Silver reached new high of US$37, can it go higher?

[Dennis Ng]

Hi all,
Silver's Historical High was US$50 back in 1980, or 31 years ago, if we factor in inflation, that would equate to to US$125 in year 2011...

So do not be surprised if one day Silver prices might reach US$125...

Many people didn't realise that Silver price was only about US$1.55 back in 1971 before the run up in prices to US$50 in 1980...or total rise of 3,125%.

Silver prices in 1999 was about US$5.25, and even if Silver prices shoots up to US$125 one day, that works out to total rise of 2,380%...

But I'll be very worried if Gold and Silver prices rise as much as during the 1971 to 1980 period, becos during that period, inflation in 1980 was as high as 14.76% and U.S. raised interest rates to 13.35% and Prime Interest rates in U.S. was as high as 20% before they finally brought inflation down.

My fear is that year 2011 to year 2020 might see another 10 years of High Inflation, not sure how high inflation rates might go up this time, but with so much printing of money by U.S. (QE 1 US$2 trillion, QE 2 US$600 billion); China (2008 to 2009 printed total about US$600 billion); Japan in last 2 weeks printed about US$300 billion....with so much money printed, what's likely to happen is that one day all these will come back to haunt us in the form of "rising inflation" (Rising Prices or looking from the other side of the coin is the case of currency losing value, that's why price rise)...

So if Silver prices really go up to US$125, how much would prices of sugar, rice and other necessities go up, I really don't know and don't hope to think about it, as it might mean over 1 billion people in the World, tipping into Poverty and Hunger...

Is your investment portfolio planned to handle such a scenario and situation? I hope all of you, my seminar graduates will be prepared for whatever scenarios that might occur, and in return, that you help or influence your friends and loved ones to get prepared as well...I hope this forum will serve like a "Noah's Ark" (my apologies, I'm not Christian, and I hope such an analogy does NOT offend anyone, as I'm just trying to use something you have heard of to explain HOW important this is.

Historical Figures of inflation rate:

http://inflationdata.com/inflation/Infl ... rentPage=2

History of U.S. interest rates below:

http://www.infoplease.com/ipa/A0908373.html

http://www.infoplease.com/business/mone ... -2006.html

U.S. Prime Rate history

http://www.wsjprimerate.us/wall_street_ ... istory.htm

[ein55]

I think the peak price of gold or silver is not the only factor, but also how long it takes to reach there. Growth of gold in the past 10 years is steady, this may be part of its mega 25-year cycle (peak may be reached in the next 5 year?)

If time for bull run is too short, bubble will be formed. Luckily now silver is moving much faster than gold, even bubble is formed in silver, the slower gold price may help to stablize the market for precious metal. When majority of these metals are traded as short term investment over long term "insurance", market will be very volatile, risk becomes higher.

I think MA method is also useful for silver, helping to minimize the risk of severe correction or even major reversal in future (the day will come for any market, but no one knows exactly when it will come)

[Starfire]

Silver excess Report

Ian Campbell / April 09, 2011, 0:37 IST

Silver and gold are racing to new records is a bad sign. There is physical demand for the metals but, as Barclays Capital says neatly of silver, “prices have discarded their fundamentals”. The silver price, in the region of $15 per ounce in September last year, is now over $39 per ounce. Its staggering 160 per cent advance in little more than six months is a sure indication of speculative excess.

Investors have rushed to buy silver s a safe-haven investment in the mould of gold because it was seen, until recently at least, as a cheaper way in. In part, the precious metal bubble has been pumped by geopolitical fears while the ongoing euro zone debt crisis has also had its part to play. But one thing, above all others, is supercharging the price of silver: the Fed’s decision early in November to print $600 billion in a second round of quantitative easing. The silver-gilt investment thinking seems plain. If dollars are being printed like so much green wallpaper, money you can bite — such as silver and gold — seems so much better.

Fed policy is blowing the bubbles. The latest surge in precious metal prices coincides with Fed minutes showing some officials thought “exceptional policy accommodation could be appropriate beyond 2011.” The Fed sees its money printing as insurance against renewed economic weakness but its policy could easily rebound badly on a recovering US economy in which there is now a palpable inflation risk.

