Silver is Approaching Stage Two of its Bull Market - James Turk

[heartastack]

If the comex is busted and ETF's worthless then I doubt we'd see a dumping of physical to that scale, that the global price would drop 50% in a day.... If silver becomes re-monetised... then that should be its safety net. If the worlds currency problems get fixed tomorrow then you can expect something like that though!

 

[intelligencer]

I've been a lurker for 1 month now. I started stacking in January '11. I enjoy this forum quite a bit and have currently stacked 40% of my goal for 2011.

Welcome RMP ... it's a great forum. Keep stackin at that rate. I started in Dec '10, went well over my budget, but managed quite fine. Should be knocking off some debt, but these guys just keep offering such good deals, I can't resist.

You'll get a gut feel for when to knock off debt. I ignored my other debts all of last year to get to a reasonable position.

I've slowed down big time this year and bought mainly junior mining shares in January, so now I feel I have that covered.

Now its time for the home loan and I sold the few remnants of my industrial stocks including Myer (for a medium loss) to throw into the home loan.

While I will be happy if my investments work out there is a risk in "overcapitalising" into investments. They could make rule changes, law changes that wipe gains out. The price could collapse and you could lose earning capacity etc. So its important to balance things out.

My home loan is now in its last legs and the end is in sight. So thats what I'm putting money into now. I think one of the happiest days of my life is going to be paying that off and getting the title deed papers. I loathe the banks so so much. Cant wait to buy my way out of their debt slavery.

 

[benjamind2010]

That article by Denninger is extremely appropriate to the silver market, or, indeed, ANY commodity market.

If you're buying silver now, beware. Stage II my arse. You have been warned about major blow-off-tops and I believe silver prices are either in blow-off-top or are about to blow off. This happened in 2008 with the price of oil. In July 2008 oil closed above $US147/BBL...Then all of a sudden it just fell off a cliff. Consider yourselves warned.

$250 silver, bah humbug. Maybe in 2013-2016. Certainly not now, there is NO monetary inflation to speak off. All we are seeing in the charts that matter are deflation and a bailout that will not be able to keep pace with the destruction of debt that is several orders of magnitude greater than any QE1/2/3/etc programs that have attempted to stave off deflation.

What QE will do, in the future, is sow the seeds of monetary inflation, and what we're seeing now is just a preview of what will likely be 10 times worse when inflation really does take hold. But right now, deflation is, by far, the greater threat.

I expect silver to be trading at or below $15/oz within the next 18 months or so, and could possibly even trade lower, perhaps $10/oz...roughly a third of what it is now. In July last year I said it would trade around $US6/oz once deflation has destroyed the nominal dollar value of most everything, and at that time the price was around $US18/oz, which would be about right, if deflation wins for long enough, and mind you those with huge short positions will be manipulating the price down to enhance their profit taking positions, so market manipulation will not only not desist, but will in fact increase, causing prices to be even lower than what many here might think.

 

[intelligencer]

Lets not mince words.

Just give us one prediction/call you made on silver throughout the course of last year that has come true. Just one.

Thanks.

That article by Denninger is extremely appropriate to the silver market, or, indeed, ANY commodity market.

If you're buying silver now, beware. Stage II my arse. You have been warned about major blow-off-tops and I believe silver prices are either in blow-off-top or are about to blow off. This happened in 2008 with the price of oil. In July 2008 oil closed above $US147/BBL...Then all of a sudden it just fell off a cliff. Consider yourselves warned.

$250 silver, bah humbug. Maybe in 2013-2016. Certainly not now, there is NO monetary inflation to speak off. All we are seeing in the charts that matter are deflation and a bailout that will not be able to keep pace with the destruction of debt that is several orders of magnitude greater than any QE1/2/3/etc programs that have attempted to stave off deflation.

What QE will do, in the future, is sow the seeds of monetary inflation, and what we're seeing now is just a preview of what will likely be 10 times worse when inflation really does take hold. But right now, deflation is, by far, the greater threat.

