I believe and everything I see points to higher PM prices!! This might be an interesting time to ask for a "bear" case!! Outside of day traders, I would like to hear from coach and others on the subject! WHAT COULD GO WRONG?? No fairy tales. What could actually happen to cause a long term drop from current levels?
The macro environment makes me very bullish long term for precious metal. I'm just giving a bearish scenario just as food for thought.
For precious metal to be bearish long term, there has to be cheap energy and a bullish equities market (pick-up in the economy without inflation). There would be no need to hedge against inflation and everybody would be piling into stocks. The only way I see this happening is if the natural gas bill passes. There would be natural gas fueling stations built throughout the country. Truck engines would be converted to natural gas. Oil and coal prices would tank. Everybody would have extra discretionary money after they fill up their cars. Demand for goods and services would go up. Energy prices would be cheap (due to switch to natural gas)which would control inflation. The cost of agriculture would go down due to cheaper transportation, tractor costs, pesticides, storage etc. We would see growth without inflation due to cheap domestic energy. It would be time to leave precious metal in a hurry...at least for me.
I don't think the natural gas bill will pass because the oil and coal lobbyists are far more powerful than the natural gas lobbyists.
I've really enjoyed all the analytical postings I've been reading. They've all been very helpful. I value reading opposing ideas very much. Thanks to all who have been posting in a mature and intellectual manner.
The other problem with Nat Gas is that even though the price is very low right now if we started using more of it we would rather quickly run into supply issues that could only be solved by more development of the shale reserves and I happen to personally know many people who hate just the idea of fracking. It would immediately be a huge environmental fight with cancer scares and dying babies and children paraded out whether real or not. I know a fair amount about fracking so, while I have some intelligent concerns, this hysteria is not my viewpoint. I am just stating that the supposedly abundant Nat Gas in America could very well be held hostage to endless government interference; so if you're counting on Nat Gas to cause a fall in the price of PMs I would seriously consider looking elsewhere. JMHO
First off, I'd be very careful going long an ETF for the long term. Those ETF's are perfect trading vehicles, but ultimately they decay and the longs will be holding the bag.
This ETF is perfect for hedging your physical silver and gold long positions:
If silver were to pull back to let's say the low 30s, this one could be at 130....to reach 230 again silver would have to make a new all time high as the decay would most likely eat a big percentage away.
I think we could have a significant silver correction still ahead. We had a very nice and healthy pull back in May. When gold pulled back silver held steady but there comes a point when the equities will run again (yes, of course with the help of market interference) and this will make the PM less attractive for the big money. Don't bet against the Fed and other Central Banks...they have the firing power to discredit "honest money" with yet another significant PM pull back.
Good points all but...don't forget, when silver is on a run there is 'inverse decay'. In other words, compounding gains as we saw last time. That's where the real money is made, as multi-day highs jump it up.
Re the Fed and central banks I disagree completley: There has never been a better time since 1913 to bet against the Fed et al. They are being discredited every day, in all their pronouncements and in all the ways they have been caught red-handed. This is part of a paradigm shift in many areas as equities once again become orphans, counter party risk becomes Question One in all financial decisions, and the efforts of centralized planners who have had one failure after another are marginalized, not be the lapdog media and prostituted government, but by the real folks who understand propaganda when they see it.
I'll take a shot: Nothing, if you don't believe current levels have been run up by specs and manipulation. If you do believe current levels are a fairly close approximation to actual combined industrial and investment demands, the only thing that would drive it down would be a vast pool of cheap silver being discovered. It won't be due to vast amounts of the real stuff coming onto the market because increasingly, it is in strong hands. The paper sales just encourage the physical uptake. That has been both the gold and silver story since the spring.
Look at the ridiculous reasons being given now: "With the SNB guaranteeing a dilution of the franc, it's risk on again and PM suffers." Really? One of the very few asset classes that could compete with PM is being groomed to be shot down and that's bad for PM??
See also: Rising dollar. Easy to dispose of. Both silver and gold have done great in rising dollar environments, that canard is old hat and has almost no staying power.
Margin lifts: So what? Specs are leaving, to be replaced by REAL INVESTORS. Raise it all you want, I've made plenty unmargined.
What today is, is just a reprise of the scare headline and robo-thinking that has missed an 11 year bull market. Don't be a chump and listen to the same folks who have been wrong FOR MORE THAN A DECADE. There is still a lot of upside, the downside is transitory and weak in staying power.
When all the paper money is confetti and you're trying to be happy about your 10-year Treasury note interest payment at least than six months' inflation, who ya gonna call?
Come to daddy.