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What is up with the silver market?

From $31 to $28.50 in a month.

What's up? 

Is JPMorgan shorting silver /again/?

I'm getting jittery.
Permalink hoyza 
January 17th, 2011 12:44pm
I hope you lose your fucking shirt, you speculator middle-man asshole.
Permalink muppet 
January 17th, 2011 12:45pm
I don't invest money I can't afford to lose, you trolling pathetic whiner.

Oh, I love you too, man.
Permalink hoyza 
January 17th, 2011 12:52pm
{pop} is the sound a regular bubble makes when it bursts.

A financial bubble sounds more like
{OMG we're destitute!!}
Permalink xampl (iPhone) 
January 17th, 2011 1:15pm
Except I don't think silver /is/ a bubble.  Check out what is happening in commodities - prices are up for everything across the board.

I expect the natural price of silver to be around $50/ounce, and expect a slow rise, except for the possibility of manipulation.
Permalink hoyza 
January 17th, 2011 1:19pm
What makes $50 the natural price?
Permalink zed 
January 17th, 2011 1:27pm
hoyza's pretense that he knows what he's talking about.
Permalink muppet 
January 17th, 2011 1:28pm
muppet go and stick your dick in the fishtank, adults are talking
Permalink what are you readying for? 
January 17th, 2011 1:35pm
Where do I get $50 from?

It's the historic price ($5/oz) adjusted for inflation, qe2, an increase in industry use and an increase in demand.

In other words, in 1967 a comic book costs $0.12.  today they are $3.99.  That's a ratio of 30+ to one.

In 1964 silver was two bucks.  Today it should be ? sixty?

The ten dollar difference is safety factor.
Permalink hoyza 
January 17th, 2011 2:08pm
bah. Typo. Historic price doesn't mean anything.  For years the prices were artificially held to about $5/oz. Now that the lid is off, they have risen.  The question is how far a rise is natural.
Permalink hoyza 
January 17th, 2011 2:10pm
Well, like anything, something is worth what someone is willing to pay for it.  My future-vision glasses are broken, but I think the jump from mid-twenties to $50 is too large for people to psychologically accept. Unless there's an external event to distract them from it.
Permalink xampl (iPhone) 
January 17th, 2011 3:05pm
According to this calculator, there should only be a 642% increase since 1967:

http://www.bankofcanada.ca/en/rates/inflation_calc.html
Permalink Kenny 
January 17th, 2011 3:11pm
The CPI, or consumer price index, is disproportionally tied to the cost of food -- and thanks to cheap corn syrup, the cost of food has dropped.

As a percentage of income, food is cheaper than it used to be.

But your greater point, I think, that inflation is debatable, is well made and I take it seriously. Thank you.
Permalink hoyza 
January 17th, 2011 3:14pm
The value of something is what someone would pay for it.
Permalink not CC 
January 17th, 2011 3:16pm
And if you corner the market, and generate an artificial scarcity (like diamonds, for instance) then you drive the price up.

When this happens to oil, it's not a very good thing.
Permalink SaveTheHubble 
January 17th, 2011 3:21pm
Not CC -

In economic terms, I'd say that silver is a clearing market.

That is to say, if you sell at $10, people will buy it until your supply runs out.  If you sell it at $100, you won't.

I'd say the "right" price for silver is somewhere in the middle.

When these things get stable enough over time, the 'right' price for a material gets predictable.

/Of course/ a black swan could happen, and of course we could have some sort of discontinuous change that blows everything out of the water.

But recognizing when an asset class is undervalued, and assuming a market correction will happen - lots of people have made money that way.  You just have to be careful.

(This will also help you avoid bubbles, fwiw, eg "houses are going for 500K for a one-room shed?  Yet population is stable and people ain't rich? /THAT/ Ain't gonna last.")
Permalink hoyza 
January 17th, 2011 3:22pm
"I expect the natural price of silver to be around $50/ounce"

Isn't that presuming no inflation of the money supply?

What's the natural price of a US dollar? 1/1500 ounce of gold?
Permalink Idiot 
January 17th, 2011 4:02pm
Wow Hoyza, you actually got my point. So you think that it's currently a bargain? Hmmm.

Do you know anyone who actually uses silver? I'd say that the industrial uses are what's going to drive silver, as opposed to gold, which is useless because it's so valuable.

Never quite figured out why gold is so valuable. It does make fantastic wiring, but the corrosion resistance doesn't explain anything to me.
Permalink not CC 
January 17th, 2011 7:29pm
Gold is incredibly non-reactive, therefore it's great for making just about any metal component that you want to have some permanence.  The only issue is how soft gold is, but I think a high enough percentage alloy shares the anti-corrosive properties of gold.
Permalink muppet 
January 17th, 2011 7:41pm
Gold is not easy to find like carbon or silicon or iron is. So you can't just dig up some more without great effort. If you could it would not be as valuable.
Permalink Idiot 
January 17th, 2011 8:34pm
>My personal bias is to stick with the simplest explanations unless more data indicates otherwise. A short selling operation at JPM gone awry, combined with significant silver shorts they inherited from Bear Stearns, has taken the bank into the position of being unable to deliver what they has already been sold.  This is complicated by the 'wink and a nod' that was likely given to the banks by a Treasury and Fed eager to keep the fat canary in the monetary coal mine from singing in the precious metals markets.

>Given the current state of the US banking industry, the regulators are afraid of what a default on the Comex by the poster child of the Wall Street Banks recovery would do to investor confidence. So they are trying to kick the can down the road.  Almost seems to be a reflex reaction in Washington these days.
http://jessescrossroadscafe.blogspot.com/2011/01/is-jpm-covering-up-naked-silver-short.html 

>This lawsuit specifically cites JPM and HSBC as custodians of the largest silver ETFs, SLV and SIVR, and how they used that market positioning to manipulate their knowledge and market positioning as custodians of these funds to manipulate the silver price to their benefit.

>The goal of this lawsuit is to move to the discovery process, and to attach itself to the ongoing CFTC and DOJ investigations into the silver market. It will be very interesting to watch this drama unfold over the coming months.

>It is always worrisome when the 'house' sits down at the same table as the players and bets against them. It ought to never be permitted except in the course of making a market in limited circumstances, because as the lawsuit also illustrates, the opportunity for private collusion is beyond the scope of the regulators, especially given the ability for the house to deal in dark pools.

http://jessescrossroadscafe.blogspot.com/2010/12/new-lawsuit-against-jpm-and-hsbc-for.html

>Deposed Tunisian President Ben Ali Said To Have Fled Country With 1.5 Tons Of Gold...
>And like that Tunisia's official gold holdings (as per the WGC) are down by 23%
http://www.zerohedge.com/article/deposed-tunisian-president-ben-ali-said-have-fled-country-15-tons-gold
Permalink Peter 
January 17th, 2011 10:39pm

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