Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 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