If inflation rises, US monetary policy could change abruptly. That would prick bubbles around the world. Gold and silver could fall precipitously.

Higher interest rates would cast the income deficiencies of precious metals into sharp relief. True, silver has industrial uses — especially in electronics — and its price may receive some support from world economic growth. But silver’s history is a warning. It also behaves as a sort of “geared” gold play, outperforming the yellow metal in times of excitement but deflates faster when the bears get the upper hand.

The five-year average price of silver is $16. It does not need to go all the way back there, from its current $40, for investors to lose a fat pile. Those who have fled printed paper may find their precious assets are anything but solid.

[fahrenheit]

Interesting read to understand the fundamentals of why Gold/Silver prices are skyrocketing... but dangerous times ahead.

http://www.gold-eagle.com/editorials_08 ... 40711.html

[fahrenheit]

another article: http://www.gold-eagle.com/editorials_08 ... 40511.html

[leslie_foo]

Gold and silver prices as per UOB gold and silver savings accounts reached another record level today.

[Starfire]

UOB Silver selling price at S$52.25

[Dennis Ng]

After I read the "rubbish" analysis by Barclay's Bank in Sunday Times 10 April 2011 "Beware of the silver streak", I almost want to shake my head in disbelief that a highly respected International Bank can produce such a "low quality" Rubbish analysis.

In the article, they mentioned:"But one thing above all is supercharging the price of silver: the US Federal Reserve's decision early last November to print US$600 billion (S$760 billion) in a second round of quantitative easing."

Dennis' comments:
this is utter rubbish. In QE1, U.S. government printed US$2 trillion, much more money, how come Silver prices only went up to US$22 in Oct 2010, but went up by 81.8% in last 6 months?

The main reason for Silver's rise is more and more people NOW are "waking up" to the fact that with countries all around the World printing money like nobody's business, with inflation rising so fast, (or from another angle, that Value of currency falling so fast), that they are starting to lose confidence in Currency and rather put their money into something tangible such as Gold and Silver.

Falling value of currency NOT only pushed up Silver's prices, but Oil prices have gone up from US$85 last year to now over US$110, even Sugar prices are up...not just Silver.

In the article, they also mentioned:"The price of silver, in the region of US$15 an ounce last September, is now over US$39 an ounce. Its staggering 160 per cent advance in little more than six months is a sure indication of speculative excess."

Dennis' comments: I checked silver prices and in Sep 2010, silver price fluctuated between US$19.50 to US$22, not sure how and where they get US$15 in Sep 2010?

In the article, they also said that:"If inflation rises, US monetary policy could change abruptly. That would prick bubbles around the world. Gold and silver could fall precipitously. Higher interest rates would cast the income deficiencies of precious metals into sharp relief."

Dennis' comments:
if inflation rises, more likely for Gold and Silver prices to rise rather than fall.

Even if interest rate rise, it depends on HOW High interest rates rise. Currently, U.S Fed rate at 0.25% is at HISTORICAL Low, even if U.S. increase interest rates to say 5%, that is still NOT really high interest rates since U.S. Fed rate was as high as 6% in year 2000 and 5.25% in year 2007....so even if interest rate rises to say 5%, it might NOT lead to Gold and Silver prices to fall precipitously.

In the 1970s, Silver price rose from US$1.50 to as high as US$50 in 1980. While Gold prices went from US$35 in 1971 to as high as US$850 in 1980. The rise of Silver price from US$15 to US$40 pales in comparison to the 4900% increase in the 1970s.

Only when Prime interest rates in U.S. was raised to 20%, that Gold and Silver prices Crash.

At current interest rate of 0.25%, it is a long, long, long way to go before interest rates even move back to NORMAL 5% to 6% during Good Economic Times.

Unlike the newspapers and TV which only recently "started" reporting on Silver, I've been saying that Silver prices were underpriced relative to Gold prices for MORE than 2 years. If you had listened to me then, you would have Bought Silver at US$14 and Gold at US$800, and now would be looking at 185% gains and 81.25% gains respectively.

