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After the 1980 run of SILVER, I saw interest dissapate over time into a long dry spell. For me, 1979-1980 was exciting, unfortunately the aftermath was bitter. It was a long, long wait until the true resurgence began 23 years later. I waited with a small portion of PMs, after mostly selling out by 1983, three years after the top. In 1980-1981, short term interest rates reached 20%, higher rates causing the DOW to reach unfathonable lows during 1974 (577), only to reach 1000 by the early 1980. The Dow took off from 773 in 1983 during a tremendous bull run. In the early 1980's everyone hated stocks, and there were many lovers of PMs.

Now, it could be that we face another generation transition from PMs to stocks once again. By early next year, it will be three years after the top again. I hope that this time will be different, but I can't count on it. It seems that stocks are once again in favor, after a long cyclical bear. The thought of waiting out another 23 years to see a new bull in PMs is depressing, and most likely I won't be around to see it's resurgence.

What are your thoughts?

Wow. Thanks, Country. I have to ask myself if I'm just dumb enough to be drug into a temporary spike.

I can also remember the period of time from 79-80. Compared to this 10 year bull run, that time seemed to be over in a flash! It was really exciting because the market just took off like a rocket and then, BAM!! It was over like that. I do remember selling a bunch of slick barber dimes for 2 bucks each in early 1980, then turning around and buying F-VF dimes out of the dealers stock for 2 or 3 dollars each, because he hadn't had time to re-price them. My LCS would just dump their silver purchases in a 5 gallon bucket and ship them to the smelter everyday.

Like Country, I sold out the rest of my silver in the mid 80's. However, in the late 90's/early 2000's, when 90% got down to 3.5x - 4x, I just couldn't resist and started buying again. Silver prices (as well as gold) just seemed to low. My mistake at that time was to belive that the low prices would go on for the foreseeable future. How I wish I could have a "do-over"!!

Personally, i think metal prices are too high right now. However, I don't see prices going back down until interest rates turn positive again. I also don't believe prices will crash overnight like they did in 1980. I think interest rates will gradually rise and metal prices will gradually fall. I don't see interest rates rising until Bernanke is replaced as Fed Chairman.

How much money was printed in the '80s? A whole lot of money has recently been poofed into existence.

Hyperinflation is preceded by a run up in equities as all the new money seeks a home.

This increase in the stock market could very well be the last indicator that things will soon fall apart.

Stock market is overpriced by at least 50%, not even counting the hundreds of trillions in counterparty risk and endless money printing. The differences between 1980 and now are so striking that it would take pages to describe.

I'll take my chances with pm's thank you. And have.

John Reich wrote:I can also remember the period of time from 79-80. Compared to this 10 year bull run, that time seemed to be over in a flash! It was really exciting because the market just took off like a rocket and then, BAM!! It was over like that.

Wasn't the massive run up in 79 and 80 caused by market manipulation by the Hunt brothers?

The spike peak in silver was the hunts but there was a general trend up regardless. TPTB broke the gold rush by unlimited selling of central bank gold until they broke the market and destroyed confidence in it at a time when the paper market was soaring.

Question for Country ( or anyone else active in the PM markets during the last bull market). During the 3 year downturn period from 80-83, was there a similar shortage of coinage as we are seeing today? I mean from demand and not from the smelting that was taking place at that time. I don't believe we have seen that kind of smelting right now that was seen during that time period. Thanks

Put a ruler over the chart Country posted from 2002 to now. Somewhere in the 20's is the right price for silver --- that's a wide range. Put the ruler over the lows and that should show the support trend.

The current coin and bar shortage is insignificant. The big institutions move tons of metal with paper instruments. The retail buyers like me play in the coin and small bullion markets. The big market that sets the price has plenty of silver at the moment against demand. The small retail investor has a shortage of small physical --- too bad, we dont get to bennefit from the lowest prices.

The coming PM spike is still a long way off, in my opinion. But it will come. Look for basing and a support level that trades sideways for a long time.

