Three Things That Are Killing Silver

Over the years (and decades) silver travels a path fraught with excitement and disappointment. Both the excitement and the disappointment stem from three things that are killing silver – unrealistic expectations, inflation, and time.

UNREALISTIC EXPECTATIONS

The unusual conditions leading to the explosion in the silver price in the late 1970s are unlikely to happen again in a similar context…

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Price Of Silver – 100 Years In The Making

Sometimes fantasy becomes reality. At other times, a dose of reality will temper fantasies of outsized and unjustified proportion.

Some silver investors and analysts could use a dose of reality. Below is a chart of silver prices dating back to 1915…

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Silver’s Apparent Recovery

SILVER’S APPARENT RECOVERY

Some might say “Silver’s performance over the past several weeks has been nothing short of phenomenal.” Others talk and act as if all of their wildly crazy price predictions have already come true.

The chart (source) below is a one-year history of daily prices for SLV (Silver ETF)…

As of this writing, SLV is up forty-eight percent since striking its most recent low of $10.86  two months ago. It would not be excessive to call it an impressive rally of magnitude.

There are, however, some items of note that might dampen one’s enthusiasm if you are looking for an infinite extension of the current rally.

The rally has come immediately on the heels of a nearly forty percent decline in silver over the preceding four weeks. As such, it is, at this point, merely a retracement of previously lost ground.

In addition, silver is still more than two dollars per ounce lower than it was when the price price peaked earlier this year. This means that silver needs to increase by another fourteen percent just to get back to its February price point just before it collapsed.

Let’s remember – when silver was at $18+ three months ago, we were being told it was last call to own silver below $20 per ounce; and the silver bullet train was supposed to be fueled by an impending stock market crash.

The stock market crashed; and silver crashed faster and harder. What will happen to silver prices when stocks crash again?

While you are thinking about that, lets look at two more charts (source) The first is a five-year history of physical silver prices…

As you can see, viewing silver’s recent move within the context of a longer-term time frame, alters our perception. The potential for additional volatility in the silver price is evident.  However, the slope of the pattern, along with the overhead line of resistance, seems to indicate that the price of silver is well contained under $20 per ounce.

Finally, viewed within the context of a ten-year time frame, it would appear that silver’s recent rally is just a hiccup in its decade-long price decline since its peak in 2011…

In conclusion, not much has changed; silver’s potential for higher prices is quite limited.

With the winds of deflation howling ominously, it is more likely that the price of silver is headed lower.

As we have said before, it is prudent to own some silver coins (see my article on silver coin premiums) for exchange and barter against the possibility of a breakdown in the financial system and complete repudiation of the US dollar.

Other than that, your best bet for wealth preservation is gold; as long as you are not chasing the price.

(also see: Silver Loses Its Mettle)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

 

 

Silver Charts Say $5 Or Lower Is Coming

SILVER CHARTS SAY $5

Even the most casual silver investor must be discouraged with what has happened to silver prices recently. But what about those who were/are super bullish? How do they feel?

As I read various reports and articles, I sense some back peddling on the more extreme predictions which were so prevalent just shortly more than a month ago. On the other hand, I also sense a reluctance to let go; to just admit they were wrong and move on.

Experiencing the reality of silver’s price decline of more than one-third in barely three weeks has left its mark in ways that cannot be ignored. It is ignored, though. And when it isn’t ignored, it is excused; or explained in terms that are supposed to make you feel better, but somehow make you feel worse.

Rather than rehash all of the depressing details verbally, I thought it might be a good idea to look at some silver charts which give us pictures of the damage that has been inflicted on a technical basis.

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Silver Fails Miserably To Meet Expectations

No matter how harsh it sounds, it is true. Unfortunately, too many people don’t want to hear it and refuse to listen.

Acknowledgement of the facts doesn’t seem to deter its supporters. We are told that silver’s ongoing underperformance relative to gold makes it “a better buy” with “more profit potential”.

Let’s see what the charts say. 

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No Silver Lining Here

NO SILVER LINING

As bad as the prognosticators can be with their predictions for the price of gold, the situation for silver is even worse.

Some very recent headlines trumpeted the following proclamations:

“Silver prices to surge…”

“Silver…Why Prices Will Soar”

“Why You Must Own Silver…”

But my favorite headline expresses all of the emotion and confusion regarding silver quite aptly: “What Is Wrong With Silver?”

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Implosive Silver Vulnerable To Big Price Drop

IMPLOSIVE SILVER

Admittedly, it must sound encouraging, and even exciting, to hear proclamations that a “silver” lining is now apparent in the metals complex. Or that a silver “blast-off (is) about to happen”.

Expectations abound for the long-expected, vertical leap in silver prices that never seems to come. And we are told it is supported by solid fundamentals that include supply deficits, a return to the 16 to 1 gold/silver ratio, increasing monetary demand for silver, etc.

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