The bear market continues for silver over the intermediate term time frame. This means lower buying opportunities (if you can find any) for the physical bullion. The market is inching closer and closer to the $25/$26 level that I expect to have a massive bounce from. This morning the market plunged, and I can only guess it was JP Morgan doing their old nasty tricks that they like to do. I find it insane how we are buying and selling our bullion silver based on what Chicago, London and world paper traders are saying it is worth. If the market crashes below $20.00 per ounce, there will be some major disconnects from the paper and silver market. Below this video, is an article/story that I wrote today with my experience at the silver dealer today.
The gold to silver ratio is in a bear market as Silver has been outperforming gold during the last year or so. Because we are in an intermediate term correction, the ratio is also correcting. When Gold and Silver goes up, generally silver will have days greater than gold. If Gold gains 1%, then Silver may gain 3%. However, on the way down if Gold goes down 1%, then Silver may lose 3%. Because of this when metals are in a bear market, I'd expect the ratio to go higher and when they are bullish the ratio should keep heading lower
January 27, 2011
I have been calling for the silver market to retrace to the $25 to $26 level as having a good chance of becoming true as it was approaching the $31.40 fibonacci resistance level. I have a good idea how the paper trading market works and feel that I could sell a few bullion coins at the top and then buy again as it dips below to that level between $25-$26. Now that the comex prices has managed to dip below the $27.00 handle I am getting very edgy as I now want to get my hands on some more silver. After all, the last thing that I want to have happen is for the market to bottom at $26.50 and not be able to buy on this dip. I started buying again last week and was only able to get generic 999 rounds for $32 CAD per ounce when the market was at $28.00/oz (The Canadian dollar and USA dollar pretty much the same value). This morning I seen once again that the market had another intra day crash as I seen nothing but big red candles on the 5 minute finviz chart as the market fell from $27.75 down to $26.80. I thought this was a good enough correction to head down to my local coin store and see what I could barter. When I arrived at the shop I seen a total of zero bullion grade coins in the shelves. The only bullion coins are the ones that had hefty premiums because they were rare years (the 1997 Canadian series) or had something fancy with them and those prices were $45 and higher. There was some decent prices on scrap 80% and 50% Canadian silver, but I am not as interested in this right now. I decided to pass on what he had in his display and then I asked him “Do you have any 999 rounds or bars you can offer for $30?” He told me that he found a maple at his house when he was cleaning some stuff around and he could only sell it for $34.00. It was all he had and he knew it was not going to last long and because of this he could not go any cheaper I knew that was the going rate, and although I didn't want to spend that amount of fiat money for a coin, I decided to not leave the shop empty handed and handed him two green Canadian twenty dollar bills and in return got a Maple leaf silver one ounce coin as well as a blue five dollar fiat note and a USA $1 fiat note. Therefore I traded two pieces of paper for two different pieces of paper and a coin weighing a shade over 31 grams. There isn't much left and I feel as if I have to take a trip soon to Can-Am precious metals which is almost an hour drive to get silver. They still have a decent inventory, and their prices this afternoon when silver was $26.75/oz CAD was $34.11. This means they are charging over $7.00 over spot and that might be the best I can do. I can try to make a few calls and I also posted a KiJiJi ad offering to buy Maples/Eagles for $30 and generics for $28. The ad was free and it will be a bonus if I can get them at those levels.
.It seems that the silver shortage is real and if the market manages to have more major downside, then we will see a major disconnect in the physical and paper markets. There is no reason for the market to be retracing this much fundamentally and because of this I feel as if this bull market in silver is going to have to keep going as it should or we will end up having a major problem if silver goes anywhere south of $24.00/oz.