Moral of the Story is do NOT place too much Respect or Confidence in Analysis and Views expressed by BIG International Banks, even they can provide Rubbish Analysis based on erroneous facts and figures and information. If Barclays' were so good, they would NOT be in Trouble during the Year 2008's Global Financial Crisis.

In year 2007, when Times were good and analysts were so bullish and positive, I've warned of a possible Global Financial Crisis and Crash in Stocks, Bonds and Property Markets on several occasions and several articles. This is something you can Verify and some of the information I provided can even be found in internet searches.

In the article, they also mentioned that:"It is true that silver has industrial uses - especially in electronics - and its price may receive some support from world economic growth."

Dennis' comments:

Silver has 3 Demand, not just Industrial demand as Barclays' have mentioned, the other 2 Demands for Silver is Investment Demand and Jewellery Demand, NOT just industrial.

There are people who invest into Silver, not speculate, how come they can only associate demand for Silver as speculative? For example, I've been holding on to my Silver investments for more than 2 years and did NOT trade in and out trying to make money from fluctuations in prices.

One thing is for Sure for me after reading the analysis by Barclay's is that I will NOT bother giving their Analysis much consideration in future as the quality of the Analysis is just ridiculous.


Apr 10, 2011
Beware of the silver streak
Price surge of 160% in six months shows speculative excess and inflation rise could prick bubbles
The price of silver broke a 31-year-old record and is now at over US$39 an ounce, from US$15 last September. -- ST FILE PHOTO

London - That silver and gold prices are racing to new record highs is a bad sign.

There is physical demand for the metals but, as Barclays Capital said neatly of silver, 'prices have discarded their fundamentals'.

The price of silver, in the region of US$15 an ounce last September, is now over US$39 an ounce. Its staggering 160 per cent advance in little more than six months is a sure indication of speculative excess.

Investors have rushed to buy silver as a safe haven investment in the mould of gold because it was seen, until recently at least, as a cheaper way in.

The precious metal bubble has been partly pumped by geopolitical fears; the ongoing euro zone debt crisis has also had a part to play.

But one thing above all is supercharging the price of silver: the US Federal Reserve's decision early last November to print US$600 billion (S$760 billion) in a second round of quantitative easing.

The silver-gilt investment thinking seems plain.

If dollars are being printed like so much green wallpaper, money you can bite - such as silver and gold - seems so much better.

Fed policy is blowing precious metal bubbles. The latest surge in prices coincides with Fed minutes showing that some officials thought 'exceptional policy accommodation could be appropriate beyond 2011'.

The Fed sees its printing of money as insurance against renewed economic weakness but its policy could easily rebound badly on a recovering US economy in which there is now a palpable inflation risk.

If inflation rises, US monetary policy could change abruptly. That would prick bubbles around the world. Gold and silver could fall precipitously. Higher interest rates would cast the income deficiencies of precious metals into sharp relief.

It is true that silver has industrial uses - especially in electronics - and its price may receive some support from world economic growth.

But its history is a warning. It also behaves as a sort of 'geared' gold play outperforming the yellow metal in times of excitement but it deflates faster when the bears get the upper hand.

The five-year average price of silver is US$16. It does not need to go all the way back there, from its current US$40, for investors to lose a fat pile. Those who have fled printed paper may find their precious assets are anything but solid.

Reuters

[Dennis Ng]

Hi all,
Silver's Historical High was US$50 back in 1980, or 31 years ago, if we factor in inflation, that would equate to to US$125 in year 2011...

So do not be surprised if one day Silver prices might reach US$125...

Many people didn't realise that Silver price was only about US$1.55 back in 1971 before the run up in prices to US$50 in 1980...or total rise of 3,125%.

Silver prices in 1999 was about US$5.25, and even if Silver prices shoots up to US$125 one day, that works out to total rise of 2,380%...

But I'll be very worried if Gold and Silver prices rise as much as during the 1971 to 1980 period, becos during that period, inflation in 1980 was as high as 14.76% and U.S. raised interest rates to 13.35% and Prime Interest rates in U.S. was as high as 20% before they finally brought inflation down.

