Prediction: Silver to sub $40 by friday 4/29

[panther]

Reasons:

-Ben Bernanke's speech is going to be spun POSITIVELY by mainstream media, making average joe investors dump their SLV to invest in the 'recovering' US economy, temporarily driving spot down
-Mainstream media talking about silver corrections much more than silver increase.. average paper silver holders likely to dump more this week
-Silver has increased WAY too fast. Not saying we won't have $50-$60 silver, but it needs to happen next fall, not next week.
-Enormous speculation on silver leaves deep downside and smaller upside


I think we will get down to high 30's, 40 or so, and then slowly move back up. I see the dollar taking a slight increase this week, but overall, long run, bearish on the dollar, bullish on commodities. At the end of the day, physical silver investors make up a very SMALL percentage of the market. We hear of our friends and family buying silver and talking about silver.. but all that demand isn't a lot compared to the industrial uses of silver, which hasn't risen that much. YES PM;s will keep going up.. but I plan on taking advantage of this correction.

That being said.. I'm selling everything I have tomorrow morning!

Anyone care to talk me out of it? The way I see it, I can dump about 250 ounces tomorrow morning, and then buy 290 ounces or so in a week or two for about the same price.

PS, I'm still long term bullish on silver.. i just have a local coin shop that will pay me a very generous amount.. +$2 on eagles, almost 36 on morgans right now, etc.. so that makes my stack very liquid, allowing me to get in and out quickly

[DeanStockwell]

I'm 40% in cash in my account! I'm ready to buy-buy-buy when we see some normal valuation. I'll post if I believe we are seeing a buying opportunity. Are you confident enough to enter short positions

[panther]

not confident to short. i don't even have a margin/commodity account. i'm 22 years old.. i have 80% of my money in silver/gold (80/20), 15% in MERDX mutual fund, and 5% cash.

[neilgin1]

Panther/Dean
i aint gonna try and "talk you out" of anything; just want to say two things:

there's an old adge in trading: "cut your losses short, and let your winners ride".

second: and i say this respectfully, you wrote, "when we see some normal valuation"?

what you see is "abnormal" valuation, do actually think silver, in 2011, priced in the $40 area is too high?

With FRN presses running at full speed, $40-50 is abnormally low, adjusted for inflation, the old hunt high is really $130, and with old school CPI indexes figured in, the price of silver would be trading $400 the ounce.

as far as confident about "shorting", did you ever figure risk to reward ratio's, when i was trading futures, i wouldnt even think of doing a trade at less than 3 to 1 R/R, meaning my profit objective has to be 3 times what i'm willing to risk.

so you sell at $45, looking for what? ....say 30, thats $15 profit, well your stop in that case should be around $50.....dont you think, a whole horde of bears have stop's clustered right around the old high, up to the $50 area? thats a recipe for disaster.

Silver is not going back down into the 30's. How do i know? well, lets say a market has a 11 % sell off from a steep run up, you now have all sorts of pronosticators opining the "top is in"...well usually when a top is put in, the second day is a continuation of this high % sell off, so why is silver trading close to a dollar higher at this writing, at nidnight Tuesday?

But you have to play your own hand bud. my advice is try sitting on your hands Tuesday, watch it trade, which will cost you nothing.
respectfully, neil

[theo]

Thinking that few re-assurances from Bernanke will send silver tumbling back into the 30s is a bit of a stretch. He's lost a lot of credibility over the past three years. Esapecially among PM investors. Only decisive action by the FOMC to raise interest rates will make a difference, and even that would likely be temporary.

[DeanStockwell]

Not so sure about that, Theo. The Bernank can move markets by huge amounts from simple speeches. He and the Fed are still in control, and will be for a long time.

[slickeast]

We will check back on this thread friday and see if anyone is correct. No matter what we think will happen or hope will happen is just taking a stab in the dark. Charts, speeches, history and speculation means nothing at this point. For every argument for it to go down there are just as many for it going up.

[DeanStockwell]

Panther/Dean
i aint gonna try and "talk you out" of anything; just want to say two things:

there's an old adge in trading: "cut your losses short, and let your winners ride".

second: and i say this respectfully, you wrote, "when we see some normal valuation"?

what you see is "abnormal" valuation, do actually think silver, in 2011, priced in the $40 area is too high?