Country, its good to question the big trends like this, but i think you are wrong (or at least early).

i fully believe the pms were manipulated down, and stocks are rising on QE. stocks may double from here before crashing, but it doesn't mean the market in general has turned like it did in 1980.

part of what gives me that confidence is that this market has tracked the market in the 70s, but we are only at about 1974 right now. Also, the 80s market ended when Volcker fundamentally changed the Fed's approach to interest rates.

Don't forget to factor in inflation when looking at the price of silver in 1980 vs today. I have read stuff from people far smarter than me that if the high for 1980 for silver was $50/ounce, that price today adjusted for inflation would be anywhere from $120-180/ounce depending on what inflation figures you use. I think we are in a consolidation period in a continued run up. However, the separation of physical price from paper price is due.

What I see as different this time around is the rise of the internet and how all of the survivalists, preppers, hoarders, gold-standard libertarians, gun nuts, and general crazies (I'm not necessarily saying anyone here is) have found reinforcement for their views online and their numbers and collective power has swelled. And it's all egged on by survivalist t.v. like The Walking Dead, Doomsday Preppers, and by right-wing radio that's constantly trashing government and hammering home how America's $14 trillion debt will cause an economic collapse and our fiat money will go down with it. Add to that the Euro crisis which is constantly making people afraid of having their savings stored in banks or in fiat money, and you basically have an ever increasing global population that's scared stiff of not having something physical and tangible.

You could see it a couple of weeks ago during the big correction, everybody was dumping gold and silver and you could see how the market wanted to make a far bigger correction but the demand for physical bullion was so strong it put a stop to the falling price.

Gold and Silver are probably on a long-term decline right now (it's quite obvious that the money is flowing into stocks), but it just seems more and more people are getting afraid out there, and want the shiny stuff.

At some point the pricing of paper and physical will disconnect and go their separate ways. Then we will see who gets the last laugh.

Ecotic wrote:What I see as different this time around is the rise of the internet and how all of the survivalists, preppers, hoarders, gold-standard libertarians, gun nuts, and general crazies (I'm not necessarily saying anyone here is) have found reinforcement for their views online and their numbers and collective power has swelled. And it's all egged on by survivalist t.v. like The Walking Dead, Doomsday Preppers, and by right-wing radio that's constantly trashing government and hammering home how America's $14 trillion debt will cause an economic collapse and our fiat money will go down with it. Add to that the Euro crisis which is constantly making people afraid of having their savings stored in banks or in fiat money, and you basically have an ever increasing global population that's scared stiff of not having something physical and tangible.

Well said! But we may have a difference between us in that I suspect from the tone that you are listing the above as incorrect and/or bad things, whereas I would view them as either correct and/or good things.

Ecotic wrote:You could see it a couple of weeks ago during the big correction, everybody was dumping gold and silver and you could see how the market wanted to make a far bigger correction but the demand for physical bullion was so strong it put a stop to the falling price.

The "everyone" who was dumping was limited to paper sellers, largely major investment banks who were dumping short paper (with the purpose of affecting price) rather than selling actual physical. In contrast the physical buyers reached a fever pitch, because they recognized that gold and silver were on a fire sale stimulated by the paper selling (since the two are still somewhat tied together).

Ecotic wrote:Gold and Silver are probably on a long-term decline right now (it's quite obvious that the money is flowing into stocks), but it just seems more and more people are getting afraid out there, and want the shiny stuff.

This last statement is internally contradictory. They are on a long-term decline? Perhaps you refer to paper prices. The decline in paper price simultaneous with record demand for physical just illustrates how the market is disconnecting, since it is not following supply and demand theory.

68Camaro wrote:The "everyone" who was dumping was limited to paper sellers, largely major investment banks who were dumping short paper (with the purpose of affecting price) rathe r than selling actual physical. In contrast the physical buyers reached a fever pitch, because they recognized that gold and silver were on a fire sale stimulated by the paper selling (since the two are still somewhat tied together).

This last statement is internally contradictory. They are on a long-term decline? Perhaps you refer to paper prices. The decline in paper price simultaneous with record demand for physical just illustrates how the market is disconnecting, since it is not following supply and demand theory.

Yeah, when I said 'everybody' and such I really meant like online traders, big investment banks, hedge funds, people selling gold and silver ETFs. The "TPTB" I think their called. The price of gold may go down because of TPTB selling it, but I think the common man will probably want more tangible assets. Yeah there's a disconnect like you said.

