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Old 07-08-2014, 08:59 PM   #1 (permalink)
abbottbowden28's Avatar
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Default Beginner Questions About Silver???

I am just getting into this hobby. I have a few questions.

1. How predictable is the rise and fall of the price of silver?

2. Is now the time to invest/stash?

3. Why does silver rise and fall?
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Old 07-09-2014, 09:17 AM   #2 (permalink)
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Originally Posted by abbottbowden28 View Post
1. How predictable is the rise and fall of the price of silver?
It is not.

Originally Posted by abbottbowden28 View Post
2. Is now the time to invest/stash?
It is not so much an investment as it is a hedge against inflation. You need to be able to put money into it that you won't need to access for years.

Originally Posted by abbottbowden28 View Post
3. Why does silver rise and fall?
There are two schools of thought. One school believes the market is manipulated by some grand-Illuminati type corporation, an all powerful Oz behind a curtain. There may be some truth to that, but at the end of the day silver is a commodity, and as such value changes according to:

A. Supply. If a giant vein of silver were found in New Jersey that would add several million tons of silver to the market, that would depress value because of supply and demand.

B. Demand. If the Iphone6 needs a lot of silver to make it go and there is a huge demand for that Iphone, Apple would buy more silver than normal and that would increase demand. Higher demand means higher prices.

C. Currency Value. Every month, the Fed has been pumping $75 billion into our economy to keep up this farce of an economic recovery. Every month there are more dollars chasing the same amount of commodities. At some point inflation hits, probably in 2018 and then Katie bar the door.
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Old 07-09-2014, 10:28 AM   #3 (permalink)
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1. It's not predictable. But if you know how to read charts and know what support and resistance levels are you can at least have a decent indication on where the price will stop (either on the way up or down). Certainly not saying this is an end all be all but if you understand the support/resistance I've found it more helpful than most other stocks. This can also be used when trying to "time" your purchases of the actual metal.

2. This answer really depends on what you believe to be true with regard to your third question.

3. I'll also have some responses here that refer to frozentimesports. There has been more and more evidence of large banks manipulating the price of silver. It's significantly easier to manipulate versus gold since the gold market is so much larger in size. The gold market per day in 2013 traded approximately 139m ounces (at the current spot price) that's $183.9B. Compare that to the silver per day average of 1,645m ounces for $34.63B per day.

All of the points frozentimesports made are accurate but there are also other macro factors at play. His A and B points correlate to the overall industrial demand which is by far the largest consumer of silver, it's also important to note that silver gets used up (i.e. every car engine has a lining of silver in it so every car that's made needs some silver). The numismatic and "hedge against inflation" demand is relatively small by comparison. But the price fluctuates pretty much daily based on what news is coming out. Price goes down when there's good news (no inflationary fears and economy is humming) and goes up when there's bad news (bad jobs report, wars, etc.).

Without knowing your time frame for investing or why you are investing answering your 2nd question is impossible. Over the long term (5+ years) I would expect silver to go up drastically as the industrial demand continues to use up silver along with the inflationary aspects of what the US economic policy is creating. Over the short to mid term (12 months or less) I would expect silver to stay in the range it has been for a very long time. $18 to mid 20's an ounce.
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