With FRN presses running at full speed, $40-50 is abnormally low, adjusted for inflation, the old hunt high is really $130, and with old school CPI indexes figured in, the price of silver would be trading $400 the ounce.

as far as confident about "shorting", did you ever figure risk to reward ratio's, when i was trading futures, i wouldnt even think of doing a trade at less than 3 to 1 R/R, meaning my profit objective has to be 3 times what i'm willing to risk.

so you sell at $45, looking for what? ....say 30, thats $15 profit, well your stop in that case should be around $50.....dont you think, a whole horde of bears have stop's clustered right around the old high, up to the $50 area? thats a recipe for disaster.

Silver is not going back down into the 30's. How do i know? well, lets say a market has a 11 % sell off from a steep run up, you now have all sorts of pronosticators opining the "top is in"...well usually when a top is put in, the second day is a continuation of this high % sell off, so why is silver trading close to a dollar higher at this writing, at nidnight Tuesday?

But you have to play your own hand bud. my advice is try sitting on your hands Tuesday, watch it trade, which will cost you nothing.
respectfully, neil

I'm out of silver for the forseeable future. Lost too much last week. My rules say that when I lose 6% of my account value to cut my losses short and trade unleveraged low risk investments for 30 consecutive days. Stops are much less than 6%. As you mentioned, silver has too low of a risk/reward ratio. I'm swing trading stocks now with very tight stops, with around 40% in cash of my total account value, which is a very large percentage for me. I believe the highest I've let it get before is around 25%.

I'll kind of rant for a second, and I know that will disagree with you Neilgin1 and many others. I feel like I should voice my opinion on the PM matter. No hard feelings of any kind. Although some of these points seem like they are directly towards you, they are not meant as attacks of any sort.

1. I'll start out by saying I have 10-15% of my net worth in physical PM. It started out at 5% but has grown with the price of PM's increasing. I don't touch this. At all. Never ever ever. The majority of my silver was swapped into credit suisse bars which I have in a secure location. Again, I will never touch this. I won't add to it unless I see an extreme jump in my Net Worth to balance things out.

2. Silver and gold are not long term investments, or at least the general nature of them should not as an investments. They produce NOTHING, pay NOTHING, the sit and do NOTHING. They hedge.
Before the recent price increase, Warren Buffet said this:

"You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?"

Today, the AU cube could buy probably double mentioned above. Seriously ask yourself. Which would you choose?

3. The runup in the past year is a bit absurd. Investors are forgetting that AG and AU are hedges. Institutional investors are buying PM's as investments, not hedges. Much of the price increase is due to speculation.

4. The long term trend is probably up. Although I think we may enter a stage of extended ranging/decline when the bull market in commodities ends.
To hedge against this, I am invested in profitable companies across the world, as well as bonds(yes, BONDS!), and Real estate funds.

5. To compare the current price to Hunt prices is also a bit absurd. That price was created by manipulation(the kind silver bugs like, the upwards manipulation that we never hear about).

6. The Fed is not as powerless as many here claim. I personally believe the Bernank has more power than nearly anyone in the world, possibly more than Obongo. They may seem like an innocent puppy, but they will be quick to bite when you try to play with them.

7. As has been proven many times recently, Asia has little influence on NY closing prices. The big run ups in Asia have been smashed time and time again.

8. I want to wish everyone holding AG paper good luck. I'd advise you to close out a portion of your investments and lock in your profits so you will lose none of your original investment, possibly more. Stay out of risk. I firmly believe there are better places to place your money right now, and if you get bit by the Fed, it is going to hurt.

[Market Harmony]

I enjoy these back and forths. We're all wrong. The future laughs at our flashlights. What will transpire in the long run is really all that matters... we are at the bottom of a staircase, and we are playing with a Yo-Yo while going up these stairs. That Yo-Yo is the price of goods. At times it is declining in height, other times it is accelerating to new highs. At times that Yo-Yo seems stuck at the bottom of the string, but always comes back up. That's what the FED creates... a course of price that is not linear from bottom step to top step, but rather random-like fluctuations of height. At the end of the day, however, we're all at the top of the staircase, no matter what policies are made or speeches read along the way.

The FED is only in existence because we, as American voters, allow it to be. It is the one institution whose sole purpose is to fleece the maximum amount from the most people without them even knowing that it is happening. The transfer of wealth out of American hands is the biggest scam the world has ever witnessed. It's happening now, and nobody seems to care.

