The story of march/april/may 2011 was quite simple. Some people bought some IShares Silver Trust shares, causing the IShares runners, that want SLV to track the silver price, to buy their stock silver up from 11,000 tonnes on 9 march to 18,639 on end april, which drove the price up from $36 to near $50. As indication, the worlds supply is 30000 tonnes. It wasn't SLV that tracked the silver price, it rather was the silver price that tracked SLV. Near $50 the shareholders started to hesitate and looked at eachother. Some sideways for a couple days. Then some couldn't resist the profit, and dumped some shares, bringing price back down to $42. That caused some RSI's to start again buying shares, driving the price back up to $49, as a typical 'double top'. And then they all 'got out'. That $36 to $50 was due to people buying silver as a paper / electronic representation. It wasn't stacking (of course some stackers were misleaded enough to buy there too, but compared to the 206 tonnes per day as paper representation along the SLV vehicle, this was peanuts). That $50 in 2011 was a very short occurrence. To make that price level a bottom price level it requires 3 times todays silver demand. In 2010 the silver demand crossed the 3 times the 2000 demand level. In 2002 the silver demand crossed the 2 times the 1986 demand level. Also something very important to take into account: the more silver is 'stacked' / stored for ETF's / whatever 'investment', the more silver will later be sold, and undo demand that would otherwise have moved the price up. So without general inflation catching up with silvers trend, well, price can hang around todays level for another decade. Of course, if the world level central planning system breaks, well, silver will have saved something instead of a fiat-nothing.
True to a degree, however these statements are based on the premise that the ETF's are in fact holding silver. In addition, two thirds of all silver demand is industrial which also dictates price through supply and demand. Lastly, devaluation of fiat and the ensuing inflation means that a static silver price will ultimately lead to a blowout of the price as fiat becomes worthless. However, I do take your point re the stackers following the ETF trend 2 years ago. As stackers, we want to believe the hyperbole to justify our actions as stackers which leads to more stacking. I think all new and current stackers are now in a golden age where we are in a position to buy at the low end of the price spectrum for at least another few months while the current Cyprus/Euro fiasco is kept in quarantine; then I see the contagion of fiat dependability, which will lead to a PM revival, which will lead to questions being asked of ETF integrity, which will require the ETF's to purchase the PM's to balance their books, which will further push up the price of PM's. by Christmas 2014, gold will be $3,000/oz and silver $150/oz, minimum, in those ratios. We then have to consider whether it is better to hold $150 or 1oz of silver. Will it be a world where silver is recognised at its true worth, or a world where $150 is no better than next month's $200. In my mind, I am wealth stacking, and should the time come when silver beats fiat every time, the paradigm changes and silver needs to be measured as true money and subsequent purchasing power.
Well, I too remember $4.50 silver - and I thought "$78 for a kilo bar? - why not?", so I did... Sold a bit, and bought a bit more over the years, and I still have that (Geomin) bar.. If I could just go back, and know what I know now........................
That's not a speculative bubble popping. That's high volume movement pushing prices down to force anxious, weak hands out of the market only to buy back at a 20% discount on the rebound. Has happened three times this month. It's quite calculated and involves at least a small mailing list of very smart 'pros' that are taking advantage of nerds with nice gaming rigs.
