Why are the metals taking a crap today?

[Son-of-Liberty]

I thought we were past this.

[Uncle Salty]

Options expiration smack down. Same old formula.

[Horn]

Some fools base the entire Precious metals market on Gold, when it should be silver.

The banks set the price for Gold.

[Sparky]

I thought we were past this.

What makes you think we will ever be past days like this?

[agnut]

I thought we were past this.

Hi Son-Of-Liberty. Yeah, I know, the day to day gyrations can be disturbing. The long term perspective is the best way to have inner peace. And that dips are best viewed as opportunities rather than tragedies.

I have been watching and waiting for 13 years and Ponce has for over 25 years. So what is a “pre expiration smack down” in the long term scheme of things ? About as ridiculous as an ant climbing up an elephant’s leg with rape on its mind.

When silver was under $5 per ounce it took some vision and study to know what route to take in preserving savings for the distant future. With silver currently over $30 it is easy and comforting to see that the 6 times price of 10 or so years ago has come to fruition. And I believe that there is a long, long way to go.

An investment in precious metals is a vote against the tyranny of fiat paper currencies floating around today. It is ludicrous that the whole world is being run with unbacked fiat currencies while there are trillions of dollars being created out of thin air. And where are these trillions of dollars going ? To foreign banks, Wall Street, Corporations, politicians. NOT to the man on the street. Years ago I wrote that we are in the midst of WWIII but most didn’t recognize it since it is an economic war. The casualties are impoverishment and loss of freedoms in the first world while starvation and death loom in the third world.

What are the weapons that cause this horrific damage ? Overissuance and misallocation of unbacked fiat currency. The best shield against these slings and arrows is precious metals. Has been for thousands of years.

Hey ! You didn’t have to sell any silver on the dips ? So no loss there. But did you buy on the dips ? I sure wish I could but developing our property and prepping has been taking all my funny money.

Funny too, I just messaged Mneagle about diversification of precious metals investment. I do not hold gold (though gold is good; I believe that silver is great) and was mostly thinking of silver. Here it is :

Diversification of precious metals has been on my mind a lot lately. I see a danger here. I have written about it in the past but nobody responded to my posts. You would think that with all the recent concern with govt confiscation that folks would be seeking a “safer haven”. I truly believe that I have found it and would be happy to discuss it if anyone is interested. I haven’t written a silver musing thread in a long time; maybe this would be received with more interest now.

Best wishes,

Agnut

The unbridled lust for money and power is an as yet unrecognized form of mental illness.

[MNeagle]

Silver Plunge Explained: Shanghai Hikes Silver Margins From 15% to 18%

http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg (http://www.zerohedge.com/users/tyler-durden)
Submitted by Tyler Durden (http://www.zerohedge.com/users/tyler-durden) on 11/18/2011 08:24 -0500


<LI class="taxonomy_term_12089 first">Google (http://www.zerohedge.com/taxonomy_vtn/term/12089)
Reuters (http://www.zerohedge.com/taxonomy_vtn/term/9184)



We wonder if the collapse in silver price yesterday may have been due to just a tiiiiiiny leak of the fact that overnight, the SGE announced an imminent margin hike. From Reuters (http://af.reuters.com/article/metalsNews/idAFB9E7M700420111118): "The Shanghai Gold Exchange said it will raise margins on silver forwards to 18 percent from 15 percent from Monday if the silver contract hits its daily trade limit on settlement on Friday. The exchange said it would lift daily trade limits on silver forward contracts to 15 percent from 12 percent if the contract hits limit up or down on settlement on Friday."
And from the SGE, courtesy of Google (http://www.sge.sh/publish/sge/jyzn/jysgg/7708.htm):

On the adjustment of silver Ag (T + D) notice of the contract price limits

Given the current silver Ag (T + D) decreased by a big margin, if today silver Ag (T + D) Contract close sealed daily limit, there unilateral market, according to exchange "Shanghai Gold Exchange Risk Control Measures" relevant provisions of the today on the final liquidation, the margin increased from 15% to 18% adjustment, the next trading day (November 21) from the Ag (T + D) contract price limits adjusted from 12% to 15%.
Invites Member units to prepare well in advance of related work and customer notification.
We can only pray that the CME does not take the hint and start hiking margins on gold and silver on price plunges. At that point one may as well be Celente when investing in paper silver.


http://www.zerohedge.com/news/silver-plunge-explained-shanghai-hikes-silver-margins-15-18?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedg e+-+on+a+long+enough+timeline%2C+the+survival+rate+fo r+everyone+drops+to+zero%29


...

