation disaster scenarios.

edit: note that on ebay already the going price is more like $45, and people are only biting on 1 coin at a time, for the most part. Packs are getting 0 bids. Not seeing the physical demand. (okay, to be fair, I do not accept ebay as proof of anything much)

I don't disagree with you that prices are a function of supply and demand. I'm simply saying the sell off was mostly precipitated by people being forced to deleverage.

I don't think we would have seen it come down as far as it did if the margins weren't tightened like they were.

So the speculators got trounced, but I don't see the longer term outlook for silver changing at all - it will go up. And now it will go up at a smoother pace without all the leveraged buying.