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LATEST NEWS ABOUT SILVER PRICES AND MARKETS

Thursday, May 31, 2012

CHART: When And Why Indians Buy Gold - Business Insider

CHART: When And Why Indians Buy Gold - Business Insider

www.GoldMarketNews.EU

Another Bullish Technical Indicator for Silver? | Resource Investor

Another Bullish Technical Indicator for Silver? | Resource Investor

www.TheSilverPrice.info


n addition to the classic reverse head and shoulders pattern forming in silver, there is another very interesting bullish indicator currently. But first, credit to where credit is due. This is not my observation, but that of poster SRSrocco over on the TFMetals boards.
This particular pattern involves a divergence between the price of silver and its Accumulation Distribution Line (ADL). What is an ADL you ask? The ADL is purely a technical indicator. It is merely a calculation involving existing price and volume information. According to Stockcharts.com there are three steps involved in its calculation:
1. Money Flow Multiplier = [(Close - Low) - (High - Close)] /(High – Low)
2. Money Flow Volume = Money Flow Multiplier x Volume for the Period
3. ADL = Previous ADL + Current Period’s Money Flow Volume
In a nutshell, the ADL is the running total of the Money Flows weighted by volume. The Money Flow itself is an indicator of the underlying market pressure which is either positive or negative. For instance, if the price of silver closes in the upper half of its daily range, that is considered a positive Money Flow. So even if the price is net lower for the day, it is still a positive sign as it recovered significantly off its lows. This is interpreted as a potential long term upper buying pressure being acted upon by a short term selling pressure.
Normally, when plotted alongside price, the ADL serves as confirmation of the price action such as in this example (from Stockcharts.com):
When a divergence appears and the ADL does not confirm the price action, it could be signalling an upcoming reversal. For a bullish example, we see that the price hits a short term low while the ADL continues higher. Shortly thereafter, there is a gap up in the price as it moves to match the ADL.

What’s next for gold and silver? - MarketWatch

What’s next for gold and silver? - MarketWatch

www.TheSilverPrice.info

Friday, May 25, 2012

Gold & Silver Are the Answer in the Long-Term | Resource Investor

Gold & Silver Are the Answer in the Long-Term | Resource Investor

www.TheSilverPrice.info


Long time readers know that I have been and remain bullish on gold and gold stocks in the longer-term. However, the reasons why I believe gold and silver will perform well in the longer-term are a bit different than what many economists and pundits are expecting.
I am a contrarian by nature. I generally try to do the opposite of the crowd in every situation I find myself regardless of whether I am in a movie theater or trading options. Before getting into the gold and gold miners analysis, I thought I would explain my position publicly to readers. I do not consider myself an expert economist, but I try to read those who many consider to be experts looking for similarities in their viewpoints and expectations.
The herd mentality exists in financial markets and a similar behavior exists among economists. Most economists in the mainstream media today tend to be Keynesians or neo-classical economists. Both viewpoints are generally accepted as the correct interpretation of economic and monetary policies by academia.
However, the academic world can actually reduce open thought through ridicule and persecution. In the world of academia the herd is right, until someone proves that they are wrong using logic based reasoning.
Very similar to political ideologies, economic ideologies are deeply rooted. Paul Krugman is a great example of Keynesian economist. Like it or not, the majority of economists believe his views are correct regardless of whether they are based on fact, history, or dare I say “common sense.”
This leads me to the reason why precious metals and commodities in general may be approaching a major bottom and the potential for a monster rally. The reasoning stems from the fact that across the world central bankers generally share the same views as Paul Krugman. They believe that the modern finance system does not need gold and that fiat currency is the answer even though history argues in their face across multiple millennia.
Most economists and financial pundits believe that sovereign debt is going to bring down the economy and they may be correct. Many believe that the debt will unleash a massive deflationary spiral that will consume fiat valuations, specifically on risk assets and debt obligations.
I do not necessarily disagree that this is a likely outcome, but what concerns me is the number of people that believe this is true. This is the herd’s idea and as I have said many times before the herd is rarely right. This time may be different, although it rarely is. For inquiring minds I offer a rather different potentiality.
What if the debt crisis causes a totally different outcome that very few economists envision? What if they follow Dr. Krugman’s ideas and create massive amounts of debt to stimulate the economy while printing vast quantities of fiat money to prop up failing financial institutions? Clearly increasing debt levels and debasing the currency do not imply a long term positive scenario.
Central banks do not have a strong track record when it comes to reducing liquidity or increasing liquidity at the appropriate times. Thus these actions are likely to facilitate some sort of crisis in the future whether it is a result of runaway deflation or inflation.
I believe that should a deflationary crisis caused by massive debt levels and diminishing economic strength present itself, central bankers around the world will behave exactly the same way. They will act simultaneously and through dovish monetary policy central bankers will flood the world with massive sums of freshly printed fiat currency with the intent to print away issues with a liquidity induced risk-on orgy.
Should that be their ultimate choice, risk assets will rally sharply higher initially. Paper assets like stocks will produce huge gains in a short period of time while supposedly safe assets such as Treasuries would likely arrive at negative interest rates across the yield curve in nominal terms. The next phase is the scary part and why I am bullish long term of precious metals specifically.
The devaluation of fiat currencies simultaneously around the world will result in a monster economic crash when the masses realize that the majority of the major worldwide currencies are becoming worth less and less. The resulting crash would be caused by the opposite force of runaway inflation while the herd mentality that anticipates a deflationary debt spiral espoused by most experts and pundits would be proven materially false. 
Under those circumstances, precious metals will be the true safe haven. Gold and silver will prove to be a true store of wealth that they have been for centuries. So many so-called experts fail to recognize that gold and silver are currencies. Yes they have industrial uses, but gold and silver represent the last unequivocal bastion of wealth preservation against the constant debasement procured by central bankers and their minions.