[MNeagle]

Hi Son-Of-Liberty. Yeah, I know, the day to day gyrations can be disturbing. The long term perspective is the best way to have inner peace. And that dips are best viewed as opportunities rather than tragedies.

I have been watching and waiting for 13 years and Ponce has for over 25 years. So what is a “pre expiration smack down” in the long term scheme of things ? About as ridiculous as an ant climbing up an elephant’s leg with rape on its mind.

When silver was under $5 per ounce it took some vision and study to know what route to take in preserving savings for the distant future. With silver currently over $30 it is easy and comforting to see that the 6 times price of 10 or so years ago has come to fruition. And I believe that there is a long, long way to go.

An investment in precious metals is a vote against the tyranny of fiat paper currencies floating around today. It is ludicrous that the whole world is being run with unbacked fiat currencies while there are trillions of dollars being created out of thin air. And where are these trillions of dollars going ? To foreign banks, Wall Street, Corporations, politicians. NOT to the man on the street. Years ago I wrote that we are in the midst of WWIII but most didn’t recognize it since it is an economic war. The casualties are impoverishment and loss of freedoms in the first world while starvation and death loom in the third world.

What are the weapons that cause this horrific damage ? Overissuance and misallocation of unbacked fiat currency. The best shield against these slings and arrows is precious metals. Has been for thousands of years.

Hey ! You didn’t have to sell any silver on the dips ? So no loss there. But did you buy on the dips ? I sure wish I could but developing our property and prepping has been taking all my funny money.

Funny too, I just messaged Mneagle about diversification of precious metals investment. I do not hold gold (though gold is good; I believe that silver is great) and was mostly thinking of silver. Here it is :

Diversification of precious metals has been on my mind a lot lately. I see a danger here. I have written about it in the past but nobody responded to my posts. You would think that with all the recent concern with govt confiscation that folks would be seeking a “safer haven”. I truly believe that I have found it and would be happy to discuss it if anyone is interested. I haven’t written a silver musing thread in a long time; maybe this would be received with more interest now.

Best wishes,

Agnut

The unbridled lust for money and power is an as yet unrecognized form of mental illness.


Yes Agnut, please start a thread on this, or bump an existing one & add to it. I must have missed the other threads. I would be VERY interested in your current solution.

Thank you.

[Son-of-Liberty]

What makes you think we will ever be past days like this?

I just felt like we already had two substantial drops over the summer and fall had built a base and that the there would be more strength towards the end of the year.

I didn't mean it that I thought we were past days that are $2 down for silver but with all the crap going on overseas I expected more strength from the metals.

[bl96S5eu]

@Son-of-Liberty
Can't say why they took a beat yesterday however I've been researching and learning more on the TA side of things lately. The intent of this research was to learn ways to better time my purchases to maximize my funny $$ when buying the shiny stuff. On that note here is an interesting article (http://fx5186.wordpress.com/2011/11/13/11132011/) I read yesterday, browse to the section titled "Silver is in the “Run” Phase with “Dead-Cat Bounce"

@agnut
As a long-standing fan of your silver musings and posts I would welcome your knowledge/wisdom on any subject.

[agnut]

Hi Mneagle. I first wrote of this diversification some years back since it was what I had gravitated toward since PM investing in 1998.

We all know that the banks and large investors are buying gold. Gold can be easily confiscated by edict or heavy taxation. Gold is primarily a storehouse of value with thousands of years of history behind it. It works well that gold has so few uses compared to silver since silver began a process of massive industrial consumption since the 1950s or thereabouts. The world changed dramatically at that time, something which few recognized the significance. No longer could silver be utilized as coinage held by the general populace and as a result in 1965, silver coinage abruptly ended. Replaced with sandwich coins made of base metals to appear the same as the intrinsically valuable 90% silver coins. Note that the ridges around the dimes, quarters, halves and dollars were continued after 1964, further promoting the illusion of intrinsic value.

http://www.bigsiteofamazingfacts.com/why-do-some-coins-have-ridges-around-the-edges

Interesting progression that speaks volumes about devaluation of our currency through the decades :

Gold coins made illegal to possess in quantity of over 5 coins. 1933
Silver coins replaced with non silver coins. 1965
Copper pennies replaced with copper flash plated zinc. 1982 (split year, some copper, some zinc plated)

And today there is much ado regarding soon to be replaced zinc pennies and nickels, both of which are now more valuable in their metal content than their face value.

