silversky

It's an interesting wedge that's built up, but it also looks quite possible that a much larger down wave could set off. It's certainly not beyond the realms of possibility. Back in May I fully expected this downwards action, but I didn't anticipate the rather lacklustre rises following it. The price action now seems to have bunched up somewhat, without a break to the upside, which is starting to look a bit weak to me. I guess I'm neutral on Silver for now.

Changing Silver industrial expectations bias Vs financial anxiety bias for Gold? I'm personally surprised by the severity of the ratio to platinum.

So the UK BOE didn't raise rates yesterday. And only a few articles about that surprise development... Bad news is what's exciting for the media, so a surprise halt to rates rising doesn't have as much mileage as doom and gloom anti government rhetoric. The market in Silver initially made an attempt to sell off, both here and in USD, but a pretty strong rejection followed. I was a little surprised by the initial move, but I'm guessing it was just a stop running exercise. Both the USA and UK seem to be getting their ducks in a row slowly, and I suspect that the massive collapse and hyperinflation narrative has pretty much run its course. For now at least.... It looks like the magic money managers might just succeed in pulling off another "healthy functioning economy" illusion, before the inevitable big one finally comes due. UK and US politicians will certainly be keen to try to paint a better picture in the lead up to winter elections in 2024.

So, fed rate came in unchanged at 5.5% as expected, and the UK yearly inflation rate actually fell from 6.8 to 6.7%, rather than a rise to the 7% forecasted. It's all just monkey magic numbers of course, but interesting to see what happens tomorrow with the BOE interest rate decision. Will they continue raising by another 0.25 points, up to the 5.5% that the market expects? It might just have a small impact on the pound if there's a surprise. The price of Silver in pounds might rise a bit as a result of exchange rate action. I'm guessing that the bank would like to raise rates. But they must be considering how many people are starting to struggle to pay their mortgages as more and more come off fixed rate deals. Poor US / global economic conditions are bad news for Silver, but the UK in stagflation is irrelevant. I'm surprised that a real correction hasn't got underway in earnest, but it seems like the money men might just get away with another round before the big one...

I wonder when the bears will find some relief? And for how long?.... It's been three days of bullish melt up, with only short periods of minor reversals. There must have been a decent amount of money lost on the short side. How many are still hanging in there hoping not to get stopped out? Further up, I imagine that there will be quite a lot of stops placed above the 21.5 area, as well as quite a number of limit buys ready too. If that area is breached, the losing shorts would add a whole fuel depot to the fire. Granted, that's a long way off yet, and it looks a little too early to me... but perhaps in September such a push might occur. Copper starting to move upwards as well, which indicates to me that this is based on economic anticipation just as much as it is on precious metal anticipation.

Interesting spike low on release of better than expected US retail figures. Perhaps that was just an electronic push which failed? The price has again rebounded sharply though, and it could in fact be the bottom for now. I will be interested to see how tomorrow's UK inflation numbers come in. That might make a bit of a change to the GBP.

Looking at the chart, the time to sell the house and back up a few trucks outside Chards was clearly between 2000 and 2005 when Silver was in the weeds. Interesting because buying a house in that period made some significant gains relative to now. But nothing like the gains that would have come from Silver. We appear to be somewhere close to the middle in terms of multiples. 15000 / 3 is back to 5000 ounces per house, and 15000 x 3 is back up to the cheap silver days of 45000

Thanks @BLOOMMAN101 for the chart. Reposted clipped below. It would appear that houses are cheap (ish) compared to Silver!!!

It would take massive negative flows to change significantly the demand floor on housing. Many of the recently imported care workers are living four to a room in shared accommodation. Even if many were to leave, there would still be enormous demand for better living conditions amongst those who remained. Add to that the near 100% increase in certain building materials, and the idea of building houses to make them cheaper is simply off the table. I would be interested to see a long term chart of house prices vs ounces of Silver if anyone has one? I'm aware that one exists somewhere for gold, but I'm curious to see one based on Silver.

Do you realistically see any government coming to power who will not continue this policy? I don't.