Thursday, May 24, 2012

trading the volatile silver market - www.thebull.com.au

trading the volatile silver market - www.thebull.com.au

www.TheSilverPrice.info

Silver's Rally Looks to Continue on the Emergence of Chinese Silver Futures and Growing Fabrication Demand - MarketWatch

Silver's Rally Looks to Continue on the Emergence of Chinese Silver Futures and Growing Fabrication Demand - MarketWatch

www.TheSilverPrice.info


NEW YORK, NY, May 24, 2012 (MARKETWIRE via COMTEX) -- It has been a tough month for both silver prices and silver stocks. The Global X Silver Miners ETF (SIL) has fallen nearly 16 percent in the last month. Despite the recent drops analysts are still optimistic about silver's future. "A greater amount of confidence in the global economy generally means higher growth and that means more silver demand. If you look out beyond the end of the year, you can still see reasons to be bullish," David Jollie, an analyst at Mitsui & Co. Precious Metals Inc. said to Bloomberg News. Five Star Equities examines the outlook for companies in the Silver Industry and provides equity research on iShares Silver Trust ETF (nyse arca:SLV) and First Majestic Silver Corp. 
Access to the full company reports can be found at:
www.FiveStarEquities.com/SLV
www.FiveStarEquities.com/AG
Silver will look to rally in 2012 on the emergence of Chinese Silver futures and increased fabrication demand. According to China Daily the Shanghai Futures Exchange recently gained approval to begin trading silver futures. "There has been an absence of a means of trading in silver in China," Wang Ruilei, an analyst with precious metals trader CGS Co Ltd, said to China Daily. "The market will be bigger and more liquid with the advent of these futures contracts."
Phillip Klapwijk, global head of analytics at Thomson Reuters GFMS, expects fabrication demand, which makes up roughly 80 percent of silver demand, to increase about 3% to 5% this year. "Prices are probably going to head higher [in the second half of 2012] and we could see a push above $40 at some point," Klapwijk said last month in a phone interview.
Five Star Equities releases regular market updates on the Silver Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.FiveStarEquities.com and get exclusive access to our numerous stock reports and industry newsletters.
The iShares Silver Trust ETF is intended to constitute a simple and cost-effective means of making an investment similar to an investment in silver. Although the fund is not the exact equivalent of an investment in silver, they provide investors with an alternative that allows a level of participation in the silver market through the securities market.
First Majestic has experienced another solid quarter of earnings and cash flow due in part to an increase in total production to 2,007,219 silver equivalent ounces, an increase of 10% compared to 1,825,366 silver equivalent ounces produced in the first quarter of 2011. Silver production remained robust during the first quarter with 1,826,803 ounces of silver being produced, representing an increase of 3% compared to 1,769,208 ounces of silver produced in the first quarter of 2011.
Five Star Equities provides Market Research focused on equities that offer growth opportunities, value, and strong potential return. We strive to provide the most up-to-date market activities. We constantly create research reports and newsletters for our members. Five Star Equities has not been compensated by any of the above-mentioned companies. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at: www.FiveStarEquities.com/disclaimer