My fear is that year 2011 to year 2020 might see another 10 years of High Inflation, not sure how high inflation rates might go up this time, but with so much printing of money by U.S. (QE 1 US$2 trillion, QE 2 US$600 billion); China (2008 to 2009 printed total about US$600 billion); Japan in last 2 weeks printed about US$300 billion....with so much money printed, what's likely to happen is that one day all these will come back to haunt us in the form of "rising inflation" (Rising Prices or looking from the other side of the coin is the case of currency losing value, that's why price rise)...

So if Silver prices really go up to US$125, how much would prices of sugar, rice and other necessities go up, I really don't know and don't hope to think about it, as it might mean over 1 billion people in the World, tipping into Poverty and Hunger...

Is your investment portfolio planned to handle such a scenario and situation? I hope all of you, my seminar graduates will be prepared for whatever scenarios that might occur, and in return, that you help or influence your friends and loved ones to get prepared as well...I hope this forum will serve like a "Noah's Ark" (my apologies, I'm not Christian, and I hope such an analogy does NOT offend anyone, as I'm just trying to use something you have heard of to explain HOW important this is.

Historical Figures of inflation rate:

http://inflationdata.com/inflation/Infl ... rentPage=2

History of U.S. interest rates below:

http://www.infoplease.com/ipa/A0908373.html

http://www.infoplease.com/business/mone ... -2006.html

U.S. Prime Rate history

http://www.wsjprimerate.us/wall_street_ ... istory.htm

Please refer to my posting and analysis on 8 Apr 2011 below, which says that US$50 in 1980 is "not real price", but more due to speculation and manipulation.

Looking at the Silver historical price chart from 1971 to 1980 and I discovered that Silver price was only about US$10 in 1979, then spiked up to about US$17 before the sudden push to US$50 in 1980 (more caused by manipulation).

http://www.24hgold.com/english/news-gol ... rect=False

Thus, US$50 historical High price for silver was mainly caused by manipulation of "Hunt Brothers" and at that time, as Gold price reached historical high of US$850, Gold : Silver ratio was 1 ounce of Gold can only buy 17 ounces of Silver.

If we use an average of Gold: Silver ratio of 30, based on Gold Price of US$850, Silver price would be US$28.33.

And based on silver price of US$28.33, factoring inflation rate of 3% for the last 31 years, then it would work out to Silver price equivalent to 1980's US$28.33 to 2011's price of about US$70.83, or about 81.6% higher than current price of US$39.

So the US$125 equivalent worked based on Historical High price of US$50 might not be a good reference.

Just sharing with all of you this latest View I have after looking at the Historical price chart of silver and thinking about this subject.

Please note that I'm not saying that Silver price would go to US$70.83, just saying that US$28.33 in 1971 is equivalent to about US$70.83 and please always remember the No. 1 question is "What if I'm wrong, will I be financially ok?"

Please only put what you can afford to lose into investments, including Silver.

[Stradlinz]

After reading this report.. I can't help but wonder whether Barclay has huge short position in silver... It was reported that JP Morgan and HSBC have huge short silver position, maybe they will be the next banks that will write such analysis and hoping silver price will retreat

After I read the "rubbish" analysis by Barclay's Bank in Sunday Times 10 April 2011 "Beware of the silver streak", I almost want to shake my head in disbelief that a highly respected International Bank can produce such a "low quality" Rubbish analysis.

In the article, they mentioned:"But one thing above all is supercharging the price of silver: the US Federal Reserve's decision early last November to print US$600 billion (S$760 billion) in a second round of quantitative easing."

Dennis' comments:
this is utter rubbish. In QE1, U.S. government printed US$2 trillion, much more money, how come Silver prices only went up to US$22 in Oct 2010, but went up by 81.8% in last 6 months?

The main reason for Silver's rise is more and more people NOW are "waking up" to the fact that with countries all around the World printing money like nobody's business, with inflation rising so fast, (or from another angle, that Value of currency falling so fast), that they are starting to lose confidence in Currency and rather put their money into something tangible such as Gold and Silver.

Falling value of currency NOT only pushed up Silver's prices, but Oil prices have gone up from US$85 last year to now over US$110, even Sugar prices are up...not just Silver.

In the article, they also mentioned:"The price of silver, in the region of US$15 an ounce last September, is now over US$39 an ounce. Its staggering 160 per cent advance in little more than six months is a sure indication of speculative excess."