So when the zinc pennies and nickels are replaced with whatever, it will have been 5 times in which the government has pulled the rug from under the common citizens’ ability to hold intrinsic value in their hands.

It seems that “fool me once, shame on you; fool me twice, shame on me” doesn’t apply here. Well, except for those wise enough to see the charade and protect themselves.

Got bricks of pennies and nickels ? I do and Ponce does. At least they have intrinsic value.

Now getting to my feelings on diversification.

First, silver bullion in either bar or ounce form are subject to govt confiscation just like gold was in the 30s.

Second, 90% silver dimes, quarters, halves and dollars have been coins of the realm for over a couple of hundred years in the US. Hard to envision a call for confiscation of them, isn’t it ? Well, I wouldn’t put anything beyond their reach but it would take the most extreme situation wherein they would attempt to call in 90% silver coins. You will have to appraise the odds yourself; I just do not believe it likely.

And third, sterling silver. This includes fabricated 80, 90 and 92.5 percent silver content. Note that only the 92.5 percent silver content is considered as sterling; the other lower percentages were European early silverware and some early US coin silver dinnerware. We are talking jewelry, cast art and dinnerware.

Each of the three types of silver above are in descending order of potential confiscation. But there is more to it than that.

The silver bullion is the easiest to sell and calculate. The 90% coins are also easy to sell. However, the sterling silver sells at a discount which I find a bit incongruous since true sterling silver contains 92.5 percent silver while 90% silver coins contain 2.5% less than the sterling silver. The balancing factor is that sterling silver can sometimes be bought at a discount to either silver bullion or 90% silver coins. At least that has been my past experience. Your mileage may vary, especially these days.

Holding 1/3 bullion, 1/3 90% silver coins and 1/3 sterling silver seems to be the best diversification I have arrived at through the years. I am thinking of trading some bullion for sterling silver and perhaps some 90% silver coins as time passes and things become worse.

As I wrote before, I cannot envision the govt taking women’s sterling silver jewelry or their sterling dinnerware. If momma ain’t happy, ain’t gonna be anybody happy. Too big a risk of a revolution against getting some extra sterling silver. This would be a confiscation beyond the pale.

We Americans have been surprisingly patient with all the “stuff” happening lately, “stuff” describing all kinds of wrongdoing and traitorous acts tantamount to crimes against humanity.

I feel that there is a sort of subconscious attitude of greatness and pride in our heritage. We have been born into freedom and haven’t known crushing tyranny. I wonder if TPTB have tragically misjudged the American people, believing that they will continue to accept the further taking of their freedoms as well as the great transference of wealth into the hands of the 1%, the ultra rich.

I am defensive of the American people because I believe that I am like them. I have a long fuse but it is connected to an explosive reaction that you would not believe. Kubler-Ross defined the five stages of loss in order of their occurrence.

The stages, popularly known by the acronym DABDA, include:

Denial — "I feel fine."; "This can't be happening, not to me."
Denial is usually only a temporary defense for the individual. This feeling is generally replaced with heightened awareness of possessions and individuals that will be left behind after death.
Anger — "Why me? It's not fair!"; "How can this happen to me?"; '"Who is to blame?"
Once in the second stage, the individual recognizes that denial cannot continue. Because of anger, the person is very difficult to care for due to misplaced feelings of rage and envy.
Bargaining — "I'll do anything for a few more years."; "I will give my life savings if..."
The third stage involves the hope that the individual can somehow postpone or delay death. Usually, the negotiation for an extended life is made with a higher power in exchange for a reformed lifestyle. Psychologically, the individual is saying, "I understand I will die, but if I could just do something to buy more time..."
Depression — "I'm so sad, why bother with anything?"; "I'm going to die soon so what's the point... What's the point?"; "I miss my loved one, why go on?"
During the fourth stage, the dying person begins to understand the certainty of death. Because of this, the individual may become silent, refuse visitors and spend much of the time crying and grieving. This process allows the dying person to disconnect from things of love and affection. It is not recommended to attempt to cheer up an individual who is in this stage. It is an important time for grieving that must be processed.
Acceptance — "It's going to be okay."; "I can't fight it, I may as well prepare for it."
In this last stage, individuals begin to come to terms with their mortality, or that of a loved one, or other tragic event.

