silver train leaving the station?

[jpetr48]

Re: Peak cheap oil....

Most commodities are already pricing in a 70% haircut in the U.S. dollar. Should this actually happen, you may or may not get a panic spike to sell into but longer term they already have a lot and maybe to much catastrophe priced in. Note any long term chart and you'll notice these spikes are only 3 to 6 months in duration and it's all down hill their after.

Ok so thinking two steps ahead where is the next rotation?

[grapejelly]

Re: Peak cheap oil....

my likely scenario is for silver to go up to $40 or $45 in the next 6 weeks, with some sharp $2 to $5 correction periods lasting 3 to 5 days, then at around $45 or so silver will fall to $25.

If silver falls to $25 - $27 soon then this is out the window, but so far, I see scenario #1 as likely.

[dropthatcash]

Re: Peak cheap oil....

Opportunity comes to those that wait.

Depreciating dollar= rising natural gas prices
Economic recovery with lower or higher oil= rising natural gas prices as nat gas price is very sensitive to industrial use
Destabilizing middle east= rising natural gas prices
Carbon tax=rising natural gas prices
Natural gas hungry oil sands projects= higher natural gas prices
The only near instant-on base load technology to compliment wind energy project loads= natural gas
Foolish pundits saying "This time it's different"
http://www.csmonitor.com/Business/Th...ural-gas-ratio
= rising natural gas

As an aside, I bought bars of silver in 1990, direct from the mine Sunshine mining, at a little over $4 on oz. My one and only reason was $4 was at of below world cost of production. A can't go wrong price!!! Well, while it didn't decline below that, it stayed flat for 15 years! Lucky for me I only bought a couple 100oz'ers as stocks far outperformed this investment. My point is, even buying at a can't loose price can be a lousy investment. (but it was a valuable lesson ; )

[jiimbergin]

Re: Peak cheap oil....

Eric Sprott: "There Is No More Silver Left"

"There's $22 billion of silver available in the world, of which the ETFs already own half, and between you guys and us we probably own the other half... Which means there's nothing left."

http://www.zerohedge.com/article/eri...re-silver-left

[c1ue]

Re: Peak cheap oil....

I understand the points, but consider the counter arguments. All you wrote is well disseminated and fully reflected in the market. You, I and about a billion other players out their have all acted on these concepts, hence it should be the least rewarding outcome. It's much like betting on an inside tip that everyone knows about. The odds reflect the knowledge and the payoff has a high chance of being net negative.

I don't agree that what I said is well disseminated. For one thing, China alone cannot finance the ongoing US/Fed credit creation spree. China has been out of the Treasury market for over a year - and the usual suspects (Japan, UK, Canada) simply cannot put a significant dent in the $2T a year which the US is accumulating in increased debt.

So on the face of it, your argument that 'everyone knows' is not valid.

Here's some concepts that may not be reflected in the market place. Most of these goods are significantly inferior to what industrialized nations are making. I've a large collection of broken items that failed withing the first year of production, even their damn thread seems to disintegrate in water and all made in China. As consumers become more in tuned to these unexpected replacement costs, they'll reject enough of the Chinese goods to cause more R&D as well as quality control costs to be incurred raising the price.

Cheap peasant labor is running out. I had a friend working in China on a U.S, project and he said 7 years ago trainloads of hungry peasants arrived in Peking every day. This isn't the case anymore, now wages are rising as factories compete of workers.

Most of the Chinese construction and infrastructure is very shoddy. Building shake like a leaf, concrete crumbles like sand, steel snaps like a twig, copper wiring so impure twice the gauge in required to carry the same current. These short-cut constructions goofs will incur a high maintanace cost as infrastructure wears out prematurly but the debt doesn't.

Most commodities are already pricing in a 70% haircut in the U.S. dollar. Should this actually happen, you may or may not get a panic spike to sell into but longer term they already have a lot and maybe to much catastrophe priced in. Note any long term chart and you'll notice these spikes are only 3 to 6 months in duration and it's all down hill their after.