Dennis' comments: I checked silver prices and in Sep 2010, silver price fluctuated between US$19.50 to US$22, not sure how and where they get US$15 in Sep 2010?

In the article, they also said that:"If inflation rises, US monetary policy could change abruptly. That would prick bubbles around the world. Gold and silver could fall precipitously. Higher interest rates would cast the income deficiencies of precious metals into sharp relief."

Dennis' comments:
if inflation rises, more likely for Gold and Silver prices to rise rather than fall.

Even if interest rate rise, it depends on HOW High interest rates rise. Currently, U.S Fed rate at 0.25% is at HISTORICAL Low, even if U.S. increase interest rates to say 5%, that is still NOT really high interest rates since U.S. Fed rate was as high as 6% in year 2000 and 5.25% in year 2007....so even if interest rate rises to say 5%, it might NOT lead to Gold and Silver prices to fall precipitously.

In the 1970s, Silver price rose from US$1.50 to as high as US$50 in 1980. While Gold prices went from US$35 in 1971 to as high as US$850 in 1980. The rise of Silver price from US$15 to US$40 pales in comparison to the 4900% increase in the 1970s.

Only when Prime interest rates in U.S. was raised to 20%, that Gold and Silver prices Crash.

At current interest rate of 0.25%, it is a long, long, long way to go before interest rates even move back to NORMAL 5% to 6% during Good Economic Times.

Unlike the newspapers and TV which only recently "started" reporting on Silver, I've been saying that Silver prices were underpriced relative to Gold prices for MORE than 2 years. If you had listened to me then, you would have Bought Silver at US$14 and Gold at US$800, and now would be looking at 185% gains and 81.25% gains respectively.

Moral of the Story is do NOT place too much Respect or Confidence in Analysis and Views expressed by BIG International Banks, even they can provide Rubbish Analysis based on erroneous facts and figures and information. If Barclays' were so good, they would NOT be in Trouble during the Year 2008's Global Financial Crisis.

In year 2007, when Times were good and analysts were so bullish and positive, I've warned of a possible Global Financial Crisis and Crash in Stocks, Bonds and Property Markets on several occasions and several articles. This is something you can Verify and some of the information I provided can even be found in internet searches.

In the article, they also mentioned that:"It is true that silver has industrial uses - especially in electronics - and its price may receive some support from world economic growth."

Dennis' comments:

Silver has 3 Demand, not just Industrial demand as Barclays' have mentioned, the other 2 Demands for Silver is Investment Demand and Jewellery Demand, NOT just industrial.

There are people who invest into Silver, not speculate, how come they can only associate demand for Silver as speculative? For example, I've been holding on to my Silver investments for more than 2 years and did NOT trade in and out trying to make money from fluctuations in prices.

One thing is for Sure for me after reading the analysis by Barclay's is that I will NOT bother giving their Analysis much consideration in future as the quality of the Analysis is just ridiculous.


Apr 10, 2011
Beware of the silver streak
Price surge of 160% in six months shows speculative excess and inflation rise could prick bubbles
The price of silver broke a 31-year-old record and is now at over US$39 an ounce, from US$15 last September. -- ST FILE PHOTO

London - That silver and gold prices are racing to new record highs is a bad sign.

There is physical demand for the metals but, as Barclays Capital said neatly of silver, 'prices have discarded their fundamentals'.

The price of silver, in the region of US$15 an ounce last September, is now over US$39 an ounce. Its staggering 160 per cent advance in little more than six months is a sure indication of speculative excess.

Investors have rushed to buy silver as a safe haven investment in the mould of gold because it was seen, until recently at least, as a cheaper way in.

The precious metal bubble has been partly pumped by geopolitical fears; the ongoing euro zone debt crisis has also had a part to play.

But one thing above all is supercharging the price of silver: the US Federal Reserve's decision early last November to print US$600 billion (S$760 billion) in a second round of quantitative easing.

The silver-gilt investment thinking seems plain.

If dollars are being printed like so much green wallpaper, money you can bite - such as silver and gold - seems so much better.