Wednesday, May 23, 2012

Gold And Silver Long-Term Technical Signals | Precious Metals | Minyanville.com

Gold And Silver Long-Term Technical Signals | Precious Metals | Minyanville.com

www.TheSilverPrice.info

have been and remain bullish on gold, silver, and gold and silver stocks in the longer-term. However, the reasons why I believe gold and silver will perform well long-term are a bit different than what many economists and pundits are expecting.

I am a contrarian by nature. I generally try to do the opposite of the crowd in every situation I find myself in regardless of whether I am in a movie theater or trading options. Before getting into the gold and gold miners analysis, I thought I would explain my position. I do not consider myself an expert economist, but I try to read those who many consider to be experts to look for similarities in their viewpoints and expectations.

The same herd mentality that exists in financial markets exists among economists. Most economists in the mainstream media today tend to be Keynesians or neo-classical economists. Both viewpoints are generally accepted as the correct interpretation of economic and monetary policies by academia.

Very similar to political ideologies, economic ideologies are deeply rooted. Paul Krugman is a great example of Keynesian economist. Like it or not, the majority of economists believe his views are correct regardless of whether they are based on fact, history, or dare I say it, “common sense.”

This leads me to the reason why precious metals, and commodities in general, may be approaching a major bottom and the potential for a monster rally. The reasoning stems from the fact that across the world, central bankers generally share the same views as Paul Krugman; they believe that the modern finance system does not need gold and that fiat currency is the answer even though history argues against this view.

Most economists and financial pundits believe that sovereign debt is going to bring down the economy and they may be correct. Many believe that the debt will unleash a massive deflationary spiral that will consume fiat valuations, specifically on risk assets and debt obligations.

I do not necessarily disagree that this is a likely outcome, but what concerns me is the number of people that believe this is true. This is the herd’s idea and, as I have said many times before, the herd is rarely right. This time may be different, although it rarely is. For inquiring minds, I offer a rather different potentiality.

What if the debt crisis causes a totally different outcome that very few economists envision? What if they follow Dr. Krugman’s ideas and create massive amounts of debt to stimulate the economy while printing vast quantities of money to prop up failing financial institutions? Clearly increasing debt levels and debasing the currency do not imply a long-term positive scenario.

Central banks do not have a strong track record when it comes to reducing liquidity or increasing liquidity at the appropriate times. Thus these actions are likely to facilitate some sort of crisis in the future whether it is a result of runaway deflation or inflation.

I believe that, should a deflationary crisis caused by massive debt levels and diminishing economic strength present itself, central bankers around the world will behave exactly the same way. They will act simultaneously; through dovish monetary policy, central bankers will flood the world with massive sums of currency with the intent to print away issues with a liquidity induced risk-on orgy.

Should that be their ultimate choice, risk assets will rally sharply higher initially. Paper assets like stocks will produce huge gains in a short period of time while supposedly safe assets such as Treasuries would likely arrive at negative interest rates across the yield curve in nominal terms.

The next phase is the scary part, and it is why I am bullish long term on precious metals specifically.

The devaluation of fiat currencies simultaneously around the world will result in a monster economic crash when the masses realize that most of the major worldwide currencies are becoming worth less and less. The resulting crash would be caused by the opposite force of runaway inflation, The herd mentality that anticipates a deflationary debt spiral espoused by most experts and pundits would be proven materially false.

Under those circumstances, precious metals will be the true safe haven.