I expect silver to be trading at or below $15/oz within the next 18 months or so, and could possibly even trade lower, perhaps $10/oz...roughly a third of what it is now. In July last year I said it would trade around $US6/oz once deflation has destroyed the nominal dollar value of most everything, and at that time the price was around $US18/oz, which would be about right, if deflation wins for long enough, and mind you those with huge short positions will be manipulating the price down to enhance their profit taking positions, so market manipulation will not only not desist, but will in fact increase, causing prices to be even lower than what many here might think.

 

[rbaggio]

That article by Denninger is extremely appropriate to the silver market, or, indeed, ANY commodity market.

If you're buying silver now, beware. Stage II my arse. You have been warned about major blow-off-tops and I believe silver prices are either in blow-off-top or are about to blow off. This happened in 2008 with the price of oil. In July 2008 oil closed above $US147/BBL...Then all of a sudden it just fell off a cliff. Consider yourselves warned.

$250 silver, bah humbug. Maybe in 2013-2016. Certainly not now, there is NO monetary inflation to speak off. All we are seeing in the charts that matter are deflation and a bailout that will not be able to keep pace with the destruction of debt that is several orders of magnitude greater than any QE1/2/3/etc programs that have attempted to stave off deflation.

What QE will do, in the future, is sow the seeds of monetary inflation, and what we're seeing now is just a preview of what will likely be 10 times worse when inflation really does take hold. But right now, deflation is, by far, the greater threat.

I expect silver to be trading at or below $15/oz within the next 18 months or so, and could possibly even trade lower, perhaps $10/oz...roughly a third of what it is now. In July last year I said it would trade around $US6/oz once deflation has destroyed the nominal dollar value of most everything, and at that time the price was around $US18/oz, which would be about right, if deflation wins for long enough, and mind you those with huge short positions will be manipulating the price down to enhance their profit taking positions, so market manipulation will not only not desist, but will in fact increase, causing prices to be even lower than what many here might think.

So at this point, you are sitting on that big pile of US Dollars you bought, right? Ready for that massive increase in value in the USD?

http://forums.silverstackers.com/topic-3886-are-you-guys-ready-for-a-big-day-page-2.html

Expect the stock market to collapse, completely, within the next 12-18 months. Expect the US dollar to gain strength several fold. It isn't rocket science. The US dollar is on the verge of an enormous rally, just as it rallied in 2000-2002 during that monstrous never-to-be-forgotten DOT.COM bust.

http://forums.silverstackers.com/topic-3914-silver-shorts-squeez.html

I can EASILY see silver reaching down as low as $12 or maybe even as low as $8 or $9 an ounce, depending on how severe this next leg down will be.

This figure, never forget, is strictly in US DOLLARS ONLY. In Australia, with it's fundamentally volatile currency, and considering the depth of the impending liquidity crisis, we could see one AUD being worth less than HALF of one USD, which would mean that if you want to take advantage of a nice low silver price in the future, you should take notice of what the USD is doing relative to the AUD.

 

[bsides]

silver can go anywhere in terms of dollars. what matters is how much 1oz silver can buy.

for the record i see low 20's sometime this year.... i'm predicting a hard and swift decline.

 

[silverfunk]

I love how deflationists carry on.

Eventually when we do get deflation they will all be on here saying "I told you so" in another 25 years or so.

 

[Slam]

The only way deflation will occur is if people are paying down debts. I have mentioned that defaults do not cause deflation, the M3 money supply is still floating in an account for the seller of the asset. The bank took the risk and lost, but TARP / QE I and II bought up those toxic assets.

Or

Banks going bust wiping out the majority if not all of the M3 money supply.

If banks go bust, then that is SHTF. Everyone will want to hoard physical metals. No money can buy that.

Slam

 

[boneyard]

That article by Denninger is extremely appropriate to the silver market, or, indeed, ANY commodity market.

If you're buying silver now, beware. Stage II my arse. You have been warned about major blow-off-tops and I believe silver prices are either in blow-off-top or are about to blow off. This happened in 2008 with the price of oil. In July 2008 oil closed above $US147/BBL...Then all of a sudden it just fell off a cliff. Consider yourselves warned.