I think we are going through the denial now which is turning to anger. Sure, some are behind and some are ahead but collectively, the American people are at the first two stages and next will be at the threshold of the bargaining stage wherein justice will be demanded. Problem is, if the justice is not forthcoming from TPTB, the American people will take matters into their own hands. This will be violent rather than their acceptance of failed bargaining and will not result in the next stage aptly named depression but rather a revolution with all kinds of unintended consequences. We are seeing the beginnings of this with Occupy Wall Street which had been somewhat ineffective in conveying the message to the people. Actually, I have always hoped for a peaceful transformation. I’m sure most of you have hoped for the same. However, the response by TPTB will determine the reaction of the American people. Arresting OWS members and disbanding them will not solve anything except delay the movement‘s inertia.

That is the way I see it; we are at a critical juncture precipitated by TPTB. Let’s put it this way. If TPTB did not have the military and law enforcement to enforce their will, they would be summarily judged by a jury of their “peers”. Make no mistake, TPTB are fighting for their lives. Confidence is being lost more rapidly than the value of their fiat currency’s purchasing power.

The spoils of this economic WWIII are no less than the total control of mankind. One world government. Has anyone described what life would be like under a one world government ?

The best defenses we little guys have is to hold and further accumulate physical precious metals. For you see, gold and silver held in the hands of billions of people would be unconquerable. Unbacked trillions of paper and electronic fiat currency would vaporize with an alternate form of the medium of exchange, aka gold and silver. For the totality of humanity to have precious metals is no less important than for the human body to have blood in its veins, transporting food and oxygen to each individual cell. We have been running for too long with cheap alcohol in our veins. That’s right; fiat currency is a drug with a consequent addiction and degradation. Who is the pusher man ? First fix is free ?

In the absence of unbacked fiat currency the precious metals would be valued directly against the goods of the world. The mind boggles with how high their purchasing power would be since there is so little in relation to the 7 billion souls on this planet.

The issue of fiat currency versus honest money is not just preservation of purchasing power but one of freedom for humanity. Otherwise we fall into a draconian enslavement and spiritual greater Dark Age, not just another Depression.

God is in gold and lives is in silver. Coincidence ? Well, Voltaire said that God was a comedian playing to an audience that was too afraid to laugh.

I recommend to go out joyously living in the knowledge that our belief in honest money is the keystone to the archway that leads to betterment of mankind. Without this keystone we have collapse and chaos.

Maybe 12/21/2012 will be a rebirth; maybe an end. Either way it doesn’t matter as long as we are doing what is right in our hearts. Should be interesting. I’ll bring the popcorn.

Best wishes,

agnut
.
P.S. By the way, has anyone noticed in the movie 2012 the aircraft carrier that was in the tsunami ? It scraped the White House off the face of the earth. It was a bit dim but I could make out the name of the aircraft carrier; it was the John F. Kennedy.

[MNeagle]

This is very interesting to me:


Holding 1/3 bullion, 1/3 90% silver coins and 1/3 sterling silver seems to be the best diversification I have arrived at through the years. I am thinking of trading some bullion for sterling silver and perhaps some 90% silver coins as time passes and things become worse.

and I've been pondering it all afternoon...

~Is your main objective to avoid confiscation of bullion & coins?
~Trading... I'm guessing you'll trade directly for the sterling, not going into fiat.
~If we don't have access to estate sales, where else would you recommend we might find sterling at a reasonable cost?

[1970 silver art]

I thought we were past this.

Nope. As long as you have this Euro debt crisis continuing, then that, in addition to JPM's manipulation, will keep the metals down for a while longer IMO. We will see.

[Shami-Amourae]

Down 5% so far this morning...

[platinumdude]

Gold down to $1691. Silver down to $30.79

Wonder where the bottom will be.

