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What’s Going On With The Price of Silver? I Have a Few Ideas.

May 25, 2010

If you make silver jewelry then you probably keep a close eye on the silver market. I know I do and when it recently topped $19.60 per oz I had to have a shot of whiskey for breakfast. (Yes, it helped.)  Thankfully, today it’s back down to a slightly less painful $17.95.  I’m running low on supplies so I hoped on roegrande.com (where I buy all my sterling at least until I get a tax ID #)  and was told that 22 ga silver sheet and silver calbe chain is on back order!  Rio out of silver … WTF?

So what does that really mean? Is everyone rushing to buy supplies while the price is down? Was Rio Grande holding off on replenishing it’s stock until the price dropped?  What exactly is going on here?

Time for a little market research!

Sadly, no one knows tomorrows price but here’s what I found … I’m no expert in this area so if you have other references or info please share them.

While most people believe that the price of silver will continue clime some think that there will be price breaks in the near future.

According to Bill Downey of SilverSeek.com, the $16 area has typically marked a major turning point for silver.  During the last 4 years silver has only been above the 16 dollar area twice – Once in 2008 for 6 months, and now this year.  The high of 2006 was at $16, the high of 2007 at $16 , the crash break price of 2008 was $16 where silver dropped from, the June price peak of 2009 was $16  and finally, the possible projected lows 2010 is the $16 area. There is no other price in the last four years that has served as a better turning point. He also notes that when money flow indicators dropped below zero a major break took place at the $16 dollar area and directly after silver fell below it’s moving averages.  We are now on the verge of a very similar situation. Read Bill’s article, Silver’s Most Important Price Point, and learn in much greater detail how he sees silver’s 3 most important indicators – peak price, liquidity and moving averages – all lining up for a major inflection point in the next couple of months. I highly recommend checking it out … it takes a minute to decipher but he’s got a great chart with arrows and such. :)

Jeff Clark also thinks the price drop in silver could be on it’s way and discusses why in his article How Low Will Silver Go?

The following chart from Jeff’s article examines all the major corrections in the price of silver in the current bull market (2001 to present).

Based on this data, he make the following projections. The recent high in silver was $19.64. Therefore…

• A correction matching the smallest decline of 10.3% would equal a silver price of $17.61. Silver closed at $17.64 on May 21, a correction of 10.1%.

• The average correction in the chart is 19.7%. You’ll notice this is almost exactly what we experienced earlier this year. An average correction from the May 20 high would give us a silver price of $15.77.

• The two nasty corrections of 33.7% and 34.9%, when averaged together, would give us a price of $12.90.

• The 53.9% cliff drop would take us as low as $9.05. (SWEET!!!)

So what am I gonna do?

In general, silver’s at a low during June and July.  I’ll buy a little now, just enough to fill my jewelry orders and hope for it to drop to $16-17 to stock up.  Then I’ll keep my fingers crossed – all of them – for it to really bottom out and stock up BIG.  Of course, my elation at a possible price drop is assuming that it will bounce back fast enough that the consumer pricing wont really be effected and that our customers wont expect lower priced jewelry.

P.S.  This is my very first financial article so I’m going to need another shot of whiskey now.  Please don’t judge but please do leave your comments.

Cheers!

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8 Comments leave one →
  1. May 6, 2011 2:37 pm

    Hello, as this article is now a year old let me recommend that you check out this one: http://riograndeblog.com/2011/05/silver-survival-guide-strategies-for-coping-with-the-rising-price-of-silver/

    Thanks for visiting.

    shirlee

  2. Tom Harrington permalink
    December 3, 2010 5:11 am

    Shirley, Sorry about the price of siver now, I hope you stocked up at 17. Do a google search on “Crash JP Morgan, buy silver”.

  3. October 5, 2010 6:11 pm

    UPDATE: $20.70 Ouch!!! But check out this article from 10/4/10 – Silver Looks Vulnerable To a Short-Term Price Fall. Hooray!

    http://news.silverseek.com/SilverSeek/1286198215.php

  4. Bob permalink
    June 25, 2010 7:37 pm

    I have no idea what silver is going to do for the rest of 2010. My opinion is that all precious metals are going to go higher and higher until only the elite 10% of our population will be able to afford these metals in large quantities. Sure alot of us or maybe some of us own silver, gold and platinum. You can bet who ever is the real mover and shaker of all this isn’t going to let any of us off cheap. Do you really think the reason gasoline prices go so high is because of supply and demand. The elite the rich and powerfull they control,control and control until the time is right for media and mass leverage to sell it all back to you for a very nice profit. So my thoughts are get ready for prices like you have never seen. If silver is your livelyhood then you better buy on the way up instead of waiting for the price to go down. Hopefully next year gas will be $2.00 a gallon and a 2500 square foot house will be $75,000. Yea right! Hey maybe if I wait long enough I will get younger. P.S. I did enjoy reading your article and don’t be to put off by my remarks. Just really haven’t seen much get cheaper that was worth anything.

    • June 26, 2010 7:10 am

      The diamond industry had been a master of that trick for years. Diamonds are not rare. That sense of value is fabricated through marketing.

      I bought a bunch of silver at the $17.40 mark and think that’ll be the low for this year.

  5. May 26, 2010 2:21 pm

    and it’s up again … figures. **sigh**

  6. May 26, 2010 2:51 am

    I ordered from Rio also and had ran into the same thing–some sheet sizes were on back order. I am always wanting to buy silver, so I used the price increases as an excuse to hurry up and get some before it goes even higher! Thanks for the info, the article links were interesting.
    StaC

  7. May 25, 2010 9:47 pm

    Hmmm, I do most of my Jewelry in Silver but haven’t really paid that much attention to the silver price as I do with watching the gold price. One reason is my low production run. The spikes in the silver price do not scare me as much as does the gold market.. Changes in the gold price really amount to huge price impact on my gold castings. While the price of each silver casting is only affected by a couple bucks per piece. I guess if I would cast 100 rings in silver, I would definitely watch this more. Thanks for the info.

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