It's quite simple really. The reason that silver is going up so quickly is because physical is currently very popular with the masses, probably multiple std devs above what would be considered "normal" in this market (unlike gold). With a futures contract size north of $100k and probably only retail participation in ETF's, so I don't really think it's retail people driving the price up via paper nor, obviously, is anyone (able to be) holding it down via the paper markets very effectively. This also explains the whole backwardation thing. It's nothing more than a physical supply squeeze which is likely to turn when this mass hysteria of dollar worthlessness ceases. At least the paper market participants seem to agree on the idea that physical silver will go down over time. Once the mooks buying physical at these ridiculous prices get a clue they'll start selling physical and we'll go back to $10 or something similar in no time. When? No idea. It depends on Fed policy and image. For now USD index still in downtrend so everything is still a go-ahead for silver because it's not a stretch to think that this market will be relatively late to catch on with the big move.
Barring the demise of the USD? In the case of USD demise, and many have already said this, silver or gold or whatever will be pretty much useless. USD demise is hyperinflationary and in a hyperinflationary event you will want to own the following for wealth preservation and/or expansion (historically anyway): -Vehicles + fuel (this is the big one) - Food (possible not applicable because we don't have supply issues for food nor will have most likely as agricultural tech is very advanced nowadays) - Weapons - Cigarettes/Drugs/Medicine - Depending on how poor it gets possibly appliances, furniture etc You'll be able to trade these things at a very nice multiple for: -Real estate -Gold and silver -Art -Anything else which is basically useless and derives value only from supply constraints. I don't think this will happen but people who are betting on PM's and think we will have utter currency collapse are stupid.
ET never ceases to amaze with the bubble and top calls on precious metals since fall '09. ROFL. Gold just broke a significant area of resistance at 1445, looks ugly, real ugly.
Silver is no bubble. It's just aggressively re-pricing itself after decades of being incredibly undervalued. Get used to these high prices and if you short, then my advice is simple - look to quicky cover, then use 25% of your profits to go long. Silver should be around $50 right now, maybe even a touch higher so it's still got some way to move.
I just did. Can't believe I made a profit after being down a ton an hour ago. It's a bubble but it's too early to take the BIG plunge.
Been hearing this silver bubble nonsense for years. Still holding most of my stash, sold a reasonable chunk at $30 and $33. Expect silver to touch, maybe pass $40 and then take a sharp dive. Then the silver bears will yell about a crash. Then it will go past $40.
Good analysis and pretty likely imo, except for the numbers. I'm not sure where you've pulled the exact number of $40 out from. I am more flexible and think the gyrations you describe could occur at any price..
something to consider. The US dollar is the bubble. Also, there is big difference between bubble and overvalued. I believe both Gold and Silver will decrease in real terms if the world economic gets better.