Gold and silver will prove to be the true store of wealth that they have been for centuries. So many so-called experts fail to recognize that gold and silver are currencies. Yes, they have industrial uses, but gold and silver represent the last unequivocal bastion of wealth preservation. 

Under the scenario where central bankers flood financial markets with currency, one would expect other essential commodities (such as oil) to also perform well. Furthermore, agricultural-based commodities would also flourish under those economic conditions. Investors would be in much better fiscal condition owning things that they could hold in their hands versus stocks or bonds.

I posit this potentiality not to say that this is exactly what is going to happen, but to challenge readers to open their minds. The crowd is usually wrong. The central bankers and most economists generally share the same viewpoints and their behavior is literally a giant group-think.

Is it possible that they are a herd that ultimately will be proven wrong? Will the herd mentality of economists and central bankers cause a massive currency crisis as they attempt to stem the tide of a deflationary debt crisis?

Regardless of which scenario occurs, precious metals will eventually be sought for their protection against the constant devaluation of fiat currencies by central banks around the world. For this reason, I remain a long-term precious metals bull. 


Read more: http://www.minyanville.com/sectors/precious-metals/articles/precious-metals-precious-metals-market-precious/5/23/2012/id/41202#ixzz1viJrwfZg

Silver Prices Dip on EU Woes. Silver Stocks to Watch: SLW, HL, PAAS, EXK, AGQ, SLV, SVM, CDE » Active Investor

Silver Prices Dip on EU Woes. Silver Stocks to Watch: SLW, HL, PAAS, EXK, AGQ, SLV, SVM, CDE » Active Investor

www.TheSilverPrice.info


Gold and silverEuropean woes returned to the market today as leaders convene for a summit on the burgeoning Greek debt crisis. While promising to do all they can to keep Greece within the union, the uncertainty is causing headaches across the market.

Turk: Important Chart Suggests Massive Move for Silver & Gold

Turk: Important Chart Suggests Massive Move for Silver & Gold

www.TheSilverPrice.info

With continued volatility in major markets, as well as gold and silver, today King World News interviewed James Turk out of Europe.  Turk included an extremely interesting chart for this interview.  He discussed gold, silver, the mining shares and importantly, what to expect this summer.  Here is what Turk had to say about the recent action in gold and silver:  “The odds are improving that both gold and silver made an important low last week, Eric.  I particularly like two things that happened last Thursday.  First, gold jumped more than 1%, which is the limit regularly being imposed by the traders using mathematical algorithms in their attempt to cap the gold price.

Tuesday, May 22, 2012

Finding a Floor for Silver & Silver Miners | Resource Investor

Finding a Floor for Silver & Silver Miners | Resource Investor

www.TheSilverPrice.info


Since silver reached our target of $50 last year it has been in a treacherous downhill descent. The depth of the decline in precious metals is approaching 2008 levels, and many mining stocks are at 2009 price levels. While it has been painful for bullion investors, it's been even more disastrous for silver miners and their investors. Now we must revisit our analysis to determine if silver and miners are near their trading floor.
We've seen a lot of bearish reports on silver including a comparison to the Nasdaq bubble crash, which overlays a projection of silver to continue falling to the $6-$8 range. Is it possible for silver to reach or hold at those levels?
 
Using earnings data for PAAS, SSRI, EXK, and AG from the first quarter of 2012, we divided earnings by actual silver produced, giving credit for gold and other base metals, in order to determine the actual break even cost of production. Gold sales averaged $1,700 and silver averaged $33 for the first quarter. Despite this SSRI wasn't profitable. EXK had the lowest breakeven point of $14.68 per ounce of silver, followed by AG at $18.33 and PAAS at $23.87. The average breakeven production cost was exactly $24 per ounce. Even excluding SSRI, the average was $21.50. Over the past 11 years, silver has risen by nearly 10 fold; however production costs have almost risen just as much. Silver's price is approaching its long term cost of production level, and given the depletion of silver stockpiles of the last 3 decades, we don't anticipate silver's price holding below that level for long – if at all. If you're somehow able to buy silver for less than $21.50 to $24 an ounce we'd argue that miners are literally paying you to buy it. Given that over the long run miners need a healthy profit margin as an incentive and buffer against their depleting resources, we'd argue that $26 to $30 is the long term nominal floor for silver.