Fed policy is blowing precious metal bubbles. The latest surge in prices coincides with Fed minutes showing that some officials thought 'exceptional policy accommodation could be appropriate beyond 2011'.

The Fed sees its printing of money as insurance against renewed economic weakness but its policy could easily rebound badly on a recovering US economy in which there is now a palpable inflation risk.

If inflation rises, US monetary policy could change abruptly. That would prick bubbles around the world. Gold and silver could fall precipitously. Higher interest rates would cast the income deficiencies of precious metals into sharp relief.

It is true that silver has industrial uses - especially in electronics - and its price may receive some support from world economic growth.

But its history is a warning. It also behaves as a sort of 'geared' gold play outperforming the yellow metal in times of excitement but it deflates faster when the bears get the upper hand.

The five-year average price of silver is US$16. It does not need to go all the way back there, from its current US$40, for investors to lose a fat pile. Those who have fled printed paper may find their precious assets are anything but solid.

Reuters

[walkinepark]

After reading this report.. I can't help but wonder whether Barclay has huge short position in silver... It was reported that JP Morgan and HSBC have huge short silver position, maybe they will be the next banks that will write such analysis and hoping silver price will retreat

After I read the "rubbish" analysis by Barclay's Bank in Sunday Times 10 April 2011 "Beware of the silver streak", I almost want to shake my head in disbelief that a highly respected International Bank can produce such a "low quality" Rubbish analysis.

In the article, they mentioned:"But one thing above all is supercharging the price of silver: the US Federal Reserve's decision early last November to print US$600 billion (S$760 billion) in a second round of quantitative easing."

Dennis' comments:
this is utter rubbish. In QE1, U.S. government printed US$2 trillion, much more money, how come Silver prices only went up to US$22 in Oct 2010, but went up by 81.8% in last 6 months?

The main reason for Silver's rise is more and more people NOW are "waking up" to the fact that with countries all around the World printing money like nobody's business, with inflation rising so fast, (or from another angle, that Value of currency falling so fast), that they are starting to lose confidence in Currency and rather put their money into something tangible such as Gold and Silver.

Falling value of currency NOT only pushed up Silver's prices, but Oil prices have gone up from US$85 last year to now over US$110, even Sugar prices are up...not just Silver.

In the article, they also mentioned:"The price of silver, in the region of US$15 an ounce last September, is now over US$39 an ounce. Its staggering 160 per cent advance in little more than six months is a sure indication of speculative excess."

Dennis' comments: I checked silver prices and in Sep 2010, silver price fluctuated between US$19.50 to US$22, not sure how and where they get US$15 in Sep 2010?

In the article, they also said that:"If inflation rises, US monetary policy could change abruptly. That would prick bubbles around the world. Gold and silver could fall precipitously. Higher interest rates would cast the income deficiencies of precious metals into sharp relief."

Dennis' comments:
if inflation rises, more likely for Gold and Silver prices to rise rather than fall.

Even if interest rate rise, it depends on HOW High interest rates rise. Currently, U.S Fed rate at 0.25% is at HISTORICAL Low, even if U.S. increase interest rates to say 5%, that is still NOT really high interest rates since U.S. Fed rate was as high as 6% in year 2000 and 5.25% in year 2007....so even if interest rate rises to say 5%, it might NOT lead to Gold and Silver prices to fall precipitously.

In the 1970s, Silver price rose from US$1.50 to as high as US$50 in 1980. While Gold prices went from US$35 in 1971 to as high as US$850 in 1980. The rise of Silver price from US$15 to US$40 pales in comparison to the 4900% increase in the 1970s.

Only when Prime interest rates in U.S. was raised to 20%, that Gold and Silver prices Crash.

At current interest rate of 0.25%, it is a long, long, long way to go before interest rates even move back to NORMAL 5% to 6% during Good Economic Times.

Unlike the newspapers and TV which only recently "started" reporting on Silver, I've been saying that Silver prices were underpriced relative to Gold prices for MORE than 2 years. If you had listened to me then, you would have Bought Silver at US$14 and Gold at US$800, and now would be looking at 185% gains and 81.25% gains respectively.

