Intelligent, bearish mid-long term perspectives on silver?

Citizen

Citizen

Member
Obviously there is a lot of conjecture, disagreement and static re. silver in the short-term, with 'experts' being proved wrong every other day. :rolleyes:

From my own research, I'm am confident of the potential for silver in the mid-long term - but then again, I've yet to encounter any writing that would suggest otherwise.

In order to temper my outlook - can anyone point me in the direction of intelligent, reasoned bearish perspectives on silver for the long-term? (preferably not from someone trying to flog some other investment in the same breath?)

Many thanks in advance.
 
Can't help you there.

I can't speak for anyone else but I don't think there are many silver bears posting on silver forums, you might have better luck in a General Discussion on a Real Estate forum.

I think we are mostly unhappy bulls when it comes to silver and most of the commentators are permabulls.
 
Yep no intelligent perspectives here just a bunch of angry bulls crying into their beer . .

Seriously read a few threads there is many perspectives some might be of use to you.... others wont .Thats the best part of this forum the honesty is refreshing . Take the bits applicable to you & use it accordingly would be my advice . Ultimately the decision is yours .You need to weigh up your risk aversion your financial circumstances , your financial position , diversity ...like i said spend some time & read a lot its been discussed many times here already
 
The difference between the bulls and bears isn't so much their views on silver, but their views on the economy. Most of us here see some kind of economic catastrophe in the future, so we stack to hedge against it.

Silver bears tend to think that the economy is recovering and we are on the path to good health. If I believed this, I would also agree with them that silver is a lousy investment. So it's not that there aren't any intelligent bears, it's just that the foundation which we build our beliefs on is different.
 
Potato said:
The difference between the bulls and bears isn't so much their views on silver, but their views on the economy. Most of us here see some kind of economic catastrophe in the future, so we stack to hedge against it.

Silver bears tend to think that the economy is recovering and we are on the path to good health. If I believed this, I would also agree with them that silver is a lousy investment. So it's not that there aren't any intelligent bears, it's just that the foundation which we build our beliefs on is different.
Click to expand...

Agreed on all points. Evidentally there is a fair bit of difference of opinion re. short-term - thats easy enough to find, and each viewpoint usually has an elaborate and somewhat 'reasoned' argument.

Which is why I'm most interested in negative long-term views that offer some alternative perspectives. No dice?
 
I ask myself this!

Why are the big boys so intent of trying to smash the price of precious metal?

Why does Mr. Ben Bernake provide stimulus to an economy that is supposedly recovered?

Why are the Chinese buying large quantities of gold?

Why does it take seven years for Germany to get their gold back from the USA?

Why are people buying physical gold and silver and why is it taking 6 weeks for me to take delivery of my orders?

How can broke economies pay back their debt to economies that leant them money?

How long can Mr. Obama tap into the USA's, strategic oil supplies?

What will happen to the silver price now that all of the USA silver has been sold-off? Where will they get their silver from in time of war?

Un-hedged gold miners are closing shop.

Other precious metal miners are going to close mining operations?

What will happen to the price of pm if the prices stay low and...say 20% of miners put their operations into "care and maintenance"?

Who is going to loan money to junior miners to explore their tenements or keep their "just-profitable-mines" in operation?

What is going to happen in places like South Africa, if mines are closed or there's mass sackings....(Civil unrest)?

Is the world population increasing or decreasing?

Is consumer future demand for silver increasing (Electronic gadgets).

Is gold and silver a good hedge against a falling Aussie dollar?

Is the world's stock market's overheated? Are those companies actually producing and giving their shareholders a good dividend? Is the PE ratio decent?

Is inflation, by my standards increasing?

Why is the oil price dropping?



These are just a few random thoughts I think about.

So what do "I" do?

I'm buying more precious metal because...I think all is not rosy.

So DYODD. :)

H
 
So silver goes up and down.So what do you expect when there is manipulation.They manipulation to buy low and sell high. And your surprised?
Now it will go up again.
 
It's not hard to draw a bearish perspective on silver. If you look at supply and demand trends you can see that silver could be in the doldrums for several years to come.

