The FBI has a good, solid saying when it comes to people... "The best predictor of future behavior is past behavior". I find this the be VERY TRUE! All the time actually! I wonder... applying this rationale to silver... I think you could come up with a lot of theories and explanations. One way that I see it is...
IF the biggest price increases in silver are in investment demand (and it is a MAJOR factor... just not the only)... then the price of silver SHOULD be somewhat predictable based on historical investment practices. That said... I'm a bit alarmed that the production of Eagles is MASSIVELY increased compared to the 80's and 90's. In the 80's when the Hunt bros bought up all the silver... it spiked the prices. Now I don't know how exactly all that silver got back out into the market (or even if there was a MAJOR physical silver hoard to be re-distributed)... but ultimately the price went back down to a "normal" level. This is because demand caught back up with supply. The recent boom is because of the demand... however... the supply has simply lagged behind. If the mint is pounding out Eagles with the record numbers that they claim to be... then doesn't it stand to reason that the price of silver will go "back" to a normal level? My gut reaction to this would be no... BUT... I don't think that the majority of the recent silver buyers will be long term holders. Heck... I see all kinds of comments on this site about folks trying to buy low one week and sell high in a few weeks and buy low again in order to increase there hoard and so on. I'm afraid that they are a big driver behind the silver boom and that when they decide to sell it off because it isn't worth it and they want to go to the beach this summer instead... then we will see some dramatic drops and I don't think that it will be followed up with $100 silver (or even $35). Don't get me wrong... I don't think we'll see any $15 Eagles... but this thinking has caused me to re-evaluate my buying habits. I'm NOT saying that we won't see silver at $100/oz sometime soon due to the "blood in the water" mentality that I've seen some folks with at my local coin shop... I just wonder over a 3 year period or so if we don't see an overall raise that is maybe on par with double inflation or somewhere in that neighborhood. I'm just a little concerned that we may be seeing spikes because of a bunch of short termers. I dunno... Interested in thoughts...