Navigating the Silver Bubble - my reflections.

[Load of Bullion]

I purchased 3 kilo bars of silver during the week (* I don't regard this as a big purchase, FWIW). It made me reflect on the ten year silver chart which I've been looking at recently and my timing.
I've been purchasing gold & silver since 2007, but had been becoming more aware the market since 2002/3 when I heard Michael Ruppert talking about gold and America's financial woes.
As far as silver goes, my main purchases were made during the 'first sell off', 'bear trap', 'media attention' and "bull trap' stages thus far.
My main gold purchases would be during the 'take off (top part)' and 'public' stages.

1)Greed stage: I remember seeing the classic lines outside the local bullion shop door during the 'greed stage' (I was mucking around changing bars at the time - not changing the size of my stack)

2)"New Paradigm": I remember when John (stella concepts) announced that he had sold a couple of thousand kilo of silver at the "New Paradigm" stage just before the fall from $48.
I remember the immediate and huge amount of abuse he received from angry fellow silver stackers via his very popular stella concepts YT channel at the time when he announced what he had done. I was not impressed with the abuse.
I'd not really seen it before within the online silver stacker community like that. Generally, this came at a time of high excitement. Silver had been surging upwards daily 'in breath taking fashion'.

3) Return to "normal": I remember hoping silver would hold above $30/oz earlier this year.

4) Despair/return to mean: Now I it seems we are having a fall back to 'the mean' perhaps via 'despair' according to the classic bubble anatomy chart below.

It is now interesting to reflect on what seemingly actually just happened!.

 

[Ernster]

If it were to follow that diagram wouldnt that mean we have a lot more to drop?

 

[Guest]

I don't see how that fantasy chart is related to gold and silver. A blow off top has not occurred in gold and silver imo

 

[Guest]

....but interesting reflections nonetheless

 

[SilverSurfer77]

What if we were just in the first sell-off stage on that diagram and the fun part of the ride is coming up

 

[thatguy]

What if we were just in the first sell-off stage on that diagram and the fun part of the ride is coming up

Tis what makes bubbles hard to see as that pattern plays out usually a couple of times within a larger bubbles ala 2006 & 2008

 

[trew]

Perhaps GP can create a new 'LoadOfBullion' button on the Post a reply window that inserts that picture into the post

(next to the 'buzz' button that was once called 'Kenny')

 

[prince_of_sales]

What we have to ask ourselves is this: had the "new paradigm" phase been reached at $49 in 2011, or was that our "first sell off" stage and there is potential upside to the market yet?

Silver has corrected almost 60% since the 2011 peak, from $49 to 19.50. A great deal of a correction.

Gold has only corrected 35% however in that same period, from $1900 to $1215. There could be more downside to $900-$1000 from here to achieve a 50%-60% correction.

I've taken a long position in silver earlier in the year after the massive drops, there has been times when I could have cashed out with a profit, but I've stuck with the investment with the mind of seeing silver in the upper $20 range once again.

Seeing as the markets are dependent on Fed policy, my hope is that as we draw nearer to the date of the supposed taper, it become apparent to investors that the conditions aren't there for the Federal Reserve to make a pullback.

If however, the Fed does pull back, the metals market will be battered and bruised. Low teens for Silver, $1000 mark or lower for Gold.

 

[mmissinglink]

I remember the immediate and huge amount of abuse he received from angry fellow silver stackers via his very popular stella concepts YT channel at the time when he announced what he had done. I was not impressed with the abuse.
I'd not really seen it before within the online silver stacker community like that.

Load of Bullion, I appreciate you sharing those comments. There are lots of abusive, vile people in the stacker community, very sadly....perhaps no greater a percentage than in the general population....but still I had imagined initially that the community of stackers would represent a better slice of the populace....but I was woefully mistaken in hindsight. For the most part, this is not at all a group of individuals I'd want to maintain connections to but I tolerate the arrogance and attitudes of those who are abusive because I am still seeking knowledge as I am about a year into this and I feel I can still learn some more things from being connected. That said, there are a few very decent people who happen to be stackers and it is them who I appreciate most in this community.




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[sammysilver]

When looking at those graphs, I can't help but feel that you are trying to shoe horn a reality into a paradigm. The chart is representative of fads which have a limited lifespan. Silver and gold have a 5,000 year history as currency. This is being measured against fiat which only goes back a couple of hundred years.

PMs should perhaps be the base lines from which others are measured against. Where would fiat sit in such a graph. For us stackers - despair.

We can go through life measuring ourselves against others, but as stackers, let's take the initiative and measure the others against us. We have studied the fundamentals. The belief is that we will not necessarily make a killing, but as a minimum, we will not be killed through a lack of resources.

 

[metalzzz]

I can see the the same things with bitcoin at the moment. I was reading through a bitcoin forum a couple of days ago. Someone posted "this is the end of bitcoin we have peaked, get ready for the crash" everybody announced that they had hit the ignore button on him.

I don't think anyone can preach they have it all worked out, this could still go anywhere.