$250 silver, bah humbug. Maybe in 2013-2016. Certainly not now, there is NO monetary inflation to speak off. All we are seeing in the charts that matter are deflation and a bailout that will not be able to keep pace with the destruction of debt that is several orders of magnitude greater than any QE1/2/3/etc programs that have attempted to stave off deflation.

What QE will do, in the future, is sow the seeds of monetary inflation, and what we're seeing now is just a preview of what will likely be 10 times worse when inflation really does take hold. But right now, deflation is, by far, the greater threat.

I expect silver to be trading at or below $15/oz within the next 18 months or so, and could possibly even trade lower, perhaps $10/oz...roughly a third of what it is now. In July last year I said it would trade around $US6/oz once deflation has destroyed the nominal dollar value of most everything, and at that time the price was around $US18/oz, which would be about right, if deflation wins for long enough, and mind you those with huge short positions will be manipulating the price down to enhance their profit taking positions, so market manipulation will not only not desist, but will in fact increase, causing prices to be even lower than what many here might think.

Ben, Ben, Ben................

Yada, Yada, Yada.

You are allowed your 2c worth.

No spelling errors.

 

[Ridesags]

If AG goes to $6-$16/oz would the price of a 10KG Rabbit drop to $2500 - $6500 ? Has anyone touched, felt or fondled one ? Bring it on ! I will have some sweet dreams tonight.

 

[lakesentrance]

If AG goes to $6-$16/oz would the price of a 10KG Rabbit drop to $2500 - $6500 ? Has anyone touched, felt or fondled one ? Bring it on ! I will have some sweet dreams tonight.

and i'd grab a 100oz bar. mind you, if silver was $6, gold could be $350, i think i'd venture into gold.

 

[lakesentrance]

I've been a lurker for 1 month now. I started stacking in January '11. I enjoy this forum quite a bit and have currently stacked 40% of my goal for 2011.

Welcome RMP ... it's a great forum. Keep stackin at that rate. I started in Dec '10, went well over my budget, but managed quite fine. Should be knocking off some debt, but these guys just keep offering such good deals, I can't resist.

You'll get a gut feel for when to knock off debt. I ignored my other debts all of last year to get to a reasonable position.

I've slowed down big time this year and bought mainly junior mining shares in January, so now I feel I have that covered.

Now its time for the home loan and I sold the few remnants of my industrial stocks including Myer (for a medium loss) to throw into the home loan.

While I will be happy if my investments work out there is a risk in "overcapitalising" into investments. They could make rule changes, law changes that wipe gains out. The price could collapse and you could lose earning capacity etc. So its important to balance things out.

My home loan is now in its last legs and the end is in sight. So thats what I'm putting money into now. I think one of the happiest days of my life is going to be paying that off and getting the title deed papers. I loathe the banks so so much. Cant wait to buy my way out of their debt slavery.

I know you're right re knocking down the debt. It's not stressing us yet, so we're happy to let it sit.
We had aspirations a month back of refinancing etc, but that felt like we'd be going against the flow. Good idea under different circumstances.

I myself am far from being over capitalised in investments. Just beginning. But i'm enjoying it.

When you get your home loan paid off, i'll hand mine over. You'll be an old hand at it.

 

[Turk]

In July 2008 oil closed above $US147/BBL...Then all of a sudden it just fell off a cliff.

My dear friend, the oil market is more rigged than Cutty Sark! Humpty didn't fall - he was pushed.
Oil will be around $190 per barrel in 22 months. You have been warned.

$250 silver, bah humbug. Maybe in 2013-2016.

From $31 to $250 is a rise of 800%. Let's draw a time line out to 2014 - which is 2.8 years away.
That becomes a rise of roughly 280% per year (maybe 220% compounded?)
You must be son-of-super-bull! I can live with that sort of increase!

There is NO monetary inflation to speak off.

Tell that to Mr Gold...

programs that have attempted to stave off deflation.

'Staving off deflation' is a basic FED 101 pretext. Their aim is simply to cause a hyperinflationary collapse of the US dollar over the next 20 months - and QE2+ are some of the tools they will use to make absolutely certain that it happens. Shadowstats.com will shows you the real CPI figures if you want something closer to the truth.