Listen to Ben tomorrow. Listen carefully. Everything he says will be the truth and will happen. It will be a benefit to he and his cronies only. Most people will hear him say no more than what they want to believe. This guy is not elected by us. He doesn't work for us. He is not on our side. To the FED, any alternative currency to fiat is sacrilege.

[Tourney64]

There's no inventory. Not sure where the inventory will come from. Just saw a report from one of the large silver mines in Peru that their silver production was down significantly, despite these record prices. Their cost were up also indicating that the silver they are trying to get is more difficult to get. Prices go down and these mines will not spend the money to get at the silver.

[Pennysaved]

Silver and gold are not long term investments, or at least the general nature of them should not as an investments. They produce NOTHING, pay NOTHING, the sit and do NOTHING. They hedge.
Before the recent price increase, Warren Buffet said this:

+++++++++++++

How can you say that gold and silver are not long term investments??? Yes they do not pay dividends but at the end of the day they are hard assets not worthless paper. They have been a store of value for thousands of years.

When gold and silver were low in the early 2000s, don't you think a lot of that had to do with the easy money that was out there. Everyone was buying houses and leveraging themselves to the hilt to live way beyond their means. Then 2008 hit.

The days of loose money and over leveraging are over. How many of those people in 2008 would have gladly traded in their stocks in GE for gold?? How many companies went belly up in 2008???? Making those stock certificates worthless. How many companies suspended or discontinued their dividends?????

When you are given a piece of paper either bonds or stocks; you are being given a promise by a government or a company. The value of that piece of paper is backed by their promises. Would you trust the promises of world governments or many CEOs out there? I would not; they do not have our best interest always in mind.

Are silver and gold risky investments; yes if you are leveraging yourself to the hilt and being a speculator.

I think many of us in here are not speculators; we actually own our metals and at the end of the day we would rather have a real store of value that has been been a proven system for thousands of years not a worthless piece of paper that is backed by someone's so called promises.

The economy is not going to get better in the near future. If the Fed stops the QE programs, the artificial benefit of all the money printing and buying securities from QE2 will start to wind down in Fall 2011. The current congress will probably not do another stimulus package due to all the crying out of the current debt. That combination of those 2 factors will probably make us go into a deeper recession in the fall. How will that affect the value of the dollar, the value of housing, the value of stocks?????? DOWN DOWN DOWN If the FED does decide to do another QE program and print more money, major inflation here we come. Either scenario in my opinion is bullish for PMs and makes them a GREAT long term ijnvestment

[68Camaro]

Dean: I agree with more of your points than not. That said, I think you got bit last week by technical analysis that wasn't applicable to an unusual situation. I think TA is a useful tool, and I'm sure you know it well (and far better than I), but I think you should consider it just one tool in your toolbox. You have many other tools available, and sometimes they need to trump TA. The old adage "If all you have is a hammer, then everything looks like a nail."

I believe I (like many others here) have a growing awareness that bad things are increasingly likely to happen. I just don't know specifically how they will happen, and especially don't know when. I disagree with JFF that the future is unknowable. I think it is somewhat knowable (at least in terms of probabilities), just not the "when" of it.

[timmus0382]

Reasons:



That being said.. I'm selling everything I have tomorrow morning!

Anyone care to talk me out of it? The way I see it, I can dump about 250 ounces tomorrow morning, and then buy 290 ounces or so in a week or two for about the same price.

I talk to my dealers all the time about trying to time big dips.
Just be careful and remember this, there is no rule physical is required to be sold at spot. Dealers are not going to sell at spot after a 5-10 dollar dip over a week. Remember when silver was 21 and dropped to 12? You couldnt find the stuff anywhere for that price, all the dealers knew it was going back to 21 so the price stayed high and or the dealers just took it off the shelf until the price rebounded. This market is different in different times. We might see spot at or under 40 in the near future but don't count on being able to buy physical for under $40. I say you will probably able to get you hands on $40 physical when spot hits $37.

[Rodebaugh]

Some educated thoughts and opinions:

Educated thoughts:
Yeah, I think its Uncle Bens decision to set the tone today. Expect a, things are looking much better but we are not out of the woods yet, speech. The key is: how much better or how deep we are in the woods. The answers are obvious to a certain extent. Housing prices remain low, unemployment remains high, raises and wage advancements are still uncommon. Consumer spending has increased some, money has poured back into the markets, and manufacturing is up. In the Republican trickle economics theory this recovery is in full swing of its early stages. I think Ben will present with an overall positive outlook with a little back patting for current and past efforts that have got us this far. As for quantitative easing no swift halts are on the radar. My guess is for the easing of quantitative easing. There is no pulling out the central line on this drug bunny.