Moral of the Story is do NOT place too much Respect or Confidence in Analysis and Views expressed by BIG International Banks, even they can provide Rubbish Analysis based on erroneous facts and figures and information. If Barclays' were so good, they would NOT be in Trouble during the Year 2008's Global Financial Crisis.

In year 2007, when Times were good and analysts were so bullish and positive, I've warned of a possible Global Financial Crisis and Crash in Stocks, Bonds and Property Markets on several occasions and several articles. This is something you can Verify and some of the information I provided can even be found in internet searches.

In the article, they also mentioned that:"It is true that silver has industrial uses - especially in electronics - and its price may receive some support from world economic growth."

Dennis' comments:

Silver has 3 Demand, not just Industrial demand as Barclays' have mentioned, the other 2 Demands for Silver is Investment Demand and Jewellery Demand, NOT just industrial.

There are people who invest into Silver, not speculate, how come they can only associate demand for Silver as speculative? For example, I've been holding on to my Silver investments for more than 2 years and did NOT trade in and out trying to make money from fluctuations in prices.

One thing is for Sure for me after reading the analysis by Barclay's is that I will NOT bother giving their Analysis much consideration in future as the quality of the Analysis is just ridiculous.


Apr 10, 2011
Beware of the silver streak
Price surge of 160% in six months shows speculative excess and inflation rise could prick bubbles
The price of silver broke a 31-year-old record and is now at over US$39 an ounce, from US$15 last September. -- ST FILE PHOTO

London - That silver and gold prices are racing to new record highs is a bad sign.

There is physical demand for the metals but, as Barclays Capital said neatly of silver, 'prices have discarded their fundamentals'.

The price of silver, in the region of US$15 an ounce last September, is now over US$39 an ounce. Its staggering 160 per cent advance in little more than six months is a sure indication of speculative excess.

Investors have rushed to buy silver as a safe haven investment in the mould of gold because it was seen, until recently at least, as a cheaper way in.

The precious metal bubble has been partly pumped by geopolitical fears; the ongoing euro zone debt crisis has also had a part to play.

But one thing above all is supercharging the price of silver: the US Federal Reserve's decision early last November to print US$600 billion (S$760 billion) in a second round of quantitative easing.

The silver-gilt investment thinking seems plain.

If dollars are being printed like so much green wallpaper, money you can bite - such as silver and gold - seems so much better.

Fed policy is blowing precious metal bubbles. The latest surge in prices coincides with Fed minutes showing that some officials thought 'exceptional policy accommodation could be appropriate beyond 2011'.

The Fed sees its printing of money as insurance against renewed economic weakness but its policy could easily rebound badly on a recovering US economy in which there is now a palpable inflation risk.

If inflation rises, US monetary policy could change abruptly. That would prick bubbles around the world. Gold and silver could fall precipitously. Higher interest rates would cast the income deficiencies of precious metals into sharp relief.

It is true that silver has industrial uses - especially in electronics - and its price may receive some support from world economic growth.

But its history is a warning. It also behaves as a sort of 'geared' gold play outperforming the yellow metal in times of excitement but it deflates faster when the bears get the upper hand.

The five-year average price of silver is US$16. It does not need to go all the way back there, from its current US$40, for investors to lose a fat pile. Those who have fled printed paper may find their precious assets are anything but solid.

Reuters

Or it could be they are "talking it down" so that they can get a bargain later..

[jeffreychua]

Talk about volatility, silver price from dropped from US$48.70 to US$34.66 in one week! Is it time to buy more?

[walkinepark]

Looks like a falling knife - just look at the rate it's dropping.

for me, i don't think i dare to catch it now..
maybe will only consider when it's near US$30.. most probably will end up buying at US$31 because i like to observe how strong the support is at US$30.

[wemakebread]

Remember the important wisdom our sifu taught us:
"If I am wrong, will I be ok?"

[Dennis Ng]

Talk about volatility, silver price from dropped from US$48.70 to US$34.66 in one week! Is it time to buy more?

based on the Silver price trend in the last 3 months, it was at about US$30 before it shot up non-stop to US$49... so buying now the downside risks is US$30, upside might be the recent high of US$49 (strong resistence). So upside is more than double of downside.

Yes, the No. 1 question for me is always "What if I'm wrong, will I be financially ok?"