The chart below is from the Silver Institute. You can see an increasing overall supply which you would expect. Actual demand other than for investment however has not kept pace. The obvious photography demand has fallen (as would be expected with everything digital these days) but Industrial demand is less than it was in 2007 and hasn't increased much since 2004. Jewellery demand has remained pretty stable over the last 10 years despite and increasing wealth in China and India - both large consumers of jewellery. Silverware demand has almost halved over the decade. While coins and medals have spiked over the same time frame - I would argue that most of this would be a part of the last demand - Investment. Producer de hedging was quite large last year but let's face fact - which producer is going to de hedge now if they have contracts at $30+ oz?

That leaves us with Net Implied Investment demand. This has grown substantially as the price of silver has increased as well as it's public awareness as an investment over the last 10 years. If you add to it the coins/medal demand you have a total investment demand that is beaten in volume only by fabrication - which is in decline itself. Therefore unless you can factor in a long term increase in the silver demanded by investment (unlikely with the decline in the spot price - declining price shows a decline in demand whether you want to admit it or not) then the medium term outlook is not positive. There is nothing that shows a large increase in demand in the near to medium term. Possilbe arguments could be technological and environmental (solar panels etc) advances however these will not impact in the short to medium - design and tooling up production takes years.

World Silver Supply and Demand (in millions of ounces)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Supply
Mine Production 597.2 613.6 637.2 641.3 666.1 683.0 713.6 752.7 757.0 787.0
Net Government Sales 88.7 61.9 65.9 78.5 42.5 30.5 15.6 44.2 12.0 7.4
Old Silver Scrap 196.0 198.7 202.7 206.2 203.0 200.8 199.8 228.8 258.1 253.9
Producer Hedging 45.9 50.4 12.2
Implied Net Disinvestment 7.8 1.4
Total Supply 889.8 874.1 951.7 926.0 913.0 914.3 929.1 1,076.2 1,039.4 1,048.3

Demand
Fabrication
Industrial Applications 368.4 389.7 430.3 453.0 486.2 490.9 403.6 500.7 487.8 465.9
Photography 192.9 178.8 160.3 142.2 117.6 101.3 79.3 72.1 66.1 57.8
Jewelry 186.8 187.6 188.4 176.5 183.8 179.1 178.7 192.8 186.5 185.6
Silverware 85.1 68.3 69.6 63.4 61.5 59.8 55.0 52.8 48.3 44.9
Coins & Medals 35.7 42.4 40.0 39.8 39.7 65.3 78.8 99.4 118.3 92.7
Total Fabrication 868.8 866.7 888.6 874.9 888.9 896.4 795.4 917.9 907.1 846.8
Producer De-Hedging 21.0 2.0 11.6 24.1 8.7 17.4 - 41.5
Implied Net Investment 5.4 63.1 39.5 9.3 116.3 158.3 132.3 160.0
Total Demand 889.8 874.1 951.7 926.0 913.0 914.3 929.1 1,076.2 1,039.4 1,048.3

Silver Price
(London US$/oz) 4.879 6.658 7.312 11.549 13.384 14.989 14.674 20.193 35.119 31.150

SOURCE: World Silver Survey 2013 (http://www.silverinstitute.org/site/supply-demand/)

malachii
 
The "Big Boys" smashed the price of gold and silver in order to buy up the actual physical and get rid of the paper, because they know it will be worthless once the doors open on the.....Comex, LBMA, and the Hong Kong Exchange.
 
Excellent analysis malachii! Thank you for taking the time to present this case.

For me personally, I don't think about the long term (meaning minimum 10 years down the road); I am concerned with now and within the next year. I do not plan to touch for at least 10 years the pm bullion blobs and coins I have now unless something radical changes of course and I have to.

It's easy to be bullish on treasured art, precious gems and metals, and petroleum....I don't think there's going to be much challenge on those things from most investors. It's the short and mid term that is much more difficult to predict by folks like us i think because the level of paper manipulation is not very predictable as just one example.

Also, the short and mid term is what most people who have interest in pms are concerned about because most, I believe, have interest in either increasing their stack or selling / trading some of what they have.

