Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

© 2005-2022 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