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Thread: Silver in 2023 - Some Reflections

  1. #1

    Default Silver in 2023 - Some Reflections

    I am cautiously optimistic for a baseline in the low/mid 20's. A price point in the high twenties seems quite feasible by year-end; the rest is speculative.

    - Demand in Asia continues to grow as populations transition from poverty to the middle class. However, traditions are also fading, especially with the Gen Z population, as they become increasingly westernized. Gold/Silver are stores of value in volatile/uncertain economies, so the OECD, Commonwealth, and U.S. have been excluded from that mental calculation. As one generation passes (like in Japan), the next liquidates its precious metal stores.

    - Silver is an industrial metal; if it goes up too fast, manufacturers will expend more research dollars into finding alternatives (the cure for high prices is high prices).

    - Premiums are high on retail silver. This is not a reflection of actual silver value but simply a limited supply in the formats most desired by consumers. If premiums were an indicator, you wouldn't have a 1000 oz bar selling at .30 to .50 over spot.

    - LMBA and Comex inventories are down rather significantly, which bodes well, but it remains to be seen if these drawdowns are sustained, especially if the world goes into recession.

    - The mainstream media is talking up silver/gold. That situation is analogous to being named a person of the year on Time. This is when the speculators (especially retail) come in, which usually means the bump is short-lived (6mths to a year).

    - Noting the above comment, one has to be very wary of the CFTC, which can change margin requirements abruptly.

    - My understanding is that JP Morgan and the LBMA are at very low risk of defaulting as they have placed severe restrictions on the holders of paper silver actually redeeming into physical, and the other disincentive, who wants to store thousands of ounces of silver at home or in a safe deposit box? Not practical.

    - I don't see the Bitcoin crowd maneuvering into silver, they are used to hyperbolic returns, and the silver market is gigantic (reddit barely moved it). It isn't a cool investment. I did the usual how much do you think this bar is worth test on millennials; on average, their estimates were just 12% of the actual value.

    I'd love to see $50-$60; that is my pie-in-the-sky forecast; if it were to hit that price point, I'd unload 80% of my holdings on the way up to there. Silver stackers (a very minor portion of silver consumption by year) tend to sell more at that price range as well, and again, if we have a recession, some will be compelled to liquidate.

    Silver predictions are dependent on multivariable conditions, and it is a complex system not unlike the weather. The lower-quality prognosticators have spectacular forecasts, and they are either operating on a very thin slice of the multivariable pool or found their opinions on "money printing madness must end one day." Sure, it may happen, but why would we return to a gold standard? The whole purpose of a gold standard is to encumber governments with spending restraints; that is the last thing they want. One currency collapses, and another one will take its place. Some of the better analysts do take a larger slice of the variable pie into consideration. Still, in my opinion, nothing short of Artificial Intelligence can come close to a complete calculation.

    Having said all this, I am pretty sanguine about the prospects for the next five years; I think physical shortages are increasingly likely this time around. I've been investing in silver since 1981; my track record was pretty poor when trading solely in physical (break even or small loss), since adopting paper silver around 2014 (I convert some to physical when profiting) I've done very well. The ridiculous Covid bump from $12 to around $28 certainly helped.

  2. #2
    Join Date
    Nov 2017
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    391

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    Quote Originally Posted by Silver76 View Post
    I am cautiously optimistic for a baseline in the low/mid 20's. A price point in the high twenties seems quite feasible by year-end; the rest is speculative.

    - Demand in Asia continues to grow as populations transition from poverty to the middle class. However, traditions are also fading, especially with the Gen Z population, as they become increasingly westernized. Gold/Silver are stores of value in volatile/uncertain economies, so the OECD, Commonwealth, and U.S. have been excluded from that mental calculation. As one generation passes (like in Japan), the next liquidates its precious metal stores.

    - Silver is an industrial metal; if it goes up too fast, manufacturers will expend more research dollars into finding alternatives (the cure for high prices is high prices).