Long term is really not in question for me....I'm bullish 10 years out and more.
 
malachii said:
It's not hard to draw a bearish perspective on silver. If you look at supply and demand trends you can see that silver could be in the doldrums for several years to come.

The chart below is from the Silver Institute. You can see an increasing overall supply which you would expect. Actual demand other than for investment however has not kept pace. The obvious photography demand has fallen (as would be expected with everything digital these days) but Industrial demand is less than it was in 2007 and hasn't increased much since 2004. Jewellery demand has remained pretty stable over the last 10 years despite and increasing wealth in China and India - both large consumers of jewellery. Silverware demand has almost halved over the decade. While coins and medals have spiked over the same time frame - I would argue that most of this would be a part of the last demand - Investment. Producer de hedging was quite large last year but let's face fact - which producer is going to de hedge now if they have contracts at $30+ oz?

That leaves us with Net Implied Investment demand. This has grown substantially as the price of silver has increased as well as it's public awareness as an investment over the last 10 years. If you add to it the coins/medal demand you have a total investment demand that is beaten in volume only by fabrication - which is in decline itself. Therefore unless you can factor in a long term increase in the silver demanded by investment (unlikely with the decline in the spot price - declining price shows a decline in demand whether you want to admit it or not) then the medium term outlook is not positive. There is nothing that shows a large increase in demand in the near to medium term. Possilbe arguments could be technological and environmental (solar panels etc) advances however these will not impact in the short to medium - design and tooling up production takes years.

World Silver Supply and Demand (in millions of ounces)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Supply
Mine Production 597.2 613.6 637.2 641.3 666.1 683.0 713.6 752.7 757.0 787.0
Net Government Sales 88.7 61.9 65.9 78.5 42.5 30.5 15.6 44.2 12.0 7.4
Old Silver Scrap 196.0 198.7 202.7 206.2 203.0 200.8 199.8 228.8 258.1 253.9
Producer Hedging 45.9 50.4 12.2
Implied Net Disinvestment 7.8 1.4
Total Supply 889.8 874.1 951.7 926.0 913.0 914.3 929.1 1,076.2 1,039.4 1,048.3

Demand
Fabrication
Industrial Applications 368.4 389.7 430.3 453.0 486.2 490.9 403.6 500.7 487.8 465.9
Photography 192.9 178.8 160.3 142.2 117.6 101.3 79.3 72.1 66.1 57.8
Jewelry 186.8 187.6 188.4 176.5 183.8 179.1 178.7 192.8 186.5 185.6
Silverware 85.1 68.3 69.6 63.4 61.5 59.8 55.0 52.8 48.3 44.9
Coins & Medals 35.7 42.4 40.0 39.8 39.7 65.3 78.8 99.4 118.3 92.7
Total Fabrication 868.8 866.7 888.6 874.9 888.9 896.4 795.4 917.9 907.1 846.8
Producer De-Hedging 21.0 2.0 11.6 24.1 8.7 17.4 - 41.5
Implied Net Investment 5.4 63.1 39.5 9.3 116.3 158.3 132.3 160.0
Total Demand 889.8 874.1 951.7 926.0 913.0 914.3 929.1 1,076.2 1,039.4 1,048.3

Silver Price
(London US$/oz) 4.879 6.658 7.312 11.549 13.384 14.989 14.674 20.193 35.119 31.150

SOURCE: World Silver Survey 2013 (http://www.silverinstitute.org/site/supply-demand/)

malachii
Click to expand...
Decline from a $50 peak along a $43 peak along a $37.5 peak along a $35.5 peak along todays $19.
When is the best moment to buy silver?
After a serious decline?
Or after after a serious uptrend?
On which time basis would you measure this, considering that price inflation has the tendency to suddenly pop up big?
Back in 2011, with a year average of $35, and before may, all rosy and fantastic 'investment' (ehm...), it was the worst moment to buy silver.
And now, at $18-19, it's... still worse?
A serious decline in demand, is exactly a reason to buy.
Or not?
On what should we wait?
Till 'investment' rushed back in buying a familypackage 20% or so tolerance 1000 ounce bars?
I have another plan: buy concentrated on every new bottom, on condition no serious general price inflation manifests itself.
I did so the last 2 times.
Does it not reach a new bottom anymore? No problem. I already have all the silver I could have, and instead I can save some euro's on a bank account, or if that seems a riskier thing, on some stuff I can buy already now instead of later.

