(Oct 2011 thread is here) viewtopic.php?f=17&t=8831
The irrational exuberance over the Euro-zone "debt settlement" (nothing much has been settled) has already waned, and the big run-up of last week has completely backed-up, at least on the Euro exchanges - they are back to where they were a week ago, and still dropping. The Euro continued to weakened more overnight relative to the dollar, and the prices of PM as measured in USD have continued to reflect that overnight, continuing to drop as the dollar has risen. Simply put, it takes fewer USD to buy gold or silver from those that hold gold or silver in Euros. So change of this type is not a literal weakening of the PM market, but a recomputation as the value of the USD changes. The PMs will also be sensitve to the general market direction, at least for short-terms, as PMs are liquidity, PMs are true cash, and when markets drop and margins have to be covered, those that also hold PMs will trade it off if they have to, in order to cover margins. This is all to be expected. Silver will also be sensitive to perceived direction of the economy, as a portion of its demand is industrial, and a weakened economy translates into lowered demand (at least theoretically, though I personally think the elevated demand as a PM is more than making up for that). Much of the above is restatement of the obvious, but it is sometimes good to see it in one place, in print (again).
![Smile :)](./images/smilies/icon_e_smile.gif)
There have been many people suggesting that PMs have yet another dip to face. And actually they do have AT LEAST one more major dip to face, and that is the big dip that happens when the balance of the market collapses. (And as that collapse could happen, in part, in a couple of stages over days/weeks, there could be a couple of steps to this big dip - in hindsight we could even see that we are in the middle of that right now.) During any significant market collapse many things will happen, sometimes in chaotic order that will only be obvious in hindsight. But these will include people buying madly out of fear, selling madly out of fear, revaluations due to constantly changing currency ratios, and possible imbalances between exchanges where PMs could be valued differently in different parts of the world. At some point real physical will take on a different price than the promise of physical, and what will matter eventually is the number of ounces of PMs that you have in your possession, rather than how they are valued in USD.