Investor Guide: How To Buy and Trade Silver Prices (NYSEARCA:SLV, NYSE:JPM, NYSEARCA:SIVR, NYSEARCA:AGQ, NYSEARCA:ZSL) | ETF DAILY NEWS

Investor Guide: How To Buy and Trade Silver Prices (NYSEARCA:SLV, NYSE:JPM, NYSEARCA:SIVR, NYSEARCA:AGQ, NYSEARCA:ZSL) | ETF DAILY NEWS

www.TheSilverPrice.info


Larry D. Spears: In late December, silver dipped to a 12-month low near $26 an ounce, and traders who responded to the barrage of “buy” recommendations were quicklyrewarded as the metal soared to a high of $37.18 just two months later.
Today, silver has pulled back below $29 an ounce, giving investors another chance to establish a position before the metal makes its next move higher.
After all, the fundamental case for silver prices remains as strong as ever.

Silver Institute to release China market report | ProfessionalJeweller.com

Silver Institute to release China market report | ProfessionalJeweller.com

www.TheSilverPrice.info


The US-based organisation The Silver Institute has been commissioned to write a report on the Chinese silver market, with a focus on the growing importance of China in the global silver industry, emerging trends and their potential market impact.
The report will be produced by The Silver Institute in partnership with precious metals consultancy group Thomson Reuters GFMS and will be published in October 2012.
A release from The Silver Institute said: “Twenty years ago China accounted for some 3% and 5% of global silver demand and supply, respectively. In 2011, according to World Silver Survey 2012, those figures climbed to 16% and 14%, making China the world’s second largest consumer and third biggest producer of the white metal.”

Monday, May 21, 2012

Sprott sees great things for gold and silver - SILVER NEWS - Mineweb.com | The world's premier mining and mining investment website Mineweb

Sprott sees great things for gold and silver - SILVER NEWS - Mineweb.com | The world's premier mining and mining investment website Mineweb

www.TheSilverPrice.info


In his keynote presentation to last week's New York Hard Assets Investment Conference, Eric Sprott, as usual as a precious metals believer, gave an upbeat presentation on the long term prospects for gold and silver.
He opened his address by pointing to a big change in the markets since he presented at the same event a year earlier when, as he pointed out, the silver price was around $49.50 "until they bombed it" and gold was shortly to see $1900 plus.  But overall he pointed to the huge sea change in the precious metals markets over the past 12 years and that the 12 month correction we are currently seeing is a temporary phenomenon and that he reckons the physical market in gold and silver is actually still in great shape.
He sees markets in general being distorted by manipulation by governments - examples being homeowner tax credits, cash for clunkers, TARP, QE1, QE2, LTROs, unlimited swap lines, etc.  A veritable litany of stimuli to prevent what should be happening from happening.  He quoted a recent interview with Jim Grant - the highly respected economic commentator - who stated that "all markets are manipulated".  Sprott pointed in particular to interest rates "which for sure are manipulated" and gave credit too to GATA who came out with the statement that markets were being manipulated long before the theme has been picked up by a number of commentators including Jim Grant.  He very strongly concurs with this view pointing out that government stimuli have been designed to try and elicit some strength in stock markets and a degree of suppression in the precious metals markets which they do not want to go up as this indicates the relative weakness in fiat currencies.
Sprott touched on a number of facets affecting the markets at the moment - JP Morgan and its big derivatives losses, financial repression, Sovereign debt - describing the latter as being in a Minsky Moment who said "If you continue to expand  your economy by increasing the amount of debt, there comes a time when the productive capacity cannot handle the debt".  Greece is seen as a great example of this,  He sees Spain as the next one on the list, although Portugal is probably in an even worse position.  He sees this as the dominoes which are going to fall one after the other and, in his mind, there is no question that they will fall.
The potential effects on the banking system are drastic.  He reminded the audience that at the peak of the 2008 financial collapse Treasury Secretary Paulson said that he was within hours of shutting the banking system down!  "Please never forget those words" said Sprott.  The system is vulnerable and has got close to this several times since.
For gold he feels that as people realise how vulnerable, flawed and over-levered and risky the banking system is they will want to withdraw their money and put it somewhere which they will see as keeping its value.
There are a number of other factors he sees as being particularly positive for the gold market.  These include:
  • The zero interest rate policy
  • China's dramatic increase in gold imports
  • Chinese and Russian mined gold (two of the world's major producers) never gets to the free market
  • Central Bank buying seemingly increasing
This effectively means a large percentage of global gold supply is being taken off the market.  "If these trends persist", said Sprott," the price of gold will not stay down".
The physical market supply thus has Sprott asking "Where is the gold coming from".  The only source which he sees as likely is that Central Banks are selling gold surreptitiously, perhaps by leasing it so that any decline does not show on their books.
Silver:  When it reached $49.50 there was suddenly 1 billion ounces of ‘paper' silver released onto the market.  Sprott is convinced that certain people in the market with very big short positions manipulated the price down.  "We see very strange things happening in the silver market" said Sprott.
He couldn't understand also why people in Europe were not buying gold given their financial system is collapsing around them.
Why does Sprott like silver so much?  People buy 50 times more silver than gold and while paper silver may be ruling the market, the day of physical will come.  "When currencies fail" said Sprott "gold will become a part of the official reserve currency and silver will have a very, very major role again."
Sprott concluded by saying while he loves gold, loves the data, that silver will still be the investment of the decade.  "Stay the course" he said.  Even though Central Banks et al may be working against you gold and silver will ultimately prevail as fiat currencies continue to decline in value.