[Son-of-Liberty]

This is retarded. Everything is taking a dump today except the USD.

[MNeagle]

http://www.kitco.com/images/live/gold.gif

[1970 silver art]

Gold down to $1691. Silver down to $30.79

Wonder where the bottom will be.

Hopefully $26 was the bottom for silver. I think that $26.00 (9-26-2011 Intra-day low) was the bottom and it will hold.

[1970 silver art]

This is retarded. Everything is taking a dump today except the USD.

For the anti-PM paper pushers...........

USD = Flight to "safety".

Physical gold and silver = "unsafe".

As long as people continue to think that the U.S. $ is a safe place to be during a crisis, then that is the "exit" where people will head to.

[agnut]

Hi Mneagle. I have also been pondering answers to your questions for a long time. There is a lot to write in order to give you my reasoning. And the validity changes over the years as I am discovering. Thanks for making me think so much about it; it may also benefit me in the future.


I will begin with talking about some of the general scenario I have been seeing lately. And then I’ll get down to the silver diversification.

I see life as a process in which we face challenges punctuated by peaceful periods. It is in these peaceful periods as we are in now that we need to plan for the future. After all, it should be far easier than when in the midst of the challenges which will be taking up all our attention. Therefore we can plan now for what scenarios we believe are most likely. It may not seem peaceful right now but we may soon be falling off the cliff. So it’s all relative.

I could write pages of possible scenarios but the future is rife with uncertainties that can change outcomes. So we must be adaptable to change as it presents itself. Remember that Darwin said that the survival of a species did not go to the fastest or strongest but those most adaptable to change. And so we humans also must be open to change as the playing field changes. I have heard it said that most people would rather die than to have to change. Can’t you see this working in the world today with so many in denial of what has been happening ? They will be left behind; they are actually leaving themselves behind. They are “extincting” themselves.

Which reminds me; my older son and I went out garage selling this morning and I learned a few things. The first stop was an estate sale opening at 8:00 but when we arrived there at that time, there were already about 15 cars parked around. It has been a cold morning with snow having fallen and the windshield frozen hard on my truck. We took the Honda instead. When we arrived I immediately saw my mistake; buyers were showing up earlier than opening time and were hauling out boxes of goodies as we went in. It was so crowded in the garage and house that we could hardly navigate. This was not what I would call a high end estate sale but rather in a modest home.

This early buyer is a new phenomenon in my experience and I will adapt and arrive earlier next time. That is, if I don’t want to be picking over the bleached bones of what was left after the voracious horde had torn up the carcass. See the Darwin parallel ? HaHa

I did do one smart thing here however. My son and I filled a large container with things we wanted and when we were ready to checkout I sized up the lady selling in the house. She was all over the prices of everything while the lady in the garage was easy going. We went to the garage and asked her how much we owed for everything. She looked at our container and said “How about 2 bucks ?” I paid her and realized that just one item in the container, an old hamburger grinder, was tagged at $3. I rarely argue with a seller in asking them if I can pay more.

My son also got a security light unit new in the box for $1; it is $50 in the store.

The next was a garage sale out on acreage. I love those because they are further out and usually less buyers show up. Also, they usually have a big barn with all kinds of accumulated items going back as far as 50 or 60 years ago. They may have bought something many years ago for $10 and don’t connect that it now may cost $80 in a store. So they may tag $2 on the item. And lastly, their quantity of items for sale is usually 4 or more times that of a residential garage sale.

I picked up a Black and Decker power saw for $3 and a heavy duty Craftsman power saw also for $3. Got a few smaller items for 25 cents each. Not much I wanted but my son did pick up an oxygen bottle for $10; he said that they are expensive new.

What I have been seeing within the last year is more and more buyers showing up, more aggressive buying, more early birds, buyers with newer cars and higher prices more often. Garage sale times are changing and I am adapting as necessary. There are still a lot of great deals but we have to be more careful now; this is a trend and I don’t know when it may reverse. I asked Ponce a rhetorical question “What should I buy that will be desirable for trading in the future ?” He said to buy just about everything, further telling me about what life is like in Cuba. Seems even a straight nail is worth a dollar there. Building materials are impossible to acquire no matter how much money you have. Will it get this way here in the good ‘ol USA with excess items laying around everywhere ? Ponce said that yes, it would get this way in time as imports dry up and prices go through the roof.

