RICHARD RUSSELL: BUY SILVER
Like myself, Richard Russell had been vocally skeptical about the parabolic surge in silver prices. But he isn’t a believer in the silver theory. Russell says the recent correction is healthy and he feels as though the recent consolidation is setting the stage for the next leg up. In his latest Dow Theory Letter the investment legend explained why he’s bullish again about silver:
“Silver — According the Constitution of the United States, only gold AND silver are money. Silver is a lot cheaper than gold, and for a while the “crowd” rushed in to buy silver as a ” safe haven substitute” for gold. Silver turned into a speculative bubble, and when the bubble broke, silver suffered a crushing drop from a price of 49.75 to 32.
I wrote that silver’s upward post-crash correction might surprise most silver-haters and silver shorts. As I write silver has rallied to above 37. The bull market in gold is still very much intact, and I believe gold will take silver UP with it.
Remember I said that during recessions, silver is treated as an industrial metal, but during periods of inflation silver is treated as a monetary metal. With inflation built into America’s future, I see silver following gold to higher levels. And I see the public once more rushing in to buy silver as a safe-haven currency against a shaky dollar.
Below I include a daily chart of silver, going back two years. Like gold, silver seems to respect a 150-day moving average, which I have drawn on the chart (blue line). Also, note that silver is still severely oversold, as per RSI.”
“Confession — I had sold much of my silver prior to the big break (I didn’t like the parabolic action of silver and the accompanying public excitement), but I have changed my mind about silver. Now that silver is trading above 37 again, I like it and suggest positions in SLV and CEF.”
Source: Dow Theory Letters
Is it really the time to buy silver, when QE2 ends next month? What thoughts will come up, if one relates silver price to the Fed’s balance sheet?
And is silver really cheap?
You’d better forget all fundamental arguments about that. SLV is ready to bounce back just because it is oversold, technical oscillators are oversold, and all small traders follow the same oscillators, which say “buy now” (RSI, MACD, …).
It’s worth a tactical swing-buy to a fibo-retrace from the top. But I wouldn’t expect a new top.
you only make money when you trade with the trend, not against it. as keynes said, the market can be irrational longer than you can be solvent.
if you’re interested in earning money, you learn to let go of your ego and read the market for what it actually is, where it is actually going and how you can exploit that knowledge to earn money.
if you’re interested in telling yourself that your theory is correct in spite of the market telling you otherwise, you’ll just be piss broke until the day your prophecy comes true. broken clock, twice a day and all that.
good advice at a bad time is the same as bad advice.
Pull up the chart of Silver from May 1979 to March 14, 1980 when it kissed its 150 day m.a. and it looked similarly “cheap”. By the end of May though, it was much (50%)”cheaper”.
Do I need to remind everybody that Russell came out with a mega BULLISH call on stocks in late 2008 right before they collapsed? THE GUY’S FRIGGIN 90 YEARS OLD! He should be in a rest home.
Do NOT buy SLV until you have read the prospectus. It has more holes than Swiss cheese:
http://www.theundergroundinvestor.com/2009/07/the-gld-and-slv-legitimate-investment-vehicles-or-not/
If you buy silver, you’re likely NOT buying physical silver, meaning you’re NOT contributing to buying pressure and NOT causing the price to rise. SLV’s custodian (JP Morgan) is the same bank that allegedly has the largest short position in silver, allegedly also the largest short position in the history of commodity trading. If you buy shares in SLV, then you’re being back-ended into “unallocated bullion”, in other words, paper IOUs, which conveniently takes the pressure off JPM’s short and leaves you with nothing but empty promises when, inevitably, the COMEX runs dry.
Consider PSLV instead. Better yet, buy the real thing.
* correction, “If you buy SLV”
Very informative. Thanks for the link
PSLV is for suckers who want to pay $120 for $100 worth of silver. Even your local coin shop doesn’t charge such premiums. If, contrary to any evidence, you really think SLV doesn’t have the silver, then do yourself a favor and buy CEF, which is roughly 50/50 gold/silver by value, and whose premium is close to zero.
Personally, I don’t buy into any of the precious metal ETFs. Short them occasionally.
I get my metals from here: http://www.perthmintbullion.com/au/View-All-Bullion.aspx
Mediocratis, I read the link you gave, but the evidence that SLV and GLD don’t hold claims on actual silver seems pretty thin. I don’t get how you go from the author’s statement at the beginning of your link – “this article contains my opinions and speculation based upon no concrete evidence” – to your statement, “If you buy [SLV], you’re likely NOT buying physical silver”. This is quite a jump in the degree of certainty.
Of course, I don’t think that SLV and GLD actually have all the silver and gold that they own, locked up in their own vaults. That’s impractical. But as long as those bars are held in trust for them and them alone, and aren’t “owned” by more than one person at a time, then buying SLV and GLD does contribute to real price pressure on the prices of silver and gold.