Wednesday, May 16, 2012

Three Reasons Silver Prices Will Rally - Money Morning

Three Reasons Silver Prices Will Rally - Money Morning

www.TheSilverPrice.info

With the recent volatility and lows in the gold market, many investors also have been wary of silver prices

Silver on Friday closed down 0.4% to $28.87 per ounce. For the week, prices dropped 5.1%. 

Not the prettiest picture, but for the year silver has increased more than twice the price of gold thanks to growing confidence that the global economy will dodge another recession bullet. 

David Jollie, an analyst at Mitsui & Co. Precious Metals Inc., recently said to Bloomberg News, "A greater amount of confidence in the global economy generally means higher growth and that means more silver demand. If you look out beyond the end of the year, you can still see reasons to be bullish."

Why Silver Prices Will Rally

Increased Demand: The global head of metals analytics at Thomas Reuters GFMS, Philip Klapwijk, has forecast silver sales to increase as end-users expand inventories that thinned at the end of 2011. 

A large portion of silver demand - 80% - comes from fabrication, which is expected to rise about 3% to 5% this year to roughly 900 million ounces.

Also helping is China's manufacturing expansion and an increased electronics industry demand. 

Klapwijk also sees current monetary policy increasing investors' appetite for silver and triggering a subsequent price rise. 

Gold, Silver Prices Dip while US Bullion Coins Notch Gains | Coin News

Gold, Silver Prices Dip while US Bullion Coins Notch Gains | Coin News

www.TheSilverPrice.info


Gold and silver prices continued to drift lower Tuesday, but platinum closed higher for the first time in more than a week and palladium settled up for the first time since Thursday.
Gold was again pressured by a weaker euro and stronger U.S. dollar as the yellow metal fell to the lowest point in more than 4-1/2 months.
"(Gold’s) safe haven status has been tarnished," Richcomm Global Services senior analyst Pradeep Unni said, according to Reuters. "It will wobble on the euro’s weakness, but in a very short term, bargain hunting and pent-up demand will emerge taking it higher."
Gold prices for June delivery fell $3.90, or 0.2%, to $1,557.10 an ounce on the Comex in New York, marking a settlement that is the lowest since December 29. Prices ranged from an intraday low of $1,546.80 to a high of $1,564.40.
"The commodity sector is being hit with massive liquidation of funds as investors’ fears regarding a slowing global economy and potential European sovereign issues trump all else," MarketWatch quoted Tom Essaye, editor of the 7:00′s Report, a daily commentary on equity and commodity markets and the economy.
"Gold is getting to that critical level of support at $1,550, and if you can stand the risk, taking a shot there on the long side probably makes sense… As Europe continues to unravel, the prospect of a full blown crisis will increase, and I think you’ll see gold start to absorb some of that money looking for a safe haven beyond the U.S. dollar."