The problem with all you note above, is even if the Chinese crap is crap, it is still cheaper to replace it every other year than buy 'made in America' - even were you able to find it.

Secondly it is a stereotype that all Chinese output is low quality and low value added. China now exports all sorts of high value added items including electronics, machinery, as well as basic inputs into food and manufacturing (chemicals).

Last but not least, I think Chinese investment advisers have already hedged the government reserves in anticipation of a collapsing dollar and If there's one thing I've learned, most "expert investment advisers", are not worth the diploma they received in their Cheerios box. If they've hedged and hedged poorly, an unwinding of these positions could flood the market with commodities, derivatives or god knows what they own.

I'm not sure where you get this idea that China has fully hedged its existing dollar portfolio against a US printing spree. Who would be the counterparty?

What you aren't considering is that China has basically written off its existing $1.6T hoard - it is the chip which keeps the US from making China the 'Iraq' or 'Afghanistan' of 2012. What China has actually done is to put all new and ongoing accumulations of dollars into resource and capital (in the manufacturing sense) accumulation. What little hedging exists is primarily via hedged trade agreements with other nations - which still employs the dollar but makes the dollar impact neutral to China and the partner.

Not the same thing at all.

[charliebrown]

Re: silver train leaving the station?

This just in from the goldenjacka$$/Chris Laird

It should always be noted that silver has gained much greater acceptance as a monetary asset. The Chinese Govt in February announced a new objective to put into action, for diversifying their reserve assets to include silver and platinum. This is huge news. Never before has the silver metal been included in national sovereign reserves management, an unprecedented event.

[Spartacus]

Re: silver train leaving the station?

Keeping in mind China was the last country to abandon Silver as currency, and I believe until that point had the longest continuous record of using Silver as currency.

Either China or India hold the record.

This just in from the goldenjacka$$/Chris Laird

It should always be noted that silver has gained much greater acceptance as a monetary asset. The Chinese Govt in February announced a new objective to put into action, for diversifying their reserve assets to include silver and platinum. This is huge news. Never before has the silver metal been included in national sovereign reserves management, an unprecedented event.

[dropthatcash]

Re: Peak cheap oil....

Knowing what you know today, where do you wish you'd have put 100% on your investment funds exactly two years ago? oil, gold, or a broad based stock index and if you missed making that trade, why?

[ocelotl]

Re: Peak cheap oil....

I remember having stopped buying silver at 200 MXN in late 2008 due to my analysis at that time... I considered buying again at the end of January due to the correction back then... I consider it now to be a bull shaking... As an answer to dropthatcash, on February 2009, I had almost all my portfolio the way I devised it to be... I think now that I should have been buying more gold and silver not 2 years ago, but 3 to 6 years ago, when I was actively diversifying.

[Adeptus]

Re: Peak cheap oil....

I considered buying again at the end of January due to the correction back then... I consider it now to be a bull shaking... As an answer to dropthatcash, on February 2009, I had almost all my portfolio the way I devised it to be... I think now that I should have been buying more gold and silver not 2 years ago, but 3 to 6 years ago, when I was actively diversifying.

What exactly do you mean by"a bull shaking". Are you suggesting that the trend is still bullish, but that some bulls are being shaken out; or are you suggesting that the bull trend is over and about to be shaken downward?

From a supply/demand perspective, it sure looks to me that demand is far outstripping supply. In ~2.5 years, some 50% of the physical registered silver at the COMEX has been delivered upon.




Looking through the CTFC's COT reports and SLV records, we can gather the following additional data. We see some deterioration in SLV inventory but not substancial and we see a fairly flat COMEX customer inventory which if I understand correctly can be leased out at some low interest rate. But again, just look at the depletion of the "Registered" supply!

