"That is of course unless it turns itself into North Korea - a basically military state where the population lives in agrarian poverty and all of the money goes to the military and the bankers who are the government." I saw an interesting article recently that showed that the deer hunters in 5 states(combined) over one weekend were larger than and standing army on the planet that weekend. One state alone had 700,000 hunters out with guns. Considering the fact that the grunt force in the military comes from the lower economic bracket, I expect decades or carnage before that ever happens. The US has been unsuccessful in Afghanistan and Iraq. The US only wins brute force wars. They never win against populations. "Our dollar goes down we pay more, our dollar goes up we pay more. This is how most normal everyday people see economics. Please, why is our dollar overvalued? Why should our dollar be worth less against a currency that is from a decaying society that exploits the world for it's own gain? We have ridden through this financial crisis better than most developed countries yet our dollar is overvalued? Overvalued against what?" Overvalued compared to everyone else whose economies are on fire? We have good fundamentals, but -only- until China cuts back on importing resources it doesn't need. The do this so they can offload US debt before it devalues. After that our property bubble goes pop, out banks stagger under the loss of capital and then we, the tax payer props them up via the RBA (No vote needed). Our dollar is no overvalued. The market revalues it every second of the day. Then the dollar will be a whole lot lower, as our debt to GDP ratio is worse than Ireland.
"Is it possible that we will have a bubble in precious metals, if people must borrow to propel the price?" The bulk of the price movement I'm seeing is coming out of the Asian session, not out of ETF (that may or may not even buy silver!). Remember, Comex has reduced margin twice in a month to shake of the undercapitalised. First time was three weeks ago, and we were knocked back about 8-9%. Next time was yesterday, and the market loss was made back within about 2-3 hours. To me, than places Silver in strong hands. I would say that the majority of leveraged silver is in the paper arena. People don't leverage to buy physical (like they would a house), so I think the bigger bubble in in fiat currencies.
We are still far away from being "entering 3rd phase", 2nd phase was just beginning. 2nd Phase just started when gold hit $1,000 in late 2009. Now is 2010 and gold is only $1,400 up $400. The 1st phase is spanning roughly 9 years (2001-2009) and 2nd Phase is suppose to be the longest phase in a bull market. To say we are finishing 2nd phase and entering 3rd phase in gold bullmarket right now is way premature. If inflation adjusted Gold price have not even beat it's last all time high. Using US govt official CPI figure, Gold all time high in 1980s $850 can be translated to today's dollar $2,300+. With gold at $1,400 today, it is no where near its 1980's inflation adjusted price. And today you got WAY more dollars floating around in the world than it was in 1980s. Gold is still dirt cheap, the general public have not participated in Gold bull run, we are no way near entering the 3rd and final phase in bull market. http://www.goldprice.org/james-turk/2008/01/real-gold-price.html According to Seeking Alpha, $1,400 in 2010 is worth less than $700 in the early 1980s (inflation adjusted). http://seekingalpha.com/article/238208-why-inflation-isn-t-affecting-gold-prices I'm wasn't saying granmas and granpas are the only average joes out there, I wasn't even saying that is my definition of average joes. Sure there are people who buy gold online, or buy ETFs but also there are people who buy gold at the store. Why is it ABC Sydney experiencing ever increasing number of walk-in customers and the mania haven't even started yet, why can't everybody just buy online? On personal note, the "lines around the block" scenario may not occur in Australia because we have such a small population. This could be occuring in other places with higher population density such as China, USA and Europe.
I dunno... I'm sitting on an airTrans flight right now (free onboard WiFi), and apart from a couple of fatties in business class, I'm surrounded by pretty normal looking people
I disagree. To think that we have another 9 years before going to Phase 3 is, I think, ridiculous. To me institutional investors have been moving in for awhile now and personally if I had to approximate I would say we are nearing the end of Phase 2.
I'm just not seeing it in phase 3. I too think we are maybe in the middle of phase 2. The reasons being is. 1) i have never heard anything about silver in the mainstream media anywhere. 2) maybe 2 in every 100 people have any idea about silver. Gold more people are staring to look at it, but never silver. So under these conditions how could it be near the final phase 3? and if it is phase 3 what do you call the phase where all the media is talking about it and everyone in the street is talking about it? is there a phase 4?