I still have some of the silver I bought back in the seventies. It’s not a lot. Mostly coins, I keep them to pass on to my relatives. The bad thing about silver is that it takes a couple of years to climb to the stratosphere, but then usually a couple of months to plummet back to earth. If you are not paying attention and you have gotten in late you can lose big time. However, physical silver will retain its value somewhat after paper silver drops because so many survivalists are invested in it. They, like me, will hang onto it for posterity’s sake. It truly has become an alternative ‘emergency’ currency of sorts, at least psychologically if nothing else.
bottom line for me is all fiat currencies are on shaky ground. this will likely pass as life must go on. staying with silver and my $111 initial target by mid 2013. best yields on somewhat “safe” plays is about 5%, so i will take a chance on silver below 40 that it will rise more than that. more crisis ahead, so holding and periodically buying silver. i have suggested month to month buying of a certain dollar amount of silver since it was $10.00. at the top what you will have is a cheap base of a larger number of ounces, and a peak of less more expensive ounces. i believe that is a pyramid and it works in silver. BUY.
Hi George,
Which fiat currencies do you specifically think are “on shaky ground” and what does that mean exactly? Threat of default? Actual default? I feel like you would have a hard time making those arguments stick with most of the readers here at TPC, with the execption of some EU peripherals.
Buy silver here ? Yes, for a short ride on the move higher. Or did Russell have begun to drink the silver Kool-Aid, as well ?
TPC, what “Silver theory” ?
Cullen,
I presume you are still staying away from Silver and preferring Gold?
I havn’t re-entered after selling at $46 (thank you again, you are partly responsible for that sale).
I’d like to see $30 again before buying.
When richard Russell says buy slv is made a mistake. He thinks all his readers have $100,000 dollars to invest. AS stated by one of the posters you need to invest that much to take physical delivery. Many people were taking money out of GLD and slv and taking physical deilvery. I still say Silver is a GREAT INVESTMENT. when a natural resouce strats to diminish it’s supply the old supply and demand curve kicks. in. With inflation silver will do great. During the good times ifi live to see them that’s when you just hoard it like money and you are ready for the big bust. 15 dollar silver is out ofthe equation. here is a tip, read the heck with the morons on television. Give me russell, embrey, and sprott.
the GS MAN
Does anybody know for a fact that CEF actually has the gold and silver that it claims or is it another possible Bernie Madoff Ponzi scheme?
The bet is that QE3.0 is now baked into the cake.
bingo, coolidge.
The vampire squid has reverse-engineered RR’s models and manipulates the prices of DJI, IYT, GLD, USO, SLV, etc. so that RR will come up with bullish statements regarding Dow theory, Silver theory, etc. In the end RR will look stupid…
I do not believe that SLV is a very good investment! The smaller miners with a projected/planned x2-3 production at a sale price of USD 25,-/Oz will be profitable.
Imagine the profits at a usd 6-70/Oz price. It costs around -5 to +10 usd to get it out of the ground. Not only a inflation hedge, but great PE earning as well.
I tend to stay away from silver trading. Its as close to Vegas as you can be in Wall Street.
I think it acts so widely because a large percentage of daily trading comes from retail.
THERE AND THAT FACT THAT IT IS OUT OF BALANCE WITH GOLD, SILVER WILL AND HAS TO CONTIUE TO GO UP,UP IN PRICE…NOT TO MENTION AN UNSTABLE GOV. BETTER BUY IT NOW BEFORE IN CATCHES UP WITH GOLD. FOR THE FACTS SPEAK FOR THEM SELF..AND YES I AM BUING ALL I CAN AFFORD WITH A LITTLE GOLD THROWN IN
CHUCK NEWTON, CALIFORNA
A fractal? Look at the above chart and a chart of the S&P500 from 1990 to 2000. Looks like were at August, 1998.
to understand RR, I think you need to look at his underlying thesis, which is that fiat currencies are doomed, we are in for hyperinflation, and gold will be $5000 an oz. (“and silver will go along for the ride.”).
If you agree with his underlying premises, then buy silver. If you don’t, then be cautious………….
SLW is less paper in my opinion than SLV and is way undervalued
I prefer Gold given that in the final analysis the Vichy boys will ask their friends at the BIS to be the dealer for a physical / cash only debt clearing operation if they want the Euro to survive.
Anyhow ever since the FED joined the BIS in the early ninties I believe there has been a conspiracy to take the dollar out.
A dollar implosion would I guess be good for silver and I have just bought a dozen silver Mexican Libertads in the off chance that they will be monetized.
QE3 is coming – buy precious metals and commodities.
NICE CALL!!!!
What a great timing.
Vampire Squid: 23
RR: 0
Buy silver……lol. WATCH THE FUNDAMENTALS. This is a very very volatile market. It was clear at the time of this article silver would be taking another short term dip.
Long term bullish, but the short term is completely unforgiving.