Date	SLV Ounces	Registered (COMEX)	Eligible (Customer)	Total COMEX Silver
12/9/2010	350,159,419	47,753,438	60,312,806	108,066,244
12/10/2010	350,159,419	47,753,438	59,304,144	107,057,582
12/13/2010	350,159,419	47,753,438	58,058,490	105,811,928
12/14/2010	352,505,135	47,753,438	58,093,864	105,847,302
12/15/2010	352,505,135	47,748,539	57,798,005	105,546,544
12/16/2010	352,505,135	46,399,818	57,364,687	103,764,505
12/17/2010	352,505,135	46,364,937	58,868,981	105,233,918
12/20/2010	350,550,455	46,375,503	58,486,340	104,861,843
12/21/2010	350,550,455	46,375,503	58,799,170	105,174,673
12/22/2010	350,550,455	46,400,515	58,708,457	105,108,972
12/23/2010	350,550,455	46,390,545	58,718,427	105,108,972
12/27/2010	350,550,455	46,390,545	58,718,427	105,108,972
12/28/2010	350,550,455	46,222,826	58,262,845	104,485,671
12/29/2010	350,550,455	45,731,192	58,140,440	103,871,632
12/30/2010	350,550,455	45,736,399	58,970,760	104,707,159
12/31/2010	351,136,751	45,736,399	59,112,829	104,849,228
1/3/2011	351,136,751	45,716,392	58,831,239	104,547,631
1/4/2011	351,136,751	45,716,392	59,867,680	105,584,072
1/5/2011	350,995,721	45,660,850	60,106,574	105,767,424
1/6/2011	350,214,049	45,660,830	60,659,415	106,320,245
1/7/2011	348,504,166	44,890,889	59,651,052	104,541,941
1/10/2011	346,794,311	44,890,889	59,350,766	104,241,655
1/11/2011	344,840,267	44,890,889	59,348,752	104,239,641
1/12/2011	344,840,267	44,885,726	59,243,292	104,129,018
1/13/2011	344,840,267	45,052,028	59,607,405	104,659,433
1/14/2011	344,840,267	45,226,120	59,183,073	104,409,193
1/18/2011	340,346,233	44,839,053	59,523,496	104,362,549
1/19/2011	340,004,313	44,839,053	59,575,472	104,414,525
1/20/2011	338,441,267	44,839,053	59,520,341	104,359,394
1/21/2011	334,191,830	44,439,610	59,715,405	104,155,015
1/24/2011	336,878,179	44,439,610	60,668,205	105,107,815
1/25/2011	335,901,359	44,344,843	60,630,928	104,975,771
1/26/2011	335,901,359	44,243,741	60,597,179	104,840,920
1/27/2011	335,217,607	43,962,813	60,721,358	104,684,171
1/28/2011	335,217,607	43,493,063	61,192,116	104,685,179
1/31/2011	335,217,607	43,512,709	61,067,764	104,580,473
2/1/2011	334,533,895	43,467,229	59,949,225	103,416,454
2/2/2011	334,387,048	43,467,229	60,126,859	103,594,088
2/3/2011	333,410,344	43,402,181	60,126,859	103,529,040
2/4/2011	333,410,344	43,402,181	59,109,001	102,511,182
2/7/2011	333,410,344	43,189,200	60,116,370	103,305,570
2/8/2011	333,410,344	42,345,622	60,707,003	103,052,625
2/9/2011	333,410,344	42,174,112	61,056,350	103,230,462
2/10/2011	333,996,310	42,168,881	60,677,891	102,846,772
2/11/2011	333,996,310	41,924,524	60,499,172	102,423,696
2/14/2011	334,728,758	41,924,524	60,838,531	102,763,055
2/15/2011	334,728,758	41,924,524	60,913,050	102,837,574
2/16/2011	334,728,758	41,924,524	60,610,739	102,535,263
2/17/2011	335,607,641	41,914,469	60,638,158	102,552,627
2/18/2011	335,607,641	41,914,469	60,459,810	102,374,279
2/22/2011	332,531,620	41,914,469	60,443,440	102,357,909
2/23/2011	340,001,630	41,914,469	60,450,699	102,365,168
2/24/2011	342,931,016	41,909,645	60,420,868	102,330,513
2/25/2011	342,931,016	43,169,476	59,759,523	102,928,999

Here's a more historic chart of the inventories of silver in Millions of Ounces from 1950 to 1999. See the pattern from 1990 to 1999 ? That is a MASSIVE deterioration in supply!