Coming bubble, timing trouble. Fiat burns and metal bubble when the suburbs start to wake, and no more jewellery do they take, to Buy Gold shops, but buy instead the melted rings of aunts long dead, sold by Buy Gold Shops with new signs, Gold Sold Here, with queues and lines. While wily bears sell every ounce since they did early, so quickly pounce when in phase one was offered low kangaroos sovs , lunars and pamp anything with a jeweller's stamp. In phase two when prices rose bulls said look my stack still grows. So in phase three they're bears in shops selling to people who dont believe tops. Then it ends as quickly as started, when slow fools have from fiat parted. And that is when, bears become bulls and buy again. (sorry William)
We stopped 5oz and 10oz so the press that does the large silver sizes can just concentrate on Kilo coins. I basically takes the same time to stamp a 5oz or a Kilo, so concentrating on Kilos means you get more ounces out the door. I think we have seen all the PM bugs who already had PMs stock up more in response to GFC. After that we've started to see institutional/smart money just starting to come in (ie Paulson, Soros) and we are now getting a trickle of mass public. These sources have been enough to move the price to where it is. We are still to see real uptake from most institutional / financial planners & brokers and mums & dads.
Remember folks, Phase 2 is the longest phase of the bull market. We're not even close to the mania of Phase 3 yet, not by a long shot. When you have 'Hot Precious Metals' instead of 'Hot Property' on TV, that's phase 3. When former inflation adjusted highs are blown out of the water, that's phase 3. When you get hourly spot price updates on the mainstream news, that's phase 3. When the queues for your coin stores are stretching around city blocks to buy, that's phase 3. We're just moving from the stealth phase right now into phase 2 in the classic sense of the word. If any of you honestly believe we're in phase 3 of the market now, then I suggest you put your money where your mouth is and put your metal up for sale here to cash in before the market crashes. I bet my last ounce not one of you would even dare. 22 million people in Australia. How many members on Australia's biggest Silver Stacking forum? And that's just 'Straya. 'nuff said IMHO.
My opinion is phase II has just started in the last 3 months or so and is becoming more established. I think up until then, the smart money was busy getting in. For me phase II is when you see a more evident investment by financial types who see the Breakout begin. The funds, super and hedge funds as well as other big investors start their moves into metals. I think this will last another 2-3 years where the euphoria of the ever growing prices as a result of more and more buying brings smaller and smaller fish in will see us get into phase III around 2012-13 to the end of 2013. The mania will last another 1-2 years before a 6 month blow off. My estimate 4-5 years left in this bull.
Bron, how much of your personal wealth do you have in PM's? In Perth Minth Certificate Program, or physical?
I think a useful way to perhaps look at phases is in times of historical time-lines. I think Jim Rogers mentioned somewhere that the average commodities bull market lasts between 12 and 20 years? If somebody could dig up charts/stats showing precious metals bull markets for the last 200-300 years and how long each one lasted that will give us some idea. If we were for instance to assume this precious metals bull market were to last 15 years (probably about average?) than (if you agree it started around 2000) it would end in 2015, giving us 5 more years of bull market. Note: there is no actual reason why a bull market has to last any specific length of time, I was just sharing a thought that perhaps is worth investigating. Another sign to watch is the price action in speculative gold and silver mining stocks. I think Peter Schiff recently mentioned that the index of global gold miners is still down around 30% from it's peak. When junior gold and silver miners and explorers as a whole (as opposed to only selected ones currently) explode in price that will probably be a sign of the top approaching.
Browns bottom from 1999 to 2002 would be a pretty respectable starting point I think which would put a bull market run ending between 2011 and 2019. Considering what the markets are doing at the moment, it could be a pretty good indicator. Then again, if the USD dies, the market run will be unfathomable in it's extent I think.
