Inflationists Should Look At The Silver Price. Is The Party Over?

For all the inflationists out there, take a look at the silver price.  It failed to pass the magic $50 and then lost 30% in a week at the beginning of May.  It has taken two months to fail to achieve any substantial bounce form there.  $35 was the point of support in May.  It is now the point of resistance.  It could bounce of course, but as each week goes by, without any, it seems that the seven year bull market is over.  What is the chance of it eventually going back down to $10 where it started as all the burned bulls limp to the sidelines?
The Tap Blog is a collective of like-minded researchers and writers who’ve joined forces to distribute information and voice opinions avoided by the world’s media.
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11 Responses to “Inflationists Should Look At The Silver Price. Is The Party Over?”

  1. israelite says:

    The only reason silver dropped in price was due to several margin hikes and and the creation of massive amounts of paper silver by the banksters.

    It has been admitted that the amount of paper silver and gold in existence is 100 times what physically exists. Do the math.

    When the world’s fiat currencies finally pop, gold and silver will be the last men standing.

    Protect yourselves, buy physical gold and silver now.

    The Silver Bullet And The Silver Shield

    http://dont-tread-on.me/the-silver-bullet-and-the-silver-shield/

  2. Me says:

    I agree with Israelite. The paper price hit a wall above which it was not allowed to go so the fiat printers forced it down with fiat and margin hikes. There is no question the price would have gone much much higher without the intervention.

    Above ground stocks have been so depleted over the last few decades that there are no significant silver reserves left. There’s now multiples more gold than silver. Now silver is so artificially cheap the miners can’t afford to mine it.

    Eventually the paper price and physical price of silver will separate.

    The Tap should also be aware of all the incredibly useful industrial and medical properties of silver.

    Here’s another possible link.
    Gadaffi threatens Europe with attack. The propaganda zombies who have been so please with themselves that the globalists are starting humanitarian wars by supporting al qaeda everywhere are going to find out the consequences of their actions. It’s also possible Gaddafi knows the globalists will pull a false flag operation to justify an invasion of Libya anyway so he might as well claim credit for it in advance.

    http://news.xinhuanet.com/english2010/video/2011-07/02/c_13962060.htm

  3. Me says:

    And another thing… you call them “inflationists”.

    That’s not true. The people I am reading call themselves deflationists.

  4. Tapestry says:

    If we are facing deflation, hold paper currency.

  5. Me says:

    Not all deflationists agree that deflation means a fall in the price of precious metals. There are scenarios where deflation causes the value of physical gold and silver to rise while other assets fall, because physical gold and silver are liquid money.

    Also, I remain to be convinced we’re in a deflationary environment for food and energy. It’s going up.

    Houses and big assets that are the concern of the super-wealthy… they might face deflation. Middle classes and down – no.

    All this ignores the fact the silver (and gold) prices have been suppressed for decades so even if they were to fall they should still spring above where they are because they are well below their true market level.

  6. Tapestry says:

    If QE2 is kept going or becomes QE3, then inflation of commodity prices would more likely continue, and gold and silver might pick up again.

    If QE is ended, and the real economy becomes the only fountain of demand, then there will be a deficit in demand as the money supply (credit basically) in the economy is declining.

    With gold and silver mines pumping hard, and with public access to buy precious metals restricted by some governments, prices of gold and silver would find it hard to get any traction. Markets where access to gold is not restricted, e.g. India, are suffering a collapse in demand, as it is.

    The only sizeable demand has been from governments like India, Russia and Mexico and they too might get cold feet if the price shows a continuing tendency to fall. The Gordon BRown effect in reverse, buying at the top of a market looks none too clever in the hundreds of billions.

  7. Me says:

    //If QE2 is kept going or becomes QE3, then inflation of commodity prices would more likely continue, and gold and silver might pick up again. //

    The rise in gold and silver price is not linked to QE2. You said yourself it has been a 7-year bull market. Seriously analysts say there are at least another 7 to go, and the price of silver might never be at the level it is again. Sort of like gold will never be $35 again.

