As I write this note, silver is undergoing a large correction. According to Kitco the prices are down $1.97 tobid $12.57 $12.62 for a loss of 13.55%. While this loss is large, I believe is part of the process. Silver cannot keep going up in a straight line every day. I expect that once the loss stops, silver will go back up and surpass its previous high. And again, it might not be a straight line upward. In short, I remain bullish on silver.
Interestingly, Bill Fleckenstein at FleckensteinCapital.com warned that a correction could happen at any time. And for those that are worried, they should take some profits off the table. I am content to ride the ups and downs. My fear is that I would take something off the table only to keep watching silver go higher. I am not sure where silver will ultimately end up. But I do think it will be higher than where it is now.
One of my favorite investors Jim Rogers was quoted in a Financial Times article Precious and base metals hit new highs (subscription required).
Jim Rogers, a former partner of George Soros forecast gold would hit $1,000 a troy ounce. The man who called the commodity rally in 1999 said “supply and demand is terribly out of balance for nearly all commodities right now ... this is not a bubble.”
I agree with Rogers. I expect the prices of commodities to trend higher, although that trend will have many twists and turns.
Disclosure: I remain long Pan American Silver Corp. (PAAS) shares.
I can see that you enjoy covering the silver market, you have a lot of blog entries covering it. I went long PAAS today, so I'll be visiting this site regularly for more insight.
Thanks.
Hi AJ,
Silver, through PAAS, is one of my larger positions. I expect the new few days or weeks to be turbulent. As you saw, silver experienced a large correction. And then silver bounced back somewhat. I am not reading much into the bounce.
I am content to sit back and watch the developments unfold. But I will be commenting when I think I see something of interest.
I am glad to have you here.
Best regards,
Kevin
Hi Kevin,
Glad to be here. A month or so ago I bought a few shares of CEF, it's a fund that buys gold and silver bullion. So it very closely reflects the price of gold and silver. Sadly I didn't buy enough, since I invest with my own money, but I'm not complaining ;). On Thursday I was torn between selling it to lock in a profit and buying more on the dip. Ended up doing neither. Not sure if you've heard of that stock before though, and was wondering what your thoughts would be on it.
Out of curiosity, are you a technical analyst?
Thanks,
AJ
Hi AJ,
Yes, I am aware of CEF.
As far as technical analysis, I couldn't read a chart if my life depended on it. I tend to be an infrequent buyer and seller of securities. When my viewpoint changes, then I adjust.
With regard to CEF or simply gold and silver, my belief is that gold and silver go higher over time. That is not to say they don't go down first. As we know, both gold and silver have gone parabolic recently. So I am not sure how all that will shake out in the short term. But longer term, I believe that gold and silver go higher because the demand is outstripping supply, geopolitical worries, and the potential for problems with the U.S. dollar.
A lot of very smart people believe that commodities have had their day in the sun. They might be right, but I do not think so.
Although I am sure you realize that I cannot provide investment advice, I wanted to state it so that everyone is clear. I am just an investor who is giving his thoughts.
Best regards,
Kevin