68Camaro wrote:Well said! But we may have a difference between us in that I suspect from the tone that you are listing the above as incorrect and/or bad things, whereas I would view them as either correct and/or good things.

Ha, I'm like a "whatever works" kinda guy. Whatever is going up I want to have it, whatever is going down... I can't dump it fast enough.

It's kind of disturbing to see long-time Realcenters questioning PMs. Looks like it's really over. I wish I hadn't gotten in when I did. Oh well.

scyther wrote:It's kind of disturbing to see long-time Realcenters questioning PMs. Looks like it's really over. I wish I hadn't gotten in when I did. Oh well.

It's just part of the cycle.

http://optionalpha.com/the-14-stages-of-investor-emotions-and-trading-psychology-10433.html

scyther wrote:It's kind of disturbing to see long-time Realcenters questioning PMs. Looks like it's really over. I wish I hadn't gotten in when I did. Oh well.

There's a difference between wondering about the paper price of PMs and questioning the wisdom of holding PMs long-term. I will get rid of my PMs when they pry my cold, dead fingers...

Ecotic wrote:You could see it a couple of weeks ago during the big correction, everybody was dumping gold and silver and you could see how the market wanted to make a far bigger correction but the demand for physical bullion was so strong it put a stop to the falling price.

Gold and Silver are probably on a long-term decline right now (it's quite obvious that the money is flowing into stocks), but it just seems more and more people are getting afraid out there, and want the shiny stuff.

1. i firmly believe the sell off was a gold price manipulation which took silver along for the ride. you had a years supply of gold (paper equivalent) sold in 2 days. the fact that stocks didn't sell off is some evidence of this.

2. look at a chart of gold and silver from the 70s. there were several painful retracements. we just had one finally. we are at about 1974. Gold and silver went up almost 30x in the 70s, this time only about 6-7x, so we have 4x to go (at least).

3. some fools are rotating into stocks due to QE. the stock market could double here prior to crashing. but none of that means the gold bull is over. that will happen when nominal market interest rates exceed the real interest rate. in other words, when you can make 7% investing in bonds, or 10% (risk adjusted) investing in stocks, then money will shift out of gold and into stocks and bonds. The 80s bull market in gold ended after the Fed Chairman allowed interest rates to skyrocket. That capped the gold price eventually and people realized it was more lucrative to hold bonds than gold. that may happen again but we are far from it.

Good points LT... and that would be the "normal" behavior, but this is different. This time, when/if the interest rates rise that much the national debts of the world will become unsustainable. The only reason they are able to maintain the current debt load in the current economy is with artificially low rates sustained by money printing.

Engineer wrote:

Love this

Morsecode wrote:

Engineer wrote:

Love this

Whoever presented this sine wave did so incorrectly. The stages are correct but the wave structure is wrong. Fear is much stronger than greed... markets climb slowly but plunge swiftly. Show the curve to have a slower rise and swifter plunges, then it would be accurate. The stages are labeled correctly, at least.

68Camaro wrote:Good points LT... and that would be the "normal" behavior, but this is different. This time, when/if the interest rates rise that much the national debts of the world will become unsustainable. The only reason they are able to maintain the current debt load in the current economy is with artificially low rates sustained by money printing.

camaro, i completely agree with what you are saying, except your suggestion that your point disproves my prior points - that the gold bull will continue until nominal rates exceed the real rate of interest.

the situation is very similar to 1974. pms crashed but nominal rates were below the inflation rate, so it made no sense to invest in bonds.

you are right that the end of the bull cannot be triggered by raising rates like Volcker did last time.

Not sure if there is any disagreement, I probably didn't express myself well. I was trying to say that there won't be any major interest rate increase allowed because that would bring the government debt to a crisis.

68Camaro wrote:Not sure if there is any disagreement, I probably didn't express myself well. I was trying to say that there won't be any major interest rate increase allowed because that would bring the government debt to a crisis.

I couldn't agree more. The Fed will make comments like interest rates will go up around 2014 but I think that is a ploy to get people to buy now instead of later. I think there is a good change of "them" taking our bank accounts before rates go up.