Tuesday, May 15, 2012

20 Years from Now: Gold at $12,000 & Silver at $1,000? | Resource Investor

20 Years from Now: Gold at $12,000 & Silver at $1,000? | Resource Investor

www.TheSilverPrice.info


hould both gold and silver bulls & bears take a long winter sleep?
Maybe.
When we look at silver prices from 1985 to today (green line in the chart below) and compare the evolution to the one from 1967 to 1974 (black line in the chart below), we can see a very similar pattern. If price would continue to track this pattern, it could mean that silver has just entered a 20 years lasting winter sleep. In the meantime, it would trade between $20 and $50, before taking off again in 2032… From then on, it could gain over 2,000% to reach nearly $1,000.
A similar pattern can be observed in the price of gold, although the time scale is slightly different. Gold would drop towards $1,000 in 2015, before taking off to about $12,000 by 2025.
 
Why the hell would gold drop towards $1,000 per ounce by 2015, while all the fundamentals are pointing to a “screaming buy”?

Putting Faith in Holding Physical Metals: Eric Sprott | Resource Investor

Putting Faith in Holding Physical Metals: Eric Sprott | Resource Investor

www.TheSilverPrice.info


Long-time investor Eric Sprott, the chairman of Sprott Inc., chief excutive officer, chief investment officer and senior portfolio manager for Sprott Assett Management LP and chairman of Sprott Money Ltd., stirred up a lot of interest he when issued a “Call to Action” to silver producers to limit sales until prices increased and put their convert their cash reserves to physical silver. He’s still pushing that argument, as Resource Investor found when we interviewed Sprott for Futuresmagazine recently.
Resource Investor: How would you characterize your relationship and that of Sprott Asset Management to the futures industry and futures trading?
Eric Sprott: I would suggest that we don’t have a great relationship to the futures industry per se, because we don’t get involved in trading of futures and never have been involved that way. We tend to be buyers of physical metal whether it’s for our accounts here at Sprott Asset Management or whether it is for the two trusts that we have listed on the New York Stock Exchange. Obviously our actions in the physical metals might have some impact on the futures markets because we have been a significant buyer of silver on a relative basis but I don’t actively trade those contracts.

Monday, May 14, 2012

The Yuan, Rupee and Physical Silver Demand :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

The Yuan, Rupee and Physical Silver Demand :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

