I VIEW SILVER (SLV) as an attractive entry candidate on long side here. Back in October I saw that QE~ was unsuccessful at generating any new momentum in the price of silver and I felt it would undergo a correction. Now that correction has lasted several months and the price has settled back down from the $33 level to the $29 area and I think the price will work itself back up to the $32-$33 area over the next three months, which is close to a 10% gain and a reasonable return given the risk (which I think is low). I am comfortable owning silver due to its compelling fundamental supply/demand situation. Happy New Year to all! Cheers. Tim January 9, 2012 12:24PM EST
Comments
jmtbernardo
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Hey Timwest where did you found this information about the demand for silver. I would appreciate if you posted your sources.
timwest
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There are a variety of sources you can look at to discern what is happening. I can point to this website to see how over the past 8 years that industrial applications in silver have driven annual demand from 355 million ounces in 2002 to 485 million ounces in 2011.
Granted that is only 4.5% per year, averaged, but in an economy that is flat and employment and wages that are flat, a market that is growing demand at nearly 5% each year is poised to do well. Granted, there are many forces at work in the market for silver and many of those forces are designed to maximize the profitability of trading silver. The volatility of silver is huge when compared to the stock market and the total size of the silver market is TINY, especially compared to a $100+ TRILLION market for bonds and a $60+ TRILLION market for equities worldwide. Silver is a tiny, tiny, tiny slice of that market and the players range from producers, hedgers, their bankers, market makers, speculators, investors, and if you use tremendous leverage which is available in the market, then a small drop in price can produce massive losses very quickly. So, with silver, always assume that there is no way to know more than the market, but what you can do is to buy silver AFTER the small speculators who have been liquidated and sold out of the market. I don't want to parrot what the rest of the world is saying about silver, and what moves markets in the short run has literally nothing much to do with the long run. Figure out what time frame you are on and make sure you are taking advantage of whatever means you have possible to help you define risk and potential return. Money management is your most important weapon. How much do you buy and when do you get out are the two most important questions to ask yourself and your money management system.
So far this is working extremely well. Likely setback will start from here and possible 2nd entry breaking under 3-5 day's of lows. If we don't see a price pullback, then this market is poised for a much faster rally. Platinum has been moving up sharply, mainly from industrial demand (automobiles) and inventory rebuilding. If you have missed this little rally, then be prepared to enter on any dips, especially when that dips occurs with what seems like negative news. Cheers. Tim 2:21PM EST Jan 16, 2013
QuantitativeExhaustion
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Tim do you still believe SLV/Silver will base before a much larger rally?
timwest
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The time frame is the issue: In this quarter, I think 33-35 is likely. In this year, I think 40-42 is likely. In this decade, I'm open to much higher prices. I am also aware that silver is volatile and that we need to be ready for short-term, sharp price breaks that shake out weaker investors and short term leveraged traders. Silver is valuable and getting more valuable every day for its useful, industrial uses. Going forward over the next 20-30 years, I could see silver over 1000/oz. Sounds crazy. Maybe I'll just say $500 instead and that is a nice 10-fold increase over the last $50 peak.
QuantitativeExhaustion
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Yeah.. I agree with longer term.
As far as this recent run, I'm not so sure $31 can hold. Price has overextended itself and is overbought near term.
QuantitativeExhaustion
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I think you are right.. lot of talk about China stimulus and China retail silver market.