So load of bullion, it's all over now for pm's? Oh great I'm relieved I can sell now and go buy a house and max out my credit card. The debt crisis is over, we don't need hard assets anymore ......

 

[Load of Bullion]

The chart is representative of fads which have a limited lifespan.

The chart shows a deviation and return to the mean. Not a limited lifespan with a return to zero.

Here is a larger version so you can see it more clearly. (+ I got a PM asking for a more legible version)

So load of bullion, it's all over now for pm's?

*I presume this comment was made due my enthusiasm for non-Govt/bank digital crypto-currencies.

I purchased 3 kilo bars of silver during the week. Read my initial post again.

Here is a link to an article with the same graphs (scroll 3/4 of the down the webpage)
http://www.tfmetalsreport.com/blog/3313/coming-paradigm-shift-silver?page=5

Bias and denial lead us to not see 'the forest' at times. I am no different.
In this case, I have the benefit of hindsight as I reflect. The benefit of witnessing what happened and the human sentiments throughout, as I've detailed. I make no predictions for the future silver price.

 

[sammysilver]

The graph shows valuation against time. Time goes back 5,000 years and as silver is money, it's impossible to evaluate value v valuation.

At the moment your supposition is that the valuation is fiat, I don't acknowledge fiat and as such the graph is a nonsense. This does not negate the fad part of stacking and it's representation against the graph but to be truly meaningful it must be graded.

Perhaps a 5,000 year graph with gold as the valuation?

 

[beeteecee]

Sammy, is the 5000 year thing really valid? I'm asking from the perspective that horses (as an example) would have been the major form of land transport during those years. There used to be an eccentric here who used to ride his horse to the pub every week, but he died a few years back. Now you don't even see horses.

I can understand that a horse would still have value, as food, or supplying manure to grow vegetables, but I think of that as just a reality. I wouldn't argue that it was so, simply because they were used for the 5000 years previous. If someone told me, well a pig is better because they poop more and taste better than horse, I would take the pig, and not be concerned at all with how long people have been eating either pigs or horses.

Sorry to use an analogy.

 

[sammysilver]

Sammy, is the 5000 year thing really valid? I'm asking from the perspective that horses (as an example) would have been the major form of land transport during those years. There used to be an eccentric here who used to ride his horse to the pub every week, but he died a few years back. Now you don't even see horses.

I can understand that a horse would still have value, as food, or supplying manure to grow vegetables, but I think of that as just a reality. I wouldn't argue that it was so, simply because they were used for the 5000 years previous. If someone told me, well a pig is better because they poop more and taste better than horse, I would take the pig, and not be concerned at all with how long people have been eating either pigs or horses.

Sorry to use an analogy.

We are talking about silver which has a 5,000 year history as money. We are measuring it against fiat which has a 400 year history. If that fiat is the USD, then that has a 100 year history. What are your parameters? Let's talk the last week, nothing's happened. The last 6 months, still nothing's happened. Throw me a bone! The graph as it stands is a wiggly line.

 

[Load of Bullion]

The graph shows valuation against time. Time goes back 5,000 years and as silver is money, it's impossible to evaluate value v valuation.

At the moment your supposition is that the valuation is fiat, I don't acknowledge fiat and as such the graph is a nonsense.

You could replace fiat with silvers purchasing power in relation to common everyday staples such as milk and bread.
At this time in history, we generally don't use silver as an everyday means of currency.

I don't acknowledge fiat.

I'm not sure how this sentiment applies to your everyday life. Perhaps you lead a very different life to most people?.
I get paid in fiat and use it to cover my everyday expenses and purchases. It is a major and very real part of my life.
It has also been much more consistent relative to the purchases of everyday necessities than silver has been.

*Whilst this is all may seem like nonsense to various die hard "got physical" PM stackers, it is very real to me.

 

[mmissinglink]

It's actually a great chart LoB...thank you for sharing a larger version. It really does represent investing in commodities (like metals and others) from what I am learning; probably is representative of paper investments also.

Since gold and silver are not money, we know that it is sentiment of investors that by-and-large drives the valuation of metals. If there is any manipulation, it is as much up as it is down....depending on what positions the strong hands are taking.

I suppose, we are soon going to be going into the "despair" tail of the drop. Eventually, there will be a return to the mean followed by a new trend upward. A strong bull market to follow in a few years? Who knows how long this will take....I don't.



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[trew]

Are we in the middle of the first sell off or the despair stage ?

Only time will tell

 

[sammysilver]

I believe that we are talking at cross purposes. You guys are battling to conform to a paradigm; wondering where you sit on a particular line.

Me, I've got a pen!

 

[mmissinglink]

^ We are simply acknowledging human psychology and history. You choosing to avoid it...well, that's your deficit in my view.

And before you put words in other's mouth, no one here is asserting that there isn't a possibility that we could see a different dynamic emerge at any time, but if we don't understand history and human psychology, we are doomed to make the same historical mistakes and we maker ourselves victims to the same snake oil salesman.


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