Opinions:
So what does this mean for silver? Well, silver is making a lot of folks out there a lot of money going up and someday it will make a lot of folks a lot of money going down. Is it a bubble? Yep. Are we at the top? I don’t believe so. Heck the top could be $100+, that’s decided by the folks playing with paper silver in New York and London. They set the price. Demand for physical does not. Where do we go from here: Short term 1-3 days flat at $44-47 for consolidation, End of May $55-60 spot price.

[slickeast]

Some educated thoughts and opinions:

Educated thoughts:
Yeah, I think its Uncle Bens decision to set the tone today. Expect a, things are looking much better but we are not out of the woods yet, speech. The key is: how much better or how deep we are in the woods.

I think that we are deep into the woods without a trail or map. Heck we don't have a compass, the sun or even a star to direct us out.

Looking much better Ok maybe we are not stuck in the briar patch anymore, but we are still in the woods. Bens job is to paint a pretty picture no matter what. Most people don't have a clue, and most of them don't care. The gov't will take care of it and everything will be ok mentality. You can only prop up a crumbling foundation for so long before you have a catastrophic failure.

[panther]

well, it looks like I was wrong for now, silver is up $2 since the fed meeting.

wish I wouldn't have sold 9k in silver this morning. i got a bit more for it than i could buy back in for, so that hedges against this increase abit

[Lemon Thrower]

yep - it looks like the correction is over. though i think this had more to do with options expiration than fibonacci or bernanke.

[Rodebaugh]

yeah my thoughts/predictions of silver to hang in the 44-47 for 1-3 days got busted 6 hrs after I made it.

lesson to be learned: Silver spot is nuts, the big boys don't read RC, and I need to stick to teeth.

[BamaJoe]

well, it looks like I was wrong for now, silver is up $2 since the fed meeting.

wish I wouldn't have sold 9k in silver this morning. i got a bit more for it than i could buy back in for, so that hedges against this increase abit

You made your call and took your shot, not a call I would have made but we all have different opinions and reasons to be in the metals. Looking back with hindsight I doubt anyone here couldn't think of something they would have done different with 20/20 hindsight.

[AGCoinHunter]

Might want to revise your prediction....

[Rosco]

lesson to be learned: Silver spot is nuts, the big boys don't read RC, and I need to stick to teeth.

Doc I have some thing stuck in my teeth guess I need to see the Dentist but WV is too far so back to Dr B for me

Need to save more money so I can Buy an Oz .999 Boss has let me buy an sort but we have trips planed an they do come first

[oober]

Because I was a little worried too, I closed Apr 46 SLV calls at a 30% loss. It then ended the day up 300% for the day. I left over 10k on the table today. Should have stuck with my plan when I originally made this bet last Thrusday.

Turn off all the noise. Bad decisions get made.

[franklin]

"Anyone care to talk me out of it? The way I see it, I can dump about 250 ounces tomorrow morning, and then buy 290 ounces or so in a week or two for about the same price."

Did you sell?

[aristobolus]

A lesson to be learned here (as taught to me by a venerable former banker turned coin dealer): Bullion is bullion; it does not change. It should be obvious to us by now that if silver "goes down" (as if that were possible), manipulation would be to blame. Nothing fundamental is changing that would precipitate such a lowering in value relative to the dollar.

Is there any reason to believe that silver will be less scarce in the near term? Are there signs of a manufacturing base coming back to America? Are we pulling our troops away from Empire building, or have we increased our commitments (Afghanistan, Libya, etc.) lately? Will the national debt increase or decrease under the new, more government driven Health care system in the U.S.? Etc. Etc.

But I commend you for the Chutzpah to put yourself out there! I think many of us are in shock that the true value of this stuff is finally coming to the fore; it is natural to fear a correction. And if it does happen... Blessed be the name of the Lord anyways!

[slickeast]

We will check back on this thread friday and see if anyone is correct. No matter what we think will happen or hope will happen is just taking a stab in the dark. Charts, speeches, history and speculation means nothing at this point. For every argument for it to go down there are just as many for it going up.

$48.50 now, so the predictions were wrong.

With silver going crazy, the dollar dropping like a rock, no one knows what will happen next week