www.TheSilverPrice.info


China and India together account for a considerable amount of the current demand for physical silver. Each emerging market country has a strong base of support for silver from individual investors, who often purchase the physical metal as jewelry and bullion since it is thought to provide a more reliable store of value than the local currency. 
Each country also uses silver in various manufacturing processes that result in products intended for export to more developed countries. An especially notable growth of silver use has occurred in China lately as Chinese solar cell manufacturing has expanded tremendously in recent years.  This and other factors have resulted in China shifting from being a major exporter of silver to being a net importer of the precious metal instead.
Furthermore, the currencies of both of these huge countries have foreign exchange rates that are managed quite actively by their respective central banks. If these exchange rates were allowed to float more freely against the U.S. Dollar, what effect would such a policy shift have on the demand for physical silver in those countries?
The Chinese Yuan
The Chinese Yuan is the official unit of account of the Renminbi, the official legal tender in the People’s Republic of China.  The Yuan’s value relative to the U.S. Dollar has been actively managed on the foreign exchange market by the People’s Bank of China for many years.
The PBOC’s currency management policy has typically taken the form of an outright peg, such as during the ten year period from 1995 to 2005 when the Renminbi traded in a tight 8.44 to 8.07 range versus the U.S. Dollar.  This high exchange rate was thought to be beneficial for developing China’s manufacturing export businesses.
Nevertheless, the Renminbi has been allowed to float more freely since then, with its value strengthening to its current level of 6.3235. The managed float partly came about due to criticism and growing pressure from U.S. officials about the persistent undervaluation of the Chinese currency contributing to a large trade deficit between the United States and China.
Most analysts would agree that even this lower exchange rate considerably undervalues the Renminbi on a Purchasing Power Parity (PPP) basis, making goods substantially cheaper to purchase in China than in the United States. For example, the International Comparison Program estimates that the USD/CNY exchange rate on a PPP basis is only 3.45 Yuan per U.S. Dollar.  
If the Renminbi were permitted by the PBOC to appreciate to achieve its PPP value, then silver would very likely be even cheaper in Chinese currency terms than it is now, thereby prompting even greater demand for the precious metal among the massive Chinese population.
The Indian Rupee
The Rupee is India’s official currency, and it has a market determined exchange rate versus the U.S. Dollar. Nevertheless, its value is actively managed by the Reserve Bank of India to prevent excessive exchange rate volatility.
The Rupee has been trending lower since forming a base at 7.72 in the early 1980’s, which has been a key factor behind persistent physical silver purchases by individuals based in India. 
Another contributing factor is the consistently high inflation rate in India, which is running at almost 7 percent per year by recent estimates.  The RBI also cut its benchmark interest rates by a greater than expected 0.5 percent in April, further undermining investor interest in Rupee denominated assets.
The Indian currency also just hit an all-time low versus the U.S. Dollar of 53.83 on May 9th before the RBI stepped in to prohibit those exporting goods out of India from retaining 50 percent of their foreign exchange earnings.  The Rupee recovered substantially on that news, which was expected to result in an extra supply of $3 billion that would need to be sold for Rupees.
Nevertheless, the International Comparison Program estimates that the USD/INR exchange rate on a Purchasing Power Parity (PPP) basis is only 14.67 Rupees per U.S. Dollar.   If India allowed the Rupee to appreciate substantially toward its PPP value, the price of physical silver would become much cheaper in local terms, also spurring already buoyant local demand for the hard currency.

Bull Market ‘Not Over’ but Speculators Turn Bearish | Resource Investor

Bull Market ‘Not Over’ but Speculators Turn Bearish | Resource Investor

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The price of gold and gold futures dropped yet again Monday morning, recording the seventh drop in nine trading days in May so far as industrial commodities, global stock markets and the euro currency all sank amid Athens' failure to negotiate a new coalition government.
Silver bullion also fell hard, touching $28.44 per ounce and losing 8.9% from the start of this month.
The price of Spanish government debt today fell yet again, pushing 10-year yields above 6.2% ahead of an auction of new bonds later today.
Greek public-sector salaries and state pensions may be unpayable "from the beginning of June" says a letter from stand-in prime minister Lukas Papadimos to party leaders, republished by Ta Nea, after May's tranche of the international bail-out was cut and tax revenues came in below target.
"We do not think the gold bull market is over," says a note from Morgan Stanley analysts, even though "gold has moved lower and is trading at levels not seen since December 2011."
Viewed on a technical chart analysis, "Damage has certainly been done [but] we do not think it is irreversible," they add, pointing to a sharp rise in speculative "short selling" by gold futures traders now expecting prices to fall further.
"The last time positioning was at these levels, prices embarked on a move higher, rallying to near $1800 per ounce. We are buyers of gold here."
The rise in speculative short-selling of gold futures is "disconcerting" however, says Marc Ground at Standard Bank, because "while investors have over the past few weeks appeared cautious of running too short on gold, this fear seems to have evaporated."
Over in the currency markets – where the euro fell to new 4-month lows vs. the dollar at $1.2860 – "We continue to target $1.20 for euro/dollar," says Ground's colleague, currency strategist Steve Barrow.
"Whether this takes time, or comes in an instant, could depend on the outcome of Greece’s political impasse."
Energy, metal and food prices all sank once more Monday morning as European stock markets lost more than 2% of their value, with Madrid losing 3% and Athens dropping 5.3%.
At the weekend Swedish central banker Per Jansson said that "of course the question [of a Greek exit] is discussed." Irish central bank chief, and fellow European Central Bank policymaker Patrick Honohan told journalists that "technically, it can be managed."
"We wish it to be possible for Greece to remain in the euro but Greece must live up to its commitments," a spokeswoman for the European Commission said Monday morning.

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