    //If QE is ended, and the real economy becomes the only fountain of demand, then there will be a deficit in demand as the money supply (credit basically) in the economy is declining.//

    You treat gold and silver like it is an ordinary asset, whereas it is money.

    Food and energy prices have been going up, and will continue to do so for the next few years. Do you disagree that this trend will continue?

    That’s the world the middle class and poor live in. Rising prices.

    What about the world the rich live in?

    Your deflationary arguments apply to houses, yachts and cars, which have been, are will continue to, become cheaper. But not the essentials ordinary people live-by.

    Middle class and poor will have less money and their money will be worth less, and less, against the real assets they need to survive.

    Gold and silver is money so it will buy the same amount of bread this year as it will next year (if not more as the price has yet to rebound from its suppressed state).

    People will need to trade in what cash they have for real money that retains its value. (Why else do you think there is VAT on silver? They want to stop the poor from becoming secure.)

    The rich will hedge into gold and silver because historically hyperinflation has not required extra-money to begin. All it needs is an increase in the velocity of money that is in circulation to raise prices. This is psychology… all you need is the ingredients for insecurity, and people go into hoard mode and clear the supermarket shelves.

    //With gold and silver mines pumping hard,//

    Lower quality ores, border line profits at current prices.

    //and with public access to buy precious metals restricted by some governments//

    The globalists know it is good for people.

    However, knowledge of gold and silver will only increase.

    // prices of gold and silver would find it hard to get any traction.//

    The global single currency is going to be backed by gold. People have been saying gold and silver can’t go up for 7 years, but as you’ve said…

    //The only sizeable demand has been from governments like India, Russia and Mexico and they too might get cold feet if the price shows a continuing tendency to fall. The Gordon BRown effect in reverse, buying at the top of a market looks none too clever in the hundreds of billions//.

    The fundamentals haven’t changed. Your argument does not explain the rise over 7 years, and the fundamentals do not include QE at all, so it is also a straw man.

  8. Tapestry says:

    It will be very interesting to see which scenario unravels in the future. This week the gold/silver bears have the upper hand!

    The rise in commodity prices over the last seven years (rise, fall and rise) has a lot to do with derivatives trading.

    Derivatives, once deregulated, become a manipulation of a market. They can be used to swing markets either way by the elite. The wider the swings both ways, the more money they will make, especially if they can convince enough players to take bets against their planned trend. Hedge your bets, ladies and gentlemen.

  9. Me says:

    Summer is a slow time for precious metals.

    Over the last 10 years there has been a strong seasonal aspect to the price of gold and silver.

    This chart is what might technically be known as “a ramp”

    http://i51.tinypic.com/2dgru3p.jpg

    This gold price chart is a proxy for the movement of the price silver because the movement of both have until recently been closely linked.

    //Derivatives, once deregulated, become a manipulation of a market. They can be used to swing markets either way by the elite. The wider the swings both ways, the more money they will make, especially if they can convince enough players to take bets against their planned trend. Hedge your bets, ladies and gentlemen.///

    Yes… As I understand it, derivatives trading allows would be price suppressors to sell vast quantities of “silver” that doesn’t and will never exist in the specified time frame in order to suppress the price.

  10. Tapestry says:

    Derivatives can be used to drive prices up and down, and not only silver. The idea is to get people to join a price trend up, sell near the top, and then collapse the price on the last few in, then buy back once the price is low again.

    Oil went to $150 then down to $40 then up to $110 in three years. If you can control those swings you make billions. Same goes for metals.

    With silver they built a five times bull market over seven years (after a long price suppression following the 1981 Bunker Hunt surge). They might put in a two year crash now, to be followed by another leg up. Who knows? Cutting QE is likely to have powerful effects on markets which they would be aware of. Play both sides is my advice,and never believe a price can only go one way.

  11. Me says:

    You keep forgetting you are discussing the paper bull market.

    Those with real money are selling the paper and buying physical silver.

    There is a bear market in paper silver but the bull market continues in physical silver.

    You won’t get $20 physical silver again let alone $10. Paper silver will go to $0.

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