Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Crash Edition - 26th Mar 19
Handy Ways to Boost Your Home Income - 26th Mar 19
US Treasury Bond Yield Inversion and Political Fed Cycles - 26th Mar 19
Golan Heights Oil all about the Shekels - 26th Mar 19
Falling Yields a Catalyst for The Gold Catalyst - 26th Mar 19
Can We Lock Up Rachel Maddow Now? - 25th Mar 19
Real US National Debt Might Be $230 Trillion - 25th Mar 19
Friday's Stock Market Sell-Off - New Downtrend or Just Correction? - 25th Mar 19
20 Days Left to Find Buying Opportunities In Gold - 25th Mar 19
Will the Historic Imbalance in Gold Stocks to Gold Price Resolve ? - 25th Mar 19
EasySMX Wireless Games Controllers Review - 25th Mar 19
Stock Market Short-term Top - 25th Mar 19
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Silver Prices, Inflation and Living With the Long Term

Commodities / Gold and Silver 2013 Apr 12, 2013 - 03:53 PM GMT

By: Dr_Jeff_Lewis

Commodities

Short term anxiety in the silver market tends to play into the hands of the mainstream financial media that loves to cherry-pick data in order to support the sentiment flavor of the day.

This sentiment is normally biased against holding hard assets like silver, resulting in them being misunderstood or scorned.


Furthermore, as the trading range for silver widens and awareness grows of silver as an investment vehicle, more people will have bought the metal at higher levels within the trading range. They therefore tend to suffer from buyers’ remorse if the market subsequently falls.

Long Term is a Different Story

Silver is not at a three-year low, since it was trading at considerably less than $20 an ounce throughout the summer of 2010, which was less than three years ago.

Also, since first rising above the key $26 support level in November of 2010, the metal has dipped to test that point four times, but has thus far failed to fall below it. This makes silver seem like a good long term buy near current levels.

In fact, the price of silver has risen over 100 percentduring the last four years, and it has risen more than 500 percentover the last ten years. Silver has been in a long term bull market that has only recently paused to consolidate its tremendous gains after peaking at the 49.77 level in April of 2011.

While the silver market may respond to inflationary fears, inflation is just one small part of the foundation for a bullish viewsupporting higher prices.

Some of the bullish non-inflationary factors include the favorable supply and demand profile for the metal, as well as a futures trading structure that is primed for a short squeeze.

What About Inflation?

Real inflation now seems to be completely out of the equation.

Instead, deflation is the current sentiment portrayed by traders, as large hedge funds and managed money are not trading based on inflation fears.

The official line is that there is no inflation, which means it is "safe" to employ a policy of financial repression - despite the absent of the crucial "growth" factor.

The current recipe for financial repression includes: growth, low interest rates and captive bond buyers in combination with a controlled financial media that sings the praises of rising equities in the absence of increasing underlying or fundamental value, even though this is perhaps the strongest signal of inflation.

Of course, the irony is that the economy is actually in a great deflationary cycle, and so central banks are using extraordinary inflationary measures to reboot or rescue the perhaps fatally troubled financial system.

Imagination Versus Reality

In terms of higher prices, food and energy inflation remains. Food price inflation is typically achieved by simply raising prices, but also byreducing the packaging size of products.

Imagination tends to focus on the extreme possibilities. For example, inflation tends to equate to dramatic hyperinflation in the minds of most people, although gradual price rises can be just as damaging to one’s purchasing power taken over time.

The issue of inflation has now become politicized, with those who worry about inflation being painted as conservative, anti-establishment extremists.

Nevertheless, the reality remains that inflation is alive and well, despite official attempts to keep headline inflation, as reflected in the CPI, low in order to maintain the illusion of relatively stable prices.

Interestingly, some alternative measures of inflation, like that used by John Williams of Shadow Government Statistics, show that consumer price inflation is actually almost ten percent per year in the United States, based on the pre-1980 method for computing CPI.

On his official website, Williams maintains that “methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.”

What is the Most Likely Scenario?

The silver market is seeing a new wave of buying emerge once again as prices soften. This is much like what occurred during the notable market dip down to the 8.44 level seen in October of 2008.

More and more physical investors seem to be acting on the increasingly obvious signs around them by boosting their holdings of silver.

Such interests have been underpinning the investment demand for silver — which competes with industrial demand — despite the overall slowdown in the global economy.

For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2013 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules