Has Anyone Noticed A Trend

[Marchas45]

I have been wondering about this the past few weeks. I have noticed that silver is not selling as fast on the forums as it used to and also on Craigslist only on ebay does it sell for spot.

On forums and craigslist I can buy it pretty much under spot now as before it was spot and the buyer paid the shipping, what is the reason, are people are running out of money or just holding it or need to sell their stash to get money? My gut feeling is telling me to buy, buy, buy as things are getting tougher out there for folks and a sign for what's to come.

Your thoughts please, Charlie

 

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[jim4silver]

I don't know about online selling, but the coin stores I go to have lots of physical silver in stock. There could be a number of reasons people are buying less (assuming that is in fact the case) right now. If someone is unemployed they probably aren't spending money on PMs right now for example.

My view on what moves the PM prices/market direction in general depends on who is buying or selling at any given time. I believe that there are some well-delineated categories of PM buyers/sellers, all of which exclude 99% of the masses (meaning they don't buy any). The below are my personal observations over the years and may not be accurate in reality.

1. Gold/silver/platinum, etc bugs like most people that frequent forums like this. We (I include myself here) buy when we have the extra money or get the addiction feeling of needing a fix of PMs to buy. I am generalizing here, but for the most part this class of folks are not wealthy per se, but mostly have an income and live comfortable lives and can afford to buy from time to time. Maybe some even cash in their 401Ks at some point to put them into metals. There is a wide mix of mentalities among these folks. Some dollar cost average and never sell. Some buy and sell when the time is right in an effort to increase their holdings in PMs. What is common among most in this group is they cannot really imagine a time when they will unload their entire stash. Even if they have a set amount they will sell at in their mind, deep down it bothers them that if they unload their stash they won't have the stash anymore. This category does not move the market on a large scale price wise because there are not enough of them around in the population.

2. Wealthy people who aren't by nature PM bugs, but want to preserve their capital any way they can. At some point over the past 10 years someone told them about the great returns in PMs or how the dollar is going to crash, etc, and now they want in. They will plunk down several thousand $$$$ in a single transaction like it is nothing. Many of these folks "dollar cost average" six figures per month into PMs when they decide they want in. These people somehow always seem to make money no matter what they invest in. When the time is right they get in and they somehow seem to sell at a good time. These people aren't necessarily high position folks like CEOs, etc. They might be your neighbor who has a million or more put away but seems to live frugally on the outside-average car, no flashy personal items, etc. These folks could potentially move the market if enough of them bought at once, but still probably not enough to move the market in general. Could perhaps clean out a local coin store of any particular item for a day or two. These folks probably also get into ETFs or transactions where they buy PMs and some company stores them for the buyer in a vault either here or overseas.

3. Hedge funds, large institutional traders, central banks, etc. These are the real movers and shakers of PM prices--they can either be long (buyers) or short (sellers). They might play all paper trades or buy physical depending on many factors. When these "folks" buy it can be hundreds of thousands or millions of dollars at a time. With the exception of the central bankers, their goal is to make $$$$$, whether the market is going up or down, and they really don't care about PMs for the sake of PMs. As the current bull market in PMs has grown over the years, the big guys' involvement in trading PMs has grown as well. Manipulation theories aside, if enough of these guys want to push a market in any direction or if they decide the market is heading in any particular direction, they can make it happen at least short term and perhaps longer with sustained buying/selling.

4. This is not a real category in a sense, but there is another type of buyer/seller who may have access to large amounts of money but doesn't really fall into the other categories. This person will generally buy a commodity or stock when it gets much press attention and has appreciated much in price. He has a general lack of foresight and often makes bad predictions about which way a market is going to move in the future or how a particular asset/company/stock is going to perform over time. This person often buys high and winds up selling low, then complains for years that the investment was a bad move. This person usually has a good income stream from somewhere like a job, etc, but often makes bad trades when/if he decides to get into the market.

I believe that right now we are in a time of quiet with respect to the category 3. buyers with respect to silver. When they decide which way they feel it is going next, you will see whether silver will break through 50 or fall below 30. If I had to bet, I am still in the camp where I believe silver will correct (maybe not below 30) before the next big take off. Maybe it is just wishful thinking on my part because I plan to load up if it gets in the 20s again. If a person has a time horizon of 3 years or more, I don't see how they can lose by buying silver and stashing it. Perhaps they could get it cheaper on a correction, but I don't think it will matter much when/if silver peaks out at some point down the road.

Just my opinions and rambling thoughts.

Jim

 

[usandthem]

^ Good stuff Jim. I always enjoy your posts.

 

[Marchas45]

Great stuff Jim always a pleasure to read your posts and I just knew you would post. I just learned some more from you, Thanks. I guess what I'm seeing is coming from the working class folk per your number 1 answer.thanks again for that. Charlie

 

[jim4silver]

Thanks for the kind words usandthem and Charlie. One somewhat related thing I noticed today is that one of the big, online coin dealers has what seem to me fairly low premiums on much of their foreign bullion gold, like Philharmonics, Kangaroos, Mexican 50 pesos etc. Even their US first spouse coins are low. What I saw listed was less than a 3 percent premium over the price of gold for some of the coins. That is cheap in my opinion. I don't buy stuff online but like to check the sites to get an idea. Some of the premiums I saw today are cheaper than what I got locally the last time I bought modern bullion. I don't know if it means anything specifically, but maybe they sense a downtrend coming soon

Another thing I heard from one of my coin dealer acquaintances is that there are some big orders recently from Germany for Krugs, so the premiums on those should be a bit higher than other bullion relatively speaking for the time being. If I was gonna buy bullion I would rather have the .9999 Philharmonics and Kangaroos than the Krugs anyway. Lots of Asian and Middle East buyers prefer the .9999 and won't buy anything 22K or less. I like to know that someday in the future if I am gonna sell I want to have the widest range of potential buyers I can get. I will get the old foreign gold coinage such as 20 francs or sovereigns though if a low enough premium even though they are not pure gold. But since they were once circulating money there is a good reason for them to not be pure gold, unlike modern bullion in my opinion, which does not get circulated as money anymore.

Jim