Silver in one ounce rounds is good for selling easily. It is recognized by coin stores and the price is quoted with little room for negotiation. Price depends on spot price plus or minus a bit depending on the buyer’s demand.

Silver in 90% silver dimes, quarters, halves and dollars is for use in trading in a much changed future. This form of silver is easily recognized by the general public. After the fiat dollar collapses, these silver coins may be highly desired as a medium of exchange.. Also copper pennies and nickels since their metal content exceeds their face value. Pone says that any US coins will be valuable as trading material. And if we have a new dollar being traded for 10 or 100 old dollars, the coins may well be valued as change for the new currency. This of course would increase their value 10 to 100 times.

Sterling silver is interesting in that there is a wide variety of fabricated pieces. Some are quite beautiful and over 100 years old. Some are sterling silverware sets, some is jewelry. The new price for this silver was way higher that its spot metal price at the time it was fabricated. There may be considerable premium of this sterling silver when someone wants to sell. Again, the times are changing and in a couple of years the only offer may be for around the spot price quoted. Many years ago I had considered accumulating a lot of sterling silver jewelry in order to resell it at swap meets for a high premium over its spot silver price but now with possible systemic breakdown, this may not be feasible.

I do think I could advertise sterling silver for sale in the papers and get tons of buyers showing up. And I would price the pieces at a large premium to spot price. In other words, it could be a profitable enterprise for a while. The downside is that people would know that I have sterling silver and this could be dangerous.

I don’t see sterling silver being confiscated while silver bullion could. That is just my opinion and who knows what the future will bring. Also, 90% silver coins from 1964 and earlier probably wouldn’t be confiscated either. They were coins of the realm and could be used just like the buffalo nickels or the Indian pennies although this wouldn’t be wise since their value is far above their face value.

One wild card could be that in a war situation, all silver would be needed and tptb could appeal to patriotism to turn them in for “the good of our country”. Yeah, like what did they ever do for me ? Besides, they allowed silver to be manipulated at low prices for decades and that is why they no longer have that multi hundred million ounce stockpile that WE citizens paid for in the first place. If I am ranting on here, so be it; I have a smoldering disgust for how our leaders have cared for the peoples’ assets. Let’s not forget the grain silos which are now empty too. No real money and no food; sounds a bit inconsiderate wouldn’t you say ?

Rant cool down period.

I’m back and blood pressure down to normal now, thank you very much.

So to answer you Mneagle, I have diversified to not only avoid confiscation but also to enjoy old coins and fabricated sterling silver in its many forms. I sleep better with this diversification.

As for trading sterling silver or 90% coins, I may someday directly do that after the public wakes up to the value of precious metals. A silver dime or two for a day’s work or something I need. The future is in a fog; I’ll know when I get there. Better to have it and not need it than to not have it and need it.

My answer to your last question as to where to find sterling silver hasn’t changed much in the last 10 years. Sure, there was more sterling silver for sale then at garage and estate sales. Not much now though; people have wised up. I bought my sterling almost entirely on eBay. It is still there and if you have any questions I would be happy to tell you how

I know a coin store that will sell their sterling silver they get in for a small premium to what they paid. If you were to talk to a few coin shops that take in scrap silver and gold, they may be willing to sell to you. Maybe no receipt needed would be an additional enticement. My local coin shop gets sterling silverware sets, takes them out of the wooden cases and dumps them in a barrel for taking to the refinery. Last time I talked to him about this, he said that I could have the boxes. In the past I have seen some of these boxes selling on eBay for up to $50. I don’t know how this is working nowadays though.

Right about now you may be wondering why I don’t take advantage of all the deals I run across (like the silverware cases). Truth is that after a while there are often too many deals to attack them all. Not lazy; just too busy.

Finally, I recommend that you at least get some 90% silver coins for trading later. Buying a lot of sterling silver might be too much for you at this time; I‘d get my feet wet before diving in. But I have to say that once in a while I pull out my sterling silver just to look at it. Can’t do that with bullion or 90% coins. Well, unless you are like Scrooge McDuck rolling around on his coins in his vault. Ah, childhood memories and comic books.

Best wishes,

agnut