Damn it, why won't it go to the moon already

[grinners]

Hi grinners

It is impossible to know the true supply, true production and demand. Most of the traded silver is paper and who knows if there is real silver behind these contracts. That is why you perceive a 1% rise in demand moving a market 30%. In normal markets that would not happen but in leveraged markets that is the norm. That is the reason why price discovery is so difficult and inaccurate.

I am talking about without leverage. Hypothetical illustration:

10 serves of water on a desert island and 10 people to drink them -> Price of water finds itself at $1. Everyone has enough, demand equals supply.

10 serves of water on a desert island and 11 people to drink them -> Do you think the price of water would only rise to $11 and one person would perish for the sake of an extra dollar?

The price of ALL water would, in fact, rise to the highest price the 2nd poorest person could afford.

I'm just showing that a small change in demand/supply can have a large affect on price without any leverage whatsoever, provided that the demand/supply is inelastic.

 

[Ronnie 666]

Hi Grinners
I understand what you mean but I believe that the major factor today is leverage and difficulty in true price discovery. As more phoney cash and paper get pumped in its going to get worse and that is why greater price fluctuations both up and down will occur. When figures are released for the total silver mined or the total silver supply at the comex we know they are BS. So how do you trade that in true market terms ? You don't it is all perception -smoke and mirrors.
Anyway good point! I accept what you are saying..
Cheers

 

[Lunartic]

So, hang in there sunshine is the message?

 

[upandaway]

Hi Grinners
I understand what you mean but I believe that the major factor today is leverage and difficulty in true price discovery. As more phoney cash and paper get pumped in its going to get worse and that is why greater price fluctuations both up and down will occur. When figures are released for the total silver mined or the total silver supply at the comex we know they are BS. So how do you trade that in true market terms ? You don't it is all perception -smoke and mirrors.
Anyway good point! I accept what you are saying..
Cheers

Ronnie you appear to share a view on the PM market and it's negatives that I would say is pretty typical of a lot of silver purchasers. I also apologise if it is slightly off topic, but formed the questions from reading some of your other posts on similar threads.

I would therefore be genuinely interested to hear the reasons why or how you feel people who do trade successfully in the PM market and most other markets (which are also manipulated I may add) do so then? There are a few here who trade and do well at it. Is it all luck considering none of us are insiders?

 

[Ronnie 666]

Hi Grinners
I understand what you mean but I believe that the major factor today is leverage and difficulty in true price discovery. As more phoney cash and paper get pumped in its going to get worse and that is why greater price fluctuations both up and down will occur. When figures are released for the total silver mined or the total silver supply at the comex we know they are BS. So how do you trade that in true market terms ? You don't it is all perception -smoke and mirrors.
Anyway good point! I accept what you are saying..
Cheers

Ronnie you appear to share a view on the PM market and it's negatives that I would say is pretty typical of a lot of silver purchasers. I also apologise if it is slightly off topic, but formed the questions from reading some of your other posts on similar threads.

I would therefore be genuinely interested to hear the reasons why or how you feel people who do trade successfully in the PM market and most other markets (which are also manipulated I may add) do so then? There are a few here who trade and do well at it. Is it all luck considering none of us are insiders?

My interpretation is that technical analysis does work short term more than 50% of the time. This is not because it works intrinsically but it works because all the traders use it. So if you are careful and follow these trends you can make cash on paper trades as you correctly point out. Occasionally you will be burned and for people like myself who have not the time to track this minute to minute day to day this is a very dangerous path. That is why I stay clear of it and warn newbys to do the same. Also in the paper markets you use leverage which makes the gains and losses greater. I have friends who only last year lost $100k in a week on a paper purchase. That is not for me and probably most of the SS members, we consider this a secular bull market so we buy physical on the dips. Now I contend I have made more money doing that than many of the technical traders on this site. The only difference is that my money is in PM not cash. I don't worry about making $5k on a trade I buy the metal and I don't sell. That metal I consider is my gain or my money or my savings. I have been doing this for many years and I have no regrets. People must not think that now is too late as I recall massive falls over past years that used to scare me. Nothing has changed and we have a way to go before this ride is over. Why bet on short term gains with high risk. Bet slowly as you can afford and over time you will win. There is very little downside risk doing it this way.