Choose your tokens and pay attention to the game. Just keep in mind WHY gold and silver are advancing around the world, and consider what you will will be holding
when the music stops.
I have talked to these guys that keep physical assets in Singapore (pretty safe place I guess).
Haven;t purchased yet as I am waiting to see if prices can go down a bit more, but seems like a good option –
http://www.malca-amit-freeport.com
The way I’m looking at it, the financial powers-that-be are controlling it. They specifically brought it down because they decided it was running away. I expect they took short positions in advance so they are all okay.
Now I expect them to carefully control the rise. So we have a correction today, with some excuse given in the media.
I’m assuming they have stopped lowering it. But I’m not confident they will let it pass $50, and that mark might take a year.
Just finished a great book “When Money Dies.” The collapse of (Germany) Weimer Empire form 1917 to 1924. WOW. The parrellels to the USA today are astonishing….printing money, large portion of the population on the government dole,and huge mistruct of the government all led to runaway inflation. The winners of that time were those who held hard assets. Well….Adolph didn’t too so hot in the end but he had a a heckuva run.
My portfolio is 15% in paper gold and silver but I’m starting to take delivery of the asset. There is way too much uncertainty around the globe. China, India, Turkey buying gold? China can not cash in their USA Treasuries without causign a liquidiity problem (i.e. they cash in $100B and the remaining $1.3T becomes worth less). Silver is a by-product. Most of the production comes from Gold and Copper miners. Plus, there isn’t a true souce of scrap. Metal shortages, economic fear, inflation will elevate the price. Short term ?? Long term-Very Bullish. Hold the metal…don’t rely on some goon taking care of you.
For those of you in the Land of the Free, a save prediction:
All the promises of ‘change’ from the Obamanable ever sounded as hollow as footsteps inside Fort Knox.
Gold and silver will be the real stuff, and you’ll need it. You’ll be the only ones that have any. Bury it deep. “Sorry, Sir, I lost all mine overboard in a boating mishap.”
Your dollars are worth about 3 cents, my Aussie dollar’s doing well at 3 1/10 cents !!! Oh joy! Physical PM’s the way to go, or dream on.
Cheers yall…
SLA-mdunk in Oz.
only a pin head who hasnt done their research still has questions on what to do with their fiat currency
If you are a speculator or “serious” investor then you probably should not mess with silver. It is indeed a very volatile and undoubtedly manipulated market. It is a very small market as well (which lends itself to ease of manipulation). If, on the other hand, you are interested in preserving what little value your paper currency has at the moment, then you should look at possessing the physical metal. Interestingly enough, U.S. gold and silver Eagles can be taken out of the country at face value (i.e. one $50 gold eagle is worth about 1530 Federal Reserve Notes right now). I suspect some of the wealthy elite set it up that way for a reason (wink-wink). Furthermore, when you exchange Federal Reserve Notes for U.S. Eagles, there is no sales tax in most states (not so with privately minted gold and silver rounds or bars). Let’s face reality folks: the Federal Government is insolvent without “quantitative easing” (i.e. monetary inflation). Putting more “legal tender” into circulation will necessarily cause commodity prices to rise. Maybe not all at once or even predictably, but they will rise and silver is a commodity. If you think that the Federal Government and the Federal Reserve can’t devalue the 3.6 cents remaining in each Federal Reserve Note by another 96.4%, then I’ve got a nice bridge I want to sell you.
Read RR for many years, actually grew up with his letters coming to our home before the internet! Say what you will about the man, he has been right with his PM call. Don’t subscribe anymore.
Learned about charts, resistance etc from a brilliant man who made millions when the market was not as much of a crap shoot and individuals actually did the trades! Now with the BS computers and Institutions and their games, fahgetaboutit. Trading that is, still ok with some l/t stock holdings.
I have been buying physical gold and silver for several years. I also own a Gold Fund for exposure to miners.
Along with agriculture and oil, that is IT for stocks. No matter what everyone is going to need food and energy.
There is no doubt we are is deep trouble with the national debt and the fiat/paper money is buying less and less. Personal debt too, with the problems in real estate and jobs! The recovery is not happening and it looks to be years before and if it happens. With zero faith in our politicians and institutions I want something that owes nothing to anyone, the oldest form of real money, Gold and Silver. Buying some silver eagles and libertads, 50 pesos Gold coins and gold eagles when I can.
I am still a buyer here and there for savings and retirement. Rather get my bullion and put it in the vault than see the pathetic interest rates with money markets. The stock market is like going to a casino, little faith there too.
I do sell coins when we need cash for an emergency or I buy a ‘collectible coin’.
I am still amazed at how many people do ot get it with gold and for that reason as well as the China factor, the market for PM’s (gold and Silver) have a long way to go. No matter what, Gold and Silver should be a part of every individuals assets. Good Luck to us all!!
Forgot to mention- The silver correction in large part was due to margin requirements being changed!