    - Premiums are high on retail silver. This is not a reflection of actual silver value but simply a limited supply in the formats most desired by consumers. If premiums were an indicator, you wouldn't have a 1000 oz bar selling at .30 to .50 over spot.

    - LMBA and Comex inventories are down rather significantly, which bodes well, but it remains to be seen if these drawdowns are sustained, especially if the world goes into recession.

    - The mainstream media is talking up silver/gold. That situation is analogous to being named a person of the year on Time. This is when the speculators (especially retail) come in, which usually means the bump is short-lived (6mths to a year).

    - Noting the above comment, one has to be very wary of the CFTC, which can change margin requirements abruptly.

    - My understanding is that JP Morgan and the LBMA are at very low risk of defaulting as they have placed severe restrictions on the holders of paper silver actually redeeming into physical, and the other disincentive, who wants to store thousands of ounces of silver at home or in a safe deposit box? Not practical.

    - I don't see the Bitcoin crowd maneuvering into silver, they are used to hyperbolic returns, and the silver market is gigantic (reddit barely moved it). It isn't a cool investment. I did the usual how much do you think this bar is worth test on millennials; on average, their estimates were just 12% of the actual value.

    I'd love to see $50-$60; that is my pie-in-the-sky forecast; if it were to hit that price point, I'd unload 80% of my holdings on the way up to there. Silver stackers (a very minor portion of silver consumption by year) tend to sell more at that price range as well, and again, if we have a recession, some will be compelled to liquidate.

    Silver predictions are dependent on multivariable conditions, and it is a complex system not unlike the weather. The lower-quality prognosticators have spectacular forecasts, and they are either operating on a very thin slice of the multivariable pool or found their opinions on "money printing madness must end one day." Sure, it may happen, but why would we return to a gold standard? The whole purpose of a gold standard is to encumber governments with spending restraints; that is the last thing they want. One currency collapses, and another one will take its place. Some of the better analysts do take a larger slice of the variable pie into consideration. Still, in my opinion, nothing short of Artificial Intelligence can come close to a complete calculation.

    Having said all this, I am pretty sanguine about the prospects for the next five years; I think physical shortages are increasingly likely this time around. I've been investing in silver since 1981; my track record was pretty poor when trading solely in physical (break even or small loss), since adopting paper silver around 2014 (I convert some to physical when profiting) I've done very well. The ridiculous Covid bump from $12 to around $28 certainly helped.

    That was a very intelligent and reasonably analysis. Which means? That very few people will listen to what you have to say!! Sad, but true. I have been following the silver market since 2001, and I sure have read and heard so much hype that by now I really don't know what to believe. Which is actually a good thing. I will try to the reasonable thing - while not expecting any praise for doing so. I view silver as a great store of value and as ultimate, real wealth. Of course, if silver heads over fifty an ounce, I will gradually sell some on the way up because it very likely will crash again.

  3. #3

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    There have been times when I have had strong feelings about which way the PM markets were headed. Most of the time, those opinions were correct. At this time, I am in a quandary as to what it will do in the next month, or even the next week, let along the next year.

    For now, I sit & wait. I have some PM. I have some dry powder. I have less than average in traditional equities. I am waiting for the shoe to drop.

    That being said, if I were to look at charts alone & ignore the outside world, I would say that silver's trend makes it look likely that it will go up by about $1.5 per month until it hit's $28, then drop back faster than it rose. My confidence in that statement is in the 20% range. I am not going to trade on that prediction. I see a total roll of the dice right now. $15/oz would surprise me no more than $40/oz. Either of those two numbers could happen very quickly & not seem out of place in today's world.

    I retreat back to my previous position. At this time, I just don't know. ...but at least I know that I don't know, and that gives me some comfort.
    “The Federal Reserve is not currently forecasting a recession.”
    Fed Chairman Ben Bernanke, January 2008
    This is no longer posted in the Fed Minutes of January 2008, but still quoted here - https://www.nbcnews.com/id/wbna22592939. The FOMC minutes still quote MR. Reifschneider. as stating the same thing.

