Chris Slife owns Howling Coyote Silver Company. He sent this email this morning, explaining why the prices of silver and gold have been so volatile. If you have questions for Chris, post them as a comment, and I’ll ask him to drop by and answer them personally. By the way, you can track the live ups and downs of your favorite precious metal here.
 There is a lot of very bearish sentiment right now out in gold and silver land and that is a very good thing!What has changed? 1) This past Friday and Saturday, www.marketwatch.com ran three major ‘hit’ pieces on silver: the waterfall started on Sunday. Do you think someone was scared? 2) We have killed bin Laden. Do you think we will leave Iraq and Afghanistan? 3) Margin requirements have been raised FIVE times on silver over the past eight days! 4) My prediction was for EXTREME VOLATILITY around $50. This is actually good because, coupled with the margin hikes – see above – a lot of very weak hands are being forced out of the market. Silver is being given over to the strongest of hands, right here, right now. 5) Another prediction I made was a pause around QE2 to give political cover for QE3. Did anyone notice jobless claims today? 6) We are fast approaching debt ceiling limits. State pensions deficits, state budget deficits, et cetera. What is more likely, that foreigners will start buying more of our debt or we will print to cover? If you believe the former, I have a bridge for sale.
Could gold/silver continue to correct? Absolutely, anything is possible; however, I know I am trying to source some physical silver and have had no luck thus far. In addition, I am going to start nibbling on some SLV call options. For those of you who wish to profit from corrections in the metals, once again, I would encourage you to invest in your financial education and learn about call and put options. They are simply a tool in your toolkit, nothing more, nothing less. It has been physiologically bearable to see this price drop because I had put options in place when silver started to correct. I have collected on my insurance policies. As always, do your due diligence. I am not a paid financial consultant and do not experience either your gains or losses. BOTTOM LINE TAKEAWAY: What has changed? NOTHING!
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Hello, just read this article and thought it might interest others
http://www.boston.com/news/world/europe/articles/…
Chris ~ Thanks for your information and advice!
Q #1 ~ What is your preferred form of silver? We've heard that buying 90% coins may be good for bartering and rounds or bullion may be useful if paying off your mortgage, or protecting your savings. What do you think? Diversify?
Q#2 ~ There's a theory that silver may BRIEFLY dip back into the $20's before skyrocketing. Do you give any merit to this theory?
Q1: Personally, I buy 1 oz rounds & bars, silver eagles, silver maples, silver dollars, and 90% silver, and yes, gold (1/10 eagles are my preferred choice). My philosophy is this: there are a myriad of scenarios that COULD transpire, but no one knows for sure how things will play out. Therefore, I hedge my bets. In an inflationary environment, all my silver items retain/gain value vis-a-vis fiat. However, if there is an out and out collapse of the dollar for instance, then I like 90% – as well as FOOD and other TANGIBLES. The bottom line is this: there are no one size fits all answers. Therefore, I agree with your idea of diversifying over a couple different silver products since we don't know how things will exactly play out.
Q2: Trying to 'top call' or 'bottom call' the price of silver is not recommended in my opinion. ANYTHING can happen. I, nor anyone else, knows for sure how things will work out. There are some very POWERFUL forces at work here and we are not privy to the games being played out behind the scenes.
(I am going to attempt to post my reply in 2 to 3 parts here.)
For me, I see no way out of the debt morasse that the US is in exept by printing more and more 'money'. (Default is an unlikely option, but an option nonetheless, that would collapse the markets, including silver, but this would be political suicide, or worse, for all involved.) So, unless there is a REAL solution offered, I see gold, silver, and other tangibles, continuing on a long-term uptrend.
In the meantime, however, price will fluctuate wildly from time to time – we could hit $20 and then blast up to $60. Who knows for sure. My advice to people is this: take an initial position and then dollar-cost-average (buy a little bit each month). That way, if silver drops further, you get more for less; however, if silver does a 180 and rockets higher, you will at least have an initial position plus whatever you add each month.
Even though I didn't answer your question directly, I hope that I gave you some good food for thought.
I am new to this and read a lot about the different gold and silver options. I am in FL. Are these purchased at coin strores? Where would you source these products?
Visit two or three reputable coin stores and/or ask around for references. The one that I go to is clean, safe, has well-informed and mature employees who are willing to educate me in the purchase of precious metals. Also, keep an eye on <a href="http://www.kitco.com” target=”_blank”>www.kitco.com for current prices of gold and silver. That site also sells PMs and you'll get an idea of what premiums are being charged for specific coins. Good luck!