It's value in toilet paper is not really relevant. Demographic forces are unlikely to reverse for several decades in the UK, and freeing yourself from having to pay ever increasing amounts of toilet paper rent is valuable to you. The only way the supply of renters and potential owners is ever going down, is if a forceful government retroactively cancels a load of new British citizens, and starts deporting them. Such a move is virtually impossible in the modern global world. The last time someone tried that sort of thing, the global community railed against them, and a world war ensued. We'd have far worse problems to worry about if such a situation developed again. Basically, housing pressure is here to stay. It'll be bickered about as always, and tinkered around with ineffectually from time to time, but ultimately it is here to stay certainly until the boomers and gen x die off in large numbers. It's good to relieve yourself early... of any requirement to pay toilet paper charges every month.

From the bbc website Not great rates obviously, but perhaps there is some internal messaging going on. I suspect that they're trying to lock in as many customers as possible over the next year before an anticipated return to zero rates when things turn south...

It certainly is an interesting setup. Oil is currently just sneaking a new high for 2023. If it does breakout due to further threats to supply, I can see this blasting through resistance and reimposing inflationary pressures. There was some hope that inflation had been tamed to some degree, and that rates might stabilise, but a forceful oil price could well kick that into touch. The US numbers will be interesting, and I think it's a near certainty that Silver will touch the trendline. A drop all the way back to the low in March could also be on the cards. Such a drop would be a pretty solid entry for buy and forget.

I certainly consider it to be a safe long term bet. I have almost no doubts about that, and agree with your logic about a strong floor. But it's a bit like copper in a way, which even though it too is absolutely vital, goes through some real downturns when economic demand falls off. The question really is, "do you think the economy is going to pick up any time soon and roar like the 80's?" Personally I feel that some nasty corrections overall are required before a better mood (certainly in the west) grips people around the world again. I think there is a "just getting by" mood at the moment. A surviving hard times attitude. Probably when that is at its darkest will be the time to get in big into resources such as Silver.

Just to add to my last post, I actually think that energy will come down in price again next year. My reasons are based on the impossibility of the West to actually win or achieve its goals in Ukraine. Even CNN is now talking about the progress being "sobering"... The cost is simply too much for the US, so a settlement is likely to be reached before this time next year. Such a settlement would likely bring down the cost of energy, reducing inflationary pressures and the threat of any further rate rises. If that scenario pans out, I see it as being positive for Silver next year.

@HonestMoneyGoldSilver I certainly agree with your longer term outlook and even think there's a good chance of this price being revisited next year. The mining floor is the cost of energy, and it's a serious floor on a number of metals including Silver. After the markets opened this week, the price of oil briefly rose before tracing out an abc pattern to the bottom of the recent trendline. It has since rebounded sharply today, back to last weeks close. Given the tensions and sanctions at the moment, I just can't see energy getting any cheaper in the short term. It seems kind of strange that the threat of inflation and rate rises seems to have a negative impact on Silver, but it might not last for long if the inflation is caused by expensive energy which reduces production. When the cost of mining becomes prohibitive, it doesn't really matter how bad the world economy is, inflation causes prices to rise. The question is though, will they rise in real terms? I suspect not. For a real terms rise in Silver, the economy needs to be healthy, and inflation needs to be under control. I'm not a proponent of financial stress causing massive rises in the price of Silver. Gold maybe, but not Silver. As I've said before, I'm pretty ambivalent on the near term price for Silver, longer term I think it's a pretty safe bet, but it might not be until after a big crash before the next cycle begins properly. This little correction we've been having recently has actually been really mild by most standards, and I think we're going to need to see some big mining failures before a real fire gets under Silver again. A rising oil price may just do that...

Only in as much as anything matters. I'm simply musing on the implications for price as this development becomes clearer to investors over the coming weeks. If shipping insurance is denied, the world's number one fertilizer hub would be taken offline. It all depends on whether this new approach is condoned or condemned by our illustrious leaders. If our ally is allowed (or even quietly encouraged) to continue this new course of action, inflation (and by extension further rate rises) is the most likely outcome. Perhaps there are some who would wish their national debts inflated away, all the while blaming others for the inflation.... As you say, most of us here are just into gold or silver as a hobby. But the price does matter, and I see turbulence coming if this development isn't immediately halted.