True deflation is historically rare, although some slight (and healthy) deflation occurred when England was on the gold standard in the nineteenth century. Prices very slowly went slightly down - and people were delighted. If you read "The Wealth of Nations" this phenomena is explained in the first couple of chapters.

...if deflation wins for long enough

Wins? Sorry, deflation left the building a long time ago and the FED have since changed all the locks.

Those with huge short positions will be manipulating the price down to enhance their profit taking positions

Will be? They've been at if for a decade now and haven't made a penny yet now they are underwater to the tune of around two billion dollars! (Imagine going home and telling THAT to SWMBO!)

I'm sure they would dearly love to enhance that position - and will welcome your good news.

Unfortunately, those 'huge short positions' are only adding fire power to an eventual upside explosion in the physical market that will happen overnight.

(By overnight I mean it will happen during the daytime in NY, but during the night here when most stackers are stacked in their beds: except for night owls like mickjohn, errol43, smokey, Photonaware and thatguy who stayed up last night enjoying the chart action!)

I expect silver to be trading at or below $15/oz within the next 18 months or so.

I expect silver to be trading above $120/oz by Dec 2012 and to cross $50/oz before Sept 2011.

(Those folk who are still buying need to wave a warm goodbye to benjamind2010 - and get on the train. The whistle is blowing.)


benjamind2010 I'm truly sorry, but you seem to have some unusual ideas. (Have you been dabbling in the pages of the WSJ?) Seriously, I'm not sure what you mean by "will not be able to keep pace with the destruction of debt..." Perhaps you have not expressed your ideas clearly enough - or perhaps I have misunderstood you.


Deflation is generally not something to be feared unless you are heavily in debt or highly geared in a long position. (Denninger even suggests this in his article which is quite accurate). Silver WILL correct sharply when the big crash comes next year, but that will be caused by desperate liquidations, not classical deflation. I would genuinely like to see these 'charts that matter'. Perhaps you mean something different by nominal deflation. There are technical nuances that are sometimes used especially just prior to a hyperinflationary upswing; this was seen in the Weimar and French collapses. But generally prices right now are not declining.

(If you wear cotton underwear you will be glad to know that the value of your jocks is appreciating one percent per day right now. Cotton is up 44% in 44 days since early Jan 2011. Start stacking now.)

One final thought: If you are referring to HOUSE prices then yes, they ARE declining, and will slide much faster this year. But this is not deflation merely more popping of inflated bubbles.

 

[silverfunk]

Even if ag crashes to the 2008 levels we will see some crazy premiums and worse shortages / delays than we are seeing now. FACT.

 

[hawkeye]

That article by Denninger is extremely appropriate to the silver market, or, indeed, ANY commodity market.

If you're buying silver now, beware. Stage II my arse. You have been warned about major blow-off-tops and I believe silver prices are either in blow-off-top or are about to blow off. This happened in 2008 with the price of oil. In July 2008 oil closed above $US147/BBL...Then all of a sudden it just fell off a cliff. Consider yourselves warned.

$250 silver, bah humbug. Maybe in 2013-2016. Certainly not now, there is NO monetary inflation to speak off. All we are seeing in the charts that matter are deflation and a bailout that will not be able to keep pace with the destruction of debt that is several orders of magnitude greater than any QE1/2/3/etc programs that have attempted to stave off deflation.

What QE will do, in the future, is sow the seeds of monetary inflation, and what we're seeing now is just a preview of what will likely be 10 times worse when inflation really does take hold. But right now, deflation is, by far, the greater threat.

I expect silver to be trading at or below $15/oz within the next 18 months or so, and could possibly even trade lower, perhaps $10/oz...roughly a third of what it is now. In July last year I said it would trade around $US6/oz once deflation has destroyed the nominal dollar value of most everything, and at that time the price was around $US18/oz, which would be about right, if deflation wins for long enough, and mind you those with huge short positions will be manipulating the price down to enhance their profit taking positions, so market manipulation will not only not desist, but will in fact increase, causing prices to be even lower than what many here might think.