Price action is influenced by the amount of buying in the market. The amount of buying is indicative to the bullishness of Gold in public perception. Price action is an indication of public view of Precious Metals. I don't know what and who are the commentators you are suggesting? But pretty much all PM analysts I came across agree that we are in 2nd phase and still have a long way to go before phase 3. James Turk, Mike Maloney and Bob Chapman and probably many others agree that we are still in phase 2. I guarantee you that I'm not flying solo in my view that we are no where near Phase 3 in this discussion.
The average major bull market last between 25-30 years. Just look at Real Estate bull market, it starts in 1980s and to this day still going (at least in Oz is). Yes, institutional investors started to take notice of price action in PM but they participation is still minimal. Look at the big picture, just do a comparison of how much the general public invested in Bonds, common stocks and derivatives and compare that to those who are buying PM, it's like comparing an ant with an elephant. If you look at an ant through magnifying glass it's easy to mistake an ant for a giant mutated bug.
Agree IMO. Here's a story. Was in cash convertors the other day, noticed a silver coin, didn't have time or my glasses to check it out. Went back yesterday hoping on the off chance they didn't have a clue what it was and priced it too cheaply or had an old price on it with the recent rise in silver spot. I was right, the owner of the store was there, he had no idea. Told me it was a Kookaburra, asked me if I knew what that was, said yes, then he gave it to me. Yep, RAM sterling proof from the birds of aust series with a kook on it, $49. Told me it was only sterling, I should be collecting gold. He asks why don't I collect gold? I snaffle most of the gold that comes in here he says. Told him i can't afford it. "You collect silver he asks?" Yep. Showed me some foreign coins which were 0.900, I didn't recognize them, didn't want em at $49 ea either. Asked me again "You buy silver? What florins and stuff?" Told him I had a few 66 round 50's and a couple of other bits. "Oh" he says, "they're pretty worthless. You need to collect scrap jewellery then. That's what you need to do." My point? If blokes like the cash convertors owners, who are at the coalface of trading goods for cash, often from the desperate, aren't yet switched on about silver values and are obsessed with the glow of gold, then we's still got a way to go before Phase 3.
I think people generally know gold is valueable because Gold is being used for jewelery extensively. EVERYBODY is exposed to gold in their daily lives just with jewelery alone. So generally people know the value of gold because they know how expensive a gold ring can be. Whereas silver is different story. Silver are not usually used for jewelery so most people do not associate silver with Precious metals such as gold. They don't encounter silver that often in their daily lives therefore they have no idea how much silver is valued... because they have no way of measuring them in their little world.
GP that is because you are probably in the South. chimpanchu is Phase 2 the longest in time, largest price gain or both?
Yes and no. Phase 2 in bull market usually is the longest running phase. This is a build up time where the big money starting to put little position in the gold market. But by no mean they go ALL IN, yet... and the general public may here a breeze here and there about the merit of buying gold. But they're still tight-up with their current (yesterday's bull) asset (in today's case probably Real Estate and Common Stocks). Eventually their current asset (Real Estate or Common Stocks) will run out of steam and come crashing down (no bull market last forever), and then all of the sudden PM become the BEST thing after sliced bread. This is when the general public ABANDON their sinking ships, and jumped on Gold/Silver bandwagon thus triggering the start of Phase 3 and final phase. And this is when ALL of the big corporations, Hedge funds, investment houses, insurance companies, banks, etc... go ALL IN to PM. All of sudden Joe Sheeples on the street start seeing and hearing their "Financial planners", neighbors, shoe shine boys, etc... pressuring them to buy Gold. As always the general public is always late to the party. They joined the party near the end of it, all the good booze already gone got snapped up by those who come early (us!). Phase 3 in bull market is the SHORTEST and most violent period in a bull market. This is the time where Joe Public sell their investment property, common stocks, cars, first born son, etc... to buy gold. Gold price can go parabolic and double in a matter of months! Gold price could swing in hundreds of dollars in a day! Just look at the price action of gold between 1979 - 1980 (as I believe is the Phase 3), gold went from $220 to $850 all within a year. And after than Gold price came crashing down even FASTER than it was going up. The show is over move on...
