Overlooked Bullish News for Silver

By: Ryan Jordan | Mon, May 19, 2014
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The sideways action in silver continued for another week, as the market drags its feet along the bottom in search of momentum for a higher move. While patience is needed with silver, and, as mentioned last week, a slightly new, lower low is possible with this metal, there are a lot of signs pointing to higher silver prices. The fact that these signs are being ignored by the market is just one more example that people do not buy bottoms - and they also only pay attention to potentially good news for an asset when its price is rising, not falling.

This week, the Silver Institute confirmed what many of us suspected last year - namely, that sales of physical silver (as opposed to ETFS or options) made a new all-time record, while supply from scrap collapsed to such an extent that it could not be made up from mine supply increases. This resulted in a silver deficit, or the first decline in above ground inventories of silver bullion in several years. For reasons that are a bit confusing to me, the Silver Institute went on to claim that silver prices will continue to drop because of economic strength, but we have to remember that, like most bank projections, a lot of professional price forecasts project current trends out into the future indefinitely (meaning that they get progressively more bearish at bottoms and progressively more bullish at tops.) As an investor or speculator, you would do well to focus on the bullish data in the Silver Institute's report and steer clear from its bearish price forecasts based on, among all things, a booming economy. I thought that first quarter GDP was zero, while inflation is moving on at a 2% pace. Stagflation anyone? I think the Silver Institute, like most Wall Street banks, is conflating the bubble on Wall Street and in high end housing with a real economic recovery.

And as many had also forecast, Federal Reserve tapering is in fact tightening and therefore not great news for the conventional stock market, although calling an exact top in these markets is hazardous to one's wealth. In addition to the news about stagflation cited above (although just based on one quarter's worth of data) we also have news out of India that the BJP party has won recent elections there. Many have speculated that this will end draconian restrictions on the Indian gold market and possibly reignite speculator interest in the sector. While silver may not be an immediate beneficiary of easing gold restrictions - in fact it may hurt Indian silver demand in the short term - with time what is good for the gold price globally can certainly influence speculators to take a look at gold's cheaper cousin.

At the moment no one is paying attention to the silver market - it looks to me as though capitulation has finally set in. If you are someone who has enjoyed big gains in other asset classes (like stocks), now would be a great time to diversify into a beaten down, cheap asset that, by definition, can't be printed at will and has been money for thousands of years.

 


 

Ryan Jordan

Author: Ryan Jordan

Ryan Jordan
Silver News Blog

Ryan Jordan

Ryan Jordan has been blogging about the precious metals since 2010. However, his interest in the precious metals markets spans nearly 20 years as both a coin collector and private trader. Ryan believes there is a lack of serious discussion of how undervalued precious metals like silver are, and he aims to explain the many reasons why people should take silver investing seriously without relying on hype, sensationalism, or scare-tactics. Ryan Jordan recognizes that assets like silver serve a dual function: one, as a real asset that can provide portfolio insurance as a non- correlated investment, and two, silver can appreciate significantly in a short period of time. Silver could be the best performing asset you could own, with or without a significant crash in the dollar, or other financial mishap. Ryan Jordan's articles have appeared at financialsense.com, gold-eagle.com, investing.com, jessescrossroadscafe.com, silverbearcafe.com, silverstrategies.com, wallstreetformainstreet.com and numerous other sites.

Ryan Jordan believes a historical perspective is absolutely essential for anyone trying to navigate today's financial markets. It is this unique historical perspective that he tries to work into his analysis of the silver market. Ryan received a B.A in History from the University of California- Los Angeles in 1998, a M.A. in History from Princeton University in 2001, and the Ph.D in History from Princeton University in 2004. His professional research involves the history of social movements, religion, and freedom of speech in American history. His two most recent academic books include: Slavery and the Meetinghouse: The Quakers and the Abolitionist Dilemma (1820-1865) and Church, State ,and Race: The Discourse of American Religious Liberty (1750-1900). As a peer-reviewed historian, his articles have appeared in The Journal of the Early Republic and Civil War History. Ryan has taught US history at all levels, ranging from undergraduate to graduate students, at Princeton University, Lafayette College, the University of California-San Diego, Mesa College and Palomar College. Currently he teaches at the University of San Diego and National University, in La Jolla, CA.

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