Here's the continuation of that chart from 1999 to ~2010. We learn from this chart that inventories have recovered "a bit" from 2000 to 2008, but have since begun to deminish again, and certainly have no way climbed back up to early 90's levels:



So long as the supply at the COMEX continues to be deminished, I'm LONG silver!

[Adeptus]

Re: Peak cheap oil....

And now, here comes a likely short squeeze (!!!)

Source: http://jsmineset.com/

Dear Friends,
Between now and Monday, February 28th be prepared for panicked short sellers who cannot make delivery to try every trick in the book to buy back their short positions.

The following is information from Dr. Jim Decosta:
Here is the URL:
http://www.finra.org/Industry/Regula...+Rule+Filings)

Quote: There’s 3 new laws gaining attention in the NSS market reform arena: FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open delivery failures FINALLY applying to shares of non-reporting corporations. FINRA 2010-043, also starting on 2/28/11 reinstates the “short sale exempt” (SSE) marking requirements for trade reporting and the OATS system. Those MMs accessing the bona fide MM exemption from executing pre-borrows or “locates” before admittedly naked short sales must now FORMALLY acknowledge the accessing of that universally-abused exemption. Being that these trades are theoretically being made to “inject liquidity” then the excuse to hide the related trade data from the public’s eyes goes out the window. You can’t have it both ways and claim the bona fide MM exemption and later claim that the related trade data needs to be kept secret because it might reveal a “proprietary trading strategy”.

Truly bona fide MMs that are able to legally access that universally-abused exemption cover their naked short position on the next downtick after their short sale when buy side liquidity is in need of being ejected as share prices fall. The 3rd new rule which is in effect now states that the offers and bids that MMs post must be of approximately the same size. No longer can the offers be of 1 million shares and the offsetting bid good for the minimum 5,000 shares.

The verbiage in 4320 is especially well done as it FINALLY puts the clearing firms that aid and abet this crime wave on the spot. With the FFETF, which is made up of 25 different agencies, now on the scene the transparency has increased markedly. You can imagine how critical the lack of transparency is to a crime involving selling nonexistent securities and then refusing to ever deliver that which you sold AFTER being allowed access to the funds of the investor being defrauded.

Here are the links to the rules SR-FINRA-2010-028 and SR-FINRA-2010-043:
www.finra.org/Industry/Regulation/RuleFilings/2010/P121522
Notice the part I marked in bold in the quote above:
"FINRA 4320 goes into effect on 2/28/11. It mandates 13 day buy-ins for open delivery failures FINALLY applying to shares of non-reporting corporations."

Got Silver? :-D

[chedir007]

Re: Peak cheap oil....

Article from zerohedge about CNBC clip talking about 130$ silver.

http://www.zerohedge.com/article/cnbc-140-silver

[Kadriana]

Re: Peak cheap oil....

I do wonder if investment demand might go down. I know I feel like I've gotten all the silver I want. I was picking up the occasional Peace/Morgan for $18-20.50 but it seems like you can't get it below $25 anymore. I think I would prefer focusing funds in another area. It's hard buying silver at $34+ when you purchased most of it under $10.

[jpetr48]

Re: Peak cheap oil....

Speculators will add more leaves to the trees which will see commercials shaking more leaves. It is a good idea to look at other commodities. For instance, the pullback in agriculture JJG may be starting too happen though I expect it to follow in earnest after market pullback in q2-q3 time frame. This may be a good macro and investment play.

I think this good vs evil- evil being JP Morgan- is not the best investment approach. While the ride up is exciting, the ride down will be even more so.

I reallocated my portfolio two weeks ago to less silver more gold as sentiment and price is gold favorable.

[chedir007]

Re: Peak cheap oil....

Jeptr,


"I think this good vs evil- evil being JP Morgan- is not the best investment approach. While the ride up is exciting, the ride down will be even more so."


I agree- also watching the recent CNBC "Fast Money" clip on silver was a surprise & bummer- anytime now, I feel like the shears will come out.