See, it doesn't need a large increase in demand. A higher general cost, inflation, that is what drives the bottoms. It's this that makes people avoiding fiatmoney and swap to other stuff like silver and increase its price. It's this what either destroys production either increases the silver price.
The rest are just temporary stories.
Silvers price was flat for two decades upto 2002, with as reason a quite big production improvement (technology/computers/automation/world markets/shift labor/etc) and sales of then existing stocks (notably government ones, those from the circulating silver coins they abandoned).
Again some stocks were build up, by people that want higher prices or better alternatives to sell them again.
What is out there that provides a better alternative? Stocks? Bonds? Houses?
I can't see much, nor I see the same room for production improvements as back then within those 2 decades.
So, at this price level and lower, I buy all the silver I can. At the moment I have 20 times ounces silver than euro's. Because I did.
The Comex position, which reflects the size of the position of the money for nothing club that causes the fast up and faster downtrends, is as low as 12 years ago, when silvers price was that 2 decades flat one of $5. I decided to not wait till after they rushed back in.
I'll suspend buying silver after they did, not before.
That's what I think about it.
I'm one on the market.
 
It's like riding waves. Imagine yourself as a surfer.
Now - check the Kitco graphs for the last 5 years. And you will see we're pretty much down, so another wave is coming.

If you know the wave is coming, then better sit on it while you still can. :)
Set your surfboard on it while the water is still low and you will enjoy the ride later, as it gradually grows! :D

Otherwise: now is a very good time to enter into silver: buy some.
It may go lower a bit, but it is already very low, so the rise is more likely, even on the mid-term. If it goes lower, buy much more!

PM's and investments in general are like riding waves. Get on the wave while it's still small, then it will grow and grow! :cool:
Miss the opportunity and you won't be able to enjoy the ride. It's best when started at the beginning, when the water is low! :D

If you try getting on a big wave (when it's already growing and a bit late to start investing) - you might get hurt. It's like jumping against a big wave frontally, as it arrives to hit the shore.

Right now is a very good entry point. You may get a second chance, if prices dip lower, but as they start rising, the opportunity will have been wasted.

I don't do surfing, but I use this metaphorical example to motivate myself and detect the best moments to invest. ;)
 
During the 9/11 crisis in 2001 the historical low futures market total net silver position lasted about 6 months (fluctuating between 5-10K).
In the Asian Contagion crisis it lasted a month.
Now, in 2013, it's since 28/05 below 10K. So it's now 6 weeks under 10K
Just a timehased analogy. In order to trigger their rush back in, it needs some news that makes people again willing to pay higher prices for silver. For ex, in august 2012 it were the EU 'bailouts' / emergency fund, and its excess reserves creation.
Of course, if such element again occurs, one can wait again to suspend stacking till the temporary buyers again sell, and $20 or so returns.

There is an important element different than the 2001 crisis though, unlike now, back then there were no ETF stocks. Silver ETF's hold about a half annual world production, and those are all people that one day will sell their 'remote' stocked (in close to market vaults) silver bars. So even if the Comex futures market would vanish, the ETF stock today hold the equivalent of a net total Comex position of 100K.
And this situation today is abit weird. For some reason, silver ETF shareholders did not sell before/in/after the mid april 2013 fast big price drop. While a very same gold 'investment' vehicle, dumped about halve their entire shares total and underlying physical stock. Why did silver ETF shareholders not dump with the gold ETF shareholders? Usually movements inside the gold and silver markets are similar. This is a rare, and by now quite long lasting exception. I remember only one such 180 inverse occasion earlier, end april / begin may 2011, where silver price was mowed down but gold price shot up, for just some hours, probably due to people swapping silver at $49 to gold at $1600.
 
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