I think that another round of inflation is coming, and hence by extension further rate rises could be on the cards. My reasons for this are the little reported hit on the chemical tanker near the port of Novorossiysk by Ukrainian / British ship drone. To be fair to the BBC, they are now reporting it, but it happened a good 12 hours ago. The purpose of these Western supported attacks, despite the media saying that Western allies are nervous about expanding the conflict to Russia itself, is to cripple Russia exports from the large black sea port of Novorossiysk. If ship insurance from this port becomes unavailable, 2% of world oil supply will be shut down. 15% of wheat supply will also be shut down. This is far more than any loss of supply from the Ukrainian grain deal, and the result will be a return to price inflation in energy (spreads to many other products) and wheat. This inflation can be comfortably blamed on Russia ending the grain deal and most will not realise. If this comes to pass, be prepared to pay a lot more for fuel again in the coming days and weeks. Monday futures will be interesting.... Anyway, back on point, what will this do to other commodities including Silver? Energy intensive mining for Silver could see temporary closures again, and a rise in price might be on the cards. Or perhaps the threat of further headline inflation over the coming months might focus the fear in investors minds of even higher interest rates dampening down the PM sector. Hard to know what to expect. (Edit): But further rate rises will definitely come if these attacks succeed in shutting down Novorossiysk through shipping insurance denial. On balance, overall, I think this could be neutral to bearish for the PM's, despite the political instability.

I see that most of Thursday's drop has been retraced. I wonder what this week will bring? I'm not convinced that this is ready for the big move upwards yet. I think a good few more months are required before the kind of base that can support a big move has been built. And I think that the central bankers hold the key for now. Until the threat of them continuing to raise rates declines, we'll probably see little battles in this sort of range for a while. And probably a big flash crash is required as well, just to clear out a load of longs. I see that IG says that 81% of their clients are long. That seems a bit one sided to me and liable to disappointment. I don't see the BoE pausing in their rate rising quite yet. But I do think the accompanying speech might talk of slowing the pace of future rises, just to cushion the blow a little. They're pretty much following the lead of the US and ECB, so they're the ones to watch for a reduction in the pace of rises.

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The supposed drop was on Thursday, after the 25th.... I guess that the drop will be reflected next week in the stats you're posting.

I agree that a big rise is coming. And your timescale is realistic as things stand. I agree that it might not seem like much to see such fractional mortgage rate cuts. But those fractions are not SVR. They are the two year fixed deals, so there's some jiggery pokery magic to work out with perceived future rate drops. This means that some bankers are seeing it as having topped at least. Perhaps it indicates only a reduction of their risk premiums against further rate rises by the central bank. I'm really just pointing it out as an indicator that not all is doom and gloom hyperinflation as the media would have us believe. When rates are known to be constrained and falling (ie in the rear view mirror), industrial demand for Silver will already have taken off....

Moneyweek has an article on their website discussing the slight reduction.

I think the rise in the US, before the drop, was just traders testing the market. Finding out whether bad news is now irrelevant or not. The rate rise was very much expected, so whether the rise was a reluctant one, (just because they promised to keep raising etc), is actually all that traders care about. The price is determined by the perceived future, (obviously I know ), but it's worth remembering that it's a future discounting mechanism, hence 3-6 months out, if rates are going to go into reverse, this is what is being assessed. I'm reading now that mortgage lenders in the UK are actually lowering their mortgage rates right now. Didn't see that splashed everywhere yet, but the msm are usually late to any party, and by the time they're hyping a narrative to the masses the change has already happened. The drop in inflation which I pointed out a while back, was more than expected, and HSBC has now led the way in reducing rates slightly. This goes against the media narrative of hyperinflation and a mortgage crisis (and everyone running out of money for food etc). I've had a feeling for a while that the talk has been a bit overblown. This would appear to be the first indication that the squeeze is passing, or at the least evolving. Whether it will be the same in the US is what really matters to the global price for Silver, but the market gave an appearance of wanting to rise against the backdrop of a rising US rate. To me, when bad news such as a rising rate can't immediately crush 4% off the price of an industrial commodity, this is an indication that the market is far more balanced than it appears. Overall I'm ambivalent on the price for the next few months, and I think it's most likely that a trading range continues to be fought over for a while before any stellar rise takes hold. I might have to sell some of my stack in the coming weeks to fund another project, and it would certainly be nice to see a return to May's prices before that, but I'm not holding my breath.