Brave predictions. I assume you are going by what happened in 2008 to make them. I'm not brave enough to do so myself, but something feels different this time. I think there's a larger monetary/investment aspect to silver than there was last time. There's also strong inflation, getting worse in China. India also. If there is a strong pullback I truly do think it will be a great buying opportunity. Don't forget at the end of 2008 it was quite difficult to get your hands on silver so I think the blow-off in silver is a way off, but I'm not ruling out an intermediate pullback and blow-offs in the commodities is probably not that far away. I certainly wouldn't invest in any of the other commodities atm, with maybe the exception of oil. Even though oil dropped to 30 it's back to almost 100 in roughly only 2 years. That 30 mark was a fantastic buying opportunity.

 

[hawkeye]

Debt deflation will be a theme I believe, with less and less debt being taken on, and more and more being paid down.

The degree of monetary inflation remains to be seen. Ben's having problems with the Bond Market on that score.

 

[mickjohn]

(By overnight I mean it will happen during the daytime in NY, but during the night here when most stackers are stacked in their beds: except for night owls like mickjohn, errol43, smokey, Photonaware and thatguy who stayed up last night enjoying the chart action!)

.... its true.

My name is mickjohn and i have an addiction.

Edit to add: Tonight has been waaaaaaaaaay better! Awesome day/night for stackers. Appreciate your work!

 

[benjamind2010]

Debt deflation will be a theme I believe, with less and less debt being taken on, and more and more being paid down.

The degree of monetary inflation remains to be seen.

No monetary inflation in sight. Just bail-outs, which are equivalent to a drop in the bucket. Bail-outs provide the illusion of recovery, but all they do is create more debt problems in the future. Banks are simply using this bail-out credit to speculate on commodities in the hope they can reduce their debts significantly from the profits. If that doesn't happen, and it there is a good chance it won't, then we're in trouble.

The more debt being paid down means more liquidity is required. What if the amount of debt required to be paid down exceeds the amount on hand?
You will get defaults and write downs. That is highly deflationary. This can trigger bank runs, or at least cause banks to fall into bankruptcy. These bail-outs are miniscule compared to the amount of debt that has to be paid down. I'd say if we put all the TARP, QE1, QE2 all together it would probably not even constitute 10% of all the outstanding debts in the economy. That's 90+% that has to be paid down, defaulted, and, more likely, written down or even destroyed, which can only do one thing - cause a major liquidity crisis.

There is no such thing as "classic deflation" caused by debt defaults. True deflation occurs ONLY as a result of a liquidity crisis - the urgent need to pay down debt, or meet large margin calls. "Classic deflation" occurs when there is too much supply of something (product, commodity, etc) and generally only occurs in that particular product. Computer technology is where we see classic deflation all the time, as older products become obsolete there is less demand for them, the same can be said for older cars. That is what you would call "classic" deflation.

True deflation could simply mean being priced out of a desired market segment requiring you to take on large debts (to be the greater fool) to satisfy that market segment (ie real estate, commercial real estate, speculative trading etc). This one is the most common cause of debt deflation, and it will be the cause of the next major stockmarket collapse. Players are trying to get in, and taking on massive margin debt as collateral to trade in their long positions. I'd consider these trapped longs because a sudden reversal causes margin debt to be called on. For the longs to maintain their position they'll need to meet margin calls, and what if they cannot do so? They will have to dump the position. If this reaches a critical mass this is what will cause a panic sell-off, as what happened in 2008, and will almost certainly happen again.

The most brutal deflationary leg in the markets has not even occurred yet. 2008 will be a cakewalk in comparison to this next deflationary leg. It will either occur in the form of random dramatic double-digit % crashes on the Dow lasting a few months, or a slow bleed that lasts a couple of years. Either way, (debt) deflation will destroy the market value just as it did in the 1930s depression. This deflationary leg will take down the price of EVERYTHING, including commodities and precious metals, and ESPECIALLY real estate.

 

[Ouch]

In the case of severe deflation, would it be better to be in Aussie cash or US cash?

 

[Stacks On]

Silver just launched itself through $32, while over at The Age online our 5 most viewed stories are:
- Footballer had sexual relations with 17 year old girl
- Bookshop going out of business
- Footballer going to be sacked
- Bookshop going out of business (again)
- Something about Warney and Hurley

Sounds like there's still ample time left for stacking before things start getting really interesting.