 

[Pirocco]

I still disagree with this point you consistently put forward of not realising a loss until you sell.
You have demonstrated above that the loss is realised at 83 coins, or -15% before selling.

I also added that that loss doesn't materialize without selling.
And feel free to disagree to eternity.

 

[Pirocco]

Just to clarify, a tripling of price does not require a tripling of demand.

A 1% increase in demand for a product with limited supply capacity could result in a 100000% increase in price.

You know as well as me that that story is bogus.
Because that 'limitation' is a function of the price.
There are thousands tonnes gold in the seawater.
Why doesn't it add to the supply capacity?
Because the current price is too low to 'mine' it without losing big.
Now, increase the price 100000% (as a standalone, NOT as general inflation, there it wouldnt even make a difference since the cost of production would have gone up too like that).
What is the result of such standalone gold price multiplication with 1000?
That they can invest 1000 times more in order to 'mine' the gold.
So your 'limited' supply is actually not limited in the way you use it as an argument.
And you can even apply this downto atomic scale.
Silver used in industrial applications, gets 'lost' for the same reason. The silver atoms are scattered in such a degree that it is not economically feasible to recycle them.
But at a thousandfolded price relative to other products (again, standalone, NOT general inflation), that 'limited supply' greatly increases again.
Or take a margin value.
Imagine that, in a for the rest unchanged world, the silver price would become $100,000,000 an ounce.
Hell, it's possible that every silver atom is recycled and that they masshunt the ocean bottoms and nearby space objects.

And the same logic also works the other way around. What would happen if the silver price did x 1000 as a standalone price increase?
Do you think that demand would remain the same? People would go after alternatives, and if the chemical/atomic properties cant be mimiced/replaced/whatever solution, people will accept the drawback (ex less speedy computer) because the silver cost drawback is way bigger. Demand and supply are an interacting story and freezing elements in a formula/relationship is changing reality.

 

[Pirocco]

My interpretation is that technical analysis does work short term more than 50% of the time. This is not because it works intrinsically but it works because all the traders use it.

This second sentence is very true and tells a whole story on its own.
That becomes very clear if you generalize it.
Something works because all people use it.
It implicites the explanation: people that use technical analysis make their trading behaviour predictable.
The very reacting on the technical observations causes the technical observations to be correct more than 50% of the time.
Since the trading 'game' is a zero sum game (a gain implies an equal loss), this implicitly means that a part of the 'traders' has to convince the others to use technical analysis.
Because then they can predict their trading behaviour.
And outspeed them in buying and selling.

 

[southerncross]

You would also have to factor in the leadtime to production on such a price increase Pirocco . Also another factor would be the scarcity of funding in such a scenario to achieve the extraction of low grade reserves. I still think we can see an exponential price rise due to the leveraging of the paper market if a collapse in the derivatives occurs despite the availability of mine-able or recyclable material.

 

[Pirocco]

You would also have to factor in the leadtime to production on such a price increase Pirocco . Also another factor would be the scarcity of funding in such a scenario to achieve the extraction of low grade reserves. I still think we can see an exponential price rise due to the leveraging of the paper market if a collapse in the derivatives occurs despite the availability of mine-able or recyclable material.

Yes of course, a higher price, allowing bigger investments, buying / installation / optimalizing, this all isn't done overnight. But latencies don't change the outcome, don't they?

A collapse in derivatives just removes the share that the derivatives represented in the price.
Demand along derivatives can be seen as an order that isn't executed yet, and in silvers case, most likely never will be executed, even to the degree that the execution was never really wanted (as is proven by the rare physical settlement of a derivative). So I don't know where you see that exponential price effect.
If you ment that marketwide, then yes, if for ex people would mass dump fiatcurrencies for products, the price of those products would greatly increase.
But then the question raises why those people would all flock to silver, even when its price rises exponentially due to it.
Put yourself in those peoples place. Imagine silvers fiatcurrency-expressed price hundredfolded, but plenty other products just tenfolded.
Wouldn't you dump your fiatmoney for those other products instead of silver? I would.
This makes clear that a fiatcurrency expressed price of silver in such an inflationary scenario is useless in a comparison with today.
In such scenario, silvers value only changes greatly relative to the fiatcurrency, not relative to other products.
So that derivatives collapse is, in terms of purchasing power, a non-argument.

 

[Eruaran]

I like to keep things really simple: Buy and hold.