  4. #4

    Default

    IMO, one thing is true, silver will both excite and disappoint us during 2023, just as it has for years and years in the past. Personally, I think silver will be higher by quite a bit at some point during 2023. Will is stay there is a completely different question. Plus what will be the premiums required to purchase it and will it (the premium) decrease in any time soon. I'm thinking demand could continue to outpace production if the stock market takes another hit or if "smart" money decides it's time to get into commodities. The real winners will be mining stocks and they could see some large gains if even a few percentage of the general market goes into mining shares. Again, all IMO. So far 4th quarter 2022 has been very good for mining and the start of 2023 has continued to make my accounts good better and better.
    Do your own due diligence

    I stand united with my friends & family in Canada who seek freedom.

  5. #5

    Default

    The cryptocurrency crash isn't hurting.
    "Compulsory altruism is none too altruistic." - me

    "All of us necessarily hold many casual opinions that are ludicrously wrong simply because life is far too short for us to think through even a small fraction of the topics that we come across." -- Julian Simon

  6. #6
    Join Date
    May 2013
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    As much as the fed may bluff and puff it's chest... High interest rates IMO are unsustainable "THIS TIME" due to the national debt. It's not like the early 80's with Vaulkner.
    treasuries are still paying neg real returns vs inflation. and the raging stock market has been tamed with a few bloody noses. Also crypto investors have been kicked in the teeth.
    Investors will be looking for cheep bargain survivors. At least to some degree that strikes the highlight pen on the mining sector. Silver would have to rise over 100% to match it's all time high hit in 1980 and also in 2011. Inflation is real and should at some point here have a real effect on the price of silver. IMO that $50 should hit again (perhaps even a new high), all things considered. The pull back this time should at least stick around the mid $30's. Just look at the price of eggs or a "T"-bone. Will this happen in 2023? who knows, but it will at least get started IMO.....One thing for sure...The cost of living will continue to rise.
    It could be my abject core stubbornness, but I just can not accept the US dollar as a safe haven. I see the world as stupid in that regard, but , then again it might be me lol.
    Ag guy
    Last edited by Ag guy; 01-05-2023 at 11:21 AM.
    live for today, admit your faults, do the right thing (even if you don't want to) & trust God!
    This life is the training of the soul for the life to come. (accept that we live in a fallen world)
    Whether you know it or not, you are a spiritual eternal being! Ag guy

  7. #7

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    Quote Originally Posted by windweaver77 View Post
    The cryptocurrency crash isn't hurting.
    Daniel Webster is said to have spoken of paper money being a powerful tool to delude the working class into surrendering their wealth. It is my assertion, that crypto is a WMD in this space, or perhaps an IQ test.
    “The Federal Reserve is not currently forecasting a recession.”
    Fed Chairman Ben Bernanke, January 2008
    This is no longer posted in the Fed Minutes of January 2008, but still quoted here - https://www.nbcnews.com/id/wbna22592939. The FOMC minutes still quote MR. Reifschneider. as stating the same thing.

  8. #8
    Join Date
    May 2013
    Posts
    1,490

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    WHY...? Is silver not up a $buck$ today? With the dollar down 86 points and gold up ????
    live for today, admit your faults, do the right thing (even if you don't want to) & trust God!
    This life is the training of the soul for the life to come. (accept that we live in a fallen world)
    Whether you know it or not, you are a spiritual eternal being! Ag guy

  9. #9

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    the euro is sinking again tdy, and it wont get better i guess, seen all the promotions of 50 off and three pairs of spectacles for the price of one.
    here in the happiest country of the world a norwegian Piper wants to buid a steelfactory using Hydrogen, tricetag 4 billion they do not have, but the green are getting red hands clapping as if the Lord came back.

    Golditiki2+++

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