Thursday, May 5, 2011

Silver and Risk

Gold in New Zealand dollars: $1920.48 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $49.87 per oz
Previous all time high: $48.58
per oz

It appears that as people feel a bit 'braver' they put more money on trades that are riskier.

They move out of cash or bonds and into commodities or currencies and others.

Silver is lumped into these risk trades as are the rest of the commodities. Even though silver is partly a monetary metal as well. We also see currencies like the NZ dollar dropping as risk comes off. It is down by nearly 2 cents in two days.

People are feeling a bit nervous lately, perhaps because Bin Laden is dead and the worry over what happens next makes them rush back into the US dollar and bonds. Perhaps because the Portugal situation is still a bit uncertain, even though a bailout from the EU is done and dusted.

Whatever the risk or lack of it, analyzing it all can be fun, but fraught with dangers if you try and make a decision on too little information.

As I said previously this week, trading this market is for the 'old-hands' who can intelligently analyze trends and who are commissioned to be advisers. And an Advisor I am not.

Silver is now down about $10 from it's high a few weeks ago. After the increase in margin requirements on silver contracts, apparently those in the speculative community are suffering losses and selling out.

So silver is searching for a bottom. What this could be, who knows. But with all this paper making the market so volatile, many pundets highly recommend that those with physical silver don't sell. The paper market has many large issues at present and some are even pointing to a default on the COMEX (ie they won't have enough physical silver to honour their contracts).

Who knows? But people like Eric Sprott still call for the gold/silver ratio to get down to 16:1 (40:1 now). The fundamentals still stand. Eric also says that the physical market in silver will ultimately determine the silver price.

Articles of interest:

And Now For Today's Mini Silver Flash Crash: Same Time, Same Place

See article here

Silver Bull Market Likely